SREE MEENAKSHI MILLS Vs. REGISTRAR OF COMPANIES MADRAS

JUDGEMENT

(1.) SREE Meenakshi Mills Ltd. , filed a balance sheet for the year ended 31-3-1962 with the Registrar of Companies. On the liabilities side under the heading "secured loans" a sum of Rs. 36,57, 804 was exhibited as having been raised on the security of fixed deposits with the Bank. What happened was that Sree Meenakshi mills Ltd. , had some fixed deposits with the Bank and raised a loan from the Bank to the extent of Rs. 36,57,804, by pledging those fixed deposit receipts. This pledge was however not registered with the Registrar of Companies. The registrar, however, took an objection that it was a charge which required to be registered under S. 125 of the Indian Companies Act, 1956. It is here necessary to quote S. 125 (1) and 125 (4) (d) and (e ). They are as follows:

(2.) NOW this contention of the petitioner is supported by the Bench decision of this court in Radhakrishnan Chettiar v. Madras Peoples' Bank Ltd. , 1943-1-Mad LJ 142 : (AIR 1943 Mad 73 ). In that case the Madras Peoples' Bank Ltd. , was indebted to one Radhakrishnan Chettiar in a sum of Rs. 3000. Being unable to repay the money, the Bank endorsed five promissory notes to Redhakrishnan chettiar as security for its indebtedness to him. Those promissory notes had been executed in favour of the Bank by its own debtors. The bank subsequently went into liquidation. Redhakrishnan Chettiar, as endorsee of the promissory notes, collected a sum of Rs. 1100 and odd, from the makers of those notes. The Official liquidator of the bank took out an application against Redhakrishnan Chettiar asking him to refund the sum of Rs. 1100 so collected on the ground that the agreement between the Bank and Redhakrishnan Chettiar by which the promissory notes had been endorsed required registration under s. 109 (1) (e) of the Indian companies Act, 1913 (which in this respect was similar to S. 125 of the Act of 1956), that since it had not been registered, it was void against the Official liquidator. The Official liquidator succeeded before Gentle J. but the Bench (Leach c. J. and Bell J.) reversed that decision. S. 109 of the 1913 Act contained the following provisions:

(3.) THE learned Government Pleader has cited the decision in Independent automatic Sales v. Knowles and Foster, 1962-3 All ER 37. In that case, the plaintiff company carried on the business of manufacturing and dealing in automatic machines. They used to sell their products under hire purchase agreements. For obtaining finances for their business, they hypothecated some of these hire purchase agreements with the defendants. That hypothecation however, was not registered under S. 95 of the English Companies Act. The plaintiff company went into liquidation. The Liquidator contended that not having been registered the hypothecation was void against him. The contention was upheld on the ground that the hire purchase agreements contained book debts of the company, that the hypothecation of the hire purchase agreements created a charge on the book debts of the company, and that it was immaterial that the hypothecation bond was intended to secure to the defendants other rights besides the book debts. I find however that in S. 95 of the English Companies Act. there is no provision corresponding to S. 125 (4) (e) of our Act, exempting from registration a pledge of movable property Consequently that decision may have to be distinguished whereas there is no reason for distinguishing the Bench decision of this court which is binding on me.