OFFICIAL LIQUIDATOR Vs. SRI KRISHNA DEO

JUDGEMENT

(1.) This is an application by the Official Liquidator praying for declaration that the holders of the third series of debentures of the U. P. Oil Industries Ltd., now in liquidation, are not secured creditors of the Company.

(2.) This Company was ordered to be wound up on the 11-5-1956. After investigating into the assets and liabilities of the Company the Liquidator found that it had three series of debentures. The first series of debentures were allotted to 8-4-1948 for a total sum of Rs. 1,50,000/-. A Debenture Trust Deed was executed and registered with the Registrar, Joint Stock Companies, Lucknow and also in the office of the Sub-Registrar, Lucknow under the Indian Registration Act. The second series of Debentures were issued on 23-6-1950 for a sum of Rs. 100,000/-. For this series also a debenture Trust Deed was executed and it was registered with the Registrar, Joint Stock Companies Lucknow as well as in the office of the Sub-Registrar, Lucknow under the Indian Registration Act. By a resolution dated the 23rd March 1952 the Board of Directors authorised Sri B. P. Agarwall who was managing the affairs of the Company to issue a third series of debentures for Rs. 4.50.000/- and a committee was appointed to allot these debentures. In pursuance of the above resolution the committee on the 7th April 1952 allotted debentures bonds nos. 1 to 4 for Rs. 2,000/- to Rai Sahib Pt. Sri Krishna Deva Bhargava of Khatauli and four bonds nos. 5 to 8 for Rs. 3,000/- to Suit. Rajeshwari Devi of Karol Bagh Delhi. No Debenture Trust Deed was executed for this series and there was no registration in the office of the Sub-Registrar under the Indian Registration Act. The Company however appears to have registered with the Registrar Joint Stock Companies the particulars of this third series of debentures on the 18th April 1952 under Section 109 of the Indian Companies Act 1913 and it further appears that a printed form of the debentures of this series along with the condition under which they were issued was also filed in the Office of the Registrar of companies, there being no Trust Deed relating to this third series of debentures each debenture allotted to each person is alleged to be a different transaction and the Official Liquidator contends that each such transaction should have been registered within 21 days of the date on which the debenture was issued. The holders of the third series of debentures are therefore said to be unsecured creditors and entitled to no preference.

(3.) Notice was issued of this petition and the petition was opposed both on behalf of the Company as well as on behalf of these debenture holders. It is contended that registration under Section 109 of the Companies Act is all that is needed under the law and as the issue of debentures was intended to create only a floating charge on all the assets of the Company generally no registration under the Registration Act was either necessary or practicable. In this" connection it was also urged that the plant and the machinery of the Company, at least the major and more substantial part of it was movable property within the meaning of the law and even if the third series of debentures were not registered under the Registration Act such plant and machinery being movable property could be held to be under a charge so far as these debentures were concerned.