LALA MANMOHAN DAS Vs. UNITED PROVINCES

JUDGEMENT

(1.) THESE consolidated appeals are from a decree of a division bench of the High Court of Judicature at Allahabad, dated August 22, 1941, and from an earlier decree of a division bench of that Court, dated April 30, 1940, both decrees being made in the winding-up of the Lower Ganges and Jumna Electricity Distributing Co. Ltd. (hereinafter called the company ).

(2.) THE question which calls for decision is whether certain mortgage debentures issued by the company for the purpose of securing a sum of Its. 3 lacs with interest, and secured by a debenture trust deed, constitute a valid charge on the undertaking and assets of the company, or whether the charge upon the undertaking intended to be created in favour of the debenture holders is void by reason of the provisions of Section 9, Sub-sections (2) and (3), of the Indian Electricity Act, IX of 1910 (hereinafter called the Act ). THEse sub-sections are in the following terms : 9. (2) THE licensee shall not at any time assign his licence or transfer his undertaking, or any part, thereof, by sale, mortgage, lease, exchange or otherwise without the previous consent in writing of the Provincial Government. (3) Any agreement relating to any transaction of the nature described in. . . . Sub-section (2) unless made with, or subject to, such consent as aforesaid, shall be void.

(3.) ON May 7, 1932, the company made an issue of mortgage debentures for securing the sum of Rs. 3 lacs repayable with interest at the rate of 7 per cent, per annum free of income-tax. Before making the said issue the company did not ask for, or obtain, the written consent of the said Provincial Government in accordance with the provisions of Section 9 of the Act. The appellant Lala Manmohan Das is the holder of the bulk of the said debentures.