S D KRISHNA AYYANGAR Vs. SVNALLAPERUMAL PILLAI

JUDGEMENT

(1.) The question in the present case is whether a charge given to the Secretary of a Limited Company upon unpaid calls can he enforced by him although not registered as required by Section 08 of the Act of 1882 (the Indian Companies Act). The difficulty in the case is occasioned by the Explanation appended to the section, which otherwise is on the same lines as the corresponding section in the English Act. It was held by the High Court of Madras that the terms of the Explanation rendered the charge not enforceable. Apart from the effect which the Explanation in the Indian Act may have in the case of a mortgage or charge to an officer of the Company, it is clear that a mere failure to register does not under either the English or the Indian Act render a mortgage or charge on the property of the Company unenforceable.

(2.) Section 68 of the Indian Act requires registration of all mortgages and charges specifically affecting property of the Company, and imposes a penalty upon any official of the Company who knowingly and wilfully authorises or permits the omission of such entry on the register. The performance of the duty to enter the mortgage or charge on the register may be compelled by order of the High Court. There is appended to this section in the Indian Act an Explanation in the following terms :- Explanation.-Omission to register under this section a mortgage or charge does not render the same invalid. But the officers of the Company cannot avail themselves as such of a mortgage or charge specifically affecting property of the Company and not so registered.

(3.) The appellant contends that the judgment of the High Court is erroneous, and that the question of construction has been conclusively settled in his favour by an order of the District, Judge in 1912 which stands unreversed.