Bharucha J.
1. Both these appeals are directed against the orders of the learned company judge passed upon a judge's summons.
2. In 1972, the State Industrial Investment corporation of Maharashtra (SICOM) advanced a loan of Rs. 45,20,000 to a company called Steel India Pvt. Ltd. upon the security of plant and machinery belonging to it. Mortgage deeds were executed by the company in favour of SICOM ON April 21, 1973, and May 23, 1974.
3. On July 30, 1975, the Maharashtra State Financial Corporation (MSFC) sanctioned a loan of Rs. 8.30 lakhs to the company and advanced a sum of Rs. 4,52,800. On April 23, 1976, a mortgage deed (now called 'the mortgage deed') was executed by the company in favour of MSSFC in respect of the same property ass was mortgaged to SICOM (now called 'the secured property'). On May 18, 1976, the company filed with the Registrar of Companies, Bombay, particulars of the charge created by the mortgage deed in the deed in the requisite From 8 under the provisions of section 125 of the Companies ACt. On March 14, 1977, MSSFC advanced to the company the balance amount of the loan. On August 10, 1977, a tripartite agreement was entered into between the company, SICOM and MIFC which provided that the rights of SICOM and MSSFC in respect of the secured property would rank parii passu.
4. In consequence of defaults committed by the company, SICOM entered into possession of the secured property on July 4, 1980. On March 31, 1982, SICOM sold to M/s. Kusum Spat and Wire Products Pvt. Ltd. the secured property in exercise of the power of sale vested in SICOM under its mortgage deeds. The sale was with the consent of MSFC. It was for the sum of Rs. 91.51 lakhs on deferred payment basis. MSSFC was entitled to receive Rs. 15.60 lakhs thereof. On April 2, 1983, possession of the secured property was given to the buyer.
5. On January 11, 1984, the company was order to be would up by this court. The winding - up related back to February 11, 1982. On May 29, 1985, the official liquidator wrote to SICOM nothing the sale of the secured property for the price of Rs 91.51 lakhs and that the due of SICOM were, in the aggregate, in the sum of Rs. 77,28,652.36. The letter alleged that the charge of the MSSFC under the mortgage deed had not been registered with the Registrar of Companies; as such, the charge was void against the official liquidator and could not be enforced. The official liquidator, therefore, called upon SICOM to pay to him the sum of Rs. 14,22,347.64, being the difference between the sale proceeds of Rs. 91.51 lakhs and its dues of Rs. 77,28,652.36 within two weeks. On July 19, 1985, and July 22, 1985, replies were addressed to the official liquidator on behalf of SICOM claiming that his contention was not correct.
6. On August 5, 1985, the MSFC issued a judge's summons to which the official liquidator and SICOM were made parties. Prayer (a) thereof sough leave under section 446 and /or 537 of the Companies Act to file it. Prayer (b) sough a declaration that MSSFC was secured creditor of the company in respect of the secured property and, hence, entitled to remain outside the winding - up. Prayer (c) sough a declaration that MSSFC was entitled to the sum of Rs. 15,60,000 aforementitioned payable out of sale proceeds of the secured property. By payer (d), the official liquidator was sought to be restrained from enforcing upon MSFC or SICOM his claim in the sum of Rs. 14,22,347.64 or any other amount.
7. On October 17, 1885, the learned company judge heard and disposed of the judge's summons by an order which reads thus:
'Leave under section 446 only granted. Payers (b) and (c) refused. As regards payer (d), in my opinion, the appropriate order is that the second respondent, SICOM, will continue to retain Rs. 14,22,347.64 and are directed to invest the same in a scheduled bank forthwith, and not to pay the amount until further orders of this court. Investment b made for a period of six months to be revenewed from time to time thereafter. Order accordingly. No order as to costs.'
8. On October 25, 1985, the order was mentioned to the learned judge for speaking to the minutes. The order then passed reads Thus:
'Heard Mr. Rao again on his request. He argued the matter to show that the order required varication. Application rejected because it seems that the second respondent has entered into an arrangement of deferred payment with the auction purchasers. That is a separate deal. The second respondent in that even should provide the amount from its pocket. Had the second respondent not entered into the arrangement, the entire Rs. 91.5 lakhs would have been received.'
9. The appeals which are now before us are filed by MSFC and SICOM, respectively: MSFC's appeal impugns the order dated October 17, 1985. SICOM's appeal impugns the order's of October 17 and October 25, 1985.
10. Counsel for MSFC and SICOM have drawn attention to section 125 of the Companies Act. Sub - section (1) of section 125 needs to be exreacted.
'125 (1). Subject to the provisions of this Part, every charge created on or after the 1st day of April, 1914, by a company and being a charge to which this section applies shall, so far as any security on the company's property or undertaking is conferred thereby, be avoid against the LIQUIDATOR and any creditor of the company, unless the prescribed particulars of the charge, together with the instrument, if any, by which the charge is created in evidenced, or a copy thereof verified in the prescribed manner, are filed with the Registrar the manner required by this Act within thirty days after the date of its creation:Provided that the Registrar may allow the particulars and instrument or copy as aforesaid to be filed within seven days next following expiry of the said period of thirty days is. the company satisfies the Registrar that it has sufficient cause for not filing the particulars and instrument or copy within that period.'
11. It is clear from the phraseology of section 125(1) that a charge created by a company is void against its liquidator or any creditor unless particulars of the charges together with the instrument, if any, by which the charge is created or a duly verified copy thereof are filed with the Registrar of Companies within thirty days after the date of its creation. What makes a charge void is the failure of the company to file with the Registrar the particulars of the charge and the instrument (or a copy of it) by which the charge is created within thirty days of its creation. That the charge is not thereafter entered on the register is not material in this regard.
12. Mr. B. B. Parekh, learned advocate for the official liquidator, did not, when we asked him, dispute that the prescribed particulars of the charge and a duly verified copy of the mortgage deed were filed with the Registrar by the company in Form 8 as required within thirty days after April 23, 1976. This appears also to be acknowledged in para 9 off the affidavit of the official liquidator dated September 13, 1985, in reply to the judges summons.
13. Mr. Parekh replied upon section 132 of the Companies Act in support of his submission that a certificate of registration was imperative for the charge to be valid. Section 132 states that the Registrar shall give a certificate under his hand of the registration of any charge that is registered stating the amount thereby secured and the certificate shall be conclusive evidence that the requirements had been complied with. This provision in no way assists. Mr. Parekh. All that it says is that a certificate of registration shall be issued and shall be conclusive evidence of registration. Wherever there is a certificate of registration of a charge, the registration cannot be challenged. That is not to say that where there is no registration certificate, the charge is void. the validity or voidness of the charge is, as aforesaid, governed by the provisions of section 125(1).
14. Mr. Parekh drew our attention to a letter date May 12, 1977, addressed by the Registrar to the company asking for a copy of the 'original deed of hypothecation ... to which the agreement of April 23, 1976, for a loan of Rs. 8.3 lakhs is supplemental. In Mr. Parekh's submissions, the company had, therefore, failed to furnish the prescribed particulars to the Register. Apart from the fact that this submissions runs counter to Mr. Parekh's answer to the court terms of the official liquidator's affidavit in reply here in above mention, this letter of the Registrar seeks a copy not of the document by which the charge was created, but of the document by which the charge was created, but of other document. It does not indicate that the prescribed particulars of the charge and a duly verified copy of the mortgage deed had not been forwarded to the Registrar within the period of thirty days prescribed by section 125.
15. Mr. Parekh drew our attention to the affidavit filed by Manodar Vithal Sumbrey on behalf of MSFC in support of the judges summons. It is state in the affidavit that the secured property was sold by SICOM 'with the consent of the parties'. In Mr. Parekh' submission, this indicated that thee sured property had not been sold by SICOM in pursuance of the power of sale that is has; and, accordingly, the sale was void having regard to 537 of the Companies Act. We find it difficult to read the arrangement in the affidavit in the manner Mr. Parekh wishes us to do. In any even, we have verified that the sale was 'in exercise of the powers of sale vested' in SICOM
Section 537 states that where a company is being would up by or subject to the supervision of the court, any sale held without leave of the court of any of the properties or effects of the company after commencement of the winding - up shall be void. A similar provision in the 1913 Act was interpreted by the Supreme Court in M. K. Ranganathan v. Government of Madras : [1955]2SCR374 . It was held that it was only when the intervention o the court was sought, either by putting in force any attachment, distress or execution or proceeding with or commencing a suit or other legal proceedings against the company, that the leave of the court was necessary and if no such leave was obtained, the remedy could not be availed off by the secured creditor. Section 537 of the present Act must be interpreted in the same manner. The sale SICOM having been effected outside the winding - up and without the intervention of the court, it is not void.
16. In the result, we hold that the charge created by the mortgage deed is not void and, accordingly, that MSFC is entitled to the sum of Rs. 15,60,000 from out of the price realised by SICOM by sale of the sured property. The consequence is that the official liquidator is entitled to no part of those sale proceeds.
17. The order of the learned company judge dated October 17, 1985, is, therefore, set aside. Consequently, him order dated October 25, 1985, is also set set aside. these orders shall be substituted by the following:
Leave to take out the judges summons under section 440. The judges summons is made absolute in terms of payers (b) , (c) and (d).
18. The parties to bear and pay their own costs throughout.