The discretionary power of the Company Law Board (CLB) under Section 141 of the Companies Act, 1956, and the procedural requirements under Section 138 for recording satisfaction of charge are crucial in determining the condonation of delay in filing satisfaction of charge before the Registrar of Companies (ROC).

( 1 ) THIS appeal is preferred by the Management of Mangalore Chemicals and Fertilizers Limited under Section 10f of the Companies Act, 1956, for short, "the Act", challenging the order dated 27-8-2003 passed by the Company Law Board (CLB), Southern Region Bench, Chennai, represented by its Chairman, the 1st respondent herein, disposing of the appellant's Company petition No. 468/141/srb/2003 filed before them, without granting the relief sought under section 141 of the Act for condoning delay in the matter of filing satisfaction of charge under section 138 of the Act.

( 2 ) THE facts of the case, in brief, are - The appellant-company was incorporated on 18-7-1966 under the Act. It was originally under the management of the Government of Karnataka and was taken over by the present management (UB group) in 1990 under a Rehabilitation Package formulated by the Government of Karnataka, financial institutions and banks. It is stated that the package could not be implemented in its entirety in view of the fact that certain financial assistance, contemplated under the rehabilitation scheme, was not extended. In the circumstances, on 25-6-1991, the company entered into a Joint Hypothecation Agreement with a consortium of 10 Banks including Syndicate Bank, the 2nd respondent herein. Under the hypothecation Agreement, a common charge against the appellant-company's stock-in-trade, goods, merchandise etc. , was created in favour of the Consortium including Syndicate Bank for a sum of Rs. 13425. 78 lakhs. On 27-9-1991, a charge was registered under the Act with the registrar of Companies, Bangalore (ROC ). In terms of the Agreement, the State Bank of India which is a lead bank, retains 5 per cent of the sale proceeds of fertilizers sold by the appellant-company for payment to consortium lenders consisting of 10 banks, including syndicate Bank, commencing from the year 1994 and, at that rate, the outstanding amount due was Rs. 134. 25 crores.

( 3 ) IN August, 1994, the appellant-company was declared sick under the Sick Industrial companies (Special Provisions) Act, 1985 (hereinafter called 'sica') and was referred to Board for Industrial and Financial Reconstruction (BIFR ). The BIFR, after several hearings, meetings and negotiations between all parties, sanctioned a rehabilitation scheme. The draft rehabilitation scheme was circulated to all concerned including the Banks and was also published in the dailies on 27-4-2000 and 28-4-2000 inviting objections/suggestions, if any. The final scheme was sanctioned by BIFR on 1-12-2000. The rehabilitation scheme inter alia provided that consortium banks including Syndicate Bank will accept Rs. 114 crores from the Company towards Term loans and Working Capital Term Loans vide Clause 3 (B ). This amount represented payment towards debts covered by the charge created on 27-9-1991. According to the appellant-company, it paid/discharged Rs. 114 crores and became entitled to get a satisfaction of charge from the ten consortium banks. All the consortium banks, except Syndicate Bank, issued memo of satisfaction of charge, on receipt of their respective amounts under the scheme.

( 4 ) STATE Bank of India, Lead Bank, issued a letter that all dues under the Hypothecation agreement stood discharged. The Management of the Syndicate Bank, however, refused to issue memo of satisfaction of charge on the ground that an application for recovery, T. A. No. 300 of 1997 filed by Allahabad Bank against Syndicate Bank and the appellant-company is pending before the Debts Recovery Tribunal, Chennai (DRT) and that unless the said application was withdrawn, they would not issue memo of satisfaction of charge.

( 5 ) IN December, 2001 appellant-company obtained Forms 13 and 17 signed by 9 out of 10 consortium banks for the purpose of filing satisfaction of charge with ROC. On 12-12-2001, the appellants filed application before BIFR for direction to Syndicate Bank to sign Forms 13 and 17. Of course, in t