1959 Supreme(Cal) 52

HIGH COURT OF CALCUTTA
S. C. Lahiri, A. N. Ray
CALCUTTA NATIONAL BANK (IN LIQUIDATION) - Appellant
Versus
ABHOY SINGH SAHELA - Respondent
A. F. O. O.  163  Of  1955
Decided On : MARCH 02, 1959

An unsecured creditor of a limited company has no locus standi in a proceeding for extension of time for registration of a mortgage or charge under Section 120 of the Indian Companies Act, 1913 as amended by Act XXII of 1936.

Headnote:

COMPANY - MORTGAGE - EXTENSION OF TIME FOR REGISTRATION - LOCUS STANDI OF UNSECURED CREDITOR - SECTION 120 OF THE INDIAN COMPANIES ACT, 1913 - WHETHER COURT COMPETENT TO EXTEND TIME IN CASE UNDER SECTION 109A - WHETHER ORDER OF EXTENSION MADE BY COURT UNDER SECTION 120 IN CASE UNDER SECTION 109A IS A NULLITY OR AN ILLEGAL ORDER MADE BY IRREGULAR ASSUMPTION OF JURISDICTION.

Fact of the Case:

The Calcutta National Bank Ltd. (now in liquidation) advanced a sum of Rs. 2,75,000/- to one Ranjit Bose with a further arrangement to advance upto the limit of Rs. 20,000/- on cash credit account and to secure repayment with costs and interest. Ranjit Bose hypothecated in favour of the Bank by way of first charge the entire Tea Estate with all the tea crops and all the moveables belonging to the Rangaroon Tea Estate and deposited the title deeds of the said Tea Estate. By an indenture dated 30-12-1944, Ranjit Bose transferred to the company the tea estate subject to the mortgage and charge in favour of the Bank. The company did not file particulars of the charge with the Registrar of Joint Stock Companies within the period of twenty-one days allowed by law whereupon the Bank which was not a party to the indenture dated 30-12-1944, filed an application for extension of time on 2-4-1949. No notice of this application was served either upon the company or upon any of its creditors and upon this ex parte application S. B. Sinha, J. , made the following order on 4-4-1949 : "it is ordered that the time for registration and for filing of particulars of the charge created under the said memorandum of deposit of title deeds and the said deed of hypothecation dated 30-8-1944, subject to which the properties were acquired by the said company under the conveyance dated 30-12-1944, in the office of the Registrar of Joint Stock Companies West Bengal be and the same is hereby extended by a month from the date hereof. "

Finding of the Court:

1. An unsecured Creditor of a limited company has no locus standi in a proceeding for extension of time for registration of a mortgage or charge under Section 120 of the Indian Companies Act, 1913 as amended by Act XXII of 1936. 2. The Court is not competent to extend the time under that section for registration of a mortgage or charge in a case which comes under Section 109-A of the Indian Companies Act of 1913. 3. An order of extension actually made by the Court under Section 120 (as amended by Act XXII of 19s6) in a case which comes under Section 109-A, is a nullity or an illegal order made by irregular assumption of jurisdiction.

Issues: 1. Whether an unsecured Creditor of a limited company has any locus standi in a proceeding for extension of time for registration of a mortgage or charge under Section 120 of the Indian Companies Act, 1913 as amended by Act XXII of 1936. 2. Whether the Court is competent to extend the time under that section for registration of a mortgage or charge in a case which comes under Section 109-A of the Indian Companies Act of 1913. 3. Whether an order of extension actually made by the Court under Section 120 (as amended by Act XXII of 19s6) in a case which comes under Section 109-A, is a nullity or an illegal order made by irregular assumption of jurisdiction.

Ratio Decidendi: 1. The word "creditor" in Sections 109 and 120 of the Act means only a secured creditor or a creditor who has acquired any right in respect of the property concerned within the meaning of the second sub-section of Section 120. 2. Sub-section (2) of Section 120 of the Indian Act is an exhaustive codification of the legal effect o an order made under the first sub-section. The holder of any right which falls outside the second sub-section has no locus standi in a proceeding under Section 120 of the Indian Act of 1913. 3. The omission to mention Section 109a in Section 120 cannot be said to be accidental. The omission to include Section 109a within Section 120 (1) was due to accident or inadvertence on the part of the legislature. 4. The order passed by S. B. Sinha J. , is not a void order but is merely a voidable order which could be revoked or recalled at the instance of a person who had acquired rights in respect of the property which form the subject-matter of the mortgage or charge and as the first respondent is not such a party the order passed by S. B. Sinha J. , could not be revoked or recalled at his instance.

Final Decision: Appeal allowed, order passed by G. K. Mitter J. set aside, application filed by the first respondent Abhoy Singh Sahela dismissed with costs in this Court as well as in the trial court.