Koshy, J.

Appellant, a surety claims the benefits of subrogation under section 92 of the Transfer of Properties Act, 1882 (in short the T.P. Act). Apart from issues relating to subrogation by operation of law, effect of registration/non-registration of charges with the Registrar of Companies under section 125 and 135 of the Companies Act and rule 14 of the Companies Rules and application of the principles of estoppel and section 115 of the Evidence Act are the questions to be considered in this case.

2. Appellant was one of the directors of the company, M/s. Mittal Steel Re-rolling and Allied Industries Ltd. (hereinafter referred to as the company). The above company, now in liquidation, applied for and availed of financial facilities from Canara Bank, Wadakkanchery to a limit of Rs.75 lakhs out of which an amount of Rs.22 lakhs and odd was outstanding as payable in June, 1981. The entire assets of the company including the land and machinery were mortgaged to the Canara Bank and directors of the company including the appellant had executed personal guarantee bonds and stood as sureties for the said loan. On account of the failure of the company to pay back the dues in proper time by 1981 the Canara Bank had expressed its inability to make further advances for the functioning of the company. It is the case of the appellant that in view of the above, he advanced Rs.18,38,852.58 to the company and the company cleared the liabilities of the Canara Bank. According to him, he paid the same as per board resolution and minutes of the discussions of the company dated 20.4.1981 will prove the same. Two resolutions passed in the above meeting are as follows:

"RESOLVED unanimously that Dr. L.P. Prabhu be and is hereby authorized to borrow money from him or from his relatives in the name of Mittal Steel Re-Rolling and Allied Industries Limited in order to redeem mortgage debts of the Company to the Canara Bank and Dr. L.P. Prabhu be subrogated to the position of the Canara Bank on redumption of the mortgage debt of the Company in full to the Canara Bank.

RESOLVED unanimously further that Dr. L.P. Prabhu be and is hereby empowered to provide required funds to the Company either by himself or by his group to liquidate the mortgagee debts of the Company to the Canara Bank and Dr. L.P. Prabhu be subrogated to the position of the Canara Bank on redemption of the mortgage debt of the Company in full to the Canara Bank."

But, mortgage was not redeemed by the appellant on the basis of the resolution and the resolution was not acted upon. There were two groups in the directors of the company. Appellants group was called P group and other group was called A group. There was an agreement on 5.1981 regarding selling of shares of A group to P group and P group settling the dues to Canara Bank. Clause 3 (a) of the above agreement reads as follows:

"3. The A group will transfer their shareholdings in the company to the P group or their nominees, only if the following conditions are satisfied by the P group in the manner and within the time stipulated hereunder, the time being the essence of this contract. (a) The P group will provide or otherwise arrange enough funds for the company, and pay and settle all the liabilities to the Canara Bank as existing at the time of settlement. Such settlement shall be made on or before 30.6.1981."

Therefore, resolution dated 20.4.1981 was not acted upon, but, in settlement of disputes between the two groups, it was agreed that appellants group will provide enough funds to the company and pay off the liabilities to the Canara Bank as existing on the date of settlement. Accordingly, P group advanced money to the company and company paid off the settlement and charge created on the property of the company was released by the Canara Bank. On 6.1981, an application was submitted by the company to the Syndicate Bank, Thrissur for financial help and the entire assets of the company was hypothecated to Syndicate B