The main legal point established in the judgment is that a charge created by a company in liquidation must be registered as required by the Companies Act, 1956, and failure to do so renders the charge void against the liquidator and the creditors. The judgment also clarified the jurisdiction of the Company Court to entertain and dispose of matters related to the winding up of a company under Section 446(2) of the Act.

U.L.Bhat, J.

1. All these applications are filed by the Official Liquidator who is the Liquidator appointed in the matter of Chemmeens Exports (P) Ltd. in liquidation. They have come before us on reference by the learned Judge in company jurisdiction. In company Petition 18/1978, on 1st March 1979, the Company Court passed the winding up order. The assets have not yet been realised and the liabilities have not yet been fixed.

2. The first respondent therein, Indian Bank, appears to be a secured creditor of the company. First respondent moved the Company Court for leave to file suit against the Company under liquidation to recover the amount due to them from the company mentioning also the fact that the company had deposited title deeds in regard to its immovable property and other assets. Notice was given to the Official Liquidator. On the Official Liquidator stating that he had no objection to leave being granted, the Company Court granted leave. Accordingly, first respondent filed suit O.S. 169/1980 in the Subordinate Judge's Court, Cochin against the company represented by the Official Liquidator as well as the erstwhile Managing Director and Director of the company and their wives who appear to have signed the promissory notes and made themselves personally hable. The company represented by the Official Liquidator filed written statement stating, inter alia, that the charge (created by way of deposit of title deeds) has not been registered in accordance with section 125 of the Companies Act, 1956 (for short 'the Act') in regard to the immovable property or the machinery but that it has been registered only regarding stock-in-trade. Therefore, the charge cannot be enforced against the property or machinery. The Civil Court did not consider this submission but answering the issues in favour of the plaintiff, passed a preliminary decree for sale of the charged property. Ext. A-1 is copy of the relevant entries in the register of charges maintained by the Registrar of Companies. Ext. A-2 is a copy of the judgment and Ext. A-3, copy of the decree in the suit. The decree was passed on 28th May 1982. Apparently, the Official Liquidator has not preferred appeal against the decree. However, it is submitted that some of the other defendants in the suit have preferred appeal and the same is pending.

3. Believing that further steps will be taken by the decree-holder to bring the charged properties to sale for recovery of the amount due, the Official Liquidator purporting to present the entire body of creditors of the company under liquidation has filed M.C.A. 11/83 praying for the following reliefs: 1. Declaring that the charge created by the company in liquidation in favour of the Indian Bank against the land and buildings of the company that is, plaint schedule properties in O.S. 169/80 and the plant and machinery in the company etc. are void against the Official Liquidator and the creditors of the company in Liquidation; and 2. to declare that the preliminary decree and judgment in O.S. 169/80 are contrary to the provisions of section 125 of the Act and as such void and unenforceable against the Official Liquidator representing the general body of creditors excluding the decree-holder and to the extent they create charge on the assets of the company scheduled to the plaint. The prayer in M.C.A. 16/83 is to stay all further proceedings in the suit till the final disposal of M.C.A. 11 /83. The relief prayed for in M.C.A. 43/83 is to quash the final decree proceeding pending in the civil court as the same is instituted without leave under section 446 of the Act. Applications are opposed by the first respondent on whose behalf counter affidavit has been filed in M.C.A. 11/83.

4. Learned counsel representing the Official Liquidator contended that the charge in regard to the immovable property and the machinery ought to have been registered under section 125 of the Act and the same, not having been registered, is void and unenforceable