This is an application to vary the order of the Official Liquidator of the Andhra Paper Mills Co., Ltd., (in liquidation) disallowing the claim of the applicant to have a charge over the movable assets of the company for a sum of Rs. 1,01,172-15-2. The liquidator admitted that the amount claimed was due, but he disallowed the claim to rank as secured creditor on the ground that the document creating the security was not registered with the Assistant Registrar of Joint Stock Companies, Cocanada, as required by section 109 of the Indian Companies Act. This order further states that in any event, the amount of Rs. 34,000 included in the claim representing payment made on 15th July, 1947 to Messrs. Natwarlal Shamaldas and Co. cannot be treated as a secured debt. No grounds for the same are however mentioned in the order.

The applicant Tansukhrai M. Karundia, claims to have advanced the aforesaid sums in circumstances set out below. The Andhra Paper Mills would appear to have issued debentures to the extent of eleven lakhs. By about 1945 interest on the same had accumulated to another six lakhs. The company having made default in payment under the terms of the debenture document, the debenture trustees had taken possession, but they were themselves unable to work the concern. They seem to have delivered over the premises again to the Mills on certain conditions, which were not fulfilled and the trustees again entered into possession of the debenture premises on the 14th February, 1947. Certain proposals would appear to have been made by the trustees to the Board of Directors as to the terms upon which moneys could be borrowed for running the concern and at the suggestion of the trustees the Company had agreed to execute deeds giving a lien or charge to any person who might be found by the debenture trustees to be willing to advance funds. A resolution to this effect was passed on 10th March, 1947 (Ex. P-1) and on the same day a draft agreement between the company and the company’s banker and treasurer was also approved by them (Ex. P-2). In pursuance of the draft so approved, Ex. P-3 was executed on the 21st March, 1947, between the company and the applicant, therein referred to as the treasurer. It is under this document that the applicant claims to have advanced moneys from time to time to the company and now claims to have a security over the properties mentioned in the document for the balance of the amounts due to him. In view of the contentions urged regarding the invalidity of the document, as against the liquidator, it is necessary to set out its main terms, which are as follows:

"These presents witness: That in consideration of the said Tansukhrai M. Karundia having agreed to lend and advance to the company such sums or moneys or credit of any nature and kind whatsoever for the purpose of carrying on the business and affairs of the company and working the factory at Rajahmundry, the Company hereby agrees and binds itself as under:

(1) All movable properties of every description in the treasurer’s possession on the company’s account, or for the time being held by the treasurer on company’s behalf whether alone or jointly. or with others in India or elsewhere including any bullion, deposit receipts, promissory notes, bills of exchange, hundies, bills of lading, railway receipts, other documents of title to goods, any other negotiable or transferable instruments or securities, bills or other documents relating to supplies made or services rendered to Government or to any other person or mercantile documents of every description or contracts other than those pertaining to immovable properties requiring registration in India and other documents evidencing the company’s title as creditors or members of any corporation, association, company or syndicate in India or elsewhere, are hereby hypothecated for and shall stand charged with, and (2) all-marketable securities and goods coming into the treasurer’s possession on the com