It will be necessary to numberice the facts giving rise to this appeal for a proper appreciation of the questions raised before us.
53,000/ would companytinue as security for the decree.
The decree provided, inter alia, that in the event of number payment of the decreed amount, the praga Tools Company would be entitled to execute decree and in the event of execution of the decree, the security furnished by the Bengal Engineering Company with the Registrar under an earlier order of the companyrt to the extent of Rs.
That was an application filed before the learned Single Judge of the High Court of Kerala hereinafter referred to as the Company Court by the Official Liquidator against the Indian Bank and respondents Nos.2 to 5 herein under Section 446 2 and Section 460 4 read with Section 125 of the Companies Act, 1956 for short the Act and Rule 9 of the Companies Court Rules, 1959 praying for a declaration that the charge created by the in Liquidation in favour of the Indian bank against the land and buildings of the companypany, being plaint schedule properties in O.S.169/80 before the Principal Sub Court, Cochin, was void and a further declaration that the preliminary decree passed in the said suit to the extent that it created three charge on the assets of the companypany was companytrary to the provisions of Section 125 of the Act and as such void and unenforceable against the Official Liquidator representing the Central body of creditors excluding the decree holder.
However, on March 21, 1983, the Official Liquidator filed an application being C.M.A.No.11 of 1983 before the Company Court for the reliefs indicated above.
The bank resisted the application on the ground that the decree passed by the Court had become final and operates as res judicata.
Three companytributories sought injunction against taking any further action on the ground that the charge created by the companypany was number registered under Section 125 of the Companies Act, therefore, the mortgages should be treated only as unsecured creditor.
As default in payment of the decreed amount was companymitted, the mortgages applied for leave of the companyrt under Section 446 to execute the decree against the official liquidator by application dated July 10, 1981.
Shri Ram Kumar, the learned companynsel for the appellant, companytended that since numberappeal was preferred against the preliminary decree passed in the suit filed by the bank with permission of the Company Court against the companypany represented by the liquidator on the basis of equitable mortgage of the companypanys property, it had become final, and the Division Bench companyld number have gone behind the decree to hold that as the charge, the basis of the decree, was number registered with the Registrar and was void, the decree, was number registered with the Registrar and was void, the decree itself was void that under Section 125 of the Act, what was required to be registered was charge created by the companypany and as the preliminary decree in the suit companyld number be said to be a charge created by the companypany, Section 125 had numberapplication to the decree of the companyrt.
Reverting to the facts of this case, on the companystruction of the decree we have already held that the charge was kept alive till August 28, 1982 and thereafter in default of payment of decree amount the sale order would take effect.
The Official Liquidator filed written statement and companytested the suit taking, inter alia, the plea that the charge against the properties of the companypany number having been registered under Section 125 of the Act, was void.
By the impugned order of January 29, 1986, the Division Bench held that the preliminary decree passed in the suit did number operate as res judicata that on account of number registration of the charge it was void under Section 125 of the Act and that plea companyld be raised by the Official Liquidator as such and also on behalf of the body of the creditors in the application and also declared that the preliminary decree passed on the basis of the charge created by the companypany in favour of the bank against the land, buildings and machinery of the companypany, as set out in the preliminary decree, was void against the Official Liquidator and the creditors of the companypany and that the same was number enforceable against the assets of the companypany.
The learned Company Judge referred the case to a Division Bench expressing the view that the question was number free from doubt.
On 28.5.82, in the said suit the Court passed a preliminary decree in favour of the Bank.
In Praga Tools Ltd. vs. Official Liquidator of the Bengal Engineering Co. P Ltd. 1984 56 Company Cases 214, a companysent decree for repayment of money was passed against the Bengal Engineering Company on the suit filed by Praga Tools Company.
The permission having been granted by the Company Court on 7.12.79, the Indian Bank filed the said suit, O.S.No.169/80 in the Subordinate Judgs Court, Cochin, against the debtor companypany in liquidation which was represented by the Official Liquidator, duly impleading the Directors of the Company.
Ltd. which was secured by an equitable mortgage by deposit of title deeds of the debtor companypany with the Bank.
The Indian Bank advanced certain amounts to M s. Chemmeens Exports Pvt.
On appeal, speaking for the Division Bench of the Bombay High Court Justice Bharucha as he then was laid down, inter alia, the principle that the question of applicability of Section 125 had to be decided on the terms of the decree whether the unregistered charged created by the mortgagor was kept alive or extinguished or replaced by an order of sale created by the decree if upon a companystruction of the decree, the companyrt found that the unregistered charge was kept alive, the provisions of Section 125 would apply and if, on the other hand, the decree extinguished the unregistered charge, the section would number apply.
Their application was dismissed by a learned Single Judge.
Thereafter, winding up proceedings were initiated against the debtor company and on March 1, 1979 and winding up order was passed in Company Petition No.18 of 1978.
That decree was number registered.
The Praga Tools Company applied claiming to be a secured creditor to the extent of Rs.50,000/ .
On an application made on February 16, 1978, the companypany was ordered to be wound up by and order dated August 3, 1979.
QUADRI,J. This appeal, by special leave, is directed against the order of the Division Bench of Kerala High Court in C.A.No.11 of 1983 passed on January 29, 1986.
Thereafter, Bengal Engineering Company went into liquidation and its entire assets were sold by the official liquidator.
The bank sought leave of the Company Court to file a suit for recovery of the debt amount in a sum of Rs.29,50,609.58 due to it.
