BEFORE THE COMPANY LAW BOARD,
SOUTHERN REGION BENCH, CHENNAI
IN THE MATTER OF COMPANIES ACT,
1956 (I OF 1956)
SECTION 614
AND
IN THE MATTER OF M/S ALSA INVESTMENTS PRIVATE LIMITED
PETITIONER:
M/s
Saradha Finance
RESPONDENTS:
1.
M/s Alsa Investments Private
Limited
2.
Mr. Altaf Pasha
3.
Mr. Salim Pasha
4.
Mr. A.V. Raman
5.
M/s Alsa Constructions &
Housing Limited
6.
The Registrar of Companies,
Chennai
PRESENT
ON BEHALF OF PARTIES:
1. Shri
K.Sasisekar, Counsel … for Petitioner.
2. Shri
V.Ramachandran, Sr. Advocate …
for Respondent.
DATE OF HEARING: 25.01.2002
1.
This is a petition filed under
Section 614(1) of the Companies Act, 1956 (“the Act”) against M/s Alsa
Investments Private Limited (“the first respondent-Company”), its directors and
the Registrar of Companies seeking the following reliefs:-
(a)
to direct the respondents 1 to
4 to execute and register form-8 & 13; and
(b)
to direct the fifth respondent
to take on record form-8 & 13 to be executed and filed by the respondents 1
to 4.
2.
According to Shri K.Sasisekar,
Advocate appearing for the petitioner, the petitioner had extended certain
credit facilities on 23.07.1996 in favour of one M/s Alsa Housing and
Construction Limited (“the Borrower”), a public limited company and a group
company of the first respondent-Company, in consideration of which the first
respondent-Company had offered its immovable property by way of equitable
mortgage by deposit of title deeds on 22.07.1996 as collateral security. The first respondent-Company having had
created charge over its immovable property securing the claim of the petitioner
ought to have filed the particulars of charge, in accordance with the
provisions of Section 125 within a period of 30 days after the date of its
creation. In spite of repeated demands,
the first respondent-Company failed to file the particulars of charge with the
fifth respondent. Hence the petition.
3. Shri
V.Ramachandran, Senior Advocate appearing for the first respondent-Company,
reiterating the averments made in the reply, has submitted that the petitioner
cannot seek any of the remedies sought in the petition for the following among
other reasons:
(i)
The petitioner is neither a
creditor of the first respondent-Company nor is the petitioner a shareholder of
the first respondent-Company.
(ii)
The first respondent-Company
did not borrow any money from the petitioner.
The first respondent-Company by offering security, which is in dispute,
cannot make it a debtor to the petitioner.
(iii)
The Borrower neither borrowed
any money from the petitioner nor the first respondent-Company derived any
benefit.
(iv)
The first respondent-Company
did not offer its property by way of equitable mortgage by deposit of title
deeds. No charge was created by the first respondent-Company over its immovable
property. There is no obligation to
register such a non-existing charge.
(v)
There is no subsisting
agreement or arrangement, whereby the first respondent-Company has offered
title deeds of its property as a security for the facility said to have been
availed by the Borrower.
(vi)
The first respondent-Company
being a company cannot offer its property as security without any valid
resolution passed at a meeting of the shareholders or the Board of Directors,
which is absent in the present case.
The deposit of title deeds, even if any, without these legal
requirements is not valid in law.
(vii)
Section 614 does not deal with
registering the charge with the Registrar of Companies.
(viii)
The CLB cannot adjudicate the
disputed claims, which would require evidence to be adduced in respect of such
claims.
4. Shri
K.Sasisekar in his reply has pointed out that the letter dated 22.07.1996 (at
page 31 of the Petition) of the Borrower addressed to the petitioner will show
that the first respondent-Company had deposited the title deeds relating to its
immovable property with the petitioner securing the claim of the petitioner.
The letter dated 12.11.99 (at page 41 of the Petition) of the Borrower
acknowledges the liability. In regard
to the absence of resolutions, Shri Sasisekar submitted that it is purely an
internal management of the first respondent-Company and that the petitioner
being a stranger dealing with the first respondent-Company has the right to
assume as against the first respondent-Company that all the requirements of
internal management have been duly complied with, as has been held in Nellai
Rolling Mills P. Ltd. Vs. The Southern India Central Benefit Fund P. Ltd. – AIR
1986 Madras 370. He further
pointed out that the first respondent-Company can offer its immovable property
as security for a third party-Borrower for which he relied upon Re Wallis
& Simmonds (Builders) Ltd – [1974] 1 All ER 561, wherein it has
been held that the presumption that deposit of title deeds to secure a debt
created by a charge on the land applied even though the debt was owed not by
the depositor, but by a third party. It is for these reasons, Shri Sasisekar
sought for the reliefs made in the petition.
5. After
considering the pleadings and submissions, both oral and written, made on
behalf of the petitioner as well as the first respondent-Company, the issues
that arise for my consideration are whether the respondents 1 to 4 should be
directed to execute form-8 & 13 and whether the fifth respondent should be
directed to take on record form-8 & 13.
6. Sections 614,
125 and 134 of the Act assume relevance in deciding the contentious issues.
Section 614 deals with enforcement of the duty of a company to submit returns
and documents to the Registrar. This
enables the Registrar as well as member or creditor of a company which has not
filed with or delivered to the Registrar any document required to be filed or
delivered under the Act, to give notice to the company calling upon it to make
good its default within 14 days, failing which the Registrar or any member or
creditor may approach the Company Law Board for direction to the company and
its officers to make good the default within such time as may be specified by
the CLB.
Section 125
deals with consequence of non-registration of charge. Accordingly, non-registration of a charge will make it void as
against the liquidator and any creditor of the company. It will make the charge holder an unsecured
creditor. However, Section 125 does not
deal with registration of charge. The
duty of registration is enjoined by Section 134, according to which, it is the
duty of a company to file with the Registrar for registration the particulars
of every charge created by the Company, failure of which attracts penalty of
upto Rs.10,000/- under Section 142. To
put it in a nutshell, Section 134 read with Section 142 will clearly show that
a company has the primary responsibility to file the particulars of every
charge created on its property in favour of any creditor. Against this legal position, it is now to be
seen whether the first respondent-Company should execute form 8&13, as
sought by the petitioner. While it is
the contention of the petitioner that the Borrower had availed credit facilities
on 23.07.96 against security of the immovable property belonging to the first
respondent-Company, it is contended by the first respondent-Company that the
petitioner neither extended any credit facility nor first respondent-Company
created charge on its immovable property securing the claim of the petitioner
and that the letters dated 22.07.1996 and 12.11.1999 (pages 31 & 41 of the
petition) of the Borrower do not evidence the deposit of title deeds by the
first respondent-Company. As per the
report of the Official Liquidator, the Borrower being a private limited company is under liquidation
as per the order dated 25.09.2000 of High Court of Madras made in CP
No.339/99. The Borrower is not a party
in the present proceedings. The
transaction with the Borrower as well as the transaction with the first
respondent-Company in regard to creation of charge are disputed. The disputed claims cannot be adjudicated on
the basis of the affidavits and counter affidavits filed by the parties. Moreover, the CLB will not go into the
validity of mortgage in the present proceedings, as has been held in number of
cases by the CLB. I am not, therefore,
inclined to grant any relief made in the petition. The Company is at liberty to
enforce its right in a competent court of law for appropriate relief. In the circumstances, there is no need to go
into merits of the other contentions raised on behalf of either of the parties.
7.
With the above directions, the
petition stands disposed of.
8.
No order as to cost.
(K.K. BALU)
Member
Dated this the 7th day
of February, 2002.