Company Law Board
State Bank Of India vs Shakthi Cotton Process Private Limited ... on 19 February, 2003
ORDER
K.K. Balu, Member
1. The petition in C.P. No. 362/2002 under Section 141 of the Companies Act, 1956 (the 'Act') is filed on 17.08.2001 by M/s. State Bank of India (SBI) for condonation of delay and extension of time for filing the particulars of modification of a charge made on 13.01.2000. The original charge was created on 20.11.1995 for Rs. 75 Lakhs by M/s. Sakthi Cotton Process Private Limited ("the company") in favour of SBI. The modification relates to giving additional security. The particulars of the said modification should have been filed with the Registrar of Companies, Karnataka, Bangalore in terms of Section 135 of the Act on or before 12.02.2000 whereas, the same were filed on 04.07.2001 with a delay of 508 days.
2. The petition in C.P. No. 364/2002 under Section 141 of the Act is filed on 13.06.2001 by M/s. State Bank of Mysore (SBM) for condonation of delay and extension of time for filing the particulars of modification of a charge made on 02.11.1997. The original charge was created on 01.02.1997 for Rs. 35 Lakhs by M/s. Asia Flora Limited ("the company") in favour of SBM. The modification relates to giving additional security by way of deposit of title deeds. The particulars of the said modification should have been filed with the Registrar of Companies, Andhra Pradesh, Hyderabad in terms of Section 135 of the Act on or before 02.12.1997 whereas, the same were filed on 19.04.2001 with a delay of 1232 days.
3. The petition came up for hearing from time to time and finally on 27.01.2003. As the issues involved in both these petitions are one and the same, they are disposed of by this common order with concurrence of the Authorised Representatives of SBI and SBM.
4. The Registrar of Companies, Karnataka, Bangalore and the Registrar of Companies, Andhra Pradesh, Hyderabad by their reports dated 06.09.2001 have no objection for the petitions being allowed by the Company Law Board (CLB).
5. According to Shri Jayaraman, Authorised Representative appearing for the petitioners, the delay in filing the particulars of modification of charges was due to inadvertence. Shri Jayaraman further pointed out that though it is obligatory on the part of the Companies to file the particulars of modification of the charges, they have failed to comply with this requirement, compelling the petitioners to approach the CLB for necessary redress. Mr. Jayaraman further pointed out that the Companies have refused to sign Form 8 & 13 in terms of Rule 6(d) of the Companies (Central Government's) General Rules and Forms, 1956 ("the General Rules & Forms, 1956"), which, according to him, in no way affect the present petitions for the following among other reasons:-
* Section 134 provides that it shall be the duty of a company to file with the Registrar for registration of the particulars of every charge created by the Company, but, at the same time registration of the charge may also be effected on the application of any person interested therein. The interested person is entitled to recover from the company the amount of any fees paid by him to the Registrar on the registration.
* Rule 6(d) of the General Rules & Forms, 1956 has been made under Sections 125, 127, 128, 130, 132, 135 and 138, but not under Section 134. Rule 6 has been introduced to ensure speedy and smooth registration of the charges. Rule 6 does not affect the right of any interested person in the charge effecting registration of the charge merely because Form 8 & 13 are not signed by the borrower. Rule 6 is procedural in natural and cannot over-ride the provisions of Section 134. Section 134 is independent of Rule 6 and not subject to the requirements of the rule. Rule 6 has not altered the procedure which was in vogue earlier which registering the creation, modification and satisfaction of the charge. Prior to amendment of Rule 6, there was no requirement of the creditor and the borrower signing Form 8 & 13. The Company or creditor or any person interested in the charge can take steps for registration of the charge following the procedure, which was in force prior to Rule 6.
* The petitioners have complied with the requirements of Section 134. The petitions are complete in all aspects save signing of Form 8 & 13 by the Companies.
* The Companies derived the benefit from the Petitioners but failed to discharge their duties. The Petitioners should not be made to suffer on account of non-cooperation of the Companies. By virtue of non-cooperation of the Companies the huge public money is at stake and public interest is affected.
* Though the petitioners are empowered to invoke the provisions of Section 614 seeking directions against the Companies to sign Form 8 & 13 and thereafter enforce the order of the CLB under Section 634A, these measures are circuitous and any delay will affect the interests of the charge holders on account of non-registration of modification of the charges.
6. Shri Jayaraman, therefore, prayed that the delay in filing the particulars of modification of the charges may be condoned and that the Registrar of Companies, Karnataka, Andhra Pradesh may be directed to take form 8 & 13 on record without these forms being signed on behalf of the Companies.
7. I have considered the elaborate arguments, both oral and written of Shri Jayaraman.
8. Considering the facts and circumstances of the cases, averments made in the petitions and the reports of the Registrar of Companies, Karnataka as well as Andhra Pradesh and submissions of the authorized representative of the petitioners, I am satisfied that it is just and equitable that the delay in filing the particulars of modification of the charges is condoned. I shall now proceed to consider whether registration of modification of the charges, in these cases, has to be effected by the Registrar of Companies without Form 8 & 13 being signed on behalf of the Companies. By virtue of Section 134, it is the duty of a company creating the charge to effect its registration. Apart from the company, charge can also be filed by any person interested therein, which will include a mortgagee, a charge holder and a director of the Company. In the present petition, the charge holders have filed the particulars of modification of the charges. At this juncture, Rule 6 of the General Rules and Forms, 1956 containing several clauses assumes importance. Clause (a) provides that copy of the instrument creating the charge or modification or satisfaction of charge shall be filed with Registrar with Form-8 or Form-10 or Form-17 along with Form 13 as the case may be in triplicate. Clause (b) provides that copy of every instrument evidencing any charge or modification of charge and required to be filed with Registrar has to be verified in the prescribed manner. Clause (c) prescribes that the relevant Forms are to be filed with prescribed fee. Clause (d) envisages that Forms should be signed on behalf of the Company and the charge holder. The remaining clauses, namely, (e) & (f) are not relevant for the purposes of these petitions. It is on record that the petitioners have complied with these requirements save Clause (d). Thus the petitioners exercising their statutory rights have filed these petitions, substantially complying with the procedure prescribed under Rule 6. The mere non-signing of Form 8 & 13 by the Companies, in my view, will not disentitle the charge holder from registration of modification of the charges, especially when the Companies have neither appeared nor opposed the petitions, inspite of the notices of hearing sent to them. Moreover, huge amount of public money is involved. For these reasons, it is hereby ordered that the delay of 508 days in filing the particulars of modification of the charge made on 04.07.2001 in CP No. 362 of 2002 and that the delay of 1232 days in filing particulars of modification of the charge made on 19.04.2001 in CP No. 364/2002 are hereby condoned and that the time for filing form 8 & 13 is extended up to 04.07.2001 and 19.4.2001 respectively subject to payment of Rs. 1,000/- (Rupees One Thousand only) by SBI and Rs. 2,000/- (Rupees Two Thousand only) by SBM as costs under Section 141(2) of the Act to the Registrar of Companies, Karnataka and Registrar of Companies, Andhra Pradesh, Hyderabad respectively. The said costs shall be paid while filing the copy of the Order. The Registrar of Companies, Karnataka and Andhra Pradesh will take on record Form 8 & 13 already filed by the petitioners and effect registration of modification of the charges made by the Companies.