Maharashtra State Financial ... vs Masvi And Company Pvt. Ltd. And Another on 21 October, 1991

[Cites 30, Cited by 2]

Bombay High Court

Maharashtra State Financial ... vs Masvi And Company Pvt. Ltd. And Another on 21 October, 1991

Equivalent citations: [1993]76COMPCAS168(BOM)

1. This is a petition filed by the Maharashtra State Financial Corporation under sections 31 and 32 of the State Financial Corporations Act, 1951. The Maharashtra State Financial Corporation is a statutory Corporation established under the abovementioned Act. The first respondent was a company incorporated under the Indian Companies Act and had its registered office and a factory in Pune. The second respondent was the managing director of the first respondent and had also mortgaged his personal properties as security for loans granted to the first respondent company.

2. By an indenture of mortgage dated 29th June, 1964, the first and second respondents mortgaged in favour of the petitioners, the properties mentioned in the deed of indenture of mortgage in consideration of an advance in a sum of Rs. 2,50,000 with interest thereon. The amounts were to be repaid by 17 half-yearly instalments.

3. By a further deed of charge dated 4th June 1968, the first and second respondents mortgaged in favour of the petitioners, the properties mentioned in that deed, in consideration of a sum of Rs. 4,80,000 advanced by the petitioner to the first respondent. The said amount was also to be returned in 17 half-yearly instalments.

4. By a second deed of further charge and additional security dated 16th December 1972, the first and second respondents mortgaged in favour of the petitioners, the properties mentioned in this deed, in consideration for a sum of Rs. 4 lakhs to be advanced by the petitioners to the first respondent. This amount was also to be repaid in 17 half-yearly instalments.

5. It is an admitted position that under the aforementioned three deeds, which are hereinafter for the sake of convenience referred to as the said three deeds, the petitioners have lent and advanced to the first respondent sums of Rs. 2,50,000, Rs. 4,80,000 and Rs. 4,00,000 respectively.

6. This petition was initially filed in the District Court at Pune. The petitioners aver that the respondents were persistent defaulters in payment of instalments and interest on the due dates and that the respondents failed and neglected to comply with the terms and conditions of the said three deeds. The petitioners aver that the respondent also failed to pay instalments of the principal sums on the due dates as mentioned in the three deeds and also did not pay interest so that the arrears amounted to more than Rs. 5,000. The petitioners also aver that the working of the first respondent company created a reasonable apprehension in the mind of the petitioner that the respondent would be unable to pay the debts. The petitioners aver that, under these circumstances, the petitioners decided to call back the entire loan. The petitioners aver that, under the aforementioned circumstances, the interest of the petitioner Corporation required that the petitioners exercise their rights under the three deeds. The petitioners, therefore, by their advocates' letter dated 5th January, 1975, called upon the respondents to pay the entire balance amounts under the aforesaid three deeds.

7. The petitioners rely upon a circular resolution dated 3rd January, 1975, wherein it has been decided that the entire outstanding loan together with interest and expenses be realized and recalled by appropriate proceedings under section 31 of the State Financial Corporations Act, 1951.

8. The petitioners aver that there is due and payable by the respondents to the petitioners under the indenture of mortgage dated 29th June, 1964, a sum of Rs. 1,16,614.49 as principal and a sum of Rs. 20,179.92 as interest. The petitioners aver that under the deed of further charge dated 4th June, 1968, there is due and payable by the respondents to the petitioners a sum of Rs. 5,14,440 as principal and a sum of Rs. 1,08,305.55 towards interest. The petitioners aver that under the second deed of further charge and additional security dated 16th December, 1972, there is due and payable by the respondents to the petitioners a sum of Rs. 4,00,000 towards principal and an amount of Rs. 91,347.57 towards interest.

9. The petitioners aver that the respondents have also committed breach of their obligations under the covenants contained in the said three deeds. The petitioners ever that they have, therefore, become entitled to call back the entire loan and also to take action under section 31 of the State Financial Corporations Act.

10. The first respondent had filed a written statement dated 19th April, 1975. In the written statement the first respondent contended that the petition was not maintainable because (a) no cause of action was shown in the petition, and (b) for non-joinder of parties such as the Bank of Maharashtra and the Maharashtra State Small Scale Industries Development Corporation.

11. The first respondent also contended that the petition was liable to be dismissed as no resolution had been passed by the board of directors of the petitioners till the date of the filing of the petition.

12. The first respondent also contended that the district court at Pune had no jurisdiction to entertain this petition as the mortgage deeds were executed at Bombay and the registered office of the first respondent was at Bombay. It was also contended that all the amounts due under the deeds were payable at Bombay and that, on that ground also, the district court at Pune had no jurisdiction.

13. The first respondent also contended that the petition had not been properly verified and that, for that reason also, the petition should be dismissed with costs.

14. The first respondent also contended that no proper notice had been served upon the respondents before the filing of this petition. The first respondent contended that the notice dated 6th January, 1972, had been served upon respondent No. 2 but that it was not a proper notice.

15. The first respondent further contended that proper court fees had not been affixed to the petition and that the petition was liable to be dismissed on that ground also.

16. The first respondent contended that they had not committed any default in payment of any amount to the petitioners. The first respondent contended that the petitioner and two other financial institutions, i.e., the Bank of Maharashtra and the Maharashtra State Small Scale Industries Development Corporation were in entire control of the first respondent company and that, therefore, the payment of instalments, if any, were to be made by the Bank of Maharashtra. The first respondent contends that, under these circumstances, the first respondent had not committed any default in the payment of instalments.

17. The first respondent next contended that the petitioner had granted to the first respondent a moratorium for a period of two years of all amounts outstanding including interest and that, therefore, for this reason also, there was no default in payment.

18. The first respondent then sets out the various products developed by the second respondent and the history of the company and states that due to the bursting of the Panshet Dam, the first respondent became a victim of financial slump and that, as a result thereof, the petitioner along with the Maharashtra State Small Scale Industries Development Corporation formulated a scheme of reconstruction. The first respondent avers that under the programme of reconstruction, the entire management was taken over by the petitioner, the Bank of Maharashtra and the Maharashtra State Small Scale Industries Development Corporation. The first respondent avers that during the period when the financial institutions were in full control of the second respondent-company, the family members had no idea and were not allowed to interfere in the management of the company. The first respondent avers that the petitioner, the Bank of Maharashtra and the Maharashtra State Small Scale Industries Development Corporation were agents and trustees of the respondents and were entirely responsible. The first respondent, therefore, denied that, under these circumstances, the first respondent has failed and neglected to pay any instalments and/or that they have failed and neglected to comply with the terms and conditions of the three deeds. The first respondent avers that the petitioners have caused great harm and damage to the first respondent and the action of the petitioner has resulted in huge loss and/or damages to the first respondent.

19. The second respondent also filed a written statement dated 12th April, 1975. In the written statement the second respondent avers that he was a highly qualified foreign engineer and that, by his skill, he had invented several designs of aircraft ground support equipment. The second respondent avers that there was a scheme of reconstruction of the first respondent-company between the petitioner, the Bank of Maharashtra and the Maharashtra State Small Scale Industries Development Corporation and that the entire management and control and administration of the first respondent-company had been taken over by them. The second respondent avers that after the scheme of reconstruction was entered into, there was an agreement under which a new managing director was to be appointed and the second respondent was to resign. The second respondent avers that in addition to the compensation which was to be paid to him it was agreed that his personal properties which had been mortgaged to the petitioner would be released. The second respondent avers that pursuant to this agreement he was asked to go on leave from 1st June, 1974, and that since that date he was on leave pending resignation. The second respondent avers that, under these circumstances, he has been released from all liabilities including the mortgage of his personal property. The second respondent avers that he has, therefore, been wrongly impleaded in the petition.

20. The second respondent avers that the property situate at Deccan Gymkhana at Pune, bearing C.S.No. 759/52 being part of the mortgage deed dated 29th June, 1964, is a joint Hindu family property and that, for that reason also, the same could not be attached by the petitioners.

21. The second respondent avers that the petitioner, the Bank of Maharashtra and the Maharashtra State Small Scale Industries Development Corporation had caused wrongful loss to the respondents and that he reserves his right to claim damages. The second respondent avers that there was no reason for any apprehension and that the petition was misconceived, improper, not maintainable and bad in law.

22. On these averments certain issues were framed. Before the issues are set out, certain facts need to be stated. This petition was initially filed on 7th January, 1975, in the court of the District Judge at Pune. After the filing of this petition, by an order of this court dated 19th August, 1976, the first respondent-company was wound up. The Official Liquidator, Bombay, has been brought on the record of the suit pursuant to an order dated 17th August, 1978. On the application of the official liquidator, this court transferred this suit from the district court at Pune, to this court. It is under these circumstances that the suit has come to this court. The second respondent filed two pauper petitions in the district court at Pune, bearing Petition No. 16 of 1979 and No. 15 of 1979. These were for accounts against the petitioners, the Bank of Maharashtra and the Maharashtra State Small Scale Industries Development Corporation and for damages against the three financial institutions respectively. Under the order dated 17th April, 1978, those petitions were also transferred to this court. Thereafter, the application for filing the petitions forma pauperis was rejected by this court. Against the order rejecting forma pauperis in Petition No. 16 of 1979 on appeal was filed. That appeal was also dismissed. In both the petitions the petitioners therein were called upon to pay court fees. It is an admitted position that the court fees were not paid and these two petitions no longer survive.

23. The second respondent has also filed a writ petition bearing No. 3048 of 1987 for a direction that the three financial institutions continue to pay amounts to the first respondent-company as per the scheme of reconstruction and also for a prayer that the proceedings in this petition be stayed. I am informed that, in this petition, the court called for a viability report from the Maharashtra State Small Scale Industries Development Corporation. The Maharashtra State Small Scale Industries Development Corporation submitted a report. The Maharashtra State Small Scale Industries Development Corporation after looking into all aspects reported that it was not possible to reconstruct the first respondent company. The petition was, therefore, dismissed. The first respondent company also took out an application for setting aside the order of winding up. That application also came to be dismissed.

It must also be mentioned that in view of the nature of the proceedings certain issues were not permitted to be raised by this court. As already mentioned above this is a petition under sections 31 and 32 of the State Financial Corporations Act. The Supreme Court has in the case of Gujarat State Financial Corporation v. Natson Manufacturing Co. Pvt. Ltd., , held that section 31 prescribes a special procedure for enforcement of claims by financial corporations. The Supreme Court has held that an application under section 31(1) cannot be and is not for a substantive relief of repayment of a loan or for prevention of monetary loss. The Supreme Court has held that sub-clause (6) of section 31 does not expand the contest in an application made under section 31 and that such application cannot be treated as a suit between mortgagees and mortgagors for sale of the mortgaged property. The Supreme Court has held that looking at the whole conspectus of provisions in section 32 coupled with the nature of reliefs sought under section 31 it is clear that the special provision is made for certain types of reliefs that can be obtained by a Corporation by an application under section 31(1). The Supreme Court has held that they could not be styled as a substantive relief for repayment of the mortgaged amount by a sale of the mortgaged property and that an application under section 31(1) is not a plaint. Our High Court in the case of Maharashtra State Financial Corporation v. Pankajkumar P. Shah , has held that in an application under section 32 of the State Financial Corporations Act, it is not open to the court to investigate the claim of the parties as regards damages. This court has held that in such applications, there is no jurisdiction to investigate into claims for damages and that such claims, if any, can only be by way of separate suits.

24. Not only are the above mentioned authorities binding on me, but I am in complete agreement with the same. Under these circumstances, even though in the pleadings it has been averred that the petitioners along with the Bank of Maharashtra and the Maharashtra State Small Scale Industries Development Corporation had caused loss and damage to the respondent, no issue was allowed to be raised on that aspect. There were other reasons also why such an issue was not raised, i.e., that while allegations as to loss and damages have been made, no particulars of any such loss or damage are given and no counter-claim was filed nor any set-off claimed and also as set out hereinabove, the pauper petition for damages was not pursued.

25. It must also be mentioned that this petition initially reached hearing before her Lordship Justice Sujata Manohar, on 2nd and 5th July, 1982. On those dates pleadings were read and certain documents were tendered across the Bar. The petition was then adjourned and was directed not to be treated as part-heard. The petition did not reach hearing for a number of years. It thereafter appeared on my board on 17th June, 1988. On that date, Mr. Satyanarayan had stated that he was not agreeable to proceed from the stage at which the matter had been left and that he was not agreeable to documents taken on record before another judge being used in these proceedings. At that stage Mr.Bharucha had stated that the petitioners were willing to receive all the documents back and start the petition afresh before this court. When the question of returning the documents to the petitioner arose, it was noticed that an original receipt dated 16th December, 1972, proving lodgment of the documents for registration had been misplaced by the office of this court. Mr.Satyanarayan was at this stage not willing to a copy of that document being taken on record. Under the circumstances, I directed the petition be placed before the learned Chief Justice for the purposes of assigning the same to her Lordship Justice Sujata Manohar.

26. Under the directions of the Chief Justice the petition was then placed before her Lordship Justice Sujata Manohar. The matter reached hearing before her Lordship on 1st February, 1989. Her Lordship permitted the petitioners to lead further evidence. The petitioners thereafter led evidence of one Suresh Ramachandra Karnik. The respondents led evidence of one, Vasant Narayan Karkhanis. At that stage, the petition was adjourned in order to enable the official liquidator to examine the claim of the petitioners and to submit a report before the company judge and also to enable the second respondent to negotiate with the petitioner.

27. Thereafter, again, due to constraint of time the petition could not reach hearing and ultimately her Lordship Justice Sujata Manohar directed that the same be not treated as part heard. The petition was then assigned by the Chief Justice to this court and reached hearing before me on 8th July, 1991.

28. At this stage the parties very fairly agreed that the matter be proceeded with from the stage at which it was last left. A consent recipe dated 17th June, 1991, to this effect was filed in this court. At this stage very fairly the respondents agreed that a certified true copy of the missing exhibit be taken on record. Thereafter, the uncompleted evidence of defendants witness, Vicinity N. Kharkhanis, was taken up from the stage at which it was left and completed. The second respondent did not lead any evidence. The parties then closed their respective cases. Arguments were advanced before the court. One of the arguments made on behalf of the official liquidator was that the provisions of section 125 of the Companies Act had not been complied with. It was orally stated to the court that an inspection of the register maintained by the Registrar of Companies would show that the provisions of section 125 of the Companies Act had not been complied with. Very fairly at this stage, the parties agreed that evidence as to compliance with the provisions of section 125 may be led by the parties. The parties were, therefore, allowed to reopen their cases. The petitioner led evidence of one Subrao Gopal Pakkhare. The official liquidator also led the evidence o f the same person. The official liquidator also led the evidence of one Mr. C.H. Venkatachalam Assistant Registrar of Companies.

29. Between the petitioners and the first respondent, the following issues were raised and settled :

Issues :

1. Whether the petitioners' notice is invalid in law and if so whether the petition is maintainable as alleged in para 6 of the reply ?

2. Whether the petition is not maintainable as the same has not been properly verified and filed by an officer authorized by the board as per the resolution as alleged in para 5 of the reply ?

3. Whether the petition is not maintainable by reason of there being no valid resolution as alleged in para 3 of the reply ?

4. Whether the petition is not maintainable for non-joinder of necessary parties, viz., the Bank of Maharashtra, the Maharashtra State Small Scale Industries Development Corporation as alleged in para 2 of the reply ?

5. Whether the petitioners have granted a moratorium as alleged in para 9 of the reply ?

6. If the answer to issue No. 5 is in the affirmative, whether the petition is not maintainable as alleged in para 9 of the reply ?

7. Whether respondents Nos. 1 and 2 failed and neglected to comply with the terms and conditions of the deed of mortgage, deed of further charge and deed of second further charge and additional security as alleged in para 8 of the petition ?

8. Whether the petition is not maintainable by reason of proper court fees not being paid as alleged in para 7 of the reply ?

9. Whether the petitioners are entitled to any relief, if so, what ?

10. And generally.

30. Between the petitioners and the second respondent. the following issues were raised and settled :

1. Whether the petitioners gave notice and if so, is it valid in law ?

2. Whether the respondents have proved that the company was taken over for reconstruction by the petitioners and others ?

3. If the petitioners have taken over the company, whether the petition would lie ?

4. If the answer to issue No. 2 is in the affirmative, then who is responsible to repay the loan in view of the fact that all the assets and security of the company were in the hands of the petitioners ?

5. Whether the personal property of respondent No. 2, viz., C. S. No. 759/52 of Pune, is legally and validly mortgaged ?

6. Whether the personal property of respondent No. 2 is personally liable ?

7. What reliefs ?

31. The answers to the issues between the petitioners and respondent No. 1 are as under :

Issue No. 1 : The notice is valid and petition is maintainable. Issue No. 2 : In the negative. Issue No. 3 : In the negative. Issue No. 4 : In the negative. Issues Nos. 5 and 6 : The petition is maintainable for reasons set out hereafter.

Issue No. 7 : In the affirmative. Issue No. 8 : In the negative. Issues Nos. 9 and 10 : As per order set out hereafter.

32. The answers to the issues between the petitioners and the second respondents are as under :

Issue No. 1 : In the affirmative. Issue No. 2 : In the negative. Issues Nos. 3 and 4 : Do not arise. Issue No. 5 : In the affirmative. Issue No. 6 : In the negative. Issue No. 7 : In the affirmative. Issue No. 8 : As per order set out hereafter.

Reasons :

Issue No. 1 as between the petitioner and both the respondents is the same. The contention of the first respondents is that the notice dated 5th January, 1975, has not been served upon the first respondent company at all. It has been contended that service of the notice has been made upon the second respondent only. The petitioners admit that the notice has not been served at the registered office of the company at Bombay. They however, contend that the notice was served upon the second respondent as the managing director of the first respondent and that the same has been accepted by the second respondent not only on his own behalf, but also on behalf of the first respondent. It was also submitted that under section 30 of the State Financial Corporations Act, the notice must be served at the registered office of the company. It is submitted that even under clause 2(b) of the deed of mortgage and the other deeds, the notice is required to be served at the registered office of the company or affixed to some part of the mortgaged premises. It was submitted that clause 2(d) of all the deeds read with section 30 makes it mandatory that such a notice must be served upon the registered office of the company. It was urged that without such a notice a petition cannot be filed.

I am unable to accept these submissions. Section 30 of the State Financial Corporations Act gives to the financial corporation power to call for repayment before the agreed period. It is a power which is independent of the provisions made in sections 31 and 32 of the State Financial Corporations Act. In my view, it is not necessary that an action under sections 31 and 32 of the said Act can be taken only after a notice under section 30 is given. Of course, one of the grounds on which the Corporation can act is after giving notice under section 30. But that it not the only ground. The Corporation can file a petition under section 31 even if there has been default in repayment or there has been failure to comply with the terms of the agreement. In the pleadings as well as in the evidence, there is no real denial that there was failure to repay the loans as per the instalments set out in the three deeds. All that has been contended in the pleadings and which is not supported by evidence is that there was no failure because there was a scheme of reconstruction and that under the scheme of reconstruction, it was the Bank of Maharashtra which was liable to make payment and/or that there was a moratorium for a period of two years. As is set out in greater detail hereafter I see no substance in the contention that there was a scheme for reconstruction and that, therefore, there is no default in . So far as the case of moratorium is concerned, the respondents have exhibited a letter dated 30th March, 1973 (exhibit 9), under which the repayments were rescheduled and under which the repayment under the mortgage deed dated 29th June, 1964, was to be by 20th December, 1974, and the repayment under the further deed of charge dated 4th June, 1968, was in eight instalments, the first of such instalments to be paid on 20th December, 1974, had not been paid. Even after the petition was filed no payments have been made and by the time this petition reached hearing, amounts even as per the reschedule had not been paid. Thus, there was clearly a failure to comply with the terms of the three deeds. That is the main ground on which this petition has been filed. There was, therefore, no necessity to give any notice under section 30. The contention that a notice must be given under section 30 cannot be accepted. In my view, the words of section 30 itself indicate that it is the option of the Financial Corporation whether or not to give such a notice. In my view, there is no compulsion that such a notice must be given in all cases. Even otherwise, it is an admitted position that such a notice has been served on the second respondent. It is also an admitted position that the second respondent has accepted that notice on his own behalf as well as on behalf of the first respondent. This is clear from exhibit `F' itself. The only question that remains is whether this acceptance can bind the first respondent. The only reason that is stated as to why it does not bind the first respondent is that the second respondent is supposed to have resigned with effect from 1st June, 1974. According to the respondents, the second respondent was not the managing director on the date he accepted the notice. there is no evidence to support this contention. On the contrary, the second deed of charge dated 28th June, 1974, describes the second respondent as the managing director of the first respondent. It has been signed by the second respondent on 28th June, 1974, as managing director. Further, exhibit 2 being item NO. 23 at a meeting held by the petitioner on 8th January, 1975, also shows that the second respondent is the managing director till that date. In this behalf it is also pertinent to see exhibit 8. This is a letter dated 26th February, 1974, addressed by the Bank of Maharashtra to the second respondent. This letter refers to a joint meeting which was held between the financial institutions for considering a scheme of reconstruction. The letter states that at this meeting it was made clear to the second respondent that all other directors except the second respondent would act as the chairman of the company and make available his technical expertise and knowledge. The letter also states that the first respondent company should pass the necessary resolutions. Thus, up to this date at least the second respondent had continued as the managing director. Before this court no resolutions of the first respondent company have been produced. There is nothing to show that the first respondent company had accepted the proposal made in this letter. The second respondent has not given any evidence. This in spite of the fact that he was in court at all stages. For all these reasons it will have to be held that the second respondent continued to be the managing director of the company. If that be so, then he was entitled to accept the notice under section 30 on behalf of the first respondent company. The notice dated 5th January, 1975 (exhibit F), having been accepted by him is a proper notice on the first respondent company. It will have to be held that the first respondent company was served with a notice under section 30. Thus, issue No. 1 between the petitioner and both the respondents has been answered against the respondents.

Issues Nos. 2 and 3 between the petitioners and the first respondent :

This issue has two aspects. The first on the point that the petition has not been properly verified. It is settled law that on this ground the petition cannot be dismissed. At the highest the petitioners can only be called upon to have the petition properly verified. As the highest the petitioners can only be called upon to have the petition properly verified. As the same was not done and as no objection in this behalf has been raised at an earlier stage, in my view, it would be most ineqitable at this stage to ask the petitioners to reverify the petition. The parties having gone to trial the facts dismiss the petition on this technical ground. The second point urged is that this petition has not been verified by an officer authorised by the board. This is based upon section 31 of the State Financial Corporations Act. Under section 31 of the Act, a petition should he filed by an officer who is generally or specially authorised by the board in this behalf. Exhibit M is a circular resolution authorising the managing director to take steps and act under sections 29 and 31 either by himself or through any officer of the Corporation in consultation with the legal advisers of the Corporation. The petitioners witness, Mr. Suresh Karnik, has deposed that the resolution was passed on January 3, 1975. In the cross-examination he was asked as to why the resolution does not bear any date. He states that even though the resolution itself does not bear a date some of the directors who had signed have put the dates below their signature. He had deposed that the last of the directors signed on January 6, 1975. This witness has deposed that the resolution was originally intended to be passed at a board meeting to be held on 8th January, 1975. In the cross-examination the witness reiterates that the resolution was passed on third January, 1975. I see no reason to disbelieve this witness. the petition having been filed on 7th January, 1975, has been filed pursuant to a valid resolution of the board of directors. I, therefore, see no substance in this submission also. Under the circumstances, these issues have been answered in the negative.

Issue No. 4 between the petitioners and the first respondent :

This issue has been raised as admittedly there is a second charge in respect of some of the properties in favour of the Bank of Maharashtra and the Maharashtra State Small Scale Industries Development Corporation. Mr. Satyanarayan and Mr. Vaidya submit that by letter dated 5th August, 1974 (exhibit 7), the petitioners have sanctioned the creation of such a second mortgage. The petitioners admit that there was such a second mortgage. It is submitted that for this reason, the Bank of Maharashtra and the Maharashtra State Small Scale Industries Corporation were necessary parties to the suit. It is submitted that as they are not joined as defendants the suit is bad for non-joinder of necessary parties and must be dismissed. In my view, the law on the subject is clear. Even in a suit the petitioners need not have made the second mortgagee a party to the suit. This, however, is not an ordinary suit. This is a petition under sections 31 and 32 of the State Financial Corporations Act. It is a special provision. In such a petition, neither the Bank of Maharashtra nor the Maharashtra State Small Scale Industries Development Corporation could be a party. IN my view, they are neither necessary nor proper parties. This issue is, therefore, answered in the negative. It may only be mentioned that the Bank of Maharashtra, the official liquidator and the second respondent. The Maharashtra State Small Industries Development Corporation have not filed any suit for recovery of its claim.

Issues Nos. 5 and 6 between the petitioners and the first respondent :

It is submitted that time had been given to the first respondent company to repay the amounts due. The only evidence of this moratorium is the letter dated 20th March, 1973 (exhibit 9). By this letter as already stated above, the amounts due under the mortgage dated 29th June, 1964, were to be repaid by 20th December, 1974, and the payments under the charge dated 4th June, 1968, were to be paid by instalments. The first instalment was payable on 20th December, 1974, and the last instalment was payable on 4th June, 1978. This letter in my view does not amount to a moratorium. At the highest, it amounts to a rescheduling of payments under the afore-mentioned two deeds. Even under this reschedule the entire amount due under the mortgage dated 29th June, 1964, was to be paid by 20th December, 1974. Admittedly that had also not been repaid. By the letter dated 5th January, 1975, under the powers reserved to the petitioner under the three deeds, as well as under the State Financial Corporations Act, the respondents were called upon to repay all amounts due. The respondents failed and neglected to do that. There is no other evidence of any further or other moratorium. It will thus have to be held that there was in fact no moratorium at the time that the petition was filed on 5th January, 1975. Under the circumstances, these two issues are also answered in the negative.

Issue No. 7 between the petitioner and the first respondent and Issues Nos. 2 and 3 of the second respondent :

These issues can be taken together. The submission of the respondents on these issues has been that the petitioners along with the Bank of Maharashtra and the Maharashtra Small Scale Industries Development Corporation had taken over control and management of the first respondent company under a scheme of reconstruction of the first respondent company. It has been the submission of the respondents that under the scheme all payments were to be made by the Bank of Maharashtra and the the management itself was taken over by the financial institutions. It was submitted that the financial institutions had appointed one of the officers for the purposes of managing and running the company. It was submitted that as a result of this scheme of reconstruction the payments, if any, were to be made by the Bank of Maharashtra. It was submitted that it was the Bank of Maharashtra which failed to release amounts and make payments and that the respondents would not be said to have failed and neglected to make payment of any instalments. It was submitted that under these circumstances the respondents had not failed and neglected to comply with the terms of the deed.

Except for the letter exhibit 8 there is no other evidence of any such scheme of reconstruction. The second respondent has not let any evidence. the first respondent's witness, Vasant Karkhanis, had submitted a letter (exhibit 8) and had stated that this letter was received by the first respondent company in the normal course of business. Such a letter must have been sent by the Bank of Maharashtra and received by the second respondent as the managing director of the first respondent company. However, this is merely a proposal. This would fructify into an arrangement only if it was accepted by the first respondent company. Even otherwise all that this letter states is that the possibility of salvaging the first respondent company would be examined by a competent and independent authority and that the long range working of the company would depend on the result of that study. The letter states that during the period that it will take for this study to be undertaken, the board would be reconstituted. The letter provided that all other directors except the second respondent would resign. By this letter, a managing director was to be appointed for the day-to-day working of the company by mutual consultations with the financial institutions. Thus, it is clear that this letter by itself is not a scheme for reconstruction of the company. It is merely a temporary working arrangement till it can be ascertained whether there was any possibility of the first respondent being salvaged. No resolution has been passed by the board of directors of the first respondent company accepting this proposal. Before this court there is no proof that any such scheme was implemented. Before this court, there is no evidence of any scheme of reconstruction. Before this court there is no evidence to show that the Bank of Maharashtra had taken over the liability or agreed to pay the instalments due under the said three deeds.

Even otherwise, even presuming there was a scheme of reconstruction and the petitioners and other financial institutions committed a breach of that scheme, the only remedy of the first respondent company and/or the second respondent it to claim damages for loss suffered by them. As has been set out hereinabove a claim for damages cannot be gone into in a petition under sections 31 and 32 of the State Financial Corporations Act. Further, the second respondent had filed a suit for damages. In that suit court fees were not paid and the suit ultimately came to be dismissed. the claim for damages has thus been abandoned. Under the circumstances, it will have to be held that the respondents remained liable to pay under the said three deeds. Admittedly the amounts have not been paid. Therefore, it will have to be held that the respondents have failed and neglected to comply with the terms of the said three deeds. Under circumstances, issue No. 7 between the petitioners and the first respondent has been answered in the affirmative and issues Nos. 2 and 3 between the petitioner and the second respondent have been answered in the negative.

Issue No. 8 between the petitioners and respondent No. 1 :

This issue is squarely covered by the authority of the Supreme Court in the case of Gujarat State Financial Corporation v. Natson Manufacturing Co. Pvt. Ltd. . In that case the Supreme Court has held that a petition under section 31 is not a plaint as contemplated by article 1 Schedule I to the Bombay Court Fees Act, 1978. the Supreme Court has held that it is not even an application in the nature of a plaint as contemplated by article 7 of Schedule II to the said Court Fees Act. The Supreme Court has held that an application under section 31(1) is covered by the residuary article 1(c) of Schedule II to the Bombay Court Fees Act and that it should, therefore, bear a fixed court fee only. In any case the petitioners have paid court fees in a sum of Rs. 15,000 which is the maximum provided under the Bombay Court Fees Act. This issue is, therefore, answered in the negative.

Issues Nos. 5, 6 and 7 between the petitioners and the second respondent :

It is submitted that the second respondent has been absolved and released from all liability and that his personal properties have also been released. The second respondent has led no evidence at all. There is no document on record to support such a case. On a contrary, exhibit 8, being the proposal given by the Bank of Maharashtra to the respondents, categorically states that the directors who have guaranteed the advances will not be absolved from their liability and that even the assets held by the family members were not to be disposed of without prior consent from the financial institutions. Thus, even the proposal was to the contrary effect. There being no evidence in this behalf, it will have to be held that there was no agreement to release the second respondent or his personal properties. It was also submitted on behalf of the second respondent that one of the properties, i.e., the property situate at Deccan Gymkhana, bearing C. S. No. 759/52 is a joint Hindu family property and that for that reason also the petitioners have no right to sell or attach that property. There is no evidence in support of this contention also. the original title-deeds have not been produced before this court to show that this property belongs to the joint family. Under the circumstances these issues have been answered in the negative.

That brings us to the question of what relief can be granted in this petition. Before that is done one legal submission which had been urged by Mr. Satyanarayan on behalf of the official liquidator must be considered. Mr. Satyanarayan had submitted that the mortgages and the charges created by the aforementioned three deeds were void, under section 125 of the Companies Act, as against the official liquidator. Section 125 of the Companies Act reads as follows :

"Section 125. certain charges to be void against liquidator or creditors unless registered.-(1) Subject to the provisions of this Part, every charge created on or after the 1st day of April, 1914, by a company and being a charge to which this section applies shall, so far as any security on the company's property or undertaking is conferred thereby, be void against the liquidator and any creditor of the company, unless the prescribed particulars of the charge, together with the instrument, if any, by which the charge is created or evidenced or a copy thereof verified in the prescribed manner are filed with the Registrar for registration in the manner required by this Act within `thirty' days after the date of its creation :

Provided that the Registrar may allow the particulars and instrument or copy as aforesaid to be filed within seven days next following the expiry of the said period of `thirty' days if the company satisfies the Registrar that it had sufficient cause for not filing the particulars and instrument or copy within that period."

33. Mr. Satyanarayan had submitted that the prescribed particulars of the charge, the instrument creating the charge or the copy verified in a prescribed manner were not filed with the Registrar within 30 days after the creation of the charge. He has also submitted that these were not done even within the period of further 30 days provided under the proviso to section 125.

34. Before the submission of either side on this point are considered, the evidence in this behalf may be set out. The petitioners as well as the first respondent have led the evidence of one Mr. Subrao G. Pakkhare, who is the company prosecutor working with the Registrar of Companies. This witness admitted that he had no personal knowledge, but that the was deposing from the files and material available with the Registrar of companies. This witness produced "Form No, 8" in respect of the mortgage dated 29th June, 1964, and the entry pertaining to the registration of the mortgage dated 29th June, 1964. These are exhibits at "O" and "P". The witness also produced "Form No. 8" in respect of the deed of charge dated 4th June, 1968, and the entry pertaining to the registration of the charge dated 4th June, 1968. These are at exhibits "Q" and "R" respectively. The witness then produced "Form No. 8" in respect of the second deed of charge dated 16th December, 1972, and the entry pertaining to the registration of the second deed of charge dated 16th December. 1972. these are at exhibits S and T. This witness also produced an entry pertaining to modifications of a charge in Form No. 14. This is exhibit U. This witness then stated that the particulars of the mortgage dated 29th June 1964, were filed on 13th August, 1964. On the Form No. 8 (exhibit "U"), there was another date, viz., 15th October, 1968. This witness could not explain what that date was. therefore, an officer who had knowledge was called for. One Mr. Venkatachalam, the Assistant Registrar of Companies then gave evidence. He deposed that the particulars of charge in respect of the second deed of charge were initially filed on 28th June, 1968. He deposed that there must have been some objections and, therefore, the documents were resubmitted on 6th August, 1968. He deposed that the documents must again have been returned and were finally resubmitted on 15th October, 1968. This witness also deposed that the particulars of charge dated 16th December, 1972, were filed on 3rd January, 1973. This witness was asked whether along with the particulars, the instrument creating the charge or a copy duly verified had been submitted. This witness stated that such copies must have been submitted as the charges could not have been registered if such copies had not been submitted. the witness deposed that under the Act the copies were not to be maintained by the office and that, therefore, the copies must have been returned to the party. This witness could not answer as to when and how the copies were returned. This witness was also asked whether in respect of the second deed of charge there was any correspondence regarding the objection, if any, raised by the office of the Registrar. This witness stated that such correspondence would be in a correspondence file which would not be maintained for so many years and that, therefore, at this stage, he was not in a position to produce any such correspondence nor say anything about it. This witness deposed that even though documents may be resubmitted at a later date, the Registrar considers the initial date of submission for the purposes of registration.

35. Thus, on this evidence, the following facts emerge :

1. Form No. 8 in respect of indenture of mortgage dated 29th June, 1964, was filed on 1st July, 1964.

Form No. 8 in respect of the second deed of charge dated 4th June, 1968, was filed on 28th June, 1968. They were returned and resubmitted on 6th August, 1968. they were again returned and resubmitted on 15th October, 1968.

Form No. 8 in respect of the second deed of charge dated 16th December, 1972, was filed on 3rd January, 1973.

2. Before the court, there is no evidence as to whether the instruments creating the charge or copies verified in the prescribed manner were filed along with Form No. 8.

3. That in respect of the deed of charge dated 4th June, 1968, there were some objections. What the objections were is not known to the court. But all objections were ultimately removed only on 15th October, 1968.

36. On these facts, the submission of Mr. Satyanarayan and Mr. Vaidya has been that in respect of the deed of charge dated 4th June, 1968, there has been non-compliance with the provisions of section 125 of the Companies Act inasmuch as the prescribed particulars of charge have not been filed within the period of 30 days after its creation and not even within the period of additional 30 days which were available under the proviso 125.

37. Mr. Satyanarayan and Mr. Vaidya have also submitted that as there is no evidence to show that the instruments creating charge or a copy thereof, verified in the prescribed manner, were filed with the registrar along with Form No. 8, it must be held that there is non- compliance with the provisions of section 125 of the Companies Act. It is submitted that as the instruments or the copies of the instruments were not available in the records of the Registrar and as there is non-compliance with the provisions of section 125. Mr. Satyanarayan and Mr. Vaidya also submitted that before a document can be registered under section 125 the same must be scrutinized and verified by the Registrar. They submitted that in this case, there is no evidence at all to show that the Registrar has scrutinized and verified the instruments before registering the same. They submitted that in the absence of any such evidence, it must be again presumed that the documents had not been properly scrutinized and verified by the Registrar. It was submitted that the Assistant Registrar has given evidence and he has not stated that the documents had been properly verified.

38. It was, lastly, submitted by Mr. Satyanarayan and Mr. Vaidya that the Registrar could not have registered the documents because the documents do not bear the requisite stamps as required under the Bombay Stamp Act. They submitted that this by itself shows that there was no proper verification by the Registrar and that, therefore, he should not have registered the documents. It was submitted that under the three deeds the petitioners have a power to sell off and take possession of the property. In this behalf, my attention was drawn to such powers as could be found on pages 11 and 24 of exhibit A. It was submitted that in cases where possession is given or agreed to be given under a deed of mortgage then under article 40 of the Bombay Stamp act, the duty which is payable is at a higher rate. It was submitted that the three deeds, viz., exhibits A, B and C bear stamp duty as if on a bond and that, therefore, the proper stamp duty had not been paid. It is submitted by Mr. Satyanarayan and Mr. Vaidya that on exhibit A, the petitioners had paid a stamp duty of Rs. 3,769 whereas in fact they should have paid a stamp duty of Rs. 15,000. It was submitted that in exhibit B, the petitioners had paid a stamp duty of Rs. 8,633 whereas in fact they should have paid stamp duty of rs. 28,600. It was also submitted that on exhibit C the petitioners had paid stamp duty of rs. 7,200 whereas in fact they should have paid stamp duty of rs. 24,000. Mr. Satyanarayan relied upon the authority in the case of Haryana Financial Corporation, Chandigarh v. Dempo Foods Ltd. [1982] Tax LR 2537. in this case, it was held that the financial corporation can claim preference over other creditors only in the proceedings under section 31 had been commenced prior to the liquidation of the company. It was held that all secured creditors including the financial corporation must comply with section 125 of the Companies Act and that in case that they had not so complied, they could not be treated as secured creditors. It was also held that whilst filing a charge under section 125 of the companies Act, it was the duty of the mortgagor to mention the stamp duty paid on the deed and that if the proper stamp duty had not been paid, then there was no compliance with the provisions of section 125 of the Companies Act. It must, however, be noticed that this was a case where the liquidation proceedings had commenced before an application under section 31(1) of the State Financial Corporations Act. It must also be noticed that this was a case where the Registrar had refused to register the charge on the ground that there were defects and the question before the court was whether the Registrar could refuse to register such a change.

39. As against this, Mr. Bharucha has relied upon the certificates issued by the Registrar under section 132 of the Companies Act. these are at exhibits H, J and K. Section 132 of the companies Act reads as under :

"The Registrar shall give a certificate under his hand of the registration of any charge registered in pursuance of this Part, stating the amount thereby secured and the certificate shall be conclusive evidence that the requirements of this Part as to registration have been complied with."

40. Thus, section 132 provides that a certificate issued by the registrar shall be conclusive evidence that the requirements of this Part, i.e., Part V, as to registration have been complied with. Section 125 falls within Part V of the Companies Act. Thus filing of the charge within the time prescribed, submission of the prescribed particulars of charge along with the instruments by which the charge is created ( or a copy thereof verified in a prescribed manner ) are requirements or registration under this Part. On a plain reading of section 132, the certificates H, J and K should be conclusive evidence that the requirements of the Part have been complied with.

41. The question, however, if if the court has before it evidence which shows that one or other requirement has not been complied with, then whether in the face of positive evidence before the court, the court must still act merely on the certificates issued by the Registrar. In this case, there is no evidence before this court as to whether the instrument or a verified copy thereof was submitted along with the particulars of charge. In the absence of such evidence, the certificate becomes conclusive evidence that the instrument or a verified copy was submitted along with the particulars. To that extent, the submission of Mr. satyanarayan and Mr. Vaidya to the contrary cannot be accepted. Even otherwise, it must be mentioned that under section 130 of the Companies Act at the time of filing of the charge the required particulars have to be given in Form No. 8 and after the registration of the charge the Registrar is to return the instrument to the party. Also the Assistant Registrar has given evidence that if the necessary instrument or a copy thereof had not been supplied, then the charges would not have been registered. There is no reason to disbelieve that evidence. In fact that is the natural course of conduct of that office. The court, however, has before it evidence as regards the stamp duty paid on the instruments and as regards the date of filing of the charges.

42. Taking the question of stamp, I see no substance in the submission of Mr. Satyanarayan and Mr. vaidya. Under article 40 of the Bombay Stamp Fees Act, a deed of Mortgage is to be stamped as if on a bond unless possession is given or agreed to be given under the instrument. The provisions in the deed to which my attention has been drawn by Mr. Satyanarayan do not in any manner give to the petitioners possession of the properties. By the three deeds all that is provided is that in case of default the petitioners have right to take possession. Every mortgagee has a right to take possession on a default. this, even under section 69 of the Transfer of Property Act. Under the three deeds there is no right to enter into possession simpliciter nor are petitioners actually given possession. thus, the three deeds have are properly stamped as if on a bond. It must also be remembered that all the three deeds have been duly registered. These could not have been done if they were not properly stamped. Thus, I see no substance in this argument of Mr. Satyanarayan and Mr. Vaidya.

43. The next point for consideration is whether the three deeds were presented within the period prescribed in section 125 of the Companies Act.

44. Before this question is considered, it must be clarified that under section 125 of the Companies Act the effect of non-compliance is that the deed is void as against the official liquidator and a creditor of the company. However, this deed created a charge not only on the assets of the company, but also on the personal assets of the second respondent. Section 125 can apply only to the extent that this deed creates a charge on the assets of the company. It can in no way affect the deed so far as it creates a charge on the assets of the second respondent. Further, even so far as the assets of the company are concerned, whilst it may be void against the official liquidator, it does not affect his right to enforce the guarantees which are given by the directors or other persons. From the evidence on record, it is clear that the mortgage deeds dated 29th June, 1964, and the second deed of charge and additional security dated 16th December, 1972, were presented within time. The only question is in respect of the deed of charge dated 4th June, 1968. On evidence, it is to be seen that this was initially submitted on 28th June, 1968. The documents were then returned and they were resubmitted on 6th August, 1968. They were again returned and finally resubmitted on f15th October, 1968. On a question from the court the Registrar has admitted that until all correct documents were finally resubmitted on 15th October, 1968, the charge could not have been registered. The date, 15th October, 1968, is beyond the period of three months as well as beyond the period of further three months under the proviso to section 125 of the Companies Act.

45. Mr. Bharucha has taken me to a number of authorities on the construction of the term "conclusive evidence" under section 132 of the Companies Act and other identical provisions.

46. Mr. Bharucha relied upon the case of Mechanisations (Eaglescliffe) Ltd., In re [1965] 35 Comp Cas 478. In this case by two deeds of charges dated 7th May, 1959, and 24th February, 1960, advances were made to a company Mechanisation (Eaglescliffe) Ltd. In the particulars which were submitted to the Registrar for registration only the principal amount was given. No mention was made about payment of interest or the other sums. On the basis of these particulars, the charge was registered and the Registrar issued his certificate again making no mention of the additional sum secured. In respect of the second deed, particulars of the principal amounts as well as the interest were forwarded, but somehow when it was registered, no mention was made of the interest. The company thereafter went into winding up. The mortgagees, viz., N. B. C., claimed as secured creditors for the total sum advanced by them with interest and other payments. The liquidator filed an application seeking a declaration that the charges in excess of what were registered were void as against him and any other creditor. It was held by the court that the certificate of registration once delivered was conclusive evidence that all necessary preliminaries had been complied with and that the prescribed particulars had been delivered. It was held that the exact terms of the charge must then be determined from the document itself. It was held that once a certificate has been issued, the effect of the certificate is to put 9it out of anybody's power to say that the prescribed particulars have not been presented. It was held that once a certificate is given, the charge cannot be voided. Whilst coming to this conclusion, the court was conscious of this fact and stated that it may be possible that in certain circumstances such an interpretation may cause hardships, but that in any way would not affect the validity of the charge itself.

47. Mr. Bharucha next relied upon the case of Eric Holmes (Property) Ltd., In re [1965] 35 Comp Cas 811 (Ch D). In this case, R, a shareholder had advanced monies to the company and had taken an undertaking from the company to execute formal mortgage deeds. At a meeting held on 29th May, 1961, it was agreed that R should be given formal documents. Thereafter two memoranda of deposit of title deeds were signed on 5th June, 1961, but no date was written at the time of execution. On 21st June, 1961, another mortgage was executed in favour of R. The second document was registered with the Registrar of Companies on 26th June, 1962. However, the two deeds of equitable mortgage were sent for registration only on 11th July, 1961, and the date of execution thereof was given as 23rd June, 1961. The Registrar the charges and issued his certificates. The company thereafter went into winding up on 4th August, 1961. Thus, in this case even though the deeds had been executed on 5th June, 1961, they had been falsely dated 23rd June, 1961, obviously for the purpose of registration. An argument identical to the one made by Mr. Satyanarayan and Mr. Vaidya was made before that court. The court held that it was in sympathy with that argument, but unable to accept it. the court held that the giving of the certificate was conclusive evidence that the documents creating a charge were properly registered even if in fact it was not properly registered. Whilst holding so the court also stated that there appears to be a lacuna in the Act inasmuch as the Act gives protection even when the bases are incorrect and/or might be fraudulent.

48. Mr. Bharucha next relied upon the case of Des Raj, Voluntary Liquidator v. Punjab Financial Corporation [1970] 40 Comp Cas 551 (Punj). In this case, the company had been advanced a sum of Rs. 1 lakh by the Punjab Financial Corporation on the security of a mortgage deed executed by the company on 14th November, 1963. the company went into liquidation and an application was made to the effect that the mortgage was without any legal effect and void because it was not registered within time as required by section 125 of the Companies Act. From the evidence on record in that case, it was ascertained that intimation had been received by the Registrar beyond the period prescribed by section 125 of the Companies Act. The court held that section 132 of the Companies Act provided that the issue of certificate was conclusive evidence that the requirements of this part had been duly complied with. The court held that the "requirement of registration" included delivery of particulars within the time specified. The court held that it was not open to the court to go into the question whether the filing was done in time or not.

49. Mr. Bharucha also relied upon the case of C. L. Nye Ltd., In re [1971] 41 Comp Cas 96 (CA). In this case, the company had been granted a loan by a bank against security of its business premises. All the documents, including an undated document creating a charge, were given to the solicitors of the bank of 28th February, 1964. It would appear that the document of charge was mislaid in the office of the solicitors and discovered only on 18th June, 1964. The company went into liquidation on 16th July, 1964. the liquidator took out a summons for the rectification of the register and for a declaration that the charge in favour of the bank was void against him and the creditors of the company. Lord Justice Russell held that the conclusiveness of such a certificate had already been a subject of a number of decisions. He then set out the various decisions wherein it was held that such a certificate was conclusive evidence. It was then held that the certificate was conclusive evidence. Lord Justice Russell held that this must be so in spite of the fact that normally a person would not be allowed to profit from his own wrong. Lord Justice Megaw concurred with this view and stated that the certificate of the Registrar precluded the liquidator from successfully asserting that the charge was void against him even though he can show that it was in fact registered beyond the period of time given for creation of the charge.

50. Mr. Bharucha next relied upon the case of Bank of Maharashtra Ltd. v. Official Liquidator, High Court of Mysore [1973] 43 Comp Cas 505 (Mys). In this case also it was held that once the Registrar registers a charge issues a certificate under section 132 of the Act, it was not open to the official liquidator to contend that the mortgage was unenforceable against the assets of the company.

51. Mr. Satyanarayan submitted that all the above-cited authorities were based upon their own facts. He submitted that in all these authorities some particulars were not supplied or that even if supplied were not noted while registering. He submitted that it was under those circumstances that it was held that a certificate under section 132 was conclusive evidence. Mr. Satyanarayan submitted that this principle cannot be applied where it has been categorically shown that the provisions of section 125 of the Companies Act as to filing within the period prescribed therein have not been complied with. In my view, this submission of Mr. Satyanarayan is not correct. All the authorities cited above fully support Mr. Bharucha. All of them lay down that a certificate under section 132 is conclusive evidence of the fact that the requirements as to registration have been complied with. In fact, in the cases of Eric Holmes (Property) Ltd., In re [1965] 35 Comp Cas 811 (Ch D) and Des Raj v. Punjab Financial Corporation [1970] 40 Comp Cas 551 (Punj), the particulars were not filed in time and the courts still held that it was not open to the courts to go into this question as the certificates were conclusive evidence.

52. It must, however, be admitted that initially I was inclined to accept the submissions of Mr. Satyanarayan and Mr. Vaidya that a certificate could not be held to be conclusive evidence once the contrary is proved. However, for the following reasons I must hold that such a certificate must considered to be conclusive evidence that all requirements as to registration must be deemed to have been complied with :

(1) The words used in section 132 of the Companies Act provide that such a certificate is conclusive evidence. These words are distinct and/or different from words used in various other statutes where mere presumptions are raised. In cases where presumptions are raised they are always rebuttable. Section 132, however, does not raise a presumption. It provides for conclusiveness. Thus, the Legislature has, with full knowledge of the fact that there was a possibility of mistake in registration or even fraud, used words which do not raise a mere presumption, but make a certificate conclusive. If that be so, then the courts are bound to implement the language of the Legislature and to give effect to that language. It must, however, be mentioned that in so providing the Legislature had not left any scope for cases where there is a genuine mistake or even a fraud. To that extent there is a lacuna in the Act.

(2) The whole aim of the provisions of this chapter appears to be to protect mortgagees. It is undoubtedly for that reason that a conclusiveness has been provided for. If a contrary interpretation were to be given, great hardship could be caused to a mortgagee for no default of his own. To take the present petition as an example. As is seen from exhibits O, Q and S, it was the first respondent who had submitted the particulars to the Registrar for the purposes of registration. It is the first respondent who had delayed supplying correct particulars. The Assistant Registrar has deposed that it is the practice of the office of the Registrar to take the date of first submitting as the date for the purposes of registration. On this basis the second deed of charge dated 4th June, 1968, was registered. The petitioners have acted on this practice and the fact of this registration. Had the charge not been registered, at that stage they could have got the first respondent company to issue a fresh deed and could have registered that fresh deed. To now hold that the charge is void would be to deprive them of the benefits for no fault of their own.

(3) It is also settled law that if there is a constant trend of judgments then such a trend should not be lightly upset. All the judgments cited by Mr. Bharucha and set out hereinabove show that it has been held by all courts that a certificate under section 132 of the Companies Act must be held to be conclusive evidence. Thus, even though initially I may have been inclined to take a different view, judicial discipline requires that this court follow the trend of judgments. For this reason also I hold that a certificate under section 132 is conclusive evidence.

53. Under these circumstances it will have to be held that the requirements as to registration including requirements as to filing within time have been complied with and that it is now not open to the official liquidator to contend to the contrary.

54. It must also be mentioned that Mr. Bharucha had also submitted that in any event the provisions of section 46(b) read with sections 31 and 32 of the State Financial corporations Act override the provisions of the Companies Act including section 125 of the Companies Act. In support of his contention Mr. Bharucha had relied upon the cases in Maharashtra State Financial Corporation v. Official Liquidator, Sidhu Tyres P. Ltd. [1988] 64 Comp Cas 641 (Bom), Kerala Financial Corporation v. C. K. Sivasankara Panicker [1978] Tax LR 1850 (Ker) and Ideal Bank Ltd. v. Pride of India Pictures Ltd. [1985] 57 Comp Cas 546 (Delhi). In the view that I have already taken it is not necessary for me to consider this submission.

55. Mr. Satyaranyan and Mr. Vaidya next submitted that interest should be granted only at six per cent. per annum. they submitted that the company has gone in great loss and has finally been wound up. They submitted that there was adequate property available as security and that there was in fact no reason why the petitioners should have acted in a hasty and high-handed manner. They submitted that for these reasons interest should be granted only at six per cent. per annum. Mr. Satyanarayan relied upon the case of Karnataka State Financial Corporation v. Sri Nithyananada Bhavan, in support of his submission that the court must apply its judicial sympathy and act fairly whilst granting interest. In my view, it is a settled principle that, unless there by a very strong ground, the court must award interest at the contractual rate. Also in this case it has not been shown that the respondents or either of them have suffered any loss or damage as a result of the action of the petitioners. The petitioners cannot be penalised by reducing interest merely because the first respondent company has gone into winding up. In my view, interest will have to be granted at the contractual rate.

56. Mr. Vaidya on behalf of the second respondent made an additional submission that, under section 31 of the State Financial Corporations Act, an action cannot be taken against an individual and that such a petition can only be against the concern. He submitted that for this reason this petition is not maintainable against the second respondent. He submitted that as against the second respondent, the petitioner must file a separate suit. In support of his contention, he relied upon the case of Munalal Gupta v. Uttar Pradesh Financial Corporation, , wherein the Full Bench of the Allahabad High court had held that the property of a surety cannot be the subject-matter of a proceeding under section 31. There may have been some force in this contention except for the fact that since the date of this authority, the State Financial Corporations Act has been amended. Sub-clause (aa) of section 31 now enables the petitioners to enforce their claim against a surety in such a petition. The Act, therefore, now specifically provides that petitions under section 31 can be maintained even against the surety. There is, therefore, no substance in this contention of Mr. Vaidya.

57. Mr. Vaidya next submitted that the second respondent is a 78 year old man who now has only a small house in Pune. He submits that the court should have sympathetic consideration and should direct the petitioners to proceed against the property of the second respondent only after first proceeding against the properties of the first respondent. Mr. Bharucha makes a statement that the petitioners shall proceed first only against the property of the first respondent and that they shall proceed against the property of the second respondent only in the event of their not being able to fully recover their dues out of the sale of the properties of the first respondent. In view of this statement, I am not passing any orders in this behalf.

58. Under the circumstances, the petition is made absolute is made absolute in terms of prayer (a). The petitioners to give to the official liquidator prior intimation of all steps taken for sale of the property and to appropriate only the amounts recovered by them after complying with the provisions of section 529 of the Companies Act. There will be no order as to costs of the petition. All parties are at liberty to bring in bids. Till the claim of the petitioner is fully satisfied, the interim order of attachment dated 8th January.

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