.. ----

INDIAN BANK

THE OFFICIAL LIQUIDATOR, CHEMMEENS

EXPORTS (P) LTD. AND ORS.

MAYS,1998

[B.N. KIRPAL AND S.S. MOHAMMED QUADRI, JJ.]

Companies Act, 1956 :

Sections 125 and 446--Charge created on the company's asset by way C of mortgage-Non registration of such charge-Effect of-Loan advanced by bank secured by equitable mortgage by deposit of title deeds uf the debtor company with the bank-Winding up proceedings initiated against the debtor company and winding up order passed by the Company Court-Bank moving on application to the Company Court for leave to file a suit against the D debtor company under liquidation and the same was allowed-Preliminary decree passed-No appeal preferred by the Official Liquidator against the decree -After the expiry of limitation to file the appeal against the decree, Official Liquidator moved an application before the Company Judge that under Section 125, charge having been not registered, the decree was void- Preliminary decree prescribed certain date for deposit of decree amount by E the company and in default the Bank would be entitled to apply to trial court for passing final decree and realisation of the decree amount by way of sale of mortgaged property-Decree amount not deposited within the date fixed by the Court-Held, if upon construction of a decree, the court found that the unregistered charge was kept alive, provisions of Section 125 would F apply and if, on the other hand, the decree extinguished the unregistered charge, section 125 would not apply and a judgement-creditor will be entitled to relief from the Company Court-As such the preliminary decree was not void or inopertative--Companies(Court) Rules, 1959, Rule 9.

Section 446-Applicability of -Power of Company Court-Held, it G has no power to declare a decree of a competent court void or inoperative- Hence application filed by Official Liquidator to declare a decree void not maintainable.

Appellant advanced certain amounts to a Company ("debtor company") which was secured by an equitable mortgage by deposit of title deeds of the H 255

A debtor company with the appellant. Thereafter, winding up proceedi11gs were initiated against the debtor company on 01.03.1979 and winding up order •- ·· was passed. Appellant sought leave of the Company Court to file a suit for recovery of the debt amount and the same was granted by it on 07.12.1979.

The appellant thereafter, filed .a suit against the debtor company in liquidation B which was represented by the Official Liquidator. The Official Liquidator filed written statement and contested the suit inter a/ia on the ground that the charge against the properties of the debtor company not having been registered under Section 125 of the Companies Act, it was void. However, in 28.05.1982, a preliminary decree was passed by the court in favour of the appellant. No appeal was filed by the Official Liquidator against the said C decree. However, on 21.03.1983, the Official Liquidator against the said decree.-However, on 21.03.1983, the Official Liquidator filed an application before the Company Court for the reliefs as indicated in its written statement filed in suit for recovery. The appellant resisted the application on the ground that the decree filed by the court had become final and operated as

res judicata. Company Court referred the matter to a Division Bench expressing the view that the question was not free from doubt. The Division Bench held that the preliminary decree passed in the suit did not operate as res judicata; that on account of the non-registration of the charge it was void under Section 125 of the Act and that the decree was void. Hence this appeal.

It was contended by the appellant that since no appeal was preferred against the decree passed in the suit on the basis of the prior permission of the Company Court it had become final; and that under Section 125 of the Act, what was required to be registered was charge created by the debtor company and as the preliminary decree in the suit could not be said to be a charge created by the debtor company, Section 125 had no application. On F the other hand it was contended by the respondent that as the charge created by the debtor company on its properties was void in view of mandatory provision of Section 125, 'the Division Bench had rightly held that the preliminary decree was also void against the creditor and the liquidator and that it was of no consequence that the liquidator did not appeal against it and G that the principal of res judicata had no application.

Allowing the appeal, this Court.

HELD : 1.1. An order or decree of a court creating charge on the priorities of a company has to be distinguished from a preliminary decree passed in a mortgage suit based on an unregistered charge, which is hit by H Section 125 of the Companies Act. The right to recover the amounts pursuant

INDIAN BANK v. OFFICIAL LIQUID. CHEM. EXPORTS (P) LTD. 257

to the counter creating charge, even under the terms of the decree was A • _. available till the said date and thereafter "the matter had passed from the domain of the contract to that of Judgement"." The question of applicability of Section 125 has to be decided on the terms of the decree - whether the unregistered charge created by the mortgagor was kept alive or extinguished or replaced by an order of sale created by the decree; if upon a construction B of the decree, the court 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 not apply. A Judgement-creditor will be titled to relief from the Company Court accordingly. [226-D; 267-G)

1.2. In the present case the charge was kept alive till the specified date viz. 28.08.1982 and thereafter in default of payment of decree amount the sale order would take effect. Admittedly the decree amount was not paid before 28.08.1982; as such the matter has passed from the domain of contract

to the realm of the judgement. The Official Liquidator filed application on 21.03.1983 seeking to declare the decree as void. By that date, what was D operative in the decree was not a mere unregistered charge but an order for sale of mortgaged property for realisation of decree amount. The preliminary decree cannot therefore be said to be void or inoperative. (268-A-B)

Gyarsi bai v. Dhansukh Lal, AIR (1985) SC 1055, relied on.

In re : Overseas Aviation Engineering (G.B.) Ltd., (1963) 33 Comp.

Cases 315; Praga Tools Ltd. v. Official Liquidator of Bengal Engineering Co. (P) Ltd., (1984) 56 Comp. Cases 214 and Swyakant Natvarlal Surati

v. Kamani Bros. Ltd., (1985) 58 Comp. Cases 121, approved.

Rani Sunder Kaer v. Rai Sham Krishan, (1934) Indian Appeals 9 (P.C.) F and Kusum Kumari v. Devi Prasad Dhandhania, AIR (1936) PC 63, referred to.

2. Provisions of Section 446 of the Companies Act, 1956 have no application to any proceedings pending in appeal before a High Court or this G Court. From tliis what follows is when a suit is constituted in the court of competent jurisdiction with the leave of the court under sub-section (1) and a decree is passed by that court whether on the basis of mortgage or otherwise, it would be binding on the Official Liquidator and no plea inconsistent with the decree passed against the Official Liquidator can be raised while deciding the question of priorities under clause (d) of sub- H

A section (2). Under Section 446, no power is conferred on the Company Court to declare a decree of the competent court void - a prayer which is made by ,,_,. •

the Official Liquidator in the application out of which this appeal arises - and so to that extent the application filed by the Liquidator in the Company Court is not maintainable. [264-G-H; 265-AI

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4393 of 1986.

From the Judgment and Order dated 29.1.86 of the Kerala High Court in M.C.A. 11of1983. y c

Harish N. Salve, Shanti Bhushan, Sudhir Chandra Aggarwal, R.F.

Nariman, Shailendra Swamp, Ms. Bindu Saxena, Ms. Leena George, K. Ram Kumar, Ms. Asha G. Nair, C. Balasubramanian, Y. Subba Rao, Ms. Santi Narayan, Dinesh Mathur, S. Ganesh, K.J. Desai and E.M.S. Anam for the . appearing parties.

The Judgment of the Court was delivered

QUADRI, J. This appeal, by special leave, is directed against the order .._ of the Division Bench of Kerala High Court in M.C.A. No. 11 of 1983 passed on January 29, 1986. That was an application filed before the learned Single E 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 company in Liquidation in favour of the Indian Bank against F the land and buildings of the company, 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 company was contrary to the provisions of Section 125 of the Act and as such void and unenforceable G against the Official Liquidator representing the General body of creditors excluding the decree holder.

It will be necessary to notice the facts giving rise to this appeal for a proper appreciation of the questions raised before us. The Indian Bank advanced certain amounts to Mis. Chemmeens Exports Pvt. Ltd. which was H secured by an equitable mortgage by deposit of title deeds of the debtor

.~ -

INDIAN BANK v. OFFICIAL LIQUID. CHEM. EXPORTS (P) LTD. [QUADRI, J ] 259

company with the Bank. Thereafter, winding up proceedings were initiated A against the debtor-company and on March l, 1979 and winding up order was passed in Company Petition No.18 of 1978. 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. 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 B Subordinate Judg's Court, Cochin, against the debtor company in liquidation which was represented by the Official Liquidator, duly impleading the Directors of the Company. The Official Liquidator filed written statement and contested the suit taking, inter alia, the plea that the charge against the properties of the company not having been registered under Section 125 of the Act, was void. On 28.5.82, in the said suit the Court passed a preliminary decree in C favour of the Bank. No appeal was filed by the Official Liquidator against the said decree.

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 D passed by the Court had become final and operates as res judicata. The learned Company Judge referred the case to a Division Bench expressing the view that the question was not free from doubt. By the imp.ugned order of January 29, 1986, the Division Bench held that the preliminary decree passed in the suit did not operate as res judicata; that on account of non-registration E of the charge it was void under Section 125 of the Act and that plea could 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 company in favour of the bank against the land, buildings and machinery of the company, as set out in the preliminary decree, was void against the Official Liquidator and the F creditors of the company and that the same was not enforceable against the assets of the company.

Shri Ram Kumar, the learned counsel for the appellant, contended that since no appeal was preferred against the preliminary decree p?.ssed in the suit filed by the bank with permission of the Company Court against the G company represented by the liquidator on the basis of equitable mortgage of the company's property, it had become final, and the Division Bench could not have gone behind the decree to hold that as the charge, the basis of the decree, was not registered with the Registrar and was void, the decree itself was void; that under Section 125 of the Act, what was required to be regi_stered H

A was charge created by the company and as the preliminary decree in the suit could not be said to be a charge created by the company, Section 125 had no application to the decree of the court. In any event, submitted the learned counsel, the liquidator himself being a party to the decree, it was binding on him and he could not be permitted to plead to the contrary. Shri E.M.S.Anam, B the learned counsel appearing for the contesting respondent, argued that because the charge created by the company on its properties was void in view of mandatory provision of Section 125, the Division Bench had rightly held that the preliminary decree was also void against the creditors and the liquidator and that it was of no consequence that the liquidator did not appeal

against it and that the principle of res judicata had no application. " -

On these submissions, the question which falls for consideration is : what is the effect of Section 125 of the Act on a preliminary decree in a mortgage suit passed on the basis of an unregistered charge; and what is relief to which the judgment creditor will be entitled to in such a case?

D Since the preliminary decree is assailed as being void under Section 125 of the Act, it would be useful to read here ihe said provision, insofar as it is relevant for our purposes.

It reads :

E "Certain charges to be void against liquidator or creditors unless registered.

125. (1) Subject to th~ provisions of this Part, every charge created on or after the !st 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 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 G 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 thirty days next following the ...- expiry of the said period of thirty days on payment of such additional H fee not exceeding ten times the amount of fee specified in Schedule

INDIAN BANK v. OFFICIAL LIQUID. CHEM. EXPORTS (P) LTD. [QUADRI, J.] 261

X as the Registrar may detennine, ifthe company satisfies the Registrar A that it had sufficient cause for not filing the particulars and instrument or copy within that period.

(2) Nothing in sub-section (I) shall prejudice any contract or obligation for the repayment of the money secured by the charge.

(3) When a charge becomes void under this section, the money secured thereby shall immediately become payable.

(4) This section applies to the following charges :

(a) a charge for the purpose of securing any issue of debentures:

(b) a charge on uncalled share capital of the company;

(c) a charge on any immovable property, wherever situate, or any interest therein:

(d) a charge on any book debts of the company;

(e) a charge, not being a pledge, on any movable property of the company;

(f) a floating charge on the undertaking or any property of the company including stock-in-trade;

(g) a charge on calls made but not paid;

(h) a charge on a ship or any share in a ship;

0) a charge on goodwill, on a patent or a licence under a patent,

on a trade mark, or on a copyright or a licence under the F copyright.

Sub-sections (5) to (8) *** *** ***"

On a plain reading of sub-section (I) it become clear that if a company creates a charge of the nature enumerated in sub-section (4), after !st day of G , April, 1914, on its properties, and fails to have the charge together with instrument, if any, by which the charge is created, registered with the Registrar of the Companies within thirty days, it shall be void against the liquidator and any creditor of the company. This, however, is subject to the provisions of Part-V of the Act. The proviso enables the Registrar to relax the period of limitation of thirty days on payment of specified additional fees, on being H

A satisfied that there has been sufficient cause for not filing the particulars and instrument or a copy thereof within the specified period. Sub-sections (2) and (3) deal with repayment of money secured by the charge. Sub-section

(2) provides. that the provision of sub-section (I) shall not prejudice the contract or obligation for repayment of money secured by the charge and B sub-section (3) says that when a charge becomes void under the section, the .money secured shall become payable immediately. Though as a consequence of non-registration of charge under Part-V of the Act, a creditor may not be able to enforce the charge against the properties of the company as a secured creditor in the event of liquidation of the company as the charge becomes void against the liquidator and the creditor, yet he will be C entitled to recover the debt due by the company on par with other unsecured creditors. It is also evident that Section 125 applies to every charge created by the company on or after the !st day of April, 1914. But where the charge is by operation of law or is created by an order or decree of the court,

Setion 125 has no application.

D In re: Overseas Aviation Engineering (G.B.) ltd, (1963) 33 Company Cases 3 I 5, the Court of appeal held, inter alia, that an order passed by the court giving effect to the charge unregistered under Section 95 of the English Companies Act (which is not only in pari materia with Section 125 of the Companies Act but is also identical in terms) was not void against E the liquidator of the company on its winding up.

In Praga Tools Ltd. v. Official Liquidator of the Bengal Engineering Co. (P) Ltd., (1984) 56 Company Cases 214, a consent decree for repayment of money was passed against the Bengal Engineering Company on the suit filed by Praga Tools Company. The decree provided, inter alia, that in the event of non-payment of the decreed amount, the praga Tools Company would be entitled to execute the 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 court to the extent of Rs. 53,000 would continue as security for the decree. That decree was not registered. Thereafter, G Bengal E[lgineering Company went into liquidation and its entire assets were sold by the official liquidator. The Praga Tools Company applied claiming to be a secured creditor to the extent of Rs.50,000. A learned Single Judge of the Calcutta High Court held that as the charge was created by an order of the court, it would not require registration under Section 125 of the Companies Act and tht the Praga Tools Company should be treated as secured creditor H to the extent of Rs. 50,000 and was entitled to recover the amount from the

INDIAN BANK'' OFFICIAL LIQUID. CHEM. EXPORTS (P) LTD. [QUADRI. J] 263

official liquidator. We approve the principle laid down by the learned Single A

> , ...,.

Judge of the Calcutta High Court. We also make it clear that an order or decree of a Court creating charge on the properties of a company has to be distinguished from a preliminary decree passed in a mortgage suit based on an unregistered charge which is hit by Section 125 of the Act. We shall advert to this aspect presently.

Now, it will be necessary to read here Section 446 of the Act. It deals with the effect of winding up order on the suits and other proceedings pending or in the offing. Section 446 is in the following terms : • "Suits stayed on winding up order, c

446. (l) When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, against the company, except by leave of the Court and subject to such terms as the Court D may impose.

:=--

(2) The Court which is winding up the comp<iny shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of -

(a) any suit or proceeding by or against the company; E

(b) any claim made by or against the company (including claims by or against any of its branches in India);

(c) any application made under Section 391 by or in respect of the company; F -"

(d) any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in course of the winding up of the company;

Whether such suit or proceeding has been instituted, or is instituted, or such claim or question has arisen or arises or such application has G been made or is made before or after the order for the winding up of the company, or before or after the commencement of the Companies

-...( (Amendment) Act, 1960.

(3) Any suit or proceeding by or against the company which is pending in any Court other than that in which the winding up of the H

A company is proceeding may, notwithstanding anything contained in any other law for the 'time being in force, be transferred to and disposed of by that Court.

(4) Nothing in sub-section (I) or sub-section (3) shall apply to any proceeding pending in appeal before the Supreme Court or a High B Court."

A perusal of the provisions, extracted above, makes it clear that when a winding up order has been made or the official liquidator has been appointed as provisional liquidator in respect of a company, the Court passing the winding up order is empowered to adopt any of the following courses :

(I) To grant leave to any person to institute or continue suit or legal proceeding, pending at the date OT winding up against the company subject to such terms as that court may impose;

(2) to entertain or dispose of

(a) any suit or proceeding by or against the company;

(b) any claim made by or against the company; including claims by or against any of its branches in India;

(c) any application made under Section 391 by or in respect of the company; and

(d) any question of priorities or any other question whatsoever whether of law or fact which may relate to or arise in the course of winding up of the company; and

(3) to transfer to itself any suit or proceedings by or against the company which is pending in any court (other than that in which the winding up of the company is proceeding) and disposed of the same.

It may be noted that these provisions have no application to any G proceeding pending in appeal before a High Court or the Supreme Court. From this what follows is when a suit is instituted in the court of competent jurisdiction with the leave of the court under sub-section (!) and a decree is passed by that court whether on the basis of mortgage or otherwise, it would be binding on the official liquidator and no plea inconsistent with the decree passed against the. official liquidator can be raised while deciding the questions H of priorities under clause (d) ofsub-section{2). We wish to make it clear that

INDIAN BANK v.OFICIAL LIQ. , CHEMMEENS EXPORTS (P)L TD. [QUADRI, J.], 265

under Section 446, no power is conferred on the company court to declare A a decree of the competent court void - a prayer which is made by the official liquidator in the application out of which this appeal arises - so to that extent the application filed by the liquidator in the company court is not maintainable.

The question, however, remains what is the effect of the preliminary decree passed by the court against the official liquidator on May 28, 1982. B It will be useful to read here the material portion of the preliminary decree :

"It is ordered and decreed that a preliminary decree is passed and that the plaintiff is entitled to re.alise from the defendants a sum of Rs. 29,50,605.59 with interest at 14% from the date of suit till the realization and that plaintiff is entitled to the cost of the suit also and that the C defendants 1 to 3 will deposit in Court on or before 28.8.1982 the above said amount and cost of the suit and on payment of the amount the equitable mortgage will stand discharged and the documents of title deposited with the plaintiff by the defendants and which are produced by the plaintiff in Court will be delivered to the defendants D and that in default of payment as aforesaid, the plaintiff may apply to the court for passing a final decree for the sale of the plaint schedule property and that the money realised by such sale shall be applied in payment of the amount due under the decree, and the balance if any, shall be paid to the !st defendant and that if the money realised by the sale of the plaint schedule property is insufficient for payment of E the decree debt in full, the plaintiff shall be at liberty to apply for a personal decree against defendants 2 to 5 for the balance and that the defendants will suffer cost hitherto incurred."

From the above quoted extract of the decree the following directions of F the Court may be noticed :

(I) that the appellant (plaintiff therein) became entitled to realize from the respondent (defendants therein which included company represented by the official liquidator) a sum of Rs. 2,50,605.59 with interest and costs of the suit;

(2) the respondents were given liberty to deposit the said amounts on or before August 28, 1982;

(3) if the amounts are deposited, the equitable mortgage will stand discharged and the documents of title deposited with the appdlant-Bank by

the respondents will be delivered to them; H

(4) in default of payment of the amounts, the appellant was authorised to apply to the court for passing the final decree for the sale of the company's property and realisation of the decreed amount; and

(5) in the event of the sale proceedings being less than the amount decreed, a personal decree was also passed against Defendants 2 to 5 therein B for recovery of the unrealised amount.

The afon:mentioned preliminary decree was passed by the Court even though the official liquidator raised the plea in the written statement that the charge created on the company's property was void under Section 125 of the Act. But it may be that plea was not argued at the hearing. However, what C is clear from the material on recmd is that no appeal was filed against the said preliminary decree by the official liquidator and the preliminary decree has attained finality.

From the above discussion, it follows that the right of the respondents D including the company represented by the official liquidator to deposit the decree amount was available till August 28, 1982. In other words, the right to recover the amounts pursuant to the contract creating charge, even under the terms of the decree was available till the said date and thereafter 'the matter had passed from the domain of the contract to t of judgment'.

E In Rani Sundar Koer v. Rai sham Krishan, (1934) Indian Appeals P.9

(P.C.), Lord Davey observed as follows :

"Their Lordships think that the scheme and intention of the Transfer of Property Act (now the corresponding provisions of the Civil Procedure Code) was that a general account should be taken once for all, and an aggregate amount be stated in the decree for principal, interest and costs due on a fixed day, and that after the expiration of that day, if the property should not be redeemed, the matter should pass from the domain of contract to that of judgment and the rights of the mortgagee should thenceforth depend, not on the contents of his bond, but on the directions in the decree."

That principle was followed by the Privy Council in Kusum Kumari v. Debi Prasad Dhandhania & Ors., (1936) P.C. 63 where the question of granting interest under Regulation 6 of 1872 fell for consideration. Regulation 6 provided, "the total interest decreed on any loan or debt shall never exceed one-fourth H of the principal sum, if the period be not more than one year, and shall not

JNDIAN BANK"· OFFICIAL LIQUID CHEM. EXPORTS (P) LTD. [QUADRI, J.] 267

in any other case exceed the principal of the original debt or loan". The trial A . ,. ~· court decreed the suit based on mortgage with interest at six per cent per annum from the date of the decree till its realisation. The amount of interest so decreed exceeded the limitation prescribed under the said Regulation. The

Privy Council has observed that once a decree had been passed, the loan or debt as the subject of enforcement no longer exists; it was in effect merged B in the decree and the allowance of interest on the decree was not the allowance of additional interest on the loan or debt. The same principle was reiterated by this Court in Gyarsi Bai v. Dhansukh Lal, AIR (1965) SC 1055. This Court - observed, "it cannot also be disputed that a mortgage merges in the preliminary decree and the rights of the parties are thereafter governed by the said decree". c

In Suryakant Natvarial Surati & Ors., v. Kamani Bros Pvt. Ltd., [1985] 58 Company Cases 121, the company created a charge under a mortgage in favour of the trustees of the Employees' Gratuity Fund. The creditors by a preliminary decree of December 3, 1977 were entitled to receive the amount D secured on the property of the company; the court fixed December 8, 1988 as the date for redemption and ordered that in default of payment of the sum -" due by that date, the property was to be sold by public auction. On an application made on February 16, 1978, the company was ordered to be wound up by and order dated August 3, 1979. As default in payment of the decreed amount was committed, the mortgagees applied for leave of the court E under Section 446 to execute the decree against the official liquidator by application dated July 10, 1981. Three contributories sought injunction against taking any further action on the ground that the charge created by the company was not registered under Section 125 of the Companies Act, therefore, the mortgagees should be treated only as unsecured creditor. Their application was dismissed by a learned Single Judge. On appeal, speaking for the Division F - lr 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 construction of the decree, the court found that the unregistered charge was kept alive, the G provisions of Section 125 would apply and if, on the other hand, the decree extinguished the unregistered charge, the section would not apply. We are in

. "" respectful agreement with that principle. We hold that a judgment creditor will be entitled to relief from the Company Court accordingly.

Reverting to the facts of this case, on the construction of the decree H

A 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. In this case, admittedly the decree amount was not paid before August 28, 1982, as such the matter had passed from the domain of contract to the realm of the judgment. The official liquidator filed application on March 21, B 1983 seeking to declare th&. decree as void. By that dates what was operative in the decree was not a mere unregistered charge but an order for sale of mortgaged property for realisation of decree amount. The preliminary decree cannot therefore by said to be void and inoperative.

For the above reasons w.: hold that the Division Bench ought not to C have held that the preliminary decree passed by the competent court on May 25, 1980 was void and un-enforceable and accordingly we set aside the order under appeal dated January 29, 1986 by allowing the appeal with costs.

R.K.S Appeal allowed.