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The bench here of the Company Law Board (CLB) has dismissed a petition by Kotak Mahindra Bank against Nagarjuna Travels and Hotels, in relation to a mortgage the latter had created towards loans of Rs 100 crore to Deccan Chronicle Holdings Ltd (DCHL).
The petition was under Section 614 of the Companies Act for the CLB to direct Nagarjuna and directors to register the mortgage in favour of the bank, under Section 125. The bank had sanctioned a short-term loan of Rs 50 crore to DCHL in May 2010, and Rs 50 crore for working capital demand-loan facility. DCHL is not a party in this suit.
The Nagarjuna board had passed a resolution agreeing to guarantee the payment and also agreeing to mortgage its immovable property comprising land and building in Hyderabad.
It has also executed an affidavit-cum-indemnity and deposited title deeds relating to the mortgaged property. The memorandum was executed in July 2012 and the company has also executed Form 8 for registration of charge created by it over the mortgaged property, signed by a director of the company.
The bank said it had tried to upload the Form 8, with the documents, on the site of the company affairs ministry. It could not be uploaded at the pre-scrutiny stage. It was found the director whose digital signature was appended to Form 8 could not be uploaded for registration of charge since he was a director of another company, a defaulting firm.
Form 8 has to be filed to the registrar of companies whenever the company creates or modifies a charge on its assets, an expert said. If the charge is not created, the lender would find it difficult to claim the mortgaged asset, he added.
An e-mail to the bank did not get a response.
The bank filed a petition to the CLB and the registrar of companies, Hyderabad, under Section 614, which empowers the CLB to direct the company and any officer related to make good the default.
Kanthi Narahari, judicial member with CLB, said the company had authorised a director to execute the documents and he was authorised to sign the Form 8, which he had done.
"Thus the company has fulfilled its obligations and has not made any default that requires the bench’s indulgence. The director authorised to execute the documents is stated to be a director of another company, a defaulting one. It is for the bank to ventilate its grievances. Seeking directions from the bench by invoking jurisdiction as vested under section 614 is fully misplaced."
On the other hand, CLB cannot issue directions to the registrar of companies for the online services not accepting the digital signature of the director, "as Section 614 envisages issue of directions by Company Law Board only against the company and its officers in default and not against anyone else," he added.
"The petition has miserably failed both on facts and on law and the bank is not entitled for any relief. The petition is dismissed." he said.
