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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1746  OF 2006

Oil and Natural Gas Corporation Ltd.           … Appellant

VERSUS

Official Liquidator of M/s. Ambica Mills Company Ltd. & Ors.                              ...Respondents

WITH

CIVIL APPEAL NO. 1747 OF 2006

WITH

CIVIL APPEAL NO. 1748 OF 2006

WITH

CIVIL APPEAL NO. 1749 OF 2006

WITH

CIVIL APPEAL NO. 1750 OF 2006

WITH

CIVIL APPEAL NO. 1751 OF 2006 1

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J U D G M E N T

SURINDER SINGH NIJJAR, J.

1. The appellant, Oil and Natural Gas Corporation Ltd. is a  

statutory corporation constituted by and under the Oil  

and Natural  Gas Commission Act,  (Central  Act,  43 of  

1959).  In  1967,  the  appellant  commenced  supply  of  

natural  gas to the industries  in  and around Vadodra.  

The Federation of Gujarat Mills and Industries agreed to  

purchase  the  gas  supplied  by  ONGC  at  Rs.100/-  per  

unit.

2. The industries subscribing to the gas supplied by the  

appellant  formed  an  association  in  1978  called  “The  

Association  of  Natural  Gas  Consuming  Industries  of  

Gujarat”  (hereinafter  referred  to  as  ‘Association’).  

Respondent-  Ambica Mills  Co.  Ltd.  is  one among the  

members of the said Association. The supply of gas to  2

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the  member  industries  was  based  on  individual  

contracts entered into with each of the concerns.  The  

appellant  and  the  members  of  the  said  Association  

entered into an agreement for  supply of natural  gas.  

The agreement provided the price payable for supply of  

gas and the rate of interest in the event of failure to  

pay the stipulated prices.

3. On  30th March,  1979,  the  contractual  period  of  the  

aforesaid  contract  expired.  After  the  expiry  of  the  

contract,  a  new contract  stipulated  prices  for  supply  

that  were  prevalent  at  the  time  of  the  respective  

contracts. The then levied price for supply of gas was  

Rs.504/- per unit.

4. The Association formed a Society registered under the  

Cooperative Societies Act. The Association filed Special  

Civil  Application No.  833 of  1979,  before the Gujarat  

High Court praying to issue appropriate writ  directing  

the  directing the Respondent therein (Appellant herein)  3

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to supply the break up and data on the basis of which  

price structure was arrived at by ONGC, for supply of  

the gas etc.

5. The Gujarat High Court by an interim order dated 30th  

March,  1979  in  the  said  Application,  directed  the  

Appellant herein to continue supply of gas at the old  

rate,  i.e.,  Rs.504/-  per  1000  cubic  meter.  On  29th  

December, 1982, the High Court modified the aforesaid  

interim order and directed the Appellant to supply gas  

to  the  member  industries  of  the  Association  at  

Rs.1000/- per 1000 cubic meter.

6. On 30th July, 1983 the said Civil Application was partly  

allowed by the Division Bench setting aside the price  

demanded by the Appellant herein, leaving it open to  

deal with the question of price fixation in any one of the  

three modes suggested in Para 36 of the judgment in  

the case of Association of Natural Gas Consuming  

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Industries  of  Gujarat  &  Ors. Vs. ONGC  &  Anr  .    

reported in 24 (2) GLR 1437.  

7. The Appellant preferred an appeal being C.A. No. 8530-

8540 of 1983 against the aforesaid order. On 15th April,  

1987, this Court passed an interim order directing that  

the  members  of  the  Association  including  the  

Respondent  shall  be  supplied  gas  at  the  rate  of  

Rs.1000/-  per  1000  cubic  metres  subject  to  an  

undertaking  that  the  respondent  shall  not  charge,  

encumber  or  alienate  except  with  the  leave  of  this  

Court any of the immovable assets.  

8. Pursuant  to  the  order  dated  15th April,  1987,  an  

undertaking was given by Ambica Mills Co. Ltd. thereby  

making available their immovable assets for discharge  

of its respective liability on 27th May, 1987.

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9. Appellant  filed  Company  Petition  No.  66  of  1983  

seeking winding up of Respondent No. 1- Ambica Mills  

Co. Ltd.  

10. C.A. No. 8530-8540 of 1983 was finally decided by  

this Court and the judgment was delivered in the same  

matter on 4th May, 1990 (reported in 1990 Suppl. SCC  

397). This Court, as regards the price fixation, had set  

aside the direction given by the High Court in Para 36 of  

the judgment                           dated 30th July, 1983. It  

was observed that the ONGC would be at liberty to take  

immediate steps to recover the charges due from the  

respondents therein, in the light of this judgment.  

11. Soon after the aforesaid judgment, ONGC filed an  

application for  certain directions and modifications of  

the aforesaid judgment. When the matter was taken up  

for  hearing  on  8th December,  1992,  learned  senior  

counsel  appearing  on  behalf  of  the  Association  

submitted  that  the  members  of  the  Association  will  

make some more substantial payments to ONGC by the  6

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end of the month, and particulars of payment so made  

would  be  submitted  in  the  Court  on  or  before  8th  

January, 1993. On 6th April, 1993, when the matter was  

taken  up  again  on  an  application  filed  by  the  ONGC  

complaining  of  non-payment  by  the  members  of  the  

Association, this Court observed that the liability of the  

members of the Association to make the payment of  

amounts  due  from  them  to  the  ONGC  was  beyond  

controversy and cannot be disputed.  In the aforesaid  

order, it was further observed that the principal amount  

due from Ambica Mills Co. Ltd. as on 31st March, 1993 in  

respect of period 1st April, 1979 to 21st January, 1987,  

as shown in the statement furnished by ONGC, is Rs.  

1.58 crores and interest thereon amounted to Rs.4.96  

crores.  Ambica  Mills  Co.  Ltd.  admitted  the  principal  

amount.  The  interest  calculated  would  be  accepted  

subject to verification. At the relevant time, reference  

relating  to  Ambica  Mills  Co.  Ltd.  under  the  Sick  

Industrial  Companies  (Special  Provisions)  Act,  1985  

(SICA)  was  already  pending  before  the  Board  for  7

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Industrial  and  Financial  Reconstruction  (BIFR).  Upon  

consideration  of  the  matter,  this  Court  on  29th April,  

1993  granted  the  prayer  of  ONGC  that  it  would  be  

entitled to take steps for disconnecting the supply of  

gas in case of non payment of the amounts due. This  

Court directed that the principal amount must be paid  

within a period of 5 years latest by 31st March, 1998. So  

far  as  Ambica  Mills  is  concerned,  the  statement  was  

made by the learned senior counsel appearing for them  

that the respondent is prepared to sell the vacant land  

at Vatwa in Ahmedabad in order to discharge the due of  

ONGC in the present case.  Ambica Mills  was granted  

liberty  by  this  Court  to  make  prayer  to  that  effect  

before the BIFR and to obtain suitable directions. It was  

also observed that the entire dues of the ONGC shall be  

first paid out of the total sale price and the balance, if  

any,  remaining  thereafter  shall  be  available  for  

utilisation in any other manner directed by the BIFR. It  

appears that in the meantime BIFR recommended that  

Ambica  Mills  be  put  into  liquidation.  This  8

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recommendation  of  the  BIFR  came  up  before  the  

Gujarat High Court along with other winding up on 17th  

October,  1997,  when  the  High  Court  appointed  a  

provisional liquidator.

12. Soon  thereafter,  it  appears  that  the  Company  

Application No.445 of 2000 in official liquidator report  

No. 44 of 1999 in Company Petition No.121 of 1995 was  

filed in  the Gujarat  High Court  seeking directions  for  

payment of the amounts due to ONGC by the Ambica  

Mills  (company in  liquidation).  On 17th January,  1997,  

the High Court ordered winding up of M/s. Ambica Mills  

Co. Ltd. and the official liquidator was appointed as the  

liquidator  of  the  company.  Thereafter  the  official  

liquidator  filed  an  application  before  this  Court  in  

respect of the disposal of the properties of the company  

in  liquidation  and  disbursement  of  the  amounts  

realised. This Court by order dated 17th October, 1997  

directed as follows :-  

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“That out of the assets of the company under  liquidation,  the  dues  of  ONGC  Limited  are  required to be paid off first and the question of  making any payment to any other creditor can  realise only out of the surplus if any remaining  after the fill  dues of the ONGC Limited have  been paid off. The High Court is therefore, to  proceed with the matter in this manner. I.As stand disposed off.”

13. It is the case of the ONGC that it is in receipt of a  

letter  dated  28th September,  1999  from  the  official  

liquidator  wherein  it  has  been  stated  that  Plot  

No.307IPS-16 of Ambica Mills  (in  liquidation) property  

was  disposed  of  for  Rs.90.11  lakhs  and  the  initial  

instalment  of  Rs.22.52  lakhs  had  already  been  

deposited by the purchaser of the said plot. A prayer  

was made for release of the aforesaid amount to ONGC.  

14. It  appears  that  respondent  No.10-Textile  Labour  

Association, Bhadra sought review of the order dated  

17th October, 1997 by filing Review Petition Nos.1193-

1203 of 2001 in I.A.No.168-178/1997 in C.A.No.8530-40  

of 1983. The aforesaid review petitions were decided by  

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this Court on 12th April, 2004 and it was directed that  

claims  of  ONGC  will  have  to  be  worked  out  in  

accordance  with  Sections  529  and  529A  of  the  

Companies  Act  as  well.  The  submissions  made  on  

behalf of ONGC that the mandamus issued by this Court  

earlier that ONGC must be paid up first from any sale of  

the assets of the company in liquidation, would prevail  

even if  the statutory provisions contained in Sections  

529  and  529A of  the  Companies  Act,  were  rejected.  

The  aforesaid  judgment  of  this  Court  is  reported  at  

2004 (9) SCC 741.  

15. The record also shows that ONGC moved Company  

Application No.445 of 2000 in Company Petition No.121  

of 1995 by way of judges summons, in which directions  

were sought that outstanding amounts of the ONGC be  

paid  by  the  company  in  liquidation.  Further,  an  

injunction  be  issued  restraining  the  company  in  

liquidation  its  agents,  officers  and  servants  from  

making any payment/disbursement in any manner,  of  11

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any of  the sale proceeds that  are available from the  

sale of assets of the company in liquidation. Further an  

injunction  was  sought  restraining  Ambica  Mills  from  

creating any charge alienation and discharging of the  

immoveable assets of the company in liquidation. This  

application was heard at length by the learned Single  

Judge and dismissed with the following observations :-

“2.16A ONGC therefore  cannot  claim any  preferential  right  on  the  basis  of  the order of 17.10.1997 in priority  to  the  secured  creditors  and  the  workmen taking into consideration  the  provisions  of  Sections 529 and 529A of  the  Act.  Such  preferential  claim,  if  falling  under Section 530 of the Act would  follow  the  claims  of  Secured  Creditors and the Workmen under  Sections 529 & 529A of  the  Act.  In  case  the  claim  of  ONGC  is  not  proved  to  be  preferential  under  Section 530 of  the Act  they would  therefore  fall  for  consideration  along with all other claims of other  creditors  as  ONGC,  on  its  own  saying, is a decree holder.

2.16B In view of what is stated hereinbefore  this application cannot be granted  at this stage, i.e. before claims of  Secured  Creditors  and  workmen  

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17. We have perused the entire record and heard the  

learned senior counsel for the parties at length.  

18. Mr.  Paras  Kuhad,  appearing  for  the  appellant  

submitted that the High Court had committed an error  

in  concluding  that  the  appellant  cannot  claim  any  

preferential right on the basis of the order passed on  

17th October, 1997. According to Mr. Kuhad, the second  

error committed by the High Court is that it has wrongly  

concluded that no security was created in favour of the  

appellant on the basis of the interim order passed by  

this  Court  on  15th April,  1987  and  the  undertaking  

furnished by the company in  liquidation Ambica Mills  

Co. Ltd. pursuant to the order of this Court. The third  

error  committed  by the  High  Court,  according to  Mr.  

Kuhad, is in holding that no security has been created  

in  favour  of  the  appellant  as  no  charges  have  been  

registered  under  Section  125  of  the  Companies  Act,  

1956.  Mr.  Kuhad has  submitted  that  the  undertaking  

dated  27th May,  1987  is  a  superimposition  on  the  14

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priorities  as  given  in  Sections  529  and  529A  of  the  

Companies Act.  In support of  his  submission,  learned  

senior  counsel  has  relied  on  a  number  of  judgments  

which we shall notice presently.  

19. Learned  counsel  for  the  respondents  has  

submitted  that  the  genesis  of  the  civil  appeal  is  the  

interim order                  dated 15th April, 1987. It is  

submitted that the aforesaid order is in the nature of an  

injunctive order whereby  the  company  in  liquidation  

was directed, not to charge encumber or alienate any  

of  its  assets  except  with  the  leave  of  this  Court,  

including  the  assets  listed  in  the  respective  

undertakings.  The  second  part  of  the  injunction  was  

that the respondents will make their immovable assets  

available for discharging the respective liabilities to the  

ONGC. The undertaking filed by Ambica Mills Co. Ltd.  

was that “none of immovable assets of the company  

will  be  further  charged  and  encumbered  hereinafter  

with effect from 15th April, 1987, except with the leave  15

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of this Court.” It is the submission of the respondents  

that in the aforesaid undertaking no specific details and  

particulars  of  any  immovable  assets  were  given  or  

provided. Therefore, the aforesaid undertaking does not  

make the appellant a secured creditor of Ambica Mills  

Co. Ltd. It  is pointed out by the learned counsel that  

even in the judgment dated 4th May, 1990 of this Court  

in  Oil  and  Natural  Gas  Commission  &  Anr. Vs.  

Association of Natural Gas Consuming Industries  

of Gujarat & Ors.  reported at 1990 (Supp) SCC 397  

did not hold that the order dated 15th April, 1987 or the  

undertaking dated 27th May, 1987 have conferred upon  

the appellant status of a secured creditor.  This Court  

only directed that the ONGC will be at liberty to take  

immediate  steps  to  recover  the  dues  from  the  

respondent in  the light  of  the judgment.  Similarly  no  

charge  was  created  by  this  Court  while  passing  the  

order dated 6th April, 1993. Explaining the order dated  

17th October,  1987,  it  is  submitted  by  the  learned  

counsel for the respondent that the order only directed  16

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that in  case of  sale of the assets of  the company in  

liquidation, the dues of the ONGC shall be paid off first.  

But this order was subsequently reviewed on 12th April,  

2004 directing that the order dated 17th October, 1997  

would  have  to  be  read  subject  to  the  provisions  of  

Sections  529  and  529A  of  the  Companies  Act.  

Therefore, the secured creditors had two options, either  

to  realise  its  securities  outside  the  winding  up  

proceedings or to relinquish its security for the general  

benefit of all and prove its claim by participating in the  

liquidation proceedings. The appellant never gave any  

option  knowing  perfectly  well  it  was  not  a  secured  

creditor. The judgments relied upon by the appellants  

have been sought to be distinguished by the learned  

counsel for the respondents.  

20. We have considered the submissions made by the  

learned  counsel  for  the  parties.  In  our  opinion,  the  

appellant cannot claim that the order dated 15th April,  

1987 created an enforceable charge on the assets of  17

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the company in liquidation. We are of the opinion that  

the learned counsel for the respondents are quite right  

in their submissions that an injunction was issued only  

to  ensure  that  the  company  in  liquidation  does  not  

further encumber or create charges in favour of third  

parties over the assets of the company in liquidation. In  

our opinion, neither the interim order dated 15th April,  

1987 nor the undertaking given pursuant thereto can  

be said to be a charge on the assets of the company in  

liquidation. This Court in the case of  Indian Bank Vs.  

Official Liquidator, Chemmeens Exports (P) Ltd. &  

Ors.  1   whilst  considering  the  provisions  contained  in  

Section  125  of  the  Companies  Act  has  observed  as  

follows :-

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

“125.  Certain  charges  to  be  void  against liquidator or creditors unless   registered.—(1)  Subject  to  the  

1 (1998) 5 SCC 401 18

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provisions of  this Part,  every charge  created on or after the Ist 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  of  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 fee  not exceeding ten times the amount of fee  specified in Schedule X as the Registrar may  determine,  if  the  company  satisfies  the  Registrar that it had sufficient cause for not  filing the particulars and instrument or copy  within that period.

(2) Nothing in sub-section (1) 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.

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(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  moveable  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;

(i) 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 a copyright.

(5) to (8)* * *”

7. On  a  plain  reading  of  sub-section  (1)  it  becomes clear  that  if  a company creates a  charge  of  the  nature  enumerated  in  sub- section (4), after 1-4-1914 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  

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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  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  (1)  shall  not  prejudice  the  contract  or  obligation  for  repayment  of  money secured  by the charge and sub-section (3) says that  when  a  charge  becomes  void  under  that  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  entitled  to  recover  the  debt  due  by  the  company  on  a  par  with  other  unsecured  creditors. It is also evident that Section 125  applies  to  every  charge  created  by  the  company on or after 1-4-1914. But where the  charge is by operation of law or is created by  an order or decree of the court, Section 125  has no application.”

21. The  observations  made  in  paragraph  7,  in  our  

opinion,  is  a  complete  answer  to  the  submission  

made by  Mr. Paras Kuhad. Clearly the appellant is  21

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only entitled to recover the dues at par with other  

unsecured creditors. In our opinion, the order dated  

15th April, 1987, was only in the nature of restraint on  

the Company in liquidation not to further encumber  

any  of  its  assets.   It  did  not  have  the  effect  of  

creating  a  charge.   Mr.  Kuhad  in  support  of  his  

submission  that  the  interim order  dated 15th April,  

1987 has to be treated as a mandate of the Court,  

has  relied  on  J.K.  (Bombay)  (P)  Ltd. Vs.  New  

Kaiser-I-Hind Spinning  and Weaving  Co.  Ltd.  2    

In the aforesaid judgment, undoubtedly it is held that  

“no particular form of words is necessary to create a  

charge and all that is necessary is that there must be  

a  clear  intention  to  make  a  property  security  for  

payment  of  money  in  praesenti.”  The  aforesaid  

observations of this Court ought not to be read out of  

context. The judgments of this Court are not to be  

read  as  statutory  instruments.  The  ratio  of  the  

judgment has to be culled out, keeping in view the  

2 (1969) 2 SCR 866 22

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facts and circumstances involved in a particular case.  

The facts in that case are noticed in paragraph 26  

from wherein  the  aforesaid  three  lines  have  been  

extracted  by    Mr.  Kuhad  in  support  of  his  

submission. We quote the relevant part of paragraph  

26 of the aforesaid judgment which is as under:

“26…….  It  was  argued  that  where  an  agreement specifies a property out of which a  debt is to be payable and is coupled with an  intention  to  subject  such  property  to  a  charge,  the  property  becomes  subject  to  a  charge  in  praesenti  even  though  a  regular  mortgage is to be executed at some future  date. Such an intention, the learned Attorney- General  argued,  was  demonstrated  by  the  agreement that (1) the debts were to be paid  out of profits and (2) the engagement by the  company  not  to  deal  with  its  assets.  The  distinction between a charge and a mortgage  is clear. While in the case of a charge there is  no  transfer  of  property  or  any  interest  therein,  but  only  the  creation  of  a  right  of  payment  out  of  the  specified  property,  a  mortgage effectuates transfer of property or  an  interest  therein.  No  particular  form  of  words is necessary to create a charge and all  that is necessary is that there must be a clear  intention  to  make  a  property  security  for  payment of money in praesenti. In Jewan Lal  Daga v. Nilmani Chaudhuri,  a case relied on  by him, the question was one relating to an  agreement  to  mortgage.  Following  on  the  agreement,  a  draft  mortgage was prepared  

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the parties to create a charge in praesenti.  The  argument  of  the  learned  Attorney- General was that if an agreement indicated a  property out of which a debt is to be paid and  an  intention  to  subject  it  to  a  charge  in  praesenti,  the  court  must  find  the  charge.  Certain other decisions were also brought to  our notice but it is not necessary to burden  this  judgment  with  them  because  in  each  case the question which the court would have  to decide would be whether the agreement in  question  creates  a  charge  in  praesenti.: ………”

22. The aforesaid observations would indicate that the  

court was examining the submissions made by the  

learned Attorney General. The effort of the Attorney  

General  was  to  persuade  this  Court,  on  the  cases  

mentioned in the aforesaid paragraph that there was  

an  agreement  which  established  an  intention  to  

create a charge.  A reading of the order dated 15th  

April,  1987  clearly  shows  that  it  firstly  gives  the  

direction to the ONGC to continue the supply of gas  

at the rate of Rs.1000/- for 1000 cubic meter. Such a  

direction  would  be  implemented  only  upon  an  

undertaking given by the respondents that they will  

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Page 26

not charge encumber or  alienate any asset  except  

with the leave of this Court. A further direction was  

that  the  immoveable  assets  included  in  the  

respective  undertaking  will  be  made  available  for  

discharging  the  respective  liabilities  of  the  

respondent company. The undertaking given by the  

company in liquidation in this case was as under :

“3. I  state that Respondent No.10 Company  undertakes that none of immovable assets of  the  company  will  be  further  charged  and  encumbered  hereafter  with  effect  from  15.04.1987, i.e. from the date of order of this  Hon’ble Court except with the leave of this  Hon’ble Court.   

4.  I  state that  Respondent  NO.10 Company  further undertakes not to alienate any of its  immovable  assets  hereinafter  with  effect  from 15.04.1987 except with the leave of this  Hon’ble  Court.   The  Respondent  No.10  Company  further  undertakes  to  make  available  all  its  immovable  assets  in  the  event of discharging the liabilities which may  arise on account  of  the difference between  

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Page 27

the price at which all the Gas being supplied  to the company during the pendency of the  proceedings in this connection and the price  which  may  be  determined  by  this  Hon’ble  court while disposing of the present Appeals  finally.  

23. A perusal of the aforesaid undertaking shows that  

Ambica  Mills  has  not  identified  any  particular  

immovable assets which would be made available in  

discharging the liabilities in favour of the appellant.  

Therefore,  we  have  no  hesitation  in  rejecting  the  

submission of Mr.Kuhad that the interim order read  

with  the  undertaking  expressed  an  intention to  

create an enforceable charge of any particular asset  

of the company in liquidation.  

24. We are of  the opinion that  the judgment  in  the  

case of Praga Tools Ltd. Vs. Official Liquidator of  

Bengal Engineering Company (P) Ltd. (1984) 56  

Comp. Cas.214 (Cal) would also not be applicable to  

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did not direct that in view of the undertaking dated  

27th May,  1987  the  respondents  have  created  

enforceable charge in favour of ONGC. Furthermore,  

it is a matter of record that even the ONGC did not  

consider itself to be a secured creditor. At the time  

when  the  Ambica  Mills  Co.  Ltd.  came  under  the  

jurisdiction of the Official Liquidator, none of the two  

options adverted to earlier was exercised by ONGC.  

The plea  of  being  a  secured creditor  is  clearly  an  

afterthought.   Therefore,  in  our  opinion,  the  

judgments rendered by the learned Single Judge and  

the Division Bench of the Gujarat High Court do not  

call  for  any  interference.  The  civil  appeals  are  

accordingly dismissed.                                      

……………………………….J. [Surinder Singh Nijjar]

………………………………..J.         [A.K.Sikri]

New Delhi; 30

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April 17, 2014.  

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