Judgement Consolidated Appeals (Nos.27, 28 and 29 of 1946) from a decree of a Division Bench of the High Court (August 22, 1941) and from an earlier decree of a Division Bench of that Court (April 30, 1940), both decrees being made in the winding-up of the Lower Ganges and Jumna Electricity Distributing Co., Ld.(hereinafter called the company). The main question in these appeals was whether the debenture holders of the company had a charge over the assets and property of the company which entitled them to rank as secured creditors having priority over the other creditors of the company. A debenture trust deed was executed by the company, which issued debentures thereunder without obtaining previously the written consent of the United Provinces Government, and the question was whether by doing so it contravened the provisions of sub-s. 2 of s. 9 of the Indian Electricity Act, 1910, so that the debenture^ were invalidated by the provision of sub-s. 3 of s. 9 of that Act; in other words, whether the transactions amounted to a “transfer” of the companys undertaking within the meaning of sub-ss. 2 and 3 of s. 9. The facts appear from the judgment of the Judicial Committee. 1949. Oct. 31, Nov. 1., Rewcastle K.C. and Subba Bow for Lala Manmohan Das, the appellant in the first appeal and the first respondent in the second and third appeals. Millard Tucker K.C. and Handoo for the United Provinces, the first respondent in the first appeal, and the appellant in the second appeal, and the first appellant in the third appeal. Dec. 19. The judgment of their Lordships was delivered by SIR JOHN BEAUMONT. The question which calls for decision is whether certain mortgage debentures issued by the company for the purpose of securing a sum of Rs. 3 lacs with interest, and secured by a debenture trust deed, constitute a valid charge on the undertaking and assets of the company, or whether the charge on the undertaking intended to be created in favour of the debenture holders is void by reason of the provisions of s. 9, sub-ss. 2 and 3 of the Indian Electricity Act (IX of 1910) (hereinafter called the Act). [His Lordship stated the terms of the sub-sections and continued] The relevant facts giving rise to these appeals are not in dispute and are as follows. 2 and 3 of the Indian Electricity Act (IX of 1910) (hereinafter called the Act). [His Lordship stated the terms of the sub-sections and continued] The relevant facts giving rise to these appeals are not in dispute and are as follows. In July, 1929, the United Provinces Government, acting under s.3, sub-s.1, of the Act, granted a licence for the distribution and supply of electrical energy within certain specified limits to a firm known as P. L. Jaitly & Co. The licence provided, inter alia, for the supply of electrical energy in bulk by the Public Works Department (Irrigation Branch) of the said Government to the licensees, and for the assignment of the licence and transfer of the undertaking by the licensees to a company formed, or to be formed, under the Indian Companies Act. On February 11, 1930, Messrs. P. L. Jaitly & Co. transferred their licence and interests under the agreement to the company, which was incorporated for the purpose of taking over the licence. It is conceded that the licence was validly assigned to the company, and the supply of electricity by the Government to the company began on November 1, 1930, and continued thereafter in accordance with the terms of the said supply agreement. On May 7, 1932, the company made an issue of mortgage debentures for securing the sum of Rs. 3 lacs, repayable with interest at the rate of 7 ¼ per cent, per annum free of income tax. Before making the said issue the company did not ask for, or obtain, the written consent of the Provincial Government in accordance with the provisions of s. 9 of the Act. The appellant Lala Manmohan Das is the holder of the bulk of the said debentures. The debentures were secured by is debenture trust deed, Ex. D. 4, dated May 7, 1932, and made between the company of the one part and the Central Bank of India, Ld., and Lala Manmohan Das as trustees of the other part. The trust deed was in common form and nothing turns on the construction of any particular provision thereof. By such deed the company mortgaged to the trustees specific assets, including the benefits arising from the said licence. Clause 6 created a floating charge on all the assets of the company. The trust deed was in common form and nothing turns on the construction of any particular provision thereof. By such deed the company mortgaged to the trustees specific assets, including the benefits arising from the said licence. Clause 6 created a floating charge on all the assets of the company. The security was to be enforceable on the happening of various events, including the making of an order for the winding-up of the company. When the security became enforceable the trustees were to have power to enter into possession of the mortgaged properties and to sell the same, and the proceeds of sale were to be applied for discharging the amount due on the debentures. On March 19, 1937, an order was made in the High Court at Allahabad for the winding-up of the company. The question as to the validity of the charge in favour of the debenture holders or their trustees early engaged the attention of the court,, and on November 24, 1939, Allsop J., who was the judge in winding-up, directed the official liquidators of the company to insert an advertisement in three newspapers to the effect that the question of the validity of the debenture would be considered by the court on December 18, 1939, on which date persons interested should appear and make their sub missions to the court. Accordingly, on December 18, 1939, the official liquidators applied to the judge for instructions whether they should treat the holders of debentures as entitled to have preference over the other creditors. The Central Bank of India, Ld., and Lala Manmohan Das as trustees for the debenture holders, and P. L. Jaitly & Co. as managing agents of the company, appeared at the hearing, but the United Provinces Government did not appear. On December 20, 1939, Allsop J., on the application held that the debentures by reason of a 9 of the Act created no valid charge and that the debenture holders should rank only as unsecured creditors. Prom the order of Allsop J. Lala Manmohan Das, as a debenture holder, preferred an appeal under the Letters Patent to the High Court at Allahabad, citing as respondents the official liquidators of the company, The Central Bank of India, Ld., and Messrs. P. L.-Jaitly & Co. The Government of United Provinces was not made a respondent. Prom the order of Allsop J. Lala Manmohan Das, as a debenture holder, preferred an appeal under the Letters Patent to the High Court at Allahabad, citing as respondents the official liquidators of the company, The Central Bank of India, Ld., and Messrs. P. L.-Jaitly & Co. The Government of United Provinces was not made a respondent. The appeal was heard by a Division Bench consisting of Thorn C.J. and Ganga Nath J. who, by their judgment dated April 30, 1940, reversed the decision of Allsop J. The view which the learned judges took was that, whilst the specific mortgage in favour of the trustees contained in the trust deed was invalid under s. 9 of the Act, the floating charge created by such deed did not fall within the prohibition contained in s. 9, sub-s. 2. There was accordingly an effective charge in favour of the debenture holders on the undertaking of the company, and the debenture holders were accordingly secured creditors. On December 20, 1940, the United Provinces made an application in the winding-up of the company, claiming that they were not bound by the decision in the Letters Patent appeal, to which they had not been parties, and claiming further that they were entitled to an equitable lien on the assets of the company for the cost of electrical energy supplied to the company and not paid for, and that such lien ranked in front of the debentures. The application came up for heading before a Division Bench of the High Court, consisting of Sir Iqbal Ahmad A.C.J. and Allsop J., when the court referred to a full Bench of that court the question " whether a charge " is or is not a transfer within the meaning of sub-s.2 of s. 9 of the Indian Eletricity Act (IX of 1910)." This question was considered by a Full Bench consisting of Sir Iqbal Ahmad A.C.J., Allsop J. and Yorke J. The Full Bench held unanimously that a charge was a transfer within s. 9, sub-s. 2. of the Act. The hearing of the application of the United Provinces before the Division Bench was then resumed and the Bench, acting on the opinion expressed by the Full Bench that the debenture holders were not secured creditors, ordered and directed the official liquidator not to treat the holders of the debentures as secured creditors. of the Act. The hearing of the application of the United Provinces before the Division Bench was then resumed and the Bench, acting on the opinion expressed by the Full Bench that the debenture holders were not secured creditors, ordered and directed the official liquidator not to treat the holders of the debentures as secured creditors. The court further held that the United Provinces Government had no equitable lien on the assets of the company and directed the official liquidator to treat the Government and the holders of the debentures squally as unsecured creditors. Appeal No. 27 of 1946 is an appeal by Lala Manmohan Das against the last-mentioned order of the court so far as it directs the official liquidator not to treat the debenture holders as secured creditors. The contention of the appellant is that although the specific mortgage of the licence purported to be created by the trust deed is void under s. 9 of the Act, the floating charge embraced the undertaking and all the assets of the company not specifically and effectively mortgaged and such charge is not within the prohibition imposed by the section and is valid. Their Lordships, therefore, are called on to decide between the view taken by the Division Bench of the Allahabad High Court in the Letters Patent Appeal that a charge is not a transfer by sale, mortgage, lease, exchange or otherwise, within s, 9, sub-s. 2, and the contrary view taken by the Full Bench of that court. This question depends entirely on the construction of the Act and their Lordships, without committing themselves to the whole of the reasoning of the learned judges of the Full Bench, think that they have come to the right conclusion in this matter. They are therefore of opinion that the direction given by the High Court to the official liquidator not to treat the debenture holders as secured creditors was justified. This disposes of appeal No. 27 of 1946. Appeal No. 28 of 1946 is an appeal by the Government of the United Provinces against the dismissal of their claim to be-entitled to an equitable lien on the property of the company. No argument has been presented to the Board in support of that claim and the appeal will be dismissed. This disposes of appeal No. 27 of 1946. Appeal No. 28 of 1946 is an appeal by the Government of the United Provinces against the dismissal of their claim to be-entitled to an equitable lien on the property of the company. No argument has been presented to the Board in support of that claim and the appeal will be dismissed. Appeal No. 29 of 1946 is an appeal by the United Provinces and the company against the decision of the Allahabad High Court in the Letters Patent appeal, holding that the debenture holders were secuerd creditors. Having regard to the view which their Lordships have taken in appeal No. 27 of 1946, this appeal has become ineffective and will be dismissed. Their Lordships will therefore humbly advise His Majesty that all three appeals be dismissed. The appellant Lala Manmohan Das must pay the costs of the United Provinces in appeal No. 27. The United Provinces must pay the costs of Lala Manmohan Das in appeals Nos. 28 and 29. There will be a right of set-off.