JUDGMENT Jagdish Sahil, J. - This First Appeal from Order by Messrs. Basant Company (hereinafter referred to as the appellant) has been filed under section 202 of the Indian Companies Act, 1913 (hereinafter called the Act) against the Benares Cotton and Silk Mills, Ltd., (in liquidation) (hereinbelow described as the company) and is. directed against the order of the learned District Judge, Varanasi, dated 3rd March, 1960. It would contribute to a clear understanding of the points raised in this appeal if the following facts were given. 2. By means of the resolution dated 17th March, 1954, the Company decided to. issue some debentures and on 2nd April, 1954, they did so. On 11th April, 1954, 125 debentures were allotted to one M. K. Jhunjhunwala but before that date on 4th April, 1954 Jhunjhunwala had already sold 50 debentures to the appellant C L i--28 and on 7th April, 1954 transfer deeds in respect of the same were executed. On 17th June, 1954, on the appellant's instructions the Allahabad Bank, Ltd., (hereinafter referred to as the Bank) requested the Company to pay them interest on those fifty debentures. On 6th July, 1954, the Company refused to make the payment on the objection that the name of the appellant had not been entered in the registers of the Company. On 4th May, 1955 the Company went into liquidation and on 8th May, 1956, Jhunjhunwala filed with the Official Liquidator a claim under section 177-A of the Act inclusive of the 50 shares mentioned above. On 10th October, 1957 he sent the debenture scrips and the transfer deeds to the Official Liquidator with a request that the name of the appellant be entered on them. On 6th November, 1957, the Official Liquidator sent a reply to the appellant saying that he was unable to do anything in the matter until the orders of the Company Judge had been obtained. On 4th January, 1958 Jhunjhunwala declared before a Magistrate at Calcutta that on or about 4th April, 1954 he had transferred in favour of the appellant 50 debentures and the appellant had become the owner thereof. Thereafter, the appellant made an application purporting to be under section 123 of the Act with a prayer that in the register of debentures the name of the appellant be included in respect of 50 debentures in the place of Jhunjhunwala. Thereafter, the appellant made an application purporting to be under section 123 of the Act with a prayer that in the register of debentures the name of the appellant be included in respect of 50 debentures in the place of Jhunjhunwala. That application was dismissed with costs on 3rd March, 1960 by the learned District Judge, Varanasi. and it is against that order that the present First Appeal From Order has been filed. 3. The learned District Judge decided against the appellant on the ground that " there are certain circumstances which go to show that the claim of the applicant is not genuine but is of a very suspicious character." We have heard Mr. Rajeshwari Prasad for the appellant and Mr. Jagdish Swaroop for the Official Liquidator. Apart from reiterating that the claim of the applicant is not genuine, Mr. Jagdish Swaroop has tried to support the order of the learned District Judge, Varanasi on the ground that the application was not maintainable, the transfer of the shares (sic) had not been proved and in any case was colourable and that the Company had a right to refuse to register the name of the appellant. 4. We will first deal with the question as to whether or not the application made by the appellant in the Court of the District Judge, Varanasi, was maintainable. The application was made under section 123 of the Act which reads :- "123. Company's register of mortgages.-(1) Every company shall keep a register of mortgages and enter therein all mortgages and charges specifically affecting property of the company and all floating charges on the undertaking or on any property of the company, giving in each case a short description of the property, mortgaged or charged, the amount of the mortgage or charge and (except in the case of securities to bearer) the name of the mortgagees or persons entitled thereto. (2) If any director, manager or other officer of the company knowingly and wilfully authorises or permits the omission of any entry required to be made in pursuance of this section, he shall be liable to a fine not exceeding five hundred rupees." 5. Admittedly, in the present case, the debentures are not "bearer". Consequently, the same are not hit by the exception to section 123 of the Act. Admittedly, in the present case, the debentures are not "bearer". Consequently, the same are not hit by the exception to section 123 of the Act. The question, however, requiring consideration is whether that section also requires entries being made in respect of transfers of mortgages or debentures by their holders in favour of third parties. Mr. Jagdish Swaroop contends that the section cannot be read so as to comprehend the recording of entries relating to the change in the ownership of the debentures and the mortgage deeds. Section 38 of the Act confers on the Court the power to rectify a register. The submission of Mr. Rajeshwari Prasad who has appeared for the appellant is that section 123 read with section 38 of the Act confers on the Court the power to direct, that the transfer made by Jhunjhunwala in favour of the appellant in respect of 50 debentures, be entered in the registers of the Company. 6. There cannot be any manner of doubt that if section 38 was comprehensive enough to include not only rectification of the register of members but also the register of mortgages including debentures, the Court would have the power to grant the prayer made by the appellant. Mr. Jagdish Swaroop, however, submits that the provisions and the scheme of the Act disclose that the legislature made a distinction between the registers of members and registers of mortgages and debentures and that it is only by means of the amendment introduced by Act 65 of 1960 in the shape of section 155 of the Act that for the first time the Court has been given the power which it did not have before to direct rectification of the register of debentures. Sub, section (5) of section 155 of the 1956 Act reads :- "(5) The provisions of sub-sections (1) to (4) shall apply in relation to the rectification of the register of debenture-holders as they apply in relation to the rectification of the register of members.,, 7. Sub-section (1) of section 155 deals with the right of a member of a Company to apply for the rectification of the register of members of the company. Subsection (2) gives the power to the Court either to reject the application or order rectification of the register. Sub-section (1) of section 155 deals with the right of a member of a Company to apply for the rectification of the register of members of the company. Subsection (2) gives the power to the Court either to reject the application or order rectification of the register. Sub-section (3) confers on the Court the power to decide any question relating to the title of the person who is a party to the application for rectification and clause (4) provides a right of appeal on the grounds mentioned under section 100 of the Code of Civil Procedure to the High Court if the order is passed by a District Court and to three or more Judges if the order is of a Single Judge of a High Court. It is true that there was no specific provision in the Act before 1960 under which a rectification of the register of mortgages could be made. The only provision that existed was section 120 which reads " 120. Rectification of register of mortgages.-(l) The Court, on being satisfied that the omission to register a mortgage or charge within the time required by section 109, or that the omission or mis-statement of any particular with respect to any such mortgage or charge, or the omission to give intimation to the registrar of the payment or satisfaction of a debt for which a charge or mortgage was created was accidental, or due to inadvertence or to some other sufficient cause, or is not of a nature to prejudice the position of creditors or shareholders of the company, or that on other grounds it is just and equitable to grant relief, may, on the application of the company or any person interested and on such terms and conditions as seem to the Court just and expedient, order that the time for registration be extended, or, as the case may be, that the omission or mis-statement be rectified, and may make such order as to the costs of the application as it thinks fit. (2) Where the Court extends the time for the registration of a mortgage or charge, the order shall not prejudice any rights acquired in respect of the property concerned prior to the time when the mortgage or charge is actually registered." 8. Mr. (2) Where the Court extends the time for the registration of a mortgage or charge, the order shall not prejudice any rights acquired in respect of the property concerned prior to the time when the mortgage or charge is actually registered." 8. Mr. Jagdish Swaroop contends that the rectification could only be made in the circumstances enumerated in the section and not for other reasons. The learned Counsel submitted that the legislature deliberately maintained the distinction between the register of members and the register of mortgages inclusive of the debenture-holders. The reasons which he suggests for the distinction are : (1) It is in the interest of all concerned and the general public to know who the members are in order to facilitate their dealing with them and in order to be known to what extent they can deal with the company. In this connection the learned Counsel placed reliance upon the following passage in Palmer's Company Law, 20th Edn. p. 450, under the heading 'Publicity of register' where the famous words of Lord Cranworth have been quoted : "Publicity of register it is important to note the fact that the register of members is, by the Act, open to the public. Lord Cranworth observed : 'When the legislature enabled shareholders to limit their liability, not merely to the amount of their shares but to so much of that amount as should remain unpaid, it is obvious that no creditor could safely trust the company without having the means of ascertaining, first, who the shareholders might be, and, secondly, to what extent they would be liable............The legislature took care to provide the register as the means of enabling persons dealing with the company to know to whom and to what they might trust." 9. Mr. Jagdish Swarup also placed reliance upon section 34 of the Act which provides for transfer of shares and sub-section (4) of which provides that " if a company refuses to register the transfer of any shares or debentures, the company shall, within two months from the date on which the instrument of transfer was lodged with the company, send to the transferee and the transferor notice of the refusal. (2) The second ground for distinction suggested by the learned counsel is that in the case of debenture holders, it is not necessary to maintain an uptodate register because it would make no difference whether A or B is the mortgagee and what is of substance is whether or not there is a mortgage and if so for what amount which can always be found out from the register of mortgages and which did not require uptodate entries with regard to the mortgagee's name. (3) Relying upon M.K. Ranganathan v. Government of Madras, (1955) 2 M.L.J. (S.C.) 68 : (1955) S.C.J. 515 : (1955) 2 S.C.R. 374 : A.I.R. 1955 S.C. 604, learned Counsel contended that a debenture-holder has two courses open to him, i.e., he may either keep out of the winding-up proceedings and file a suit to enforce the mortgage and thus sell the property out of court if the mortgage deed permits that or to give up the security and come up as an ordinary creditor. The submission is that if the debenutre-holder would ask for the permission of the Court to file a suit it would naturally be granted. It is on the basis of the considerations enumerated above that the learned counsel urged that there is a clear distinction between the register of debentures and the register of members and consequently the law did not provide for the rectification of the register of debenture-holders. We are unable to agree with the learned counsel. It is true that there is a distinction between the register of members and the register of mortgages including the debenture-holders. But the outside public would be equally interested in knowing who the members. are as in knowing who the mortgagees inclusive of the debentures-holders are. We are not prepared to accept the argument of the learned counsel for the Liquidator that the public is only interested in knowing who the members are and is indifferent with regard to the names of the secured creditors or debenture-holders. There may be some difference in the degree of the importance of the two registers but it cannot be said that it would neither serve public interest nor would it contribute to the better management of the affairs of the company if an upto date register of mortgages is maintained. There may be some difference in the degree of the importance of the two registers but it cannot be said that it would neither serve public interest nor would it contribute to the better management of the affairs of the company if an upto date register of mortgages is maintained. The management of the company itself would require an upto date register of mortgages to know who its creditors are and in order to deal with them inclusive of payment of interest. Members of a company on liquidation may become contributories and the debenture-holders are and continue to remain the creditors of the company. It cannot be disputed that in order to have a correct and overall picture of the affairs of the company so necessary for its proper functioning, it is necessary to have both the registers posted uptodate. 10. Apart from it, it is clear beyond controversy that the law requires that a register of mortgages be maintained. In view of that mandatory legal requirement, it would be subversive of the scheme of the Act and also violative of common sense to hold that though the law requires a register of mortgages to be maintained, it does not require it to be posted uptodate ; there is no sense in maintaining any register which is not uptodate. Besides, the words "or persons entitled thereto" after the words "the names of the mortgagees " occurring in section 123 of the Act clearly reveal that not only the names of the original mortgagees but also those of their transferees, who become entitled by virtue of the transfers, be included in the register which obviously means that the register of mortgages has got to be rectified from time to time. 11. Another way of looking at the matter and getting the same result would be to peruse clause (3) of section 34 of the Act which reads : " (3) It shall not be lawful for the company to register a transfer of shares in or debentures of the company unless the proper instrument of transfer duly stamped and executed by the transferor and the transferee has been delivered to the company along with the scrip :.................... .. 12. The sub-section clearly legalises and visualises the transfer of debentures also. .. 12. The sub-section clearly legalises and visualises the transfer of debentures also. It would, therefore, be difficult to hold that even though the law requires the maintenance of a register of mortgagees, inclusive of debenture-holders, gives the Court the power to extend the time for the registration of the same and whereas the law not only visualises but also legalises the transfer of debenture scrips, no entry in respect of the transfer can be made in the registers of the company. It is well settled that Courts are bound to construe the words in a statute in a manner which would carry out the purposes of the Act or a section. (See Bisheshar Singh v. State of Orissa, (1954) S.C.J. 219 : 1954 S.C.R. 842 : A.I.R. 1954 S.C. 139) That being the position, we do not see how the submission of the learned Counsel for the Official Liquidator can be accepted that the application made by the appellant to the District Judge, Varanasi for the rectification of the register of mortgages so as to make an entry in respect of the transfer of the 50 debentures-scrips in favour of the appellant by Jhunjhunwala be made was not legally 'maintainable. We, therefore, overrule this submission of the learned Counsel and hold that the application was competent. 13. We are also not impressed with the connected submission made by the learned -Counsel that in any case such an application is not maintainable after a winding-u order has been passed. Nothing has been brought to our notice which may result in accepting that the provisions of sections 123, 34 and other sections mentioned above stand paralysed or suspended during the period following the passing of the winding-up order. In fact, during the winding-up proceedings, the Court assumes .greater responsibility than it has while the company is functioning normally. We .are, therefore, unable to accept even this submission of the learned Counsel. We also see no merit in the submission of the learned Counsel that a company has a right to refuse registration. No company has got a right to refuse to do a thing which the law requires it to do. Nothing has been pointed out to us to justify the conclusion that it has any such right. We also see no merit in the submission of the learned Counsel that a company has a right to refuse registration. No company has got a right to refuse to do a thing which the law requires it to do. Nothing has been pointed out to us to justify the conclusion that it has any such right. We have already said above that under the law a transferee is entitled to get a register of mortgagees rectified so as to include the transfer of a debenture in his favour. In that view of the matter, we see no justification for the Liquidator to submit that the Company has got a right to refuse registration. 14. The only question that remains to consider is whether or not in the circumstances of the present case, it can be said that there was no transfer of the shares in favour of the appellant by Jhunjhunwala. The learned District Judge has called the transaction as " suspicious ". The learned Counsel for the Official Liquidator has described it by the name of " colourable ". The pith and substance of both the objections is that in fact the transaction was not genuine, in other words it was not gone through. The learned District Judge has given some circumstances which, in his opinion, created a doubt or suspicion with regard to the genuineness of the transaction. We will come to those circumstances a little later. At the outset, we would like to point out that there is no doubt, in fact the registers of the company show it, and it is .admitted that Jhunjhunwala was the holder of 125 debentures. He has clearly stated before a Magistrate at Calcutta as shown earlier, that he had transferred 50 out of those 125 debentures to the appellant. There is no reason to disbelieve the statement of Jhunjhunwala. The appellant examined Sri Kishori Lal Gupta, the cashier of the appellant before the learned District Judge, Varanasi. This witness clearly stated that on 7th April, 1954, Jhunjhunwala transferred 50 debentures to the appellant, the transfer deeds were written and the consideration of Rs. 50,000 paid in his presence. His cross-examination has not revealed anything so as to justify the rejection of his .statement and we have no reasons to disbelieve him. This witness clearly stated that on 7th April, 1954, Jhunjhunwala transferred 50 debentures to the appellant, the transfer deeds were written and the consideration of Rs. 50,000 paid in his presence. His cross-examination has not revealed anything so as to justify the rejection of his .statement and we have no reasons to disbelieve him. That being the position, it must be held that it has been proved as a fact that 50 debentures were transferred by Jhunjhunwala to the appellant. 15. There are two circumstances on the basis of which the learned District Judge considered the transaction to be suspicious. One was that even though Jhunjhunwala was allotted debentures only on the 7th April, 1954, he is purported to have transferred 50 debentures on 4th April, 1954. It is admitted that Jhunjhunwala had 125 debentures in his name. He was a Director and if he knew that 125 debentures would be allotted to him, there was no legal hurdle in his transferring 50 out of those expected but certain debentures even before the formal allotment in his favour was made. 16. The second suspicious circumstance, according to the learned District Judge and the learned Counsel, for the Liquidator is that Jhunjhunwala has shown all the 125 debentures in his return filed under section 177-A of the Act. This circumstance is clearly explainable. The law requires that unless a transfer is registered for the purposes of the Act, the original holder will retain a right over the shares. Inasmuch as the registers of the company were not corrected either by the company or by the Liquidator by showing 50 debentures in the name of the appellant, it was only proper that Jhunjhunwala showed all the 125 debentures in his own name. 17. The learned' District Judge was also influenced by the circumstance that the payment of Rs. 50,000 was not made by cheque but by cash. In our judgment, this was a completely colourless circumstance and the learned District Judge was not justified in inferring from this that no payment was made. Considering all the material before us, we are of the opinion that the transaction of the sale of 50 debentures by Jhunjhunwala to the appellant has been fully proved and that the transaction was neither suspicious nor colourable. 18. Considering all the material before us, we are of the opinion that the transaction of the sale of 50 debentures by Jhunjhunwala to the appellant has been fully proved and that the transaction was neither suspicious nor colourable. 18. For the reasons mentioned above, we allow the appeal, set aside the order passed by the learned District Judge, Varanasi and direct the Official Liquidator to enter the name of the appellant in respect of 50 debentures in the register of mortgages of the company. In the circumstances of the case, the parties will bear their own costs.