JUDGMENT Federal Bank Limited has made an application for appointment of a Receiver over the securities mentioned in Schedule 'J' to the petition and also for sale of the securities by private contract or public auction. There is also a prayer for injunction against the Receiver. The Respondent No. 1 is Shree Hanuman Jute Mills Limited, an existing company within the meaning of the Companies Act, 1956. The case of the plaintiff bank is that it had granted accommodation to the company to the extent of Rs. 65,00,000/- by way of cash payment with a sub-limit of Rs. 40,00,000/- as and by way of packing credit limit. As a security for this accommodation, the whole of the company's present and future stocks of raw materials, stocks-in-process of manufacture, finished and semi finished goods, stores and all movable plants and machineries including their spares and various other assets including future book debts, bills, money receivables and various other things were hypothecated and charged by way of first charge in favour of the bank. It was agreed that the company will not, so long as the money is remained due to the bank, remove or cause of permit to be removed any of the hypothecated goods. An unattested deed of hypothecation dated December 26, 1983 was executed by the company embodying various terms and conditions on the basis of which the cash credit accommodation was granted. 2. By way of collateral security the company executed on demand promissory note for Rs. 65,00,000/- dated December 26, 1983 in favour of the bank or order payable with interest mentioned therein and duly delivered the same to the bank. 3. A further accommodation to the tune of Rs. 30,00,000/- was granted by the bank to the company as Foreign Documentary Bill Purchase Facility to enable the company to carryon business of exports of goods manufactured by it. Sri Mahabir Prosad Jalan, Sri Tolaram Jalan anJ Bajrang Prosad Jalan, the respondent Nos. 2, 3 and 4 guaranteed payment and discharge on demand of all amounts due and payable to the bank by the company in respect of the above mentioned accommodation facilities together with interest and other charges and expenses. 4. At the request of the company, on or about January 24, 1985 the bank increased the limit of the cash credit amount to Rs. 95,00,000/- with a sub-limit of Rs. 60,00,000/- as packing credit. 4. At the request of the company, on or about January 24, 1985 the bank increased the limit of the cash credit amount to Rs. 95,00,000/- with a sub-limit of Rs. 60,00,000/- as packing credit. A supplemental deed of hypothecation dated January 24, 1985 to the unattested deed of hypothecation dated December 26, 1983 was executed for this purpose. On January 24, 1985 as on demand promissory note for Rs. 95,00,000/- was executed by the company and delivered to the petitioner. The respondent Nos. 2, 3 and 4 by a writing dated January 24, 1985 besides confirming their liabilities and/or obligation under the guarantee dated December 26, 1983, also guaranteed repayment of the enhanced limit of Rs. 95,00,000/- together with interest, cost, charges and other expenses. 5. The charge created by the company over its assets and properties were duly registered with the Registrar of Companies. 6. It is the case of the bank that the company has liquidated its dues in respect of accommodation granted by way of Foreign Documentary Bill Purchase Facility. But the company has failed to pay its dues in respect of the cash credit facilities. 7. By a writing dated January 1, 1988 the company unconditionally acknowledged that a sum of Rs. 91,09,837.18 p. with interest calculated up to September 30, 1987 was due and payable to the Bank. 8. The company by a notice dated June 7, 1987 suspended its business and closed its entire Mill with effect from the said date. The bank thereupon called up the said loan and a demand was made by a letter dated January 7, 1988. Since payment was not made by the bank a suit has been instituted in this Court praying for, inter alia, a decree for Rs. 91,68,392.18 against the company. It is the case of the bank under the clear terms of the agreement that the bank is entitled to take necessary steps for appointment of a Receiver over the assets hypothecated as security for the loan. It has been stated that the loan granted by the bank has not been repaid and the factory being closed, an order should be made as prayed. 9. On behalf of the company, Mr. Kapoor has advanced two arguments. The first is that the so called unattested deed of hypothecation is really attested. He has invited by attention to the signature at the foot of the agreement. 9. On behalf of the company, Mr. Kapoor has advanced two arguments. The first is that the so called unattested deed of hypothecation is really attested. He has invited by attention to the signature at the foot of the agreement. It has been argued that since the document has not been properly stamped as an attested document, the Court should not take any notice of this document. 10. I am unable to uphold this argument. To attest an instrument is "not merely to subscribe one's name to it as having been present at its execution but includes also essentially, the presence, in fact, at its execution of some disinterested persons capable of giving evidence to what took place. To "attest" is to bear witness to a fact" (Stroud's Judicial Dictionary, 3rd Edition, Volume 1, pages 234-235). 11. The world "attested" has also been defined by Section 3 of the Transfer of Property Act, to mean "attested by two or more witnesses each of whom has been the executant sign or affix his mark to the instrument or has seen some other persons sign the instrument in the presence and by direction by the executant............". 12. Therefore, merely because the deed of hypothecation has been signed by or on behalf of both the parties does not mean that the deed has been attested. Moreover the unattested deed of hypothecation is not the only evidence of the loan transaction and the security given for the loan. It has been stated in the petition that the charge created ova the assets and properties of the company was duly registered with the Registrar of Companies. 13. It has also been pointed out on behalf of the Bank that year after year this particular loan has been specifically shown in the company's Balance Sheet as "Secured Loan" in favour of the Bank. On January 1, 1983 the company acknowledged, in writing, its liability as on 31st September, 1986 for a sum of Rs. 91,09,837.18 P. 14. The second contention on behalf of the company is that a reference has already been made to the Board of Industrial and Financial Construction (hereinafter described as the Board) under Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 for determination of the measures to be adopted with respect to the company. 91,09,837.18 P. 14. The second contention on behalf of the company is that a reference has already been made to the Board of Industrial and Financial Construction (hereinafter described as the Board) under Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 for determination of the measures to be adopted with respect to the company. A "Sick Industrial Company" has been defined under the said Act as an industrial company which at the end of a financial year has accumulated losses equal to or exceeding its net worth and bas also suffered cash losses in the relevant financial year and the financial year immediately proceeding such financial year. This provision on applies to a company which has been registered for not less than seven years. 15. It was argued that an application for appointment of Receiver can not be made while the case of the company was under investigation by the Board. 16. Section 22(1) of the Act provides : – "Where in respect of an industrial company, an inquiry under Section 16 is pending or any scheme referred to under Section 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under Section 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Companies Act, 1956, or any other law or the memorandum and articles of association of the industrial company or any other instrument having effect under the said Act or other law, no proceedings for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof shall lie or be proceeded with further, except with the consent of the Board or, as the case may be the Appellate Authority". 17. The contention on behalf of the petitioner is that an application for the appointment of a Receiver over the properties of the company will not lie by virtue of the provisions of Section 22(1) without the approval of the Board. Therefore, this application is misconceived. 18. The respondents have, however, failed to establish that an inquiry is actually pending under Section 16 in this case. Chapter 3 of the Act deals with Reference, Inquiries and Schemes. Therefore, this application is misconceived. 18. The respondents have, however, failed to establish that an inquiry is actually pending under Section 16 in this case. Chapter 3 of the Act deals with Reference, Inquiries and Schemes. Section 15 lays down the manner in which reference application can be made to the Board in case the company has become a sick industrial company. Section 16 lays down the method of inquiry into working of sick industrial companies. Sub-section (1) of Section 16 is couched in permissive language and lays down that the Board may make "such inquiry as it deems fit for determining whether any industrial company has become a sick industrial company". This can be done upon receipt of a reference with respect to such company under Section 15 or upon information received with respect to such company or upon its own knowledge as to the financial condition of the company. 19. In this case, a reference has been made by the Directors of the company under Section 15. The Board may make an inquiry on its own or require any operating agency to inquire into and make a report as provided in sub section (2) of Section 16 :– "Where the Board deems it fit to make an inquiry or to cause an inquiry to be made into any industrial company under sub-section (1) or, as the case may be, under sub-section (2), it shall appoint one or more persons to be a special director or special directors of the company for safeguarding the financial and other interests of the company." 20. It has been contended on behalf of the respondents that the word "shall" has to be construed as an enabling expression. It is not mandatory for the Board to appoint special directors whenever an inquiry is to be made under sub-section (1) of Section 16. The Board has been given power in an appropriate case to appoint one or more persons to be Special Director to safeguard the interest of the company. 21. I am unable to accept this contention on a number of grounds. Section 16 itself has used the expression "may" in sub-section (1), sub section (2) and sub-section (3) where it has conferred power upon the Board to make inquiry or require an operating agency to make inquiry. But the language of sub-section (4) is quite different. 21. I am unable to accept this contention on a number of grounds. Section 16 itself has used the expression "may" in sub-section (1), sub section (2) and sub-section (3) where it has conferred power upon the Board to make inquiry or require an operating agency to make inquiry. But the language of sub-section (4) is quite different. It says that the Board "shall appoint one or more persons to be a Special Director or Special Directors of the company". The legislature has consciously and deliberately used "shall" instead of "may" in sub-section (4). 22. Moreover, Section 16(4) has to be construed bearing in mind the provisions of Section 22(1) which unequivocally states that "no proceedings for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a Receiver in respect thereof shall lie or be proceeded with further except with the consent of the Board as the case may be or the Appellate Authority". 23. This prohibition on proceeding against the properties of an industrial company makes sense only if the provision of Section 16(4) is borne in mind. Otherwise, it will be open to an industrial company to make a reference under Section 15 and by that process shut out all the creditors, secured or unsecured, from enforcing their claims against the company. 24. The construction suggested by the respondents is not warranted by the clear wording of the statute and is also in-equitable and should not be adopted. If the Board has appointed a Special Director or Special Directors of a company for safeguarding the financial and other interest of the company, it may not be permissible for a creditor to proceed against the company. The inquiry may result in framing of a scheme for the reconstruction, revival and rehabilitation of the industrial unit or even for the sale or lease of a part or whole of the industrial undertaking of the sick industrial company or for adoption or ameliorating or remedial measures as or for adoption or ameliorating or remedial measures as provided in Section 18 of the Act. Thereafter, when an inquiry has started in order to safeguard the financial and other interest of the company, one or more Special Directors have to be appointed. Thereafter, when an inquiry has started in order to safeguard the financial and other interest of the company, one or more Special Directors have to be appointed. After the appointment of the Special Director, it may not be open to the Court to order winding up of the industrial company or appoint a Receiver over the assets of the company as the case may be except with the consent of the Board or the Appellate Authority. 25. I am, however, unable to uphold the contention that even without appointment of Special Director, the Court is powerless to appoint a Receiver on an application made by a secured creditor merely because the company has made a reference under Section 15(1). 26. Nothing has been shown to establish that an inquiry has commenced into the working of the company under Section 16(1). It has been contended on behalf of the respondents that the reference made by the Directors of the company has been registered. That however, does not mean starting of an inquiry. The making of an inquiry is, a matter of discretion of the Board. There has to be some evidence to show that inquiry has commenced. It is only when some tangible step is taken for making the inquiry that Section 22(1) comes into play. The provisions of Section 16 comes into operation only when "in inquiry under Section 16 is pending" or any scheme referred to under Section 17 is under preparation or consideration or where an appeal relating to an industrial company is pending under Section 25. 27. The respondent have failed to establish that any of that there conditions has been fulfilled in this case. Therefore, the prohibition upon appointment of a Receiver in respect of the properties of the company is not attracted in this case. 28. The petition must succeed. There will be orders as prayed in terms of prayers (a), (b) and (c). The petitioner will be entitled to costs of this application. 29. Mr. Rabi Prosad Mukharji, Advocate and Mr. S.P. Majumdar Advocate arc appointed Joint Receivers. Joint Receivers are entitled to remuneration of 100 G. Ms. each to be paid by the bank. Joint Receivers will not take possession before 4.4.88. All parties are to act on a signed copy of the operative part of the judgment.