Judgment :- The applicant is a Co-operative Bank. This application is filed seeking the following reliefs: a) to set aside an enquiry report by the Register of Companies, enclosed with Annexure-R dated 25.1.2006. b) to direct he Union of India to initiate prosecution against respondents 3 to 10 for alleged offences under the provisions of the Companies Act, 1956, as detailed in the application. c) And for a direction to the Registrar of Companies to effect deletion of certain entries in the Register of Charges maintained under section 130 of the Companies Act, 1956. 2. The facts are as follows:- The applicant is a Co-operative Bank which had advanced a term loan on the security of plant, machinery and other property, for a sum of Rs.250 lakh on 16.1.1996 in favour of the first respondent M/s. Murudeshwar Foods and Exports Limited (in liquidation). And another loan of Rs.50 lakh as on 8.3.1996 to enable it to acquire the assets of M/s Binaga lce Cold Storage Private Limited, Binaga, Karwar. The charges created in respect of the above borrowings were registered with the Registrar of Companies (hereinafter referred to as ‘the ROC’ for brevity) at Bangalore. The first respondent is said to have defaulted in the repayment of the loans. The applicant – Bank had therefore raised a dispute under Section 70 of the Karnataka Cooperative Societies Act, 1959 (hereinafter referred to as ‘the KCS Act’ for brevity). An order of attachment before judgment was said to have been passed by the Joint Registrar of Co-operative Societies, Belgaum, against the first respondent at the instance of the applicant as per order dated 7.12.1996. Accordingly, the properties furnished by the first respondent as security for the loan transactions were duly attached. The first respondent had thereafter filed a petition under Section 433 (1) and (f) of the Companies Act, seeking voluntary winding-up of the company before this court in Company Petition No.82/2000. That petition was allowed as on 27.7.2000. The applicant – Bank had approached this court under an application in CA 1071/2002, seeking leave to prosecute the above proceedings before the Joint Registrar of Cooperative Societies, Belgaum against the company. It is at that point of time, that the applicant – Bank claims to have learnt of the Statement of Affairs filed before the Official Liquidator, along with an affidavit of respondent No.4 dated 27.12.2001. It is at that point of time, that the applicant – Bank claims to have learnt of the Statement of Affairs filed before the Official Liquidator, along with an affidavit of respondent No.4 dated 27.12.2001. And that this has been supplemented by a Joint Affidavit of Concurrence, dated 11.2.2002, filed by respondents 4 to 9. It is the applicant’s case that the above Statement of Affairs does not disclose the charge created in respect of the assets offered as security for the above said loan transactions with the applicant. On the other hand, it generally declared that all charges created had been satisfied. The applicant therefore sought a search of the records of the Registrar of Companies (hereinafter referred to as ‘the ROC’ for brevity). It was found that the above loan transactions were shown as having been satisfied as on 10.7.1996 in respect of Rs.250 lakh and on 29.10.2001 in respect of Rs.50 lakh. The applicant had therefore filed an application before this Court in CA 366/2004, seeking a direction to the Union of India to prosecute the respondent –directors of the company in liquidation as well as the ROC for having colluded with them and for having committed a breach of trust and duty. That application was disposed of directing the ROC to hold an enquiry insofar as the complaint of falsification of record by recording a satisfaction of charge and insofar as the affidavits of the respondent-directors which were found to be false is concerned, the ROC was directed to initiate action in accordance with law. The ROC has forwarded a report to the applicant to state that at this point of time, the relevant records are not traceable and therefore, he is not in a position to ascertain whether a notice as mandated under Section 138 of the Companies Act was duly issued by the then Registrar of Companies, to the applicant. It is further stated that the discharge of the loan transactions as recorded was in the context of the explanation having been offered on behalf of the company in liquidation as to there being no authority to borrow in the first instance, in the absence of any resolutions of the company and he has hence opined that the particulars furnished in Form no.17 may not be false particulars. It is further opined by the ROC that action, if any, to be initiated against the respondent – directors would be by the Official Liquidator and not by the office of the ROC. 3. Shri Madhusudhan Naik, Senior Advocate appearing for the Counsel for the applicant contends that under the provisions of the Companies Act- it is mandatory to register every charge created for the purpose of borrowings by a company. The same is registered with the ROC and is entered in the Register of Charges. The payment or satisfaction of any such charge should also be reported within 30 days of such payment or satisfaction. The Registrar is, in turn, required to issue a notice to the holder of the charge to show-cause as to why payment should not be recorded. It is stated that when the applicant found from the Statement of Affairs filed on behalf of the respondent-directors before the Official Liquidator, that the loans obtained from the applicant-bank to the extent of Rs.3.00 Crore was indicated as having been satisfied the applicant – bank had got conducted a search in the office of the ROC to ascertain the status of the charges registered under Section 125 of the Companies Act in favour of the applicant-bank in respect of the charges created under the above loan transactions. The applicant had found on inspection, in the year 2003, that the loans were indicated as having been satisfied in full. True copies of Form no.17 dated 2.8.1996 and 16.7.1996 had been obtained in this regard. It was also found that, inexplicably, entries in the Register of Charges were however made only as on 29.10.2001 and 1.11.2001, respectively. Shri Naik, would point out that insofar as the explanation put-forth by the respondent-directors is concerned, it is claimed that the day to day management of the company in liquidation was vested with one Vijay V. Kamat, Executive Director and one Srinivas R Nayak, whole-time Director. It is claimed that these two had, without the knowledge or the authority of the Board of Directors, fraudulently availed of loans to the extent of Rs.3.00 Crore from the applicant and had appropriated the same for their personal benefit. The sanctioned loans which were remitted to the account of the company with M/s Vijaya Bank had been illegally withdrawn with the connivance of the bank officials in respect of which criminal proceedings had been initiated. The sanctioned loans which were remitted to the account of the company with M/s Vijaya Bank had been illegally withdrawn with the connivance of the bank officials in respect of which criminal proceedings had been initiated. The above named officials of the company were relieved of their office as on 10.8.1996 by the Board of Directors. It is further stated that the Articles of Association of the Company vested the power to borrow funds with the Board of Directors and it was never delegated to the above named Directors. They were however forged and false Board Resolutions which had been used in raising the above loans. It is further claimed that the Board of Directors had got issued a legal notice to the applicant informing it about the criminal acts committed by the above two directors and called upon it to cancel the charges created on the assets of the company. And further, it is the explanation offered by the respondent-directors that as the charges created were illegal and invalid, the Board had proceeded to take corrective steps by filing Forms no, 17 and 13 with the ROC while also informing the authority of the criminal acts. It is claimed that the ROC accepted their contention that the charge created was unauthorized and accordingly, registered the satisfaction of charge. It is further claimed that as there is no provision in the Act, to rectify a charge wrongly created the above mode was adopted to nullify the invalid charge. It is sought to be admitted that the charge was not satisfied by repayment of the loan –as no such loan was legally or validly created. Shri Naik, would submit that as is evident from the above stand of the respondents, there is no denial of the loan transactions having been created and the same not having been discharged. As there was no such explanation forthcoming insofar as the declaration made in the Statement of Affairs is concerned, the respondents, by their patent admission in the proceeding, render themselves liable for criminal prosecution for having willfully made false statements before this court. Shri Naik would then submit that insofar as the office of the ROC is concerned, as per the report now submitted by the ROC- it is not in dispute that two sets of Forms no.17 and 13 were registered. Shri Naik would then submit that insofar as the office of the ROC is concerned, as per the report now submitted by the ROC- it is not in dispute that two sets of Forms no.17 and 13 were registered. The first set, relating to the charge created on 16.1.1996, dated 2.8.1996 were registered (for reasons best known to the ROC) only on 29.10.2001 and the second set, relating to the charges created on 18.3.1996 dated 16.7.1996, only on 1.11.2001. The ROC now reports that no records are available at this point of time to ascertain whether notice was issued to the applicant on the filing of the above Forms no.13 and 17. It is the opinion of the ROC that it is difficult to hold that false particulars have been willfully furnished in the two sets of Forms no.13 and 17 filed. The ROC has also expressed that as regards false declarations made in the Statement of Affairs are concerned, it would be for the Official Liquidator to initiate action. The ROC also offers an opinion that the forms filed are only to seek rectification of incorrect and invalid registration of the invalid charge and does not really evidence satisfaction of the loan transaction. Shri Naik contends that the above reasoning and opinions expressed by the ROC is misleading and mischievous and ought to be seriously viewed by this court. It is pointed out that the ROC has no power to rectify the entries in the Register of Charges even if invalidly made. The power is conferred under Section 141 of the Act on the Company Law Board and not the ROC. The plain language employed in Forms no.13 and 17 as regards the alleged discharge of the loan transactions cannot be interpreted any other way. The statements were false on the face of it. The claim by the Roc that records regarding issuance of notice of the filing of Forms no.13 and 17 not being available is a casual statement without any further explanation. The fact that the same have been registered as late as November 2001 would require the ROC to explain with reference to the provisions of Disposal of Records (in the office of the ROC)Rules, 1984. Shri Naik would therefore submit that appropriate action be initiated against the respondents including the office of the ROC. 4. The fact that the same have been registered as late as November 2001 would require the ROC to explain with reference to the provisions of Disposal of Records (in the office of the ROC)Rules, 1984. Shri Naik would therefore submit that appropriate action be initiated against the respondents including the office of the ROC. 4. Per contra, it is contended on behalf of Respondents 3 to 5 and 7 to 9 that it was latently discovered by the Board of Directors after a special audit carried out through an independent firm of Chartered Accountants of the criminal acts of malfeasance and misfeasance by its two officers V.V. Kamath and S.R. Naik, including the borrowing of Rs.3.00 Crore from the applicant on the basis of false and forged Board Resolutions. It is further alleged that they were acting in active connivance with the bankers of the company as well as the very Chairman as well as the Managing Director of the applicant – Bank, namely, G.T. Hegde and Sreenivas Prabhu, respectively. A criminal complaint has been instituted in this regard. The company had also taken steps to intimate and call upon the applicant to cancel the invalid transactions. Inspite of which further transactions having been entered into by the applicant – Bank with the errant directors by way of hypothecation of motor vehicles of the company clearly establishes the unholy nexus alleged. It is pointed out that a further pointer to the applicant Bank having actively conspired in bringing about the illegal loan transactions is evident from the fact that though prior sanction was required to be obtained from the company’s lead banker – Vijaya Bank, no such sanction was sought. Further as per guidelines of NABARD, the ceiling limit to a single corporate borrower is limited to 25% of the capital funds, which is about Rs.189 lakh and hence, there is disbursal of an excess sum of Rs.111 lakh, in violation of guidelines. The Board of Directors had taken further corrective steps in informing the ROC of the sordid affair and filed Forms no.13 and 17 in respect of the above transactions in order to rectify the invalid registration of the invalid charges. It is only after satisfying himself of the illegal transactions, that the invalid entries have been rectified. It is contended that the present application is not maintainable in law. It is only after satisfying himself of the illegal transactions, that the invalid entries have been rectified. It is contended that the present application is not maintainable in law. The appropriate course is to file a complaint before the jurisdictional criminal court on the baseless allegations. It is further contended that as laid down in Deonarayan Prasad Badani v. Bank of Baroda 27 Company Cases 223 (Bombay), ultra vires borrowing - beyond the power of the company or beyond the powers of the directors, does not have the effect in law of creating a debt and any instrument thus created is void. It is also contended that the funds have not been utilized for the benefit of the company and have been siphoned of for the personal benefit of the errant directors named above-hence the company repudiates its alleged liability. As there was no legal liability – it was only by way of abundant caution that the Forms no.13 and 17 were filed under Section 138 of the Act before the ROC. It is stated that only respondents 3 and 6 were on the Board of Directors at the time of passing the relevant resolutions and the other respondents were appointed as Directors subsequent to filing of the return regarding satisfaction of charge –hence it is prayed that they be absolved and that the application be rejected in limine. 5. Respondent No.6 has filed separate statement of objections justifying the report submitted by the ROC and reiterating the statements made on behalf of respondents 3 to 5 and 7 to 9. It is submitted by Ms. Paramal, Counsel on behalf of respondent no.10, the Registrar of Companies, that the said authority has complied with the directions in terms of the order dated 28.7.2005 in C.A.366/2004. That he has assigned reasons in support of the findings in the report submitted. It is contended that action against the office of the ROC is not tenable as the alleged offences committed under Sections 628 and 629 of the Act can only be by the officers of the company. Secondly, in terms of Section 635A, no proceeding shall lie against the officers of the Government in respect of anything done in good faith in pursuance of the Act. The action of the office of the ROC are sought to be justified as being in accordance with law. Secondly, in terms of Section 635A, no proceeding shall lie against the officers of the Government in respect of anything done in good faith in pursuance of the Act. The action of the office of the ROC are sought to be justified as being in accordance with law. In the light of the above, it would be seen that the present application is a reiteration of the application filed earlier by the very applicant in C.A.366/2004 disposed of on 28.7.2005. From a perusal of the earlier order this Court had prima facie opined that the two charges created on 16.1.1996 and 18.3.1996, respectively, in respect of assets of the company were duly registered with the Roc. However, on the question whether there was compliance with Section 138 of the Act by the ROC in having entered the discharge and satisfaction of the charges, could not be answered without the relevant material being placed before the court. 6. This Court also took note of the fact that there was admittedly no discharge of the loans and the mere misuse of funds by the errant Directors named above would not efface the charges recorded in terms of Sections 125 of the Act. This Court had directed the ROC to hold an enquiry on the basis of the representation to be made by the applicant and to act in accordance with law. As the ROC has now filed a report to state, in effect, that no further action is warranted – the question that would arise for consideration is whether the facts and circumstances warrant this Court to issue directions as prayed for. 7. As can be seen from the tenor of Section 621, a Court shall take cognizance of any offence against the Act, which is alleged to have been committed by any company or any officer thereof only on the complaint in writing of the Registrar, or of a shareholder of the Company or of a person authorized by the Central Government in that behalf. It is not contemplated that such a complaint can also be compelled to be made by this Court. Especially so when the ROC who was specifically directed to enquire as to whether there was a violation of the law as complained and the ROC, in turn, expressing that there may not be any room for complaint. It is not contemplated that such a complaint can also be compelled to be made by this Court. Especially so when the ROC who was specifically directed to enquire as to whether there was a violation of the law as complained and the ROC, in turn, expressing that there may not be any room for complaint. The official liquidator in his report in OLR 263/2007 dated 29.5.2007 has remained equally non-commital-while stating that on verification of documents of the company in liquidation which is maintained by the ROC-that the Official Liquidator is not in a position to state whether a notice has been sent by the Registrar of Companies to the secured creditors as required under Section 138 of the Companies Act. There are however two aspects-firstly, whether there was in fact a discharge and satisfaction of the loan amounts in the respondent-directors seeking to file with the Registrar of Companies the two sets of Forms no.13 and 17 as on 16.7.1996 and 2.8.1996 actually registered on 1.11.2001 and 29.10.2001, respectively. Admittedly, there was not actual satisfaction of the loan –it is the case of the respondent-directors however, that the charges created in the first instance were itself invalid and hence rectification of the same under Section 141 of the Act did not arise. But it was only by way of abundant caution, the said Forms were filed which were duly acted upon by the ROC. And it is on that basis that the Statement of Affairs had been filed. However, from a perusal of the Statement of Affairs and List E “Unsecured Creditors” found at Page 40 of the application, there is a declaration to the following effect. “Includes Rs.3,00,00,000 (Rupees three hundred lakhs only) covered as secured in Company’s books but treated as unsecured since the security offered stands satisfied.” This is a false and incorrect statement and is established on the admitted position as indicated in the statement of objections of the respondent-directors. The specious plea as to the charges itself being invalid is not tenable. This aspect of the matter though peripherally addressed by the Court earlier, the issue was not taken to its logical conclusion. The Second aspect of the matter is the irregular proceedings before the ROC. The specious plea as to the charges itself being invalid is not tenable. This aspect of the matter though peripherally addressed by the Court earlier, the issue was not taken to its logical conclusion. The Second aspect of the matter is the irregular proceedings before the ROC. It is claimed that there are no records available to ascertain whether notice was issued of the filing of Forms 13 and 17 by the Company, to the applicant. The loss of the records is not adequately explained. The belated registration of such alleged discharge on satisfaction of the loans is also not explained. The ROC was not competent to receive the said Forms 13 and 17 for purposes of purported rectification of the charges duly registered The Registrar of Companies in his report, understandably, has down played the gross irregularities – (though the present incumbent may not be answerable for the same) for the obvious reason that otherwise he would have unhappy task of bringing it to the attention of his superiors in order that action may be taken against the person responsible, with possible criminal action. Insofar as the first aspect is concerned, sub-section (2) of Section 621 lays down that sub-section (1) will not apply to any action taken by the liquidator of a company in respect of any offence alleged to have been committed in respect of any of the matters included in Part VII (Sections 425 to 560) or in any other provisions of the Act relating to the winding-up of companies. There is an obviously false statement made in the Statement of Affairs filed and endorsed by the deponents of all the affidavits filed in support of the same. And for good measure, though there was no actual payment and discharge of the loan transactions it is, with impunity, reiterated in the pleadings in relation to this application, though sought to be justified on untenable premises. The official liquidator is hence obliged to proceed against the concerned by initiating appropriate proceedings in respect of the offence or offences. Insofar as the alleged criminal or civil misconduct of the officer of the ROC is concerned, in view of the apparent irregularity in the conduct of the concerned Registrar of Companies at the relevant point of time, it would be for the Central Government to take any action as against the said officer if it is so inclined. Insofar as the alleged criminal or civil misconduct of the officer of the ROC is concerned, in view of the apparent irregularity in the conduct of the concerned Registrar of Companies at the relevant point of time, it would be for the Central Government to take any action as against the said officer if it is so inclined. Accordingly, the present application stands disposed of while directing the official liquidator to initiate appropriate proceedings against the concerned respondents. The office of the Registrar of Companies is directed to delete the entries made in the Register of Charges on the basis of two sets of Forms 13 and 17, dated 16.7.1996 and 2.8.1996, respectively, filed on behalf of the respondent-company and registered on 29.10.2001 and 1.11.2001, as the same have been entered contrary to Section 141 of the Act. A copy of this order shall be forwarded to the second respondent.