Case Law Companies 1954 Petitioner Dhirendra Chandra Pal Vs Respondent Associated Bank of Tripura Ltd

Case Law Companies 1954

Petitioner Dhirendra Chandra Pal

Vs Respondent Associated Bank of Tripura Ltd

DATE OF JUDGMENT:-06/12/1954








CITATION: 1955 AIR  213  1955 SCR  (1)1098


Banking Companies Act (X of 1949), ss. 45-B, 45-G  (inserted by  Act XX of 1950)*-Claims decided under s.  45-B-Procedure to be followed.

HEADNOTE: The object of the Banking Companies Act, 1949 is to  provide a  machinery  for expeditious and speedy  termination  of proceedings  in   liquidation and in the absence  of any specific provisions of the Act to the contrary or any  rules framed by the High Court under s. 45-G of the Act  (inserted by  Act XX of 1950) the normal procedure for  deciding all claims under s. 45-B of the Act (inserted by Act XX of 1950) should be a summary proceeding originating with an  applica-tion.            But  the court in its-discretion may  think  fit  to direct or the rules of the High Court may provide  that  a suit  is  the proper remedy in view of the nature  of  claim made and the questions involved in such claim. Sree Bank v. Mukherjee ([1950] 55 C.W.N. 400), referred to.


CIVIL APPELLATE JURISDICTION: Civil Appeal No. 91 of 1953. Appeal from the Judgment and Decree dated the 12th  day  of June  1951  of the High Court of Judicature at Calcutta  in Appeal from Original Decree No. 56 of 1951 arising  out  of the Decree dated the 8th day of March 1951 of the said    High

Court exercising its Ordinary Original Civil Jurisdiction in Suit No. 3993 of 1950. H.J.  Umrigar, Rameshwar Nath and Rajinder Narain  for the appellant. A.N. Sinha and P. C. Dutta for the respondent. 1954. December 6. The judgment of the Court was  delivered by

JAGANNADHADAS  J. -This is an appeal, by leave of  the High Court of Calcutta under article 133 (1) (c) For these two sections 45-B and 45-G (inserted by Act XX  of 1950) two now sections 45-B and 45-U wore inserted by s.  10 of Act LII of 1953. 1099 of  the Constitution, from its judgment  in  its  appellate jurisdiction confirming that of a Single Judge of the Court. The point involved is a short  one and  arises  on the Following facts. The respondent before us, Associated Bank of Tripura Ltd., went into liquidation on the 19th December, 1949. A month prior to the liquidation, i.e., on the    19th November, 1949, the appellant before us and the Bank entered into  an agreement whereby the appellant became a tenant  of the Bank in respect of a certain parcel of land.  One of the terms of the tenancy-agreement was that the appellant should vacate the land demised on 24 hours’ notice.  After the Bank went into liquidation the Liquidator served on the appellant on  the 18th April, 1950, a notice terminating his  tenancy and  calling  upon him to vacate the land and to  hand over possession by the end of April, 1950.

This not having been done,  the Liquidator filed an application on  the  original side of the High Court under section 45-B of the  Banking Companies Act for ejectment of the appellant and obtained anex parte decree against him on the 10th July, 1950.  On the 28th  August, 1950, the appellant applied for setting  aside the ex parte decree but the application was dismissed on the 7th  September, 1950.  Consequently the appellant filed the Present suit on the 12th September, 1950, in  the  original side of the High Court, asking for a declaration that the ex parte  decree against him was made without jurisdiction and was  a nullity and  that  he continued  to  be  a  tenant not with standing the said ex parte decree. The plaint does not specifically mention the reason for claiming the  decree to be without jurisdiction or nullity.

But the point  taken at the trial was that the Court had no power to deal with  a question relating to the ejectment of the appellant from the demised land, in  a summary proceeding  initiated on an application but could pass  the decree  only on  a suit regularly instituted. This contention was raised on the basis of  a judgment of the Calcutta High Court given on the 24th August, 1950, that in respect of such a relief under section 45-B a summary proceed- 1411100 ing  is not maintainable but that a suit has to  be  filed. This  decision has  since been reported  in  Sree  Bank  v.

Mukherjee(1). The  learned  trial Judge  before  whom the Present suit came up was of the opinion that though the  ex parte decree for  ejectment was  obtained  on  a   wrong proceeding,  there was no inherent lack of  jurisdiction  in the  Court  and that the fact of  the decree having been obtained in a wrong proceeding did not render it a  nullity. This view of the learned Judge was affirmed by the Appellate Bench. It has not been disputed before us that the relief by way of ejectment.  Of the appellant from the land demised  is one which  would  fall within the scope of section 45-B  of the Banking Companies Act and that the Liquidator could obtain the  said  relief by an appropriate proceeding in  the High Court. Indeed, the learned appellate Judges specifically held  that  the Court had  by virtue of  section   45-B, jurisdiction over the subject-matter of the dispute and this view  has not been challenged having regard to the wide and comprehensive language of the section. But what is urged is that  the Court having followed the view taken in  the Sree Bank  Case  (supra) (whose correctness was  not  challenged before it) that the appropriate proceeding to obtain such  a relief was  only  a  suit,  it should have, consistently therewith, held the decree obtained on a mere application to be invalid.  In the Court below the question as to  whether the decree obtained on a wrong proceeding was one so  wholly without jurisdiction as to be a nullity or whether  it was vitiated  only by  a  mere  irregularity  in  the  mode  of obtaining  the relief, and hence not open to attack  in collateral  proceedings was the subject-matter of  elaborate consideration. It appears to us, however, that it would  be more satisfactory to consider and decide   whether the basic assumption  which gave rise to this argument, viz. That the appropriate  proceeding under section 45-B was only  a suit and  not  an application, is correct.  It is necessary for this purpose to notice the relevant sections.  Section 45-A of the Banking Companies Act, 1949, as amended by Act XX  of 1950

(1)  [1950] 55 C.W.N. 400.1101

defines ‘Court’ for the purposes of Part III and Part  III-A of the Act as “the High Court exercising jurisdiction in the place  where  the registered office of the Banking  Company concerned, which is being wound up, is situated”. The said section also provides that “notwithstanding anything to the contrary contained in the Indian Companies Act, 1913, or  in any notification, order or direction issued thereunder or in any  other law for the time being in force, noother  court (i.e.  a  court other than the one as above  defined)  shall have  jurisdiction  to entertain any matter relating  to or arising  out of the winding up of a banking company”. Next is section 45-B (1) which is in the following terms:

“Notwithstanding anything to the contrary contained in the Indian Companies Act, 1913, or in any other law for the time being  in force, the Court shall have full power  to  decide all claims made by or Against any banking company  and all questions of properties and all other questions whatsoever, whether of law or fact, which may relate to or arise in the course of  the winding up of the  banking  company  coming within the cognizance of the Court”. Section 45-G authorises the Court to make rules -consistent with  the  Act concerning the mode of  proceedings  for the decision  of  claims and other proceedings  under  the Act. This  group  of sections in Part III-A constitute a wide departure  from the corresponding provisions of the  Indian Companies   Act.  Under  various  sections  thereof the liquidator,  after an order for winding up of a company  is made,  can approach a Company-Court for exercising  certain powers in aid of and to expedite the process of liquidation. The procedure normally adopted for the purpose is by way  of application.   But the scope of matters in respect of  which the liquidator can obtain the help of the Company-Court  by summary procedure is rather limited.  In respect  of  other matters and particularly in the matter of collecting  assets or recovering properties from third parties, (not covered by sections 185 and 186) the liquidator has to invoke the help of the 1102

appropriate Court in the ordinary way.This as is well known leads to a great deal of inevitable delay and expense. When in 1949 special legislation in respect of Banking  Companies was taken up, it was one of the stated objects, to provide a machinery  by  which proceedings in liquidation of  Banking Companies  could be expedited and speedily  terminated. It was found,  however, that the Act of  1949,  as  originally enacted,  was inadequate to achieve that purpose.  It is  in this situation that the Amending Act of 1950 introduced into the Act of 1949 an entire Chapter, Part III-A, consisting of sections 45-A to 45-H under the heading “Special  provisions for speedy disposal of winding up proceedings”. It  appears to us that, consistently with this policy  and  with the scheme of  the Amending Act, where the liquidator  has  to approach the Court under section 45-B for relief in  respect of  matters legitimately falling within the  scope  thereof, elaborate  proceedings by way of a suit involving  time and expense,  to the detriment of the ultimate interests of the company under liquidation, were not contemplated.In the absence of any specific provision in this behalf in the Act itself and in the absence of any rules framed by  the High Court  concerned under section 45-G, the procedure  must  be taken  to be one left to the judgment and discretion of the Court, having regard to the nature of the claim and of the questions therein involved.

In  the Sree Bank Case (supra), the question that arose for direct consideration was  one  of  limitation. But in considering  it and when pressed with the argument that,  if the appropriate proceeding was by way of an application       and not  a suit, difficulties might arise as to the question  of limitation,  the  learned  Judges  felt it  unnecessary  to consider  whether or not the Limitation Act applies  to the applications under section 45-B and if so what would be the period which would govern such applications. They proceeded to  decide  the particular case before them,  viz.  A case relating to a debt due to the Bank, on the view that  “there is nothing in the Companies Act or the Banking Companies Act which permits a 1103 liquidator  to recover debts from  debtors  of  a  Banking Company by a summary proceeding such as an  application  to the Company Judge” and therefore held that  no application for recovery would lie and that only a suit should have been brought for which the period of limitation was the  ordinary period provided in the Limitation Act. It appears  tous, with great respect to the learned Judges, that this approach as  to the nature of the proceeding required  or  permitted under  section 45-B of the Banking Companies  Act  was not correct.  The question is not whether section 45-B permitted summary proceedings but the question is whether the  section prescribed definitely a particular method of proceeding and whether consistently with the policy of the Act it was not to  be presumed that a speedy and cheap remedy          was  to  be available  to  the  Liquidator, unless  the  Court  in its discretion  thought fit to direct or the rules of  the High Court provided that a claim of a particular nature had to be pursued by a suit.  It is to be remembered that section 45-B is not confined to claims for recovery of money or  recovery of  property,  moveable or immoveable, but  comprehends all sorts  of claims which relate to or arise in the  course  of winding up. Obviously  the  normal  proceeding  that the section contemplated must  be taken to be a summary proceeding by way of application.

We  are clearly of the opinion that in the present case the Court  which passed the ex parte decree was fully  competent to decide the matter raised before it on summary application and to pass the ex parte decree which has been challenged by the suit and that the decree of the Courts below  dismissing the  suit  is correct. We are not to be  supposed  to have expressed  any opinion on the question of  limitation  which was  raised  before  the High Court in the  Sree  Bank Case (supra).  That is a question which may have to be decided in an appropriate case when it is raised directly.The appeal is accordingly dismissed with costs.

Appeal dismissed, 1104

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