Case Law Companies Act Sree Bank Ltd Vs Sarkar Dutt Roy and Co

PETITIONER:
SREE BANK LTD.

Vs.

RESPONDENT:
SARKAR DUTT ROY AND CO.

DATE OF JUDGMENT:
09/04/1965

BENCH:
ACT:
Banking Companies Act (10 of 1949′), s. 45-O and Banking
Companies (Amendment) Act (52 of 1953)–Applicability to
instalment decree.

 

HEADNOTE:
In 1949, the Banking Companies Act was passed with a
view to protect and secure the interests of depositors. In
1953 s. 45-O was enacted by the Banking Companies
(Amendment) Act, in pursuance of the recommendations of
the Banking Companies Liquidation Proceedings Committee.
Section 45-O (1) provided that in computing the period of
limitation prescribed for an application by a banking
company which is being wound up, the period commencing from
the date of the presentation of the winding up petition
shall be excluded; and s. 45-O (3) provided that sub-s. (1)
shall also apply to a banking company in respect of which
the winding-up petition was presented before the
commencement of the Amendment Act, that is, 30th December
1953.
On 1st May 1947, a decree for a sum of money had been passed
in favour of the appellant–Bank, against the
respondents. The decree provided that the amount which was
due on 30th May should be paid in 6 annual instalments each
payable on 30th December from 1947 to 1952. The decree also
provided that if the respondents failed to pay any
instalment within 4 months of its becoming due, the
appellant shall be entitled to realise all the amounts then
due, by execution. None of the instalments was paid. On May
11, 1948 a petition for winding up of the appellant was
presented and it was ordered to be wound up on August 3,
1948. In August 1956 the liquidator filed an execution
application on the original side of the High Court, for
realising the amounts. The application was allowed, but the
High Court, in Letters Patent Appeal, held that the
application was barred by time.
In appeal to this Court, the appellant contended
that in view of s. 45-O the application was within time:
while the respondents contended that: (1) all the
instalments fell due by 1st May 1948 by operation of the
default clause, and therefore, the application was barred by
Art. 182 (7) of the Limitation Act, 1908, by the time s. 45-
0 was brought on the statute book; (ii) the section has no
retrospective operation so as to revive a debt which had
become barred at the date of its enactment; and (iii) if the
default clause gave only an option to the appellant so that
it could apply for execution as and when an instalment fell
due, then, the instalments which fell due in 1947, 1948 and
1949 had become barred before the enactment of the section;
and the instalments which fell due during the years 1948 to
1952 were also not saved from the bar of limitation, as the
section applied only to those cases where the right to
execute had arisen before the presentation of the winding-up
petition.
709
HELD: (By full Court): Section 45-0 saved the execution
application from the bar of limitation imposed by Art.
182(7) of the Limitation Act. [712H; 719A; 727D; 742A]
(i) Per Sarkar, J: The right to apply for execution in
respect of the instalments under the decree arose on the
dates on which they respectively fell due. [713H]
The default clause was only intended for the benefit
of the appellant and gave an option to the appellant to sue
for the entire amount or waive the benefit of the option,
and the appellant had not taken advantage of it. [713D, E,
H]
Ram Culpo Bhattacharji v. Ram Chunder Shome, (1887)
I.L.R. 14 Cal. 352, referred to.
(ii) Per Sarkar, J: There is no reason why a distinction
should have been intended between debtors, the claims
against whom might have become barred before the section was
enacted and those, the claims against whom, became barred
thereafter. In fact, the object of the section would be
better achieved by applying it to both classes. [715 F-G]
One of the methods by which, the object of the Act which
was to protect depositors, could be achieved is by extending
the period of limitation for enforcement of the claims of a
bank in liquidation, so that more money may be collected for
payment to the depositors. That being so, the largest
extension of the period, which the language used is capable
of, must have been intended. [715E-F]
Besides, s. 45-O(3) expressly makes sub-s. (1),
applicable to a banking company being would up on a petition
presented before 30th December 1953 Under s. 45-0(1) and
(3) a period which had started to run before that date could
be excluded, and, there is no hint that such exclusion is
confined to cases where the right had not become barred by
that date. Subs. (3) must have been intended to give full
retrospective effect to subs. (1), as otherwise, it need not
have been enacted, because, sub-s. (1) would, by its own
terms, apply to cases of winding up on a petition presented
before the Amending Act, and, considering the intention of
the Act, sub-s. (3) could not have been enacted as a
surplusage or ex abundanti cautela. Therefore, s. 45-0(1)
applies to applications by the banking company, even when
they had become barred before the Amending Act. [716 B-E H;
717 C]
Per Wanchoo, J: The appellant would be entitled to
exclude the entire period from 11th May 1948–the date of
presentation of the winding-up application–upto the date of
the execution application and would thus be entitled to
execute the decree for the total of the 6 instalments due.
[726 E]
The language of s. 45-0(1) implies that it was meant to
be retrospective and that conclusion becomes inevitable when
it is read with sub-s. (3), in the background of the remedy
that the legislature intended to provide for the benefit of
depositors. Section 45-0(1) imperatively lava down that
where an application is filed by a banking company which was
being would up on or after 30th December 1953 the Court must
exclude the period commencing from the date of
presentation of the winding up petition to the date of the
application in computing the period of limitation. Further
by virtue of subs (3), subs. (1) applies not only to those
banking companies which were being wound up on petitions
presented on or after the section came into force, but also
to those banking companies where the winding-up petition was
made before 30th December 1953 and whether the winding up
order was made before or after that date provided the
banking company was in the process of being wound up when
the application was filed; and, there is no scope for the
court to consider
710
whether the application, if filed before 30th December 1953,
would barred by limitation or not. [722H; 723 A-B, D-E; 724
E]
Per Raghubar Dayal J: The appellant’s application for
execution is maintainable and not barred by time, because,
the effect of s. 45-0(1) is that, in applications made by a
banking company which is being would up, or for whose
winding up a petition has been presented before 30th
December 1953, the period of limitation is arrested on the
date of the presentation of the winding up petition, and it
is not material whether such date is earlier than 30th
December 1953 or net. Therefore, the sub-section is
retrospective, and an application can be made even in regard
to matters with respect to which such action could be taken
on the date of the presentation of the windup petition, but
could not be taken, because of efflux of time, on 30th
December 1953. [731C; 736G. 737E]
One of the conditions for the application of the sub-
section is that a “banking company is being wound up”, and
this condition would be satisfied by all companies with
respect to which winding up orders had been made either
before 30th December 1953 or thereafter. There is nothing
in the language of the sub-section to limit the expression
to those companies which respect to which winding up orders
are made subsequent to that date. The provision is not for
the benefit of such companies only, but, is for the benefit
of all companies which would be in the process of winding up
during the enforcement of the Act. This is also apparent
when sub-ss. (1) and (3) are read together. So read, the
period of exclusion would be available in connection with
applications by a banking company which is being wound up or
with respect to which a petition for winding up has keen
made prior to 30th December 1953. If the provisions of sub-
s. (1) can apply to the banking companies with respect to
which proceedings on a winding petition were pending on 30th
December 1953, there is no reason why they should not apply
to banking companies with respect to which winding up orders
had been made prior ‘to that date. Further, if a restricted
interpretation is given to sub-s. (1), by confining it to
cases where the cause of action was not barred on 30th
December 1953, then sub-s. (3) will have no utility,
because, that sub-section only provides that whatever
advantage a banking company can derive from the provisions
of sub-s. (1) when it is being wound up, would be available
to it even if it is not being wound up, if a petition for
its winding up had been presented prior to 30th December
1953. The only case in which the banking company can take
advantage of sub-s. (3), then, would be vhen the cause of
action for the application has not lapsed by that date and
the proceedings on a winding up application were pending on
that date. But, such cases would be covered by the language
of sub-s. (1)itself, for, the cause of action would be alive
on 30th December 1953 and the winding up order would be made
subsequent to that date. [734-B-E; 736B, E-H]
Case law referred to.
(iii) Per Sarkar and Raghubar Dayal, JJ.: Section 45-
0(1) should be read as permitting the exclusion of the
entire period commencing from the date of the presentation
of the winding up petition where the debts became due before
that date, and, in cases There the debt became due
subsequently such part of that period as commences from the
date of the accrual of the debt. [718E; 741F]
Per Sarkar, J.: There is no reason why it should have
been intended that debts which fell due before the
presentation of the winding up petition but were not barred
by that date could be
711
recovered, and not those which became due thereafter. No
doubt, if the sub-section is applied to the case of a debt
accruing due to a banking company after the presentation of
a winding up petition, such a debt would be completely free
from the bar of limitation, but since it has that effect in
the case of debts which accrued due prior to the
presentation of the petit,ion and had not become barred on
that date, the section must be construed as permitting the
whole of the period commencing from the presentation of the
petition to be excluded where in fact it could be done, and
a part of that period only where the whole of it could not
be excluded. [717F, H; 718C, H]
Cortis v. The Kent Water Works Company, 7 B & C 314,
referred to.
Per Raghubar Dayal, J: The appellant waived its right
under the default clause of the decree and sought execution
for the realisation of the various instalments. Even so the
execution application was within time, because, a banking
company is entitled to exclude, the period from the date on
which the winding up petition was presented upto the date
of the institution of the application, from the period of
limitation prescribed, and it would be illogical to hold
that it is not entitled to ask that a shorter period, as the
case would be, when the cause of action arose subsequent to
the presentation of the winding up petition, should be
excluded. It may be that this means, the entire period of
limitation is abrogated with respect to causes of action
arising subsequent to the date of the winding up petition,
but it would be anomalous to hold that action can be taken
with the help of the sub-section with respect to causes of
action’ which had arisen much earlier than the date of the
presentation of the winding up petition, but action cannot
be taken with respect to causes of action arising subsequent
to such a date if it had not been taken within the
prescribed period of limitation. [740G, 741C, G-H]
Per Wanchoo J.: The present case is governed by s. 45-
0(3)’ because, the winding up petition was presented before
s. 45-0(1) came into force, but by virtue of sub-s. (3),
sub-s. ‘(1) would apply. As there was default in the payment
of the instalment due on 30th December 1947, the right to
execute all the remaining instalments arose on ist May 1948
and since that right was not waived, limitation for all the
instalments began even on ist May 1948, while the winding up
application was filed on 11th May 1948, and so, the
appellant could take advantage of the section and execute
the decree for the entire amount. [726A-E; 727C-D]
Exclusion of time cannot take place where time has not
begun to run before the date from which the exclusion
begins. Therefore, in order that s. 45-0(1) should apply, it
is necessary that the period of limitation for the
application should have begun to run before the date of
winding up petition, but should not have run out. [724-C]
On this interpretation, in the case of instalment
decrees without a default clause, the instalments which
became due and were not paid before the winding up petition
may be recoverable by execution, while in the case of
instalments which became due after the presentation of the
petition, the exclusion provided by the section would not
come into play. But if the sub-section is interpreted as
stopping limitation in all cases, after the presentation of
the winding up petition, it will result in another anomaly,
that there would be no limitation at all in a case where the
liquidator files a suit and gets a decree. [7241; 725A]
712

 

JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 76 of
1952.
Appeal from the judgment and order dated September 22,
1959 of the Calcutta High Court in Appeal from original
order No. 230/1958.
A.N. Sinha and P.K. Mukherjee, for the appellant. D.N.
Mukherjee, for the respondent.
The following judgments were delivered:
Sarkar, J. On May 1, 1947, a decree was passed in favour
of the appellant bank against the respondents by consent of
parties for payment of Rs. 31,000/- in the manner specified.
The decree provided that if the respondents failed to pay
any of the instalments mentioned in it within four months of
the date of its becoming due, the appellant bank “shall
deem all … instalments in default and shall be entitled to
realise all the said amounts by execution”. The amounts
payable under the decree by May 30, 1947 were all duly paid.
That left a sum of Rs. 21,000/- payable by six annual
instalments, each payable on the 30th December of a year,
the first instalment being payable in 1947 and the last in
1952. None of these instalments was paid and an application
for realising them by execution was made on August 26, 1957.
In the meantime a petition for winding up the appellant bank
had been presented on May 11, 1948 and an order for winding
up had been made on August 3, 1948. Since then the
appellant bank has been in the course of winding up. The
application for execution was made by the liquidator in the
course of the winding up.
Under Art. 182(7) of the First Schedule to the
Limitation Act 1908 an application for execution is barred
if not made within three years from the date on which the
amount sought to be realised was payable under the decree.
On December 30, 1953, s. 45-O was introduced in the Banking
Companies Act, 1949 by the Banking Companies (Amendment)
Act, 1953. Sub-section (1) of that section is in these
terms:
S. 45-0. (1) Notwithstanding anything to
the contrary contained in the Indian
Limitation Act, 1908 or in any other law for
the time being in force, in computing the
period of limitation prescribed for a suit or
application by a banking company which is
being wound up, the period commencing from the
date of the presentation of the petition for
the winding up of the banking company shall be
excluded.
The appellant bank claims that this section saves its
application for execution from the bar of limitation imposed
by Art. 182(7). The respondents’ answer to this contention
is first that s. 45-O has no retrospective operation; it
does not revive a debt which was already barred at the date
of its enactment. Then they say that
713
all the instalments fell due on April 29, 1948 by the
operation of the default clause and therefore, they were all
barred under Art. 182(7) by December 30, 1953 when s. 45-O
was brought on the statute book. Thirdly they say that if
it is held that the default clause gave the appellant bank
an option which it had not exercised and the right to apply
for execution in respect of the instalments arose on the
dates they respectively fell due, the instalments which fell
due on December 30 of the years 1947, 1948 and 1949 had
become barred before the date of the enactment of s. 45-0
and that section could not revive them and the instalments
which fell due in the years 1948, 1949, 1950, 1951 and 1952
were not saved from the bar of limitation by s. 45-0 as it
provided for exclusion of a period commencing from the
presentation of the petition for winding and was, therefore,
confined to cases where the right had arisen before such
presentation, which the right in regard to these instalments
had not.
First, as to the effect of the default clause, no real
difficulty arises. It obviously gave an option to the
appellant. As was said in Ram Culpo Bhattacharji v. Ram
Chunder Shome(1), “The proviso by which the whole amount of
the decree becomes due upon default in payment of any one
instalment is a proviso which, look at it how you will, is
put in for the benefit of the creditor, the decree-holder,
and his benefit alone; and when a proviso is put into a
contract or security, and in ‘security’ I include ‘decree,’
for the benefit of one individual party, he can waive it, if
he thinks fit.” There is not the least doubt that the
default clause in the case in hand was intended for the
benefit of the appellant bank; the clause had no operation
till the appellant bank wanted to take advantage of it. The
High Court took that view and with that I am in full
agreement. The High Court further held that the appellant
bank had not exercised the option to enforce that clause.
Bachawat J. expressly said that the appellant “in fact has
waived the benefit of that option.” The learned Chief
Justice held in view of the option, that “the starting point
of limitation will be the dates On which each instalment
became due.” He could have held this only in the view that
the option had not been exercised. None of the parties
appears to have contended to the contrary in the High Court.
This being a question of fact it cannot be raised for the
first time in this Court. On such a question of fact, the
High Court’s finding is binding on us. Furthermore,
undoubtedly if the respondents wished to contend that the
option had been exercised, it was for them to have given
evidence of such exercise but they did not do so. No such
evidence has been brought to our notice from the records of
the case. It has, therefore, to be held that the right to
apply for execution in respect of the instalments under the
decree arose on the dates on which they respectively fell
due.
The next question as to whether s. 45-0 (1) has a
retrospective operation is of real difficulty. Having.
given the matter my
(1) (1887) I.L.R 14 C.I 352, 354.
714
most anxious consideration, it seems to me that the better
view would be to hold that it has such an operation. The
general rule no doubt is, as was stated by Wright J. in In
re. Athlumney,(1) “Perhaps no rule of construction is more
firmly established than this–that a retrospective operation
is not to be given to a statute so as to impair an existing
right or obligation, otherwise than as regards matter of
procedure, unless that effect cannot be avoided without
doing violence to the language of the enactment. If the
enactment is expressed in language which is fairly capable
of either interpretation, it ought to be construed as
prospective only.” It can no doubt be argued with force that
no violence will be done to the language used in sub-s.
(1) of s. 45-O if it is read as applying only to cases where
the right to apply has not become barred at the date of its
enactments. But there are other considerations.
Two reasons have operated on my mind to lead me to the
conclusion that the general rule should not be applied in
the present case. First, it is recognised that the general
rule is not invariable and that it is a sound principle in
considering whether the intention was that the general rule
should not be applied, to “look to the general scope and
purview of the statute, and at the remedy sought to be
applied, and consider what was the former state of the law
and what it was that the Legislature contemplated.”: see
Pardo v. Bingharn(2). Again in Cries on Statute Law, 6th
ed., it is stated at p. 395, “If a statute is passed for the
purpose of protecting the public against some evil or abuse,
it may be allowed to operate retrospectively, although by
such operation it will deprive some person or persons of a
vested right.” To the same effect is the observation in
Halsbury’s Laws of England, 3rd ed., vol. 36 p. 425. This
seems to me to be plain commonsense. In ascertaining the
intention of the legislature it is certainly relevant to
enquire what the Act aimed to achieve.. In Pardo v.
Bingham(2) a statute which took away the benefit of a longer
period of limitation for a suit provided by an earlier Act
was held to have retrospective operation as otherwise it
would not have any operation for fifty years or more in the
case of persons who were at the time of its passing
residing beyond the seas. It was thought that such an
extraordinary result could not have been intended. In
R.v. Vine(3) the words “Every person convicted of felony
shall for ever be disqualified from selling spirits by
retail …… and if any person shall, after having been
so convicted, take out or have any licence to sell spirits
by retail, the same shall be void to all intents and
purposes” were applied to a person who had been convicted of
felony before the Act was passed though by doing so vested
rights were affected. Melior J. observed (pp. 200-201). “It
appears to me to be the general object of this statute that
there should be restraints as to the persons who should be
(1) (1898) 2 Q.B.D. 547, 551-552.
(2) (1869) L.R. 4 Oh. A. 735, 740.
(3) (1875) 10 Q.B. 195.
715
qualified to hold licences, not as a punishment, but for the
public good, upon the ground of character … A man
convicted before the Act passed is quite as much tainted as
a man convicted after; and it appears to me not only the
possible but the natural interpretation of the section that
any one convicted of felony shall be ipso facto
disqualified, and the licences, if granted, void.”
Now the object of the present Act is beyond doubt. It
is well known that prior to 1949 in our country a large
number of mushroom banks had come into existence and were in
the control of persons not very scrupulous or competent.
Many banks came to grief and failed with the result that the
depositors largely lost their moneys. It was with the
object of giving relief to these innocent depositors that
the original Act of 1949 and the Acts amending it were
passed. A few of the sections may be referred to by way of
illustration. Section 43 of the Act provides that every
depositor shall be deemed to have proved his claim for the
amount shown in the books of the bank until the liquidator
showed reasons for doubting the correctness of the entry.
Section 43A gives a right to preferential payment upto a sum
of Rs. 250/- to such depositors. Indeed in Joseph Kuruvilla
Vellukunnel v. The Reserve Bank of India) it was observed by
this Court at p. 656, “the whole intend (sic.) and purpose
of that Act is to secure the interests of the depositors.”
There need now be no doubt about the object of the Act. One
of the methods by which that object can be achieved clearly
is by extending the period of limitation for the enforcement
of the claims of a bank in liquidation so that more money
may be collected for payment to the depositors. That is why
s. 45-O and its predecessor s. 45-F had been enacted. Both
extended the existing period of limitation in regard to
claims by a bank against its debtors. That being so, it
would be natural to think that the largest extension which
the language used is capable of giving was intended. Then I
find no reason why a distinction should have been intended
between debtors the claims against whom might have become
barred before the section was enacted and those the claims
against whom became barred thereafter. The object would be
better achieved by applying the section to both classes. I,
therefore, think that the Act was intended to have a
retrospective operation.
The other reason why I think that sub-s. (1) of s. 45-0
has a retrospective operation is provided by the terms of
sub-s. (3) of that section. Retrospective operation is of
course a question of the intention of the legislature and
that intention has to be gathered from the whole statute.
The two sub-sections have, therefore, to be considered
together: see Barber v. Pigden(1) and Hutchinson v. Jauncey
(3). How sub-s. (3) is in these terms:
The provisions of this section, in, so far
as they relate to banking companies being
wound up, shall also apply to a banking
company in respect of which a petition
(1) [1962] Suppl. 3 S. C.R. 622. (2)
(1937)IK.B. 664.
(3) (1950)IK.B. 574. (D)5SCI–7
716
for the winding up has been presented before
the commencement of the Banking Companies
(Amendment) Act, 1953.
It expressly makes sub-s. (1) applicable to a banking
company being wound up on a petition presented before the
amending Act. That would indicate that the first sub-section
was intended to apply to suits and applications by a banking
company in liquidation even where the winding up petition
had been filed before the amending Act. It should,
therefore, apply to all such suits or applications even when
they had become barred before the amending Act. Again it is
indubitable that as a result of the third subsection a
period which had started to run before the amending Act is
to be excluded under the first sub-section. The third
subsection gives no hint that such exclusion is to be
confined to cases where the right had not become barred
before that Act. 1t expressly gives the first sub-section a
retrospective operation by permitting exclusion of an
antecedent period. All this is strong indication that sub-
s. (1) is to have a retrospective operation.
If that is not the intention, then it is clear to me
that sub-s. (3) need not have been enacted at all for
clearly the first sub-.section would by its own terms have
applied to cases of winding up on a petition presented
before the amending Act. It applies to all banking
companies being wound up and. therefore, also to such
companies as are being wound up on a petition presented
before that Act. It could be said that even then the first
sub-section not have a retrospective operation but would
only apply prospectively to a banking company being wound up
on a petition presented before the Act. This may be
illustrated by two cases. In R.v. St. Mary, Whitechapel
(Inhabitants)(1) Lord Denman C.J. said that a statute “is
not properly called a retrospective statute because a part
of the requisites for its action is drawn from time
antecedent to its passing.” Again in Master Ladies
Tailors Organisation v. Minister of Labour and National
Service(2) it was observed, “The fact that a prospective
benefit is in certain cases to be measured by or depends on
antecedent facts does not necessarily …… make the
provision retrospective.”
Why then was sub-s. (3) enacted? It must have been to
give sub-s. (1) full retrospective operation, to make it
affect vested rights. If it were not so, sub-s. (3) would
have been a mere surplusage or enacted ex abundanti cautela.
A statute is not to be so read unless that reading is
compelled by the words used. There are no such words and I
do not think that reading is justified by the rule of
presumption that a. statute is not intended to have a
retrospective operation. In this case particularly because
of the clear intention of the Act to protect a sizable
section of the public consisting of the depositors, I feel
that a reading of sub-s.
(1) (1848) 12 Q.B. 120 at. p. 127.
(2) (1950) 2 All. F.R. 525, 527.
717
(3) as a surplusage or ex abundanti cautela would be
unwarranted. Furthermore, if that sub-Section was enacted
merely ex abundanti cautela, then why did it not also say
that the provisions of s. 45-O would apply to a case where
the winding up order had been made before the Act? Why was
it not thought that caution was necessary to provide for
such a case also? I am not saying that sub-s. (3) does not
make the section apply to a case where the winding up order
had been made before the amending Act. All that I am saying
is that the omission of a reference to the case of a winding
up under such an order shows that sub-s. (3) was not ex
abundanti cautela. It must have been intended to give full
retrospective effect to s. 45-0 including sub-s. (1) of that
section.
It remains now to deal with the last point. It is said
that’ since sub-s. (1) allows the period commencing from the
date of the presentation of the petition for winding up to
be excluded in the computation of the period of limitation,
it can only apply to a case where the period of limitation
had commenced to run before that date. The contention is,
unless it did so, the whole of the period cannot be excluded
and the section permits exclusion of the whole or none. It
is, therefore, said that even if the first subsection had a
retrospective operation, it could result in saving the bar
of limitation only so far as the application concerned the
instalment which fell due on December 30, 1947 for the
petition for the winding up of the appellant bank had been
presented on May 11, 1948 and, hence, before the other
instalments became due and the period of limitation in
respect of them commenced to run.
I am not inclined to accept this contention. I see no
reason why it should have been intended that debts which
fell due before the winding up petition was presented but
were not barred on that date could be recovered and not
those which became due thereafter. It has to be remembered
that a liquidator is not always appointed on the
presentation of the petition for winding up and It does not
infrequently happen that a long time elapses between the
two. It has also to be remembered that liquidator would
require quite some time after his appointment to get
acquainted with the state of affairs of the company in
liquidation and start taking steps for the recovery of its
dues. Therefore, there is no reason to think that it was
not intended to give the benefit of the Act to a debt
accruing due to a banking company after the presentation of
a petition for its winding up. No doubt if sub-s. (1) is
applied to a case of a debt accruing due after the
presentation of the petition for winding up, such a debt
would be completely free from the bar of limitation. But,
is there any reason to think that this was not intended? I
find none apart from a rigid and somewhat technical reading
of the words used and this I am unable to accept, as it, to
my mind, manifestly defeats the object of the Act. I here
wish to point out that the bar of limitation is completely
lifted in the case of a debt accruing due before the
presentation of the petition for winding up which had not
become time barred
718
then, and it is natural to think that the intention must
also have been to lift the bar completely in the case of
debts accruing due subsequently. There is no reason to make
a distinction between the two classes of debts. I may add
that the complete lifting of the ban of limitation would not
produce an astounding result or a great hardship. It has to
be remembered that the Act is geared up to seeing that the
winding up proceedings are concluded as quickly as possible.
To ensure that, large powers have been given to the Reserve
Bank of India. Therefore, the removal of the bar of
limitation should not keep a debtor in suspense for an
inordinately long time. It is true that the sub-section does
not expressly say that the bar of limitation is totally
removed in certain cases. That however is no reason for
saying that it has not that effect. It clearly has that
effect in the case of debts which accrued due prior to the
presentation of the winding up petition and had not become
barred on that date, even though the sub-section does not
expressly say so. The absence of these words, therefore, is
not a reason leading to the view that debts which became due
after the presentation of the petition for winding up were
not intended to be protected.
In my view, the first sub-section should be read as
permitting the exclusion of the entire period commencing
from the date of the presentation of the petition for
winding up where the debts became due before that date and
in cases where the debt became due subsequently, such part
of that period as commences from the date of the accrual of
the debt. I think such a reading has the support of
authority. In Cortis v. The Kent Water-works Company(1)
it was held that a statute which enabled a rate to be made
upon certain persons and permitted a person against whom the
rate had been made to file an appeal against the order
making it on his entering into a recognizance, allowed a
corporation which could not enter into a recognizance, to
prefer the appeal without doing so. It was said that any
other reading of the Act would defeat the object of the
statute which was to subject corporations to rates. Bailey
J. observed, “But assuming that they cannot enter into a
recognizance, yet if they are persons capable of being
aggrieved by and appealing against a rate, I should say that
part of the clause which gives the appeal applies to all
persons capable of appealing, and that the other part of the
clause which requires a recognizance to be entered into
applies only to those persons who are capable of entering
into a recognizance, but is inapplicable to those who are
not.” (p. 331). On the same principle I would hold that the
section permitted the whole of the period commencing from
the presentation of the petition for winding up to be
excluded where it could in fact be so done and a part of
that period only where the whole of it could not be
excluded. Any other reading would, to my mind, defeat the
object of the Act and should, therefore, be avoided.
(1).7 B.& C. 314.
719
In the result 1 would allow the appeal, set aside the
judgment of the appellate bench of the High Court, and hold
that the decree was fully executable. The appellant will be
entitled to take all steps for such execution as arc
permitted to it in law. The appellant will get the costs
here and below.
Wanchoo, J. This appeal on a certificate granted by the
Calcutta High Court raises a question as to the
interpretation of s. 45-0 of the Banking Companies Act, No.
X of 1949, (hereinafter referred to as the Act). The
section was enacted in the present form by the Banking
Companies (Amendment) Act, No. LII of 1953.
It is necessary to state certain facts which are not in
dispute now in order to see how the question arises. The
appellant-bank (in liquidation) through its Midnapore branch
got a compromise decree against the respondent on May 1,
1947, for the sum of Rs. 31,000/- of which Rs. 2,155 were
paid by the respondent that very day. The decree provided
that Rs. 6,885/- were to be paid by May 9, 1947 and the
balance of Rs. 22,000/- in seven instalments as under: —
1. Rs. 1,000/- on May 30, 1947.
2. Rs. 2,000/- on December 30, 1947.
3. Rs. 4,000/- on December 30, 1948.
4. Rs. 4,000/-on December 30, 1949.
5. Rs. 4,000/- on December 30, 1950.
6. Rs. 4,000/- on December 30, 1951.
7. Rs. 3,000/- on December 30, 1952.
The sum of Rs. 6,885/- and the first instalment of Rs.
1,000/were duly paid, but the respondent did not pay the
second instalment due on December 30, 1947, nor did he pay
the subsequent instalments. On May 11, 1948, a winding-up
petition was presented in consequence of which the
appellant-bank was wound-up by an order dated August 3,
1948. Paragraph 5 of the compromise, which was part of the
decree provided that if the judgment debtor did not pay any
instalment and committed default, then four months after
such default, all the instalments shall be deemed to be in
default and the decree-holder would be entitled to recover
the entire amount of the decree by execution proceedings.
It appears that the appellant attempted by applications
presented in 1948 and 1950 to execute decree. It is,
however, unnecessary to set out the details of those
proceedings at this stage. Suffice it to say that nothing
was realised in those proceedings and that the proceedings
started on the application presented in 1950 were
subsequently transferred to the High Court in view of the
relevant provisions of the Act, which had come into force
meanwhile.
On August 24, 1957, the appellant presented an
application in tabular form for execution of the decree on
the ordinary original
720
civil side of the Calcutta High Court, and the present
appeal has arisen out of the proceedings following thereon.
It was stated in the application that the respondent had
failed to pay the amount of the decree under execution and
that the appellant had been wound up by an order of the
court dated August 3, 1948 on a petition for winding-up
presented to it on May 11, 1948. It was prayed therefore
that the High Court liquidator who was the official receiver
of the appellant be appointed receiver without security and
without remuneration to collect and realise amounts payable
to the respondent by the Executive Engineer, Works and
Buildings Department, Midnapore Division up to a maximum
limit of Rs. 35,000/-. A prayer was also made for the
appointment of an interim receiver and an interim order for
appointment of such receiver was made on August 26, 1957,
which order was confirmed on June 2, 1958. The respondent
thereupon appealed and the main question that was raised
then on its behalf was that the execution of the decree was
barred by limitation. The appellant the other hand
contended that in view of the provisions contained in s. 45-
0 of the Act, the application was within time. The appeal
court held on an interpretation of s. 45-O that the
execution was barred by limitation. It is against this order
that the present appeal has been flied on a certificate
granted by the High Court.
The contention of the respondent was that the execution
application flied in 1957 was a fresh application and was
clearly barred by time.
The appellant met this objection on the basis of the
provisions of s. 45-O of the Act which reads as under:–
“(1) Notwithstanding anything to the
contrary contained in the Indian Limitation
Act, 1908 or in any other law for the time
being in force, in computing the period of
limitation prescribed for a suit or
application by a banking company, which is
being wound up, the period commencing from
the date of presentation of the petition for
the winding up of the banking company shall be
excluded.
(2) ………
(3) The provisions of this section,
insofar as they relate to banking companies
being wound up, shall also apply to a banking
company in respect of which a petition for the
winding up has been presented before the
commencement of the Banking Companies
(Amendment) Act, 1953.”
I have already mentioned that the application for
winding up the appellant was presented on May 11, 1948. The
winding up order was made by the High Court on August 3,
1948. The Act came into force on March 16, 1949. On
March 18, 1950, the Banking Companies (Amendment) Act,
No. XX of 1950
721
came into force. On October 24, 1953 the Banking Companies
(Amendment) Ordinance No. IV of 1953 was promulgated
and lastly on December 30, 1953, the Banking Companies
(Amendment) Act. No. LII of 1953 came into force. The
case of the appellant throughout has been that the period
from May 11, 1948 (when the winding-up petition was made) to
August 26, 1957 (when the execution application was made)
had to be excluded in computing the period of limitation in
view of sub-ss. (1) and (3) of s. 45-O of the Act. This
contention was rejected by the High Court. It was held that
s. 45-O did not have retrospective effect in the sense of
reviving rights which had become barred on the date it came
into force and in this view an application for execution of
the entire amount was barred by time counting from the first
default. In the alternative it was held that instalments 2,
3 and 4 had become time barred before the coming into force
of s. 45-O on December 30, 1953 and as there was nothing in
s. 45-O which could revive claims which had become time
barred no execution could be taken out in respect of them.
The High Court further held that s. 45-O could not apply to
instalments 5, 6 and 7 as the cause of action to execute the
decree for realisation of amounts due under those
instalments arose subsequent to the date on which the
petition for winding up was presented and the language of
sub-s. (1) of s. 45-O indicated that its provisions were to
apply only to cases where the period for the presentation of
an application had commenced to run prior to presentation of
the winding-up application. The High Court consequently
held the application for execution to be barred by time.
It is well-settled that provisions of an enactment
operate prospectively. and that the right to sue or apply,
which has become barred by lapse of time under the previous
law, does not revive unless the new law, expressly or by
necessary implication, so provides. The High Court held
that there was nothing in s. 45-0 which could lead to the
conclusion that its provisions had retrospective effect in
the sense that the right to apply which had become time-
barred on December 30, 1953 when the Amendment Act came into
force, could revive, and consequently enable the appellant
to apply for execution.
The principal question therefore is whether the language
of s. 45-O (1) read with s. 45-O (3) is retrospective in
operation and revives claims that might have become barred
by Limitation on the date when that section came into force
i.e. December 30, 1953. Now so far as sub-s. (3) is
concerned, that provision is certainly retrospective in
the sense that it applies the provisions of s. 45-O (1) to
all banking companies which were being wound up on December
30, 1953, and thereafter, even though the application for
winding up might have been made before December 30, 1953.
The main purpose of sub-s. (3) obviously is to make it clear
that s. 45-O (D applies not only to those cases of banking
companies where application for winding up is made on or
after December 30, 1953 but also to those where the
application for winding-up had
722
been made before December 30, 1953 so long as the conditions
for the application of s. 45-0 (1) are fulfilled. The
effect of this on the construction of sub-s. (1) will be
considered presently.
Section 45-O (1) begins with a non-obstante clause and
prescribes a special manner of computing the period of
limitation in cases governed thereby notwithstanding
anything to the contrary in the Indian Limitation Act, 1908.
The first condition that is necessary for the application of
s. 45-O O) is that the suit or application should be by a
banking company which is being wound up. Thus s. 45-O (1)
will not apply to a banking company which is not being wound
up or where the winding up is over. It thus applies to a
banking company between the date of the winding up petition
and the conclusion of the winding up proceedings after a
winding up order has been made. Where a suit or application
is made by a banking company which is being wound up, the
sub-section provides for exclusion of a certain period in
computing the period of limitation prescribed in the Indian
Limitation Act, 1908. The exclusion is of the time
commencing from the date of presentation of the petition for
the winding up of a banking company to the date of suit or
application. Thus where a banking company which is being
wound up files a suit or makes an application on or after
December 30, 1953, when s. 45-O (1) came into force, the
subsection directs that in such circumstances the period of
limitation shall be calculated by excluding the period
commencing from the date of presentation of the petition for
winding-up upto the date of the filing of the suit or
application. These words in my opinion are categorical and
lay down what period shall be excluded when a suit or
application is filed by a banking company. which is being
wound up. I cannot agree with the High Court that in
applying s. 45-O (1) the court has to consider whether the
relief claimed in the suit or application by a banking
company which is being wound up had become barred by
limitation before December 30, 1953. when s. 45-0 came into
force. The condition necessary for the application of s.
45-O (1) is that the suit or application should be filed by
a banking company which is being wound up. Once it is clear
that the suit or application is filed by a banking company
which is being wound up, the court must exclude the period
of limitation from the date of presentation of the petition
for winding upto the date of the filing of the suit or
application. In what manner the exclusion can be made will
be considered later. But these words leave no scope to the
court to consider whether the suit or application, if filed
before December 30, 1953, would be barred by limitation or
not. They imperatively lay down that where an application
or suit is flied by a banking company (which is being wound
up) on or after December 30, 1953, when s. 45-O (1) came
into force, the court must exclude the period commencing
from the date of presentation of the petition for winding-up
to the date of the suit or application in computing the
period of limitation. Further by virture of sub-s. (3),
sub-s. (1) applies not only
723
to those banking companies which were being wound up on
applications presented on or after s. 45-O (1) came into
force, but also to those banking companies where the
application for winding-up was made before December 30,
1953, provided the banking company was in the process of
being wound up when the suit or application was filed. The
Act was passed for the benefit of depositors and to give
time to liquidators to familiarise themselves with the
affairs of banks. That is why sub-s. (3) applied sub-s. (1)
to all banking companies in liquidation even though the
petition for winding-up might have been made before the Act
came into force. It follows that the legislature intended
to help depositors in all banks in which liquidation
proceedings were not over. Sub-section (3) would lose a
large part of its efficacy if sub-s. (1) and sub-s. (3) read
together are not interpreted to provide for retrospective
operation of the provisions of sub-s. (1). It will be giving
full effect to the intention of the legislature and
advancing the remedy intended to be given to depositors if
sub-s. (1) and sub-s. (3) are read together to be
retrospective in the manner indicated above. The language
of sub-s. (D on its plain reading necessarily implies that
it was meant to be retrospective and that conclusion
becomes inevitable when it is read with sub-s. (3) in the
background of the remedy that the legislature intended to
provide for the benefit of depositors.
It may be mentioned that the Banking Companies
(Amendment) Act, No. XX of 1950, had also provided a special
period of limitation by s. 45-F which was in these terms:–
“45-F. Special period of
limitation–Notwithstanding anything to the
contrary contained in the Indian Limitation
Act, 1908 (IX of 1908) or in any other law for
the time being in force, in computing the
period of limitation prescribed for any suit
or application by a banking company, the
period of one year immediately preceding the
date of the order for the winding up of the
banking company shall be excluded.”
That provision however only excluded one year immediately
preceding the date of the order for the winding-up of the
banking company. It seems thereafter the Banking Companies
Liquidation Proceedings Committee 1952 was appointed and had
recommended that “provisions may be made by the legislature
to the effect that limitation will stop running against a
banking company from the date of the winding-up order.”
This recommendation appears to be the basis of s. 45-0.
Even so the words of s. 45-O have to be interpreted as they
stand whatever may have been the recommendation of the
committee and on a plain construction of those words it is
quite clear that sub-s. (1) of s. 45-0 provides in the case
of a suit or application filed by a banking company which
is being wound up that the period commencing from the
date of presentation of the petition for winding-up of the
banking company
724
to the date of suit or application shall be excluded.
It will however be seen that though the committee
recommended that limitation should stop running against a
banking company from the date of the winding-up order, the
legislature made two changes when it proceeded to enact s.
45-O (1) of the Act. In the first place it did not provide
for stopping of the running of limitation; it provided for
exclusion of a certain period. It further provided for
exclusion of the period commencing from the presentation of
a winding-up petition and not from the winding-up order as
recommended by the committee. Now exclusion has been
provided in ss. 12 to 16 of the Limitation Act also. It is
well settled that exclusion of time cannot take place where
time has not begun to run before the date from which the
exclusion begins or the time limited has already expired
before such date. There can thus be no question of
exclusion where the time has not begun to run and is not
continuing to run. Therefore, though the committee might
have recommended that limitation should stop running from
the date of the winding-up order, the legislature adopted
the well-known device of exclusion in order to help banking
companies in realising their dues. I may add that in the
earlier provision in Act XX of 1950 also. the legislature
had only provided for exclusion and the same device was
continued when s. 45-O (1) was introduced by the Amendment
Act of 1953. It is therefore clear that when the
legislature enacted s. 45-O (1) it made two changes already
indicated in the recommendation of the committee and those
changes are clear from the words of s. 45-O. Therefore, in
order that s. 45-O (1) should apply, it is necessary
firstly that the banking company should be in the process of
being wound up when the suit or application is being filed,
and secondly that the period of limitation for the suit or
application should have begun to run before the date of the
winding-up petition but should not have run out before such
date. Otherwise there can be no question of excluding the
period beginning from the date of presentation of the
petition for winding-Up of the banking company. Further in
view of sub-s. (3) of s. 45-O, sub-s. (1) thereof will apply
to all banking companies which are in the process of being
wound up, even if the petition for winding-up was made
before s. 45-0 (1) came into force and even if the winding-
up order was made in such case whether before or after the
date on which s. 45-O (1) came into force i.e. December 30,
1953.
It is however urged that on this interpretation there
may be some anomalies, particularly in the cases of
instalment decrees. For example, it is said that where an
instalment decree provides for six yearly instalments and
does not provide for any default clause it may happen that
some instalments may become due and may not be paid before a
winding-up petition while other instalments may become due
after the winding-up petition. In such a situation, the
instalments which became due and were not paid before the
winding-up petition may be recoverable by execution
725
under s. 45-0 (1) for the period of limitation having begun
and not having run out the exclusion provided by s. 45-O (1)
comes into play, while in the case of instalments, which
became due after the presentation of the winding-up
petition, the period of limitation not having begun
exclusion could not come into play. It is said that it
would be rather anomalous that earlier instalments should be
recoverable but not later ones. It is submitted that if the
subsection is interpreted to lay down stoppage of the period
of limitation after the presentation of the winding-up
petition it will equally cover all instalments. It may be
accepted that there would be this anomaly on the
interpretation which I have accepted. But the language is
clear and provides for exclusion which can only take place
after the period of limitation has begun and before it has
run out. Therefore, whatever the anomaly where the language
is clear and unambiguous it has to receive the only
construction of which it is capable. As against this I may
point out that if the language of s. 45-O (1) is interpreted
as stopping of limitation in all cases after the
presentation of the winding-up petition it will result in
equal anomalies. Take a case where a liquidator files a
suit and gets a decree. Was it the intention of the
legislature by this provision to lay down that there would
be no limitation in such a case for the execution of the
decree? That would be the result if the provision in s. 45-
0 (1) is interpreted as meaning stoppage of all limitation
from the date of the presentation of winding-up petition.
But it could hardly be the intention of the legislature that
the liquidator in such a case should not execute the decree
which he gets within the period of limitation provided by
the Indian Limitation Act. The reason for exclusion
provided in s. 45-0 (1) appears to be that after a winding-
up order the liquidator takes charge and he will naturally
take time to familiarise himself with the affairs of the
company. So in all cases where time has begun to run before
the winding-up petition and has not run out, the
liquidator should get some breathing space and that is why
the period from the date of the winding-up petition is
excluded. But where the time has not begun to run before
the windings petition, the liquidator would have ample time
within which to know the true state of affairs and in such a
case the legislature did not intend that there should be no
limitation as provided in the Indian Limitation Act. That
is why one finds the language of exclusion in s. 45-O (1).
The benefit of that provision is meant for cases where time
has begun to run but has not run out before the presentation
of the winding-up petition; it is not meant to provide that
there would be no limitation in all cases where banking
companies are in the process of liquidation. In any case if
the legislature wanted to make such a sweeping provision I
should have found appropriate language for that purpose in
s. 45-O (1). In the absence of such appropriate language,
the provisions of s. 45-O (D which appear to be clear and
unambiguous, must receive their only proper construction
already set out above.
726
Let me now see how this construction applies to the
facts of the present case. The present case is governed by
s. 45-O (3) because the winding-up petition was presented
before s. 45-O (1) came into force, but by virtue of sub-s.
(3) of s. 45-O, sub-s. (1) would apply to the present case.
The question then is whether limitation had begun to run
before May 11, 1948 on which date the winding-up petition
was presented and if so for which instalments or for the
whole of the amount. If limitation had begun to run before
May 11, 1948. the period from May 11, 1948 upto the date of
the application for execution on August 26, 1957, would have
to be excluded. Now the evidence is that there was default
in payment of the instalment due on December 30. 1947. So
the period of limitation for that instalment certainly began
to run from that date. Further paragraph 5 of the
compromise to which I have already referred lays down that
if payment was not made of any instalment within after four
months of the due date, the entire remaining decretal amount
would also become due. These four months expired on April
30, 1948 and from May 1, 1948 the appellant bank was
entitled to execute the entire decretal amount that remained
due. Therefore the right to execute all the remaining
instalments arose on May 1, 1948. Thus limitation for all
the instalments from second to seventh began on May 1, 1948
while the application for winding up was made on May 11,
1948. In view of the interpretation of s. 45-0 (1) which I
have accepted, the appellant would be entitled to exclusion
of the entire period from May 11, 1948 upto the 6ate of the
execution application, and would thus be entitled to
execute the decree for Rs. 12,000/which is the total of
instalments 2 to 7 with interest.
But it is said that the appellant cannot execute the
whole decree as it had waived the first default. I have
already indicated that the High Court had considered the
matter both from the point of view of the whole amount and
of each instalment. No question of waiver was raised by the
respondent in his objection-petition. On the other hand it
seems to have been urged before the High Court that
limitation started from the first default i.e., May 1, 1948
and so there was no question of considering the matter of
later instalments at all. This was negatived by the High
Court on the authority of Ranglal Aggarwalla v. Shyrnlal
Tamuli(1) and that is how the High Court came to consider
the question of instalments in the alternative.
Besides it appears that two execution applications were
made in this case one in February 1948 and the other in.
July 1950. When the first execution application was made the
default clause had not come into operation and the appellant
only wanted execution of the second instalment of Rs.
2,000/- and prayed for attachment for Rs. 2,030/-,
including interest. So there could be no waiver then. The
second execution application was made not only after
(1) (1945-46) 50 C.W.N. 735.
727
the first default but after two other defaults also of the
instalments of Rs. 4,000/- each due on December 30, 1948 and
December 30, 1949. The total of instalments then in
default was only Rs. 10,000/-. Though a copy of the
second execution application is not printed in the record,
it is clear from the particulars in the present tabular form
filed in 1957 that the relief sought at the second execution
was by attachment for Rs. 26,070/-. Clearly therefore the
appellant was executing the whole decree after the default
and there can be no question of waiver in the circumstances:
(see also the appellant’s statement of case paragraph 20).
Bachawat J. (as he then was) who delivered a short separate
judgment has certainly said that the present appellant could
waive and had in fact waived the benefit of the default. But
that with respect does not appear to be accurate. I am
therefore of opinion that there was no waiver of the first
default and so the appellant can take advantage of s. 45-0
and execute the decree for the entire amount.
I would therefore allow the appeal and set aside the
order of the High Court, and order that execution should
proceed according to law. The appellant will get its costs
incurred before the appeal court and this court from the
respondent. The remaining costs will abide the result.
Raghubar Dayal, J. This appeal, by certificate under
art. 133(1)(a) of the Constitution, requires the
construction of s. 45-0 of the Banking Companies Act, 1949
(Act X of 1949), hereinafter called the Act. This section
was enacted in its present form by the Banking Companies
(Amendment) Act, 1953 (Act LII of 1953). hereinafter called
the Amending Act.
The question arises on these facts. The appellant bank,
through its Midnapore Branch, obtained a compromise decree
against the respondent in O.S. No. 25 of 1947 of the First
Court of the Subordinate Judge, Midnapore, on May 1, 1947.
The decree was for an amount of Rs. 31,000/- of which Rs.
2,115/were paid by the respondent that very day. The decree
provided that Rs. 6,885/- were to be paid by May 9, 1947 and
the balance of Rs. 22,000/- in seven instalments as under:
1. Rs. 1,000/- on May 30, 1947.
2. Rs. 2,000/- on December 30, 1947.
3. Rs. 4,000/- on December 30, 1948.
4. Rs. 4,000/- on December 30, 1949
5. Rs. 4,000/- on December 30, 1950.
6. Rs. 4,000/- on December 30, 1951.
7. Rs. 3,000/- on December 30, 1952.
The judgment-debtor respondent did not pay the second and
subsequent instalments. Paragraph 5 of the compromise
which formed part of the decree provided that if the
plaintiff decree-holder
728
did not get the amount due to it on account of the
instalments within 4 months from the time of default, it was
to deem, on the expiry of the said 4 months, all the other
instalments to be in default and would be entitled to
realise the entire amount of the decree then due through
execution proceedings.
The appellant attempted, by applications presented in
1948 and in 1950, to execute the decree. The details
relating to these applications and the proceedings thereon
need not be set out here as they do not affect the question
for consideration. Suffice it to say that nothing was
realised in these proceedings and that the proceedings
started on the application presented in 1950 were
subsequently transferred to the High Court in view of the
relevant provisions of the Act.
On August 24, 1957, the appellant presented an
application in a Tabular form for execution of the decree,
on the ordinary original civil side of the Calcutta High
Court. It was stated in column 10 meant for noting the mode
in which the assistance of the Court was required that the
defendant judgment debtor had failed to pay any portion of
the decretal amount or interest, that the decree-holder Bank
was wound up by an order of the Court dated August 3, 1948
on a petition for winding-up presented to it on May 11, 1948
and that the Court Liquidator, High Court, and the Official
Liquidator of the decree-holder Bank, be appointed receiver
without security and without remuneration, to collect and
realise the amount payable to the defendant firm and/or
Sukumar Dutta. one of its partners, by the Executive
Engineer, Works & Building Department, Midnapur Division,
upto a maximum limit of Rs. 35,000/-. A further prayer
was made that an interim receiver be appointed before issue
of any notice of the application to the judgment debtor. On
this application an interim order for the appointment of a
receiver was made on August 26, 1957. This order was
confirmed on June 2, 1958. The judgment-debtor respondent
appealed against this order contending that the execution of
the decree was barred by limitation. The High Court
agreed with the contention and dismissed the application and
also set aside the order for appointment of receiver. It
is against this order that this appeal has been presented
under a certificate from the High Court.
The contention for the judgment-debtor is that the
execution to realise intsalments number 2 to 7 had expired
long before August 24, 1957 when the execution application
in tabular form had been presented as the date for the
payment of the last instalment was December 30, 1952. The
period of 4 months after the expiry of December 30, 1952
within which the decree-holder could execute the decree
expired on May 1, 1953. The execution application was
presented after the expiry of 3 years of this date. This
729
objection on the ground of limitation was met by the decree-
holder Bank on the basis of the provisions of s. 45-O of the
Act which reads:
“(1) Notwithstanding anything to the
contrary contained in the Indian Limitation
Act, 1908 or in any other law for the time
being in force, in computing the period of
limitation prescribed for a suit or
application by a banking company which is
being wound up, the period commencing from the
date of presentation of the petition for the
winding up of the banking company shall be
excluded.
(2) Notwithstanding anything to the contrary
contained in the Indian Limitation Act, 1908
or section 543 of the Companies Act, 1956 or
in any other law for the time being in
force, there shall be no period of limitation
for the recovery of arrears of calls from any
director of a banking company which is being
wound up or for the enforcement by the banking
company against any of its directors of any
claim based on a contract, express or implied;
and in respect of all other claims by the
banking company against its directors, the
period of limitation shall be twelve years
from the date of the accrual of such claims or
five years from the date of the first
appointment of the liquidator, whichever is
longer.
(3) The provisions of this section, in so
far as they relate to banking companies being
wound up, shall also apply to a banking
company in respect of which a petition for the
winding up has been presented before the
commencement of the Banking Companies.
(Amendment) Act, 1953.”
To appreciate the contention based on this section it is
necessary to mention a few more facts. On May 11, 1948, a
petition for winding-up by the Bank was presented. The
winding-up order was made by the High Court on August 3,
1948. The Act came into force on March 16, 1949. On March
18, 1950, the Banking Companies (Amendment) Act, 1950 (Act
XX of 1950) came into force. On October 24, 1953, the
Banking Companies (Amendment) Ordinance IV of 1953 was
promulgated and lastly, on December 30. 1953, the Amending
Act came into force. The contention for the appellant
before the High Court and in this Court is that the period
between May 11, 1948 when the windings application was filed
and August 1957 when the execution application was
presented, is to be excluded from the computation of the
period of limitation, in view of sub-ss. (I) and (3) of s.
45-O of the Act. This contention was rejected by the High
Court on the ground that instalments Nos. 2, 3 and 4 had
become time barred before the coming into force of s. 45-O
on December 30,
730
1953 and that there was nothing in s. 45-0 to revive the
claims which could not be enforced due to the lapse of time
under the provisions of the Limitation Act. Section 45-0
was not held to apply to the case of instalments 5, 6 and 7
as the cause of action to execute the decree for the
realisation of the amounts due under these instalments arose
subsequent to the date on which the petition for winding-up
was presented and the language of sub-s. (1) of s. 45-O
indicated that its provisions were to apply only in cases
where the period for the presentation of an application had
commenced to run prior to the presentation of the winding-up
application. The High Court, consequently, held the
application for execution to be barred by time and dismissed
it.
The contentions urged before the High Court by the
respective parties have been repeated before us. It is thus
that the question of the construction of s. 45-O of the Act
has arisen.
It is no doubt true that the provisions of an enactment
operate prospectively and that the consensus of opinion is
that unless they expressly or by necessary implication
provide otherwise. the right to sue or apply which had
become barred by lapse of time under a previous enactment is
not revived by the succeeding enactment. The High Court was
of opinion that there is nothing in s. 45-0 which could lead
to the conclusion that its provisions had retrospective
effect in the sense that the right to apply which had become
time-barred on December 30, 1953, when the Amending Act came
into force, could revive and consequently enable the Banking
Company to apply for that relief. Lahiri, C.J. said:
“On this point it is significant to note
that sub-section 3 of section 45-O makes the
provisions of the section applicable only to a
banking company in respect of which a petition
for winding-up has been presented before the
commencement of the Banking Companies
(Amendment) Act of 1953; but does not make the
provisions of the section applicable to debts
due to the banking company which had become
barred by lapse of time before the date of
such commencement. Then again sub-section 1
of section 45-0 provides that the period
commencing from the date of the presentation
of the petition for winding-up of the banking
company shall be excluded and does not say
that this period shall always be deemed to
have been excluded. The use of the future
tense in sub-section (1) indicates that the
Legislature did not intend its provisions to
operate on decrees which had before the date
of its commencement become unenforceable by
lapse of time. There is therefore neither any
express word nor any necessary implication in
section 45-0 to indicate that its provisions
were intended by the Legislature to have
retrospective effect.”
731
Bachawat J., practically took the same view
and said that sub-s. (1) of s. 45-0 did not
provide that the period from the date of
presentation of the petition for winding-up of
the banking company would be always deemed to
have been excluded and that though sub-s. (3)
of s. 45-O specially provided for the
retrospective application of the section to a
banking company the Legislature deliberately
had not provided that sub-s. (1) of s. 45-O
would have a larger retrospective operation.
I am of opinion that sub-s. (1)–and
specially when read with sub-s. (3)of s.
45–0.) operates retrospectively and that
the appellant’s application for execution
presented to the High Court in 1957 for
executing the decree for the realisation of
the instalments in the payment of which the
respondent judgment-debtor made default was
maintainable and not barred by time.
It is not necessary for the retrospective
operation of the provision of an Act that it
must be stated that its provisions would be
deemed to have always existed. That is one
mode and may be an effective mode of providing
that the provisions would have retrospective
effect. Retrospective effect of an enactment
can also be gathered from its language and the
object and intent of the legislature in
enacting it.
In The Queen v. Vine(1) an enactment
which was penal in nature was construed to
have retrospective effect despite the rule
that when an enactment is penal in nature it
is not to be construed retrospectively if the
language is capable of having a prospective
effect given to it and is not retrospective,
as the object of the’ enactment was not to
punish offenders but to protect the public
against public-houses in which spirits were
retailed being kept by persons of doubtful
character.
Government had been making laws for
exercising control over the Banks since 1936
upto which time the Indian Companies Act, 19
13, governed the working of Banking Companies
as well. In that year, Part 10A was added to
the Indian Companies Act. Amendments were made
to this Part subsequently and, ultimately, it
was repealed by the Banking Companies Act,
1949. In this Act too, Part 3A was added by
the Amending Act of 1950. The Amending Act of
1953 substituted the present Part 3A in the
Act for the Part originally introduced in
1950.
Section 45-F which was inserted in the Act
by the Amending Act of 1950 may be quoted, as
some reference to it would be made
subsequently. It reads:
“45F. Special period of
limitation–Notwithstanding anything to the
contrary contained in the Indian Limitation
Act, 1908 (IX of 1908), or in any other law
for
(1) L.R. 10 Q.B. 195.
(D)5SCI– 8
732
the time being in force, in computing the
period of limitation prescribed for any suit
or application by a banking company, the
period of one year immediately preceding the
date of the order for the winding-up of the
banking company shall be excluded.”
A scrutiny of the provisions of the Act and especially of
Part 3A clearly indicates that the object of the Legislature
in enacting these measures was to protect the interests of
the depositors of the banking company and to expedite
winding-up proceedings. We need not refer to the provisions
which would indicate such a purpose of the Legislature. The
expeditious disposal of the winding-up proceedings is
clear by the provisions by s. 40 which provides that
notwithstanding anything to the contrary contained in s.
466 of the Companies Act, 1956, the High Court shall not
make any order staying the proceedings in relation to the
winding-up of a banking company, unless the High Court is
satisfied that an arrangement has been made whereby the
company can pay its depositors in full as their claims
accrue.
In Joseph Kuruvila Vellukunnel v. The Reserve Bank
India(1), it was observed:
“An examination of the Banking Companies
Act reveals two things prominently. The
first is that the whole intent and purpose of
that Act is to secure the interests of the
depositors…”
It can be presumed that companies which are wound-up had
been usually mismanaged. Mismanagement can also account for
the failure of the banking company to sue the debtors for
the recovery of the amounts due to the banking company
within limitation. This injures the interests of the
depositors and others concerned in the proper running of the
banking company. It is again within the range of
possibility, nay probability, that the liquidator appointed
for the banking company when it is ordered to be wound up
would require some substantial time to acquaint himself with
the complete position about the affairs of the company and
that during such period limitation for instituting suits or
making applications in the interests of the banking company
may expire. This aspect is fully explained in paragraph 57
of the Report of the Banking Companies Liquidation
Proceedings Committee, 1952, which is set out below:
“The Committee has also considered the
question as to whether the law of limitation
should be further relaxed in favour of the
Liquidator. The Liquidator has already been
granted a year’s grace by Section 45F of the:
(1) [1962] Supp. 3 S.C.R. 632, 656.
733
Banking Companies Act. Most of-the witnesses
examined by us were of opinion that the
Liquidator’s year was inadequate. They urged
that in many cases it takes the Liquidator a
long time to ascertain who the debtors are and
the amounts due from them, particularly where
the records are distributed in different parts
of India or are incomplete. Under the
procedure envisaged above the debtor is liable
to be arraigned in the winding-up proceedings,
and is entitled to claim relief in such
proceedings. As regards creditors, it is
settled law that ‘the Limitation Act ceases to
run as from the winding-up order so that a
creditor whose claim is not then barred will
not be barred by subsequent delay’. We see no
reason why limitation should not cease to run
against the banking company from the date of
the winding-up order. If the procedure
envisaged above is adopted, the necessity for
the Liquidator to file suits against the
debtors of the bank will rarely arise.
Further, the Liquidator shall have no scope
for unconscionable delay in proceeding against
the debtor. He is required to bring the
debtor before the Court within 6 months from
the date of the winding-up order unless
further time is granted by the Court. We
therefore recommend that provision may be made
by the Legislature to the effect that
limitation will stop running against a banking
company from the date of the winding-up
order.”
It appears that the Legislature mostly accepted this view of
the Committee and enacted s. 45-O providing mainly that
there would be no running of limitation against the banking
company subsequent to the date of the petition for winding-
up with the result that limitation would run in the ordinary
course upto the winding-up petition. There is much logic
behind it. Non-action upto the date of the petition for
winding–up was on account of the mismanagement of the
banking company. The debtor of the banking company gets
advantage of the negligence of the company to sue him or
apply against him within the period of limitation. Since
the presentation of the petition for winding-up of the
company, the Court gets control over the affairs of the
company and supervises the acts of the liquidator, in
accordance with the provisions of the Act which, to secure
necessary action in all matters within a reasonable time,
provide certain periods for certain actions to be taken by
the liquidator of the Court. It is to be presumed therefore
that any delay in the taking up of any legal action by the
Banking Company would be for good reasons. The Legislature
seems to have been of the opinion that the interests of the
banking companies, especially of its depositors, should not
suffer on account of the delay which could not be avoided
even when the Court was in charge of the affairs of the
banking company. Viewed in this
734
perspective, it should appear that the relevant date for
considering whether action can be taken by the banking
company by suit or application is the date of presentation
of the winding-up petition. If the banking company had a
right to sue or to apply on the date the petition for
winding-up was presented, that right should not be lost to
it.
I may now consider how far the legislature succeeded in
making s. 45-0 of the Act, specially its sub-sections (1)
and (3) carry out this object and intention. For the
application of sub-s. (1), two things are necessary: (i)
that a company is being wound-up and (ii) that a suit is
instituted or an application is made by such a banking
company. If these two things exist, the period commencing
from the date of presentation of the petition for winding up
is to be excluded in computing the limitation prescribed for
such a suit or application.
The first condition would be satisfied by all companies
with respect to which winding-up orders had been made either
before the commencement of the Amending Act of 1953 or
thereafter. There is nothing in the language of the sub-
section to limit the expression companies being wound up’ to
those companies with respect to which winding-up orders are
made subsequent to December 30, 1953. There seems to be no
good reason why such a limitation on this expression be
imposed. The provision is not for the benefit of such
companies only but is for the benefit of all the companies
which would be in the process of winding-up during the
enforcement of the Act. The process might have commenced
before or after the enforcement of the Act. Naturally,
petitions for the winding-up of companies with respect to
which winding-up orders had been made prior to December 30,
1953, must have been made before that date. The language of
sub-s. (1) plainly applies to companies which were being
wound up when the Act came into force. I may refer to
certain cases in which expressions of general import have
been so construed.
In Weldon v. Winslow(1) the provision of law for
construction was:
“a married woman shall be capable …… of
suing and being sued either in contract or in
tort, or otherwise, in all respects as if she
were a feme sole, and her husband need not
be joined with her as plaintiff or defendant,
or be made a party to any action or other
legal proceeding brought by or taken against
her, and any damages or costs recovered by her
in any such action or proceeding shall be her
separate property …… ”
Brett, M.R. said at p. 787 that the section dealt with an
action for tort and that after the Act came into operation a
married woman
(1) I.R.13 Q.B.D. 784.
735
might bring such an action in her own name and the damages
and costs recovered shall be her separate property. He
continued:
“It is said that this is a retrospective
construction, because the cause of action
arose before the statute came into operation;
but the section does not say anything about
cause of action; it deals with bringing the
action. and there is nothing in it to limit
its provisions to causes of action arising
after the statute came into operation. I
think, therefore, that an action brought after
the statute came into operation is within the
plain words of s. 1, and it is necessary to
distort the grammatical meaning of the words
to arrive at the interpretation proposed by
the defendant’s counsel.”
These remarks can apply aptly to the
construction of sub-s. (1) of s. 45-O. That
sub-section deals with the computation of
limitation with respect to suits and
applications filed after the coming into force
of the Amending Act of 1953 and do not apply
to suits and applications which had been filed
earlier. The provisions say nothing about the
time when the petition for winding-up be
presented. There is nothing to limit the
provisions to petitions for winding-up which
had been presented after the Amending Act came
into force.
In Bank of Athens Societe Anonyme v.
Royal Exchange Assurance(1) an application
under sub-s. (1) of s. 3 of the Law Reform
(Miscellaneous Provisions) Act, 1934,
empowering the Court to award interest on the
whole or any part of the debt or damages for
the whole or any part of the period between
the date when the cause of action arose and
the date of the judgment, was construed not to
be restricted to proceedings taken after the
Act had come into force. It was said by
Branson J., at p. 773:
“I think that on the true construction of that
section the
court in any proceeding, whenever commenced,
whether before or after the Act, has the
discretion which the section gives it. The
words as they stand are applicable in that
sense.”
The construction I put on the provisions
of sub-s. (1) gets support from the provisions
of sub-s. (3). It is to be noticed that sub-
s. (3) does not provide that the provisions of
sub-s. (1) would apply to banking companies
with respect to which winding-up orders had
been made prior to the commencement of the
Amending Act of 1953. If it had said so, the
question we are considering now would not have
arisen as that would expressly apply the
provisions of sub-s. (1) to the companies
which were being wound-up on December 30,
1953. Sub-s. (3) provides that the provisions
of the section, viz., of sub-ss. (1) and (2),
shall also apply in so far as they relate to
banking companies being wound-up to a banking
(1) L.R. [1938] 1 K.B. 771.
736
company in respect of which a petition for
winding-up has been presented before the
commencement of the Amending Act. Sub-s. (3)
contemplates cases in which the petitions for
winding-up had been made prior to the
enforcement of the Act but no orders for the
winding-up of the company had been made. If
the provisions of sub-s. (1) can apply to the
companies with respect to which proceedings
on a winding-up petition were pending on
December 30, 1953, it would be very anomalous
if they would not apply to the companies with
respect to which winding-up orders had been
made prior to December 30, 1953. This leads
to the inference that sub,S. (1) by its own
language applies to banking companies which
were being wound-up on December 30, 1953.
Further, this would be apparent if we
combine the provisions of sub-ss. (1) and (3)
together, which could be read thus:
“Notwithstanding.. in force, in computing
the period of limitation prescribed for a suit
or application by a banking company which is
being wound up, or in respect of which a
petition for the winding-up has been
presented before the commencement of the
Banking ” Companies (Amendment) Act, 1953, the
period commencing from the date of the
presentation of the petition for winding-up of
the banking company shall be excluded.”
So read, it becomes clear that the period of exclusion would
be available in connection with suits or applications by a
banking company which is being wound-up or with respect to
which a petition for winding-up has been made prior to
December 30, 1953.
I am further of opinion that if a restricted
construction be placed on the provisions of sub-s. (1) of s.
45-O, the effect of sub-s. (3) would be very much reduced.
In fact, it will probably have no utility. If the cause of
action for a suit or application had lapsed by efflux of
time prior to or on December 30, 1953, the advantage of
sub-s. (1) will not be available to the banking company on
account of the provisions of sub-s. (3). Sub-s. (3) itself
does not give any particular right to the banking company.
It only provides that whatever advantage a banking company
can derive from the provisions of sub-s. (1) when it is
being wound-up, would be available to it even if it be not
being wound-up, if a petition for its winding-up had been
presented prior to the enforcement of the Amending Act of
1953. The only case in which the banking company can take
advantage of sub-s. (3) then would be when the cause of
action for the suit or application has not lapsed by
December 30, 1953 and the proceedings on a winding-up
application were pending on that date. Such cases would be
covered by the language of sub-s. (1) if the cause of action
was alive on December 30, 1953. The order for the winding-
up of the company would be made subsequent to the date and
therefore suits or
737
applications covered by sub-s. (1) would get the advantage
of the provisions of that Act. The expression ‘the period
commencing from the date of the presentation of the petition
for the winding-up of the banking company shall be excluded’
fixes the point of time from which the excluded period will
commence, and cannot be limited to the dates of such
petitions which be presented after December 30, 1953.
It is true, as stated in Jwala Prasad v. Official
Liquidator(1), that the only purpose which sub-s. (3) of s.
45-0 serves is to make it clear that sub-s. (1) will apply
even when the petition for the winding-up of a company is
presented prior to the commencement of the Amending Act of
1953. I do not think that a separate subsection was enacted
merely for the clarification of the point that the
provisions of sub-s. (1) of s. 45-O would take in such cases
firstly because such cases would be covered by the language
of sub-s. (1) and, if not, it could have been stated in sub-
s. (1) itself that those provisions would apply where the
petition for winding up was presented before or after the
commencement of the Act by simply adding the expression
‘presented before or after the commencement of the Act’
between the words ‘banking company’ and ‘shall be excluded’.
I am therefore of the view that the effect of sub-s. (1)
of s. 45-0 is that if suits or applications made by a
,banking company which is being wound-up or for whose
winding-up a petition has been presented prior to December
30, 1953, the period of limitation is arrested on the date
of the presentation of the petition for winding-up of the
company and that it is not material whether such a date is
earlier than December 30, 1953, or not and that therefore
suits can be instituted and applications made even in regard
to matters with respect to which such action could be taken
on the date of presentation of the application for winding-
up of the company but could not be taken on the date the
Amending Act of 1953 came into force.
I may now refer to the case law on the point which is so
far quite meagre.
In Punjab Commerce Bank v. Brij Lal(2) the suit was
filed on March 31, 1952 under s. 45-B of the Banking
Companies Act, 1949, as amended by Act XX of 1950. The
cause of action arose on October 9, 1946. The application
for winding-up was made on February 17, 1948 and the
winding-up order was made on October 11, 1952. The suit was
dismissed on December 2, 1952 as barred by time and an
appeal against the dismissal was pending in the High Court
on December 30, 1953 when the Amending Act of 1953 came into
force. The suit was certainly time-barred as the law
(1) A.I.R. 1962 All. 486. (2) A.I.R, 1955 Punj, 45.
738
stood on the date of its institution. It was urged for the
appellant that the Amending Act was retrospective in effect,
that it applied to all suits which were pending on the date
it came into force and as the appeal was a re-hearing of the
case the suit would still be within time as the Amending Act
would be applicable to the case on the date of its decision.
This contention was repelled. Bishan Narain J., said at p.
46:
“I have carefully read this section and in
my opinion section 45-0 is not retrospective
in effect expressly or by necessary
implication and further there is nothing in
this section so retrospective in effect as to
revive a claim which before that date had
become unenforceable by lapse of time.”
These observations apparently go against the
appellant. They were, however, made in
connection with the provisions of s. 45-O
applying to a suit pending on the date the
Amending Act came into force and their import
is limited by the other observations made when
dealing with the provisions of s. 45-O. These
observations, on pp. 46 and 47, are:
“It will be noticed that neither sub-s. (D
nor sub-s. (3) makes any mention of a pending
suit at the time when the Amending Act of 1953
came into force although the legislature does
provide under s. 45-C provisions for
transferring such a suit to the High Court.
In the absence of any specific mention of
pending suits it not possible to hold that the
section would apply to them. Sub-section (3)
is to a certain extent retrospective in effect
because it makes sub-s. (1) applicable to
those cases in which a petition for winding-up
had been presented before the Amending Act,
1953 came into force, but this retrospective
effect cannot be extended to claims or suits
pending in the High Court at the time that the
Amending Act came into force.”
“Applying this test I hold that s. 45-O does not apply
to pending suits.”
Sub-s. (3) of s. 45-O has been considered to be
retrospective to a certain extent. It was not necessary for
the purpose of this case to consider in what cases and in
what manner its retrospective provisions could be used.
In Suburban Bank Ltd., v. Nistaran(1) the plaintiff had
claimed inter alia several sums advanced as loans to the
defendant on June 27, 1945. Winding-up application was made
on May 12, 1948; the winding-up order was passed on June 30,
1948 and the suit was instituted on December 3, 1949 when s.
45-F of the-,
(1) A.I.R. 1955 Cal. 172.
739
Banking Companies Act, introduced by the Amending Act 23
of 1949, provided a special period of limitation. The suit
was clearly time-barred in view of art. 59 of the Limitation
Act and s. 45-F of the Banking Companies Act. Consequently,
the question arose as to whether s. 45-O, in view of the
alteration of the law during the pendency of the suit, could
apply to that suit. It was held that the question whether
the proceeding is barred by the law of limitation must
depend on the law in force when the proceeding was
instituted and that sub-s. (1) of s. 45-O does not refer to
pending proceedings either in express words or by necessary
implication. When considering the effect of s. 45-O, it was
said at p. 175:
“The general words ‘a suit or application’
can be given full effect by limiting them to
suits and applications commenced after the
sub-section came into force.
” No occasion arose to consider the effect of
the provisions of sub-s. (3) of s. 45-O in
proceedings instituted after it came into
force.
In M/s. Kesarichand v.S.B. Corporation(1) the period of
limitation was to commence from December 29, 1950.
Article 85 of the Limitation Act was held applicable to the
case. The application for winding-up of the company was made
on February 26, 1953 and winding-up order was made on May
26, 1953. An application under s. 45-D of the Act was
presented on June 28, 1954, more than three years from the
commencement of the period of limitation but within 6 months
from the commencement of the Amending Act of 1953. December
29, 1950, being the starting point for limitation, the
period of limitation for the application expired before
December 30, 1953, a day before the Amending Act came into
force and the question did arise whether the applicant could
be allowed to get the advantage of s. 45-O. It was
contended that even if the benefit of s. 45-O was given to
the plaintiff bank, the application would be barred by
limitation as the period which was to be excluded in view of
sub-s. (1) of s. 45-O commenced from the date of the
presentation of the petition for winding-up and ended on the
date on which the winding-up order was made. This contention
was negatived. It was held that s. 45-O was retrospective in
operation.
In Jwala Prasad’s Case(2) the period of limitation for
taking proceedings under s. 235 of the Indian Companies Act,
1913, commenced on November 1, 1947. The period prescribed
was 3 years from the date of the first appointment of the
liquidator or from the arising of the cause of action. The
application for winding-up was made on February 17, 1950 and
the liquidator was appointed the same day. The liquidator
applied for action under s. 235 on
(1) A.I.R. 1959 Assam 162. (2) A.I.R. 1962 All. 486.
740
September 30, 1953, before the enforcement of the Amending
Act of 1953. It was not a case therefore where an
application was made by the banking company subsequent to
the enactment of s. 45-O. The question about the
application being made within ,time was to be decided on the
law of limitation as it stood on September 30, 1953. The
law of limitation as laid down in s. 235 was to apply taking
into consideration the provisions of s. 45-F of the Act as
it stood on September 30, 1953. The Court held that the
application could not be held to be in time even if the
advantage of the provisions of s. 45-F be given. It however
considered the effect of s. 45-O and said at p. 494 that
there was nothing in the section to show that it was
intended to be retrospective in effect in the sense that it
revived remedies which had already come to art end and
reliance was placed on the earlier Calcutta, Punjab ,and
Assam cases referred to above.
I therefore hold that the provisions of sub-s. (1) of s.
45-0 are retrospective in effect and are applicable to suits
or applications by a banking company in respect of causes of
action for the suit or an application about which suits
could be instituted or applications made on the date of the
presentation of the winding-up petitions made before the
commencement of the Amending Act of 1953, even though the
specified period of limitation for such action had expired
before the enforcement of the Amending Act.
In the present case, judgment-debtor respondent defaulted in
payment of the second installment due on December 30, 1947.
On May 1, 1948, the appellant’s right to execute the decree
for the entire amount due under the decree arose. The
petition for the winding-up of the company was made on May
11, 1948. The appellant’s application for execution
presented in 1957 for the entire decretal amount due to it
would not be time-barred if it had exercised its option to
have realised the entire decretal amount in default of
payment of the second instalment. The right to exercise
such an option arose on May 1, 1948, earlier than the
presentation of the winding-up application, but the
appellant-decree holder, however, appeared to have waived
its such right and to have sought execution for the
realisation of the various installments. Bachawat J., said
in his judgment:
“The respondent could waive and in fact has waived the
benefit of that option and became entitled to enforce
payment of each installment as and when it fell due.”
It was therefore that an objection was raised to the
execution of the decree for the installments failing due
after the presentation of the winding-up application on May
11, 1948 on the ground that the provisions of sub-s. (1) of
s. 45-0 applied only to such suits or applications the
causes of action for which accrued before the relevant date,
i.e., the date of the presentation of the application for
winding-up. The contention is that the provision about the
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exclusion of time in the period of limitation predicate that
the period of limitation had commenced to run prior to the
beginning of the period to be excluded and that therefore
the provisions of sub-s. (1′) of s. 45-O would apply only to
suits or applications with respect to such causes of action
which had accrued prior to the date of the winding-up
petition. This contention for the respondent has been
accepted by the High Court. In this the High Court was in
error.
It is clear that the object of the Legislature was that
the running of time during the period when the winding-up
proceedings were pending in Court and when the Court
supervised those proceedings be not included in the period
of limitation prescribed under the ordinary law of
limitation. The banking company is entitled for the
exclusion of the period from the date on which the
application for winding-up had been presented up to the date
of institution of the suit or filing of an application, from
the period of limitation prescribed for any suit or
application and it would be illogical to hold that it is not
entitled to ask that a shorter period, as the case would be
when cause of action arose subsequently to the presentation
of the application for winding-up, be also excluded from the
period of limitation prescribed for any suit or application.
It appears to me that the object and intention of the
Legislature in enacting sub-s. (1) of s. 45-O was that the
period subsequent to the presentation of the petition for
winding-up be not taken into consideration in computing the
period of limitation. The entire period will be excluded
from consideration if the limitation had begun to run prior
to the presentation of the petition for winding-up and the
relevant lesser period i.e., the period commencing from the
accrual of the cause of action subsequent to the date of
presentation of the petition for winding-up of the company
would be excluded from the period of limitation which also
commences from the accrual of the cause of action.
It may be said that this means that the entire period of
limitation is abrogated with respect to causes of action
arising subsequent to the date of presentation of the
petition for winding-up. Such may be the result, but that
does not mean construing the provisions of sub-s. (1) of s.
45-O in the context of the circumstances and reasons for the
enactment of those provisions. It would be anomalous to
hold that action can be taken with the help of the
provisions of sub-s. (1) of s. 45-O with respect to causes
of action which had arisen much earlier than the date of the
presentation of the petition for winding-up but action
cannot be taken with respect to causes of action arising
subsequent to such a date if it had not been taken within
the prescribed period of limitation. There is nothing in
the language of the sub-section, in my opinion, to accept
the contention for the respondent whose acceptance would
lead to results which would not have been contemplated by
the Legislature.
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I am therefore of opinion that the appellant’s
application for execution presented in August 1957 was
presented within limitation. I would accordingly allow the
appeal with costs, set aside the order of the Division Bench
of the High Court on Letters Patent Appeal and restore that
of the Single Judge.
ORDER
This appeal is allowed. The appellant will get its
costs in this Court and in the High Court.
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