Companies Act Case Laws Jyoti Bhushan Gupta Vs The Banaras Bank Ltd

PETITIONER:
73 JYOTI BHUSHAN GUPTA

Vs.

RESPONDENT:
THE BANARAS BANK LTD

DATE OF JUDGMENT:
12/10/1961

BENCH:
SHAH, J.C.
BENCH:
SHAH, J.C.
SINHA, BHUVNESHWAR P.(CJ)
SUBBARAO, K.
MUDHOLKAR, J.R.

CITATION:
1962 AIR 403 1962 SCR Supl. (1) 73
CITATOR INFO :
F 1971 SC 218 (5)
ACT:
Limitation-Order of high Court directing
contributors to pay money to liquidator-Order if
passed in exercise of ordinary original Civil
jurisdiction-Execution application filed beyond
three years-If barred-Indian Limitation Act 1908
(IX of 1908), Art. 183-Indian Companies Act, 1913
(VII of 1913), ss and 199-Letters Patent of the
Allahabad High Court.

 

HEADNOTE:
The Banaras Bank Ltd. was ordered by the
Allahabad High Court to be compulsorily wound up.
The High Court passed an order under s. 187 of the
Indian Companies Act, 1913, directing the
appellants, whose names had been placed on the
list of contributors, to pay a certain sum of
money to the official Liquidator. The official
Liquidator applied for execution of the order more
than three years after the making thereof. The
appellants contended that the execution
application, not having Been preferred within
three years as prescribed by Art. 182 of the
Limitation Act was barred. The official Liquidator
contended that the order was made in the exercise
of ordinary original civil jurisdiction by the
High Court and the application was governed by
Art. 183 which prescribed a period of limitation
of twelve years.
^
Held, that Art. 183 was applicable to the
case and the application for execution was within
time. The order was Made by the High Court in the
exercise of its ordinary original civil
jurisdiction as contemplated in Art. 183. Though
the Letters Patent did not invest the High Court
with any original jurisdiction it could be
conferred by legislation. The Indian Companies
Act, 1913, invested the High Court with the
jurisdiction to order payment of amounts due by
debtors of companies ordered to be wound up. The
jurisdiction was ordinary, it did not depend on
and extraordinary action on the part of the High
Court. It was original as a petition for the
exercise of it was entertained by the High Court
as a court of: first instance and not as an
appellate court, and since the High Court
adjudicated upon the liability of the debtor to
pay debts due by him to the company the
jurisdiction was civil.
In the matter of Candas Narondas, Navivahu
and C. A; Turner, I. L. R. (1889) 13 Bom. 520 and
P. T. Munia Cervai
74
v. The Hunuman Bnak Ltd., I.L.R (1958) Mad. 658,
referred to

 

JUDGMENT:
CIVIL APPELATE JURISDICTION: Civil APPEAL No.
198 of 1956.
Appeal from the judgment and decree dated
August 24, 1950, of the Allahabad High Court in
Execution First Appeal No. 399 of 1947.
Gopi Nath Kunzru and Ganpat Rai, for the
appellants
G. S. Pathak and G. C. Mathur, for the
respondent.
1961. October l 2. The Judgment of the Court
was delivered by
SHAH, J.-The Banaras Bank Ltd.-a public
limited company having its registered office at
Banaras-(hereinafter referred to as the Bank) was
ordered on March l, 1 940 to be compulsorliy wound
up by the High Court of Judicature at Allahabad,
and the Official Liquidator was appointed to
conduct the proceedings in winding up. On
September 12, 1942, an order was made by the High
Court under s. 187 of the Indian Companies Act,
1913 (VII of 1913) for payment of unpaid calls and
the appellants Jyoti Bhushan Gupta. and Gokul
Chand, whose names had been placed on the list of
contributors, were directed to pay with interest
Rs. 95,178/5/9 to the official Liquidator of the
Bank. This order was, by virtue of s. 199 of the
Act, enforceable in the manner in which the decree
of the High Court made in any suit pending therein
may be enforced. On September 12, 1946, the order
was transferred to the District Judge, Allahabad
for execution. On September 23, 1946, the official
Liquidator applied to the District Court,
Allahabad for execution of the order dated
September 12, 1942, and prayed that certain
amounts due to the appellants be attached in
satisfaction of the claim. The execution
proceedings were transferred by the District Judge
75
to the Civil Judge, Allahabad. The appellants
contended Inter alia that as the application for
execution was not preferred within 3 years of the
order for payment as prescribed by Art. 182 of the
First Schedule of the Limitation Act it was barred
by the law of limitation. The official Liquidator
contended that the application was governed by
Art. 183 of the Act and that, in any event,
certain part payments having been made towards the
claim by the appellants, the period of limitation
was extended thereby. At the hearing, the
alternative plea of part payment was abandoned by
the Official Liquidator.
The Civi1 Judge held that the application for
execution was barred limitation as it was not
preferred within 3 years from the order of the
High Court. In appeal to the High Court of
Allahabad, the order passed by the Civil Judge was
reversed and the proceedings were remitted to the
Civil Judge with a direction to restore the
execution application to its original number and
to proceed with it according to law. Against that
order with certificate of fitness granted by the
High Court under Art. 133 of the Constitution,
this appeal is preferred.
Counsel for the Company contended that the
order passed by the High Court not being a final
order the appeal on certificate granted by this
High Court is not maintainable. We have not
thought it necessary, having regard to the
importance of the question raised by the
appellants and the fact that this Court may in a
proper case regularise the proceeding in this
Court by granting special leave, even if
certificate under Art. 133 of the Constitution
could not be issued by the High Court, to hear the
parties on the question as to the maintainability
of the appeal OD the certificate and have heard
the appeal on the merits.
We are of the view that the appeal must fail
on the merits.
76
Art. 182 of the Indian Limitation Act
provides a period of 3 years for an application
for execution of a decreer an order of any Civil
Court not provided by Art. 183 or s. 48 of the
Code of Civil Procedure, 1908 (V of l908). By Art.
183 a period of l2 years for enforcing a judgment,
decree or order of any Court established by Royal
Charter in the exercise of its ordinary original
civil jurisdiction is prescribed and the period
commences to run from the date on which a present
right to enforce the judgment, decree or order
accrues to some person capable of. releasing the
right. The order sought to be executed was not
passed by the High Court in the trial of a suit:
it was passed in exercise of the jurisdiction
conferred upon the High Court by s. 187 of the
Indian Companies s Act, 1913. Section 3 of the
Indian Companies Act by sub-s.(1) enacts that the
Court having jurisdiction under this Act shall be
the High Court having jurisdiction in the place at
which the registered office of the company is
situate. By the proviso, the Central Government
may by notification in the official Gazette
empower any District Court to exercise all or any
of the jurisdiction conferred upon the High Court.
But it is common ground that no notification
conferring jurisdiction and empowering the
District Court at Banaras-where the registered
office of the company is situate-to pass orders
under B. 187 has been issued. The High Court was
therefore the only Court competent to direct under
B. 187 of the Indian Companies Act payment of the
amount due from the appellants.
Counsel for the appellants contends that
the authority exercised by the High Court in
directing payment under s. 187 of the Indian
Companies Act, 1913, is neither ordinary, nor
original civil. He submits that by s. 187 a
special power is vested in the High Court by the
Indian Companies Act, 1913, which is exercisable
in its extraordinary jurisdiction. To appreciate
this argument it is necessary to refer to the
statute authorising the establish-
77
ment of the High Court, and the Letters Patent
constituting the same.
The High Court for the North Western
Province, of which the Allahabad High Court is the
successor, was constituted by the Letters Patent
issued on March 17, 1866, in exercise of the
powers conferred by cl. 16 of the Charter Act of
1861 (24.25 Vict. C. 104). By that clause, Her
Majesty the Queen was authorised to establish a
High Court and to invest the High Court with such
jurisdiction, powers and authority as under the
Charter Act may by cl. 9 be conferred upon the
High Court to be established in any of the
presidencies, i. e., calcutta, Bombay and Madras.
The High Courts of Calcutta, Bombay and Madras,
which were popularly known as the Presidency High
Courts were by cl. 12 of their respective Letters
Patent invested with ordinary original civil
jurisdiction to entertain and try suits of every
description subject to the restriction as to
territorial limitations contained in cl. 11
thereof. But by its Letters Patent, the High Court
for the North Western Province was not invested
with jurisdiction to entertain civil suits in
exercise of its ordinary original civil
jurisdiction.
Counsel for the appellants submits that
Art.183 applies only to decrees and orders passed
by the High Courts established by the Royal
Charter, which by their constitution are
authorised to entertain, hear and try civil suits
in exercise of their ordinary civil jurisdiction,
and as no such power was conferred upon the
Allahabad High Court, the order sought to be
executed was not passed in exercise of the
ordinary original civil jurisdiction. It is true
that when the Letters Patent were issued the High
Court had no jurisdiction under a law relating to
companies of the nature exercised by the High
Court, the character whereof falls to be
determined in this appeal. But by cl. 16 of the
Charter Act and cl. 35 of the Letters Patent of
the Allahabad High Court jurisdiction
78
which Was not initially conferred upon the High
Court could the conferred by legislation within
the competence of the Governor-General in Council
and the Governor in Council. By the Companies Act
of 1913, the High Court was invested with
jurisdiction to order payment of the amounts due
by debtors of companies ordered to be wound up.
This jurisdiction may be invoked as of right
against all persons whose names are placed on the
list of contributors. The jurisdiction is
ordinary: it does not depend on any extraordinary
action on the part of the High Court. The
jurisdiction is also original in character because
the petition for exercise of the jurisdiction is
entertainable by the High Court as a court of
first instance and not in exercise of its
appellate jurisdiction. Again by s. 187 no special
jurisdiction is conferred. The High Court
adjudicates upon the liability of the debtor to
pay debts due by him to the Company: the
jurisdiction is therefore civil. Normally, a
creditor has to file a suit to enforce liability
for payment of a debt due to him from him debtor.
The Legislature has by s. 187 of the Companies Act
empowered the High Court in a summary proceeding
to determine the liability and to pass an order
for payment, but on that account the real
character of the jurisdiction exercised by the
High Court is not altered. Nor is there any
substance in the contention that the authority to
order payment of a debt under s. 187 is merely a
power of the High Court and not its jurisdiction.
By s. 3 read with s. 187 of the Companies Act the
High Court has jurisdiction to direct payment of
the amount due by a contributory: and an order
passed for payment manifestly is an order passed
in exercise of the jurisdiction vested in the High
Court by s. 3 read with 8. 187 of the Companies
Act.
The Judicial Committee of the Privy
Council was called upon In the matter of Candas
Narondas Navivahu and C. A. Turner(1) to determine
the true
(1) I. L. R. (1889) 13, Eom. 520.
79
nature of the jurisdiction exercised by the High
Court of judicature at Bombay in respect of
insolvent debtors. The Privy Council held that
article 180 of Schedule II of the Indian
Limitation Act XV of 1877 (which was similar to
article 183 of the Indian Limitation Act, l908)
applies to a judgment of a Court for the relief of
insolvent ebtors entered up in the High Court, in
accordance with section 86 of the Statute 11 and
12 Vic., c. 21. It was held in that case that
although a Court exercising insolvency
jurisdiction determines the substance of the
question relating to an insolvent’s estate, the,
proceedings in execution and the judgment are the
High Court’s. The judgment is entered up in the
ordinary course of the duty cast upon the High
Court by the law, not by way of special or extra
ordinary action, but in the exercise of its
ordinary original civil jurisdiction. Lord
Hobhouse delivering the judgment of the judicial
committee observed:
“But it was strongly contended at
the bar that this jurisdiction though civil
and original, was not ordinary: and Mr. Rugby
argued that the passages of the Charter which
have just been epitomised divide the
jurisdiction into four classes-ordinary
original, extraordinary original, appellate,
and those special matters which are tho
subject of special and separate provisions.
But their Lordships are of the opinion that
the expression “ordinary jurisdiction”
embraces all such as is exercised in the
ordinary course of law and without any
special step being necessary to assume it and
that it is opposed to extraordinary
jurisdiction, which the Court may assume at
its discretion upon special occasions and by
special orders. They are confirmed in this
view by observing that, in the next group of
clauses which indicated the law to be applied
by the Court to the various clauses of cases,
there is not a four-fold division of
jurisdiction, but a three-fold one, into
ordinary, extraordinary,
80
and appellate. The judgment of 1868 was
entered up by the High Court, not by way of
special or discretionary action, but in the
ordinary course of the duty cast upon it by
law, according to which every other case of
the same kind would be dealt with. It was,
therefore, entered up in exercise of the
ordineary original civil jurisdiction of the
High Court.”
Council for the appellants contended that by cl.
18 of the letters Patent the High Court of Bombay
was invested with insolvency jurisdiction whereas
the High Court of Allahabad is not invested by the
Letters Patent with any jurisdiction in the matter
of companies and therefore the principle of “In
re-Candas Narondas” does not apply. But under cl.
18 of the Letters Patent a Judge or Judges of the
High Court are to sit as a Court for relief of
insolvent debtors and powers and authorities with
respect to original and appellate jurisdiction are
to be deter mined by reference to the law relating
to insolvent debtors. The jurisdiction to deal
with the claims of companies ordered to be wound
up is conferred by the Indian Companies Act and to
that extent the Letters Patent are modified. There
is, however, no difference in the character of the
original civil jurisdiction which is conferred
upon the High Court by Letters Patent and the
jurisdiction conferred by special Acts. When in
exercise of its authority conferred by a special
statute the High court in an application presented
to it as a court of first instance declares
liability to pay a debt, the jurisdiction
exercised is original and civil and if the
exercise of that jurisdiction does not depend upon
any preliminary step invoking exercise of
discretion of the High Court, the jurisdiction is
ordinary.
In P. T. Munia Servai v The Hanuman Bank
Ltd, Tanjore (1), a Division Bench of the Madras
(I) 1. L. R. (1958) Mad. 685
81
High Court by the Banking Companies Act, ]949 (X
of 1949) is part of its ordinary civil
jurisdiction within the meaning of Art. 183 of the
Limitation Act and an order passed in exercise of
its ordinary original Civil Jurisdiction is
governed by Art. 183 and not by Art. 182 of the
Limitation Act. In that case on an application
preferred by the Official Liquidator of the
Hanuman Bank Ltd., a direction for payment by the
High Court of certain sums of money by the
appellant Munia on or before a certain date was
made. To an application for enforcement of that
liability Art. 183 of the Limitation Act was held
applicable.
In our view, the High Court was right ill
holding that the application for execution filed
by the official Liquidator was within limitation.
The appeal, therefore, fails and is dismissed with
costs.
Appeal dismissed.

 

 

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