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Brahmayya and Co., Official Liquidators of Hanuman Bank (In Liqn.) Vs. Mohammedsa Rowther (Died) and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtChennai High Court
Decided On
Case NumberOriginal Side Appln. Nos. 79 and 80 of 1954
Judge
Reported inAIR1959Mad366; (1959)1MLJ294
ActsBanking Companies Act, 1949 - Sections 45O(1)
AppellantBrahmayya and Co., Official Liquidators of Hanuman Bank (In Liqn.)
RespondentMohammedsa Rowther (Died) and ors.
Appellant AdvocateS. Swaminathan, Adv.
Respondent AdvocateK.S. Naidu, Adv.
DispositionAppeal dismissed
Excerpt:
.....sold properties hypothecated to bank as security under mortgage - appellant delayed in filing application to bring on record legal representatives of deceased respondent - lower court dismissed application in reason that it was barred by limitation - section 45-o excluded period of limitation only for filing petition for winding up - appeal dismissed. - - he contended that the language of sub-section (3) of section 45-o clearly manifested an intention on the part of the legislature to give retrospective effect to the special provisions contained in section 45-o (1). 5. in our opinion these appeals can be disposed of on another short ground without discussing theabove contention raised as regards the retrospectiveoperation of section 45-o (3). it appears clear to us..........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.' sub-section 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.' the learned judge on a construction of sub-section (1) of section 45-o held that it would apply only to cases where the claim is subsisting both on the date when the amendment act of 1953 came into force and.....
Judgment:

Rajamannar, C.J.

1. The facts which have led up to these two appeals against the judgment of Ramaswami Goundar J. in Applns. Nos. 3369 of 1952 and 3953 of 1953 are the following. The Hamiman Bank Ltd., Tanjore, went into liquidation, The petition for winding up was filed on 17-8-1947 and it was directed to be wound up on 5-11-1947. The Official Liquidators who were appointed by this Court in the winding up petition filed a suit. O. S. No. 16 of 1949, in the Court of the Subordinate Judge of Kumbakonam against one Mohammedsa Rowther for the recovery of a sum of Rs. 12,620-7-0 by sale of the properties hypothecated to the bank under a mortgage bond dated 29-9-1943 and another deed dated 14-3-1944 under which the same properties were offered as security for additional amounts.

The suit was filed sometime in April 1949. There was written statement by the defendant denying liability and issues were framed on 12-7-1949. When the suit was pending the Banking Companies Act, 1949 was passed and came into force on 16-3-1949. Before this Act there was a Governor-General's Ordinance, 23 of 1949 and under the provisions of that Ordinance there was an application to this Court to direct the defendant in the suit to pay the Official Liquidators a sum of Rs. 15,130-13-1 with further interest and praying in default of payment the properties hypothecated may be sold.

The suit was transferred to the company side of this Court. The defendant died on 29-11-1951. When the application filed by the Official Liquidators above mentioned came on for orders before the learned Master on 6-11-1952 it was reported that the respondent to the application, that is, the defendant in the suit, was dead. Adjournments were taken from time to time and eventually on 21-1-1953, an application, No. 637 of 1953, was filed to bring on record the legal representatives of the deceased respondent and to set aside the abatement. There was no application as such for the delay to be excused.

In the affidavit filed on behalf of tho Official liquidators in support of the application the only allegation made was that the Official Liquidators were informed on enquiry that the respondent was dead leaving behind him certain legal representatives, It was therefore prayed that this Court may set aside the abatement caused by the death of Mohammedsa Rowther, that is, the respondent, and to bring on record five persons as the legal representatives of the said deceased Mohammedsa Rowther. The application was opposed.

In the counter-affidavit filed on behalf of the proposed legal representatives it was pointed out that there was absolutely no ground or sufficient cause for setting aside the abatement and that no grounds were even set forth in the application. Even the date of death had not been mentioned. In the reply affidavit on behalf of the Official Liquidators it was stated that the death of the respondent was not known to them until the notice sent to him by this court was returned unserved and as soon as they got information they took steps to bring on record the legal representatives. They further stated that the delay in the circumstances was not due to wilful negligence or default on their part.

The application for setting aside the abatement and for bringing on record the legal representatives of the respondent first came up before the learned Master who held that no sufficient cause had been shown for the delay in seeking to set aside the abatement within the period allowed under Article 171 of the Limitation Act He therefore dismissed the application. There was an appeal from this order of the Master to the learned Judge sitting in Chambers (Appln. No. 3953 of 1953). The appeal came on for hearing before Ramaswami Gounder J. along with the application to set aside the abatement. The learned Judge hold that there had been long delay in filing the application to set aside the abatement and the delay had not been satisfactorily accounted for.

2. Before the learned Judge for the first time learned counsel for the Official liquidators contended that the suit had not abated as there was no question of the bar of limitation having regard to the provisions of Section 45-O of the Banking Companies Act, a provision which along with other provisions was added to the original Act by the Amendment Act XXIII of 1953, which came into force on 30-12-1953. Section45-O (1) in so far as it is material for the purpose of these appeals runs thus:

'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 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.' Sub-section 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.' The learned Judge on a construction of Sub-section (1) of Section 45-O held that it would apply only to cases where the claim is subsisting both on the date when the Amendment Act of 1953 came into force and also on the date of the presentation of the petition for winding up, and as the time for bringing on record the legal representatives and setting aside the abatement had elapsed before the coming into force of Section 45-O of the Act Sub-section (3) of that section would not revive the right which had become barred. (3) The learned Judge observed : 'To give effect to the contention of the learned counsel for the Official Liquidators in the present case would give rise to very startling results. There may ever be so many banking companies now in liquidation, and ever so many claims by such banking companies, which had ceased to exist as subsisting claims on the date when the present amendment Act came into force. To give effect to the contention would be to bring back to life all such dead claims. A court will not lightly engender such consequences unless it is compelled to do so by clear language, and there is no such language in the present section.'

In this view the learned Judge dismissed both the applications before him. The Official Liquidators have filed the above appeals against the above common order of the learned Judge.

Mr. Swaminathan, learned counsel for the Official Liquidator-appellants could not convince us that there was sufficient explanation for the delay in filing the application for setting aside the abatement and bringing on record the legal representatives of the deceased respondent. He was unable to point out to any averment in any affidavit filed on behalf of the Official Liquidators as to when exactly the Official Liquidators came to know of the death of the respondent, when and what steps they took, and when they took steps why there was a delay of over two and a half months from the date of their knowledge. The learned Judge was apparently supplied with certain correspondence between the Official Liquidators at Madras and the joint liquidator at Tanjore. But the correspondence disclosed that there was much avoidable and unexplained delay in taking steps. We entirely agree with the learned Master and the learned Judge that there was no adequate explanation for the delay and no sufficient reason to excuse it.

4. Mr. Swaminathan next pressed upon us the contention based on the provisions of Section 45-O in the Banking Companies Act. As the petition for winding up the appellant company was filed long before the amendment in 1953, the learned counsel for the appellant summoned to his aid Sub-section (3) of Section 45-O. The result of this sub-section was, according to him, that the provisions of Section 45-O (1) would apply equally to the appellant bank, though the petition for winding up had been presented before the Banking Companies Amendment Act, 1953 had come into force. He contended that the language of Sub-section (3) of Section 45-O clearly manifested an intention on the part of the legislature to give retrospective effect to the special provisions contained in Section 45-O (1).

5. In our opinion these appeals can be disposed of on another short ground without discussing theabove contention raised as regards the retrospectiveoperation of Section 45-O (3). It appears clear to us thatsub-section (1) of Section 45-O cannot in terms apply to acase like the present. In our opinion this sub-sectionapplies only to a suit or application for which thecause of action or the right to apply arose before thepresentation of the petition for the winding up ofthe company. It cannot apply to a suit or application in respect of a cause of action or right whichaccrued subsequent to the presentation of the petition, still less subsequent to the order of winding up.

The enactment provides for the exclusion of aperiod commencing from the presentation of the petition for the winding up of the banking company incomputing the period of limitation prescribed for asuit or application. In the present case the datefrom which the period of limitation has to be computed is the date of the death of the respondent, thatis, 29-11-1951. This is subsequent to the date ofthe petition for the winding up and even subsequent to the date of the order winding up the company. How then can the period which commencedanterior to the date from which limitation has to becomputed for the application be excluded in such apetition? The provision for exclusion indicates thatthe date from which the period of limitation is to becomputed is before the date of the presentation ofthe petition.

Mr. Swaminathan, learned counsel for the appellant admitted that the logical application of hisconstruction would lead to anomalies which couldnot have been obviously contemplated by the legislature. Take for instance a case in which the Official Liquidators subsequent to the winding up have granted a lease of certain property belonging to the company to a tenant and they are compelled to filea suit for arrears due from the tenant. If the construction put on Section 45-O (1) is accepted, then obviously such a suit would not be barred at all becausethe period commencing from the date of the petitionshall be excluded from the date from which limitation has to be computed for a suit is a date subsequent to the presentation of the winding up petition.

More such anomalous instances can be given but it is not necessary to do so. Suffice it to say that the language of Section 45-O (1) does not permit its application to a case where the cause of action for instituting the suit or the right to make an application accrued to the company in liquidation after the presentation of the winding up petition.

6. In this view it is not necessary for us to consider the other ground on which the learned Judge has held against the appellants. We hold that the provisions of Section 45-O of the Banking Companies Act do not save the applications made by the Official Liquidators from the bar of limitation that is imposed by the provisions of the Indian Limitation Act. The appeals are therefore dismissed. No costs. The Official Liquidators will take the costs of these appeals from the company's funds.


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