(1) Company Appln. No. 245 of 1963 is for passing a preliminary decrees on a mortgage dated 11-4-1949, executed by the first respondent, Ramamirthammal, in favour of the bank which is in liquidation. On 14-2-1955, in Company Appn. 3943 of 19543, the list of debtors was settled by this court in which item 22 related to the debt owing by Ramamirthammal. There was a brief reference that the dent was secured by a mortgage. Beyond that, no particulars, as required by Rule 3 in the Fourth Schedule under S. 45-D(2) of the Banking Companies Act 1949 were given. As a matter of fact, the decree passed by this court on 14-2-1955, was a money decree. The decree also did not provide for future interest. This application is made on the ground that there was some omission on the part of the court form passing a mortgage decree and also providing for subsequent interest. This application was heard on a previous occasion and it emerged as a result of the discussion in court that the Official liquidators should file an application for settling the mortgage debt of Ramamirthammal. They have, therefore, filed Company Appln. No. 207 of 1964 in which they pray that they may be permitted to amend the settled list of debtors by adding the particulars as required by Rule 3. They also pray, rather curiously, for adding a provision in the decree for payment of further interest. The above applications are resisted by the third respondent, S. Alagammai Achi, who claims to hold a security bond dated 21-6-1952.
(2) Section 45-D of the Banking Companies Act provides for the settlement of list of debtors. This section has operation notwithstanding any other law. That means the section has overriding effect. Sub-section (2) of the section says that subject to the rules made under Section 52, the Official Liquidator shall, within six months from the date of the winding up order file from time to time in the High Court a list of debtors containing such particulars as are specified in the fourth schedule. A proviso follows to the effect that such lists may, with the leave of the High Court, be filed after the expiry of the said period of six months. On receipt of a list, the High Court causes notices to be issued to the persons affected and after an enquiry as provided by rules made under Sec. 45-U, it may make an order settling that list of debtors. In so settling, it has power to settle a list in part as against such of the persons whose debts have been settled without settling the debts of all the persons placed on the list. While settling the list, the High Court shall pass an order for payment of the amount due by each debtor, which will have the force of a decree. Such an order will be subject to an appeal, final and binding for all purposes as between the parties. Under sub-section (7) of S. 45-D, the High Court has power to pass any order in respect of a debtor on the application of the Official Liquidator for the realisation, management, protection, preservation or sale of any property given as security to the Banking company and to give such powers to the Official Liquidator to carry out the aforesaid directions as the High Court thinks fit. Sub-section (10) states that S. 45-D will not apply to a debt which has been secured by a mortgage of immovable property, if a third party has any interest in such immovable property. Section 45-O in effect makes the Limitation Act inapplicable to debts owing to a banking company in liquidation.
(3) In the light of these provisions, the liquidators say that hey were entitled to ask this court to exercise its discretion to excuse the delay in filing an application for settlement of the list of the particular creditor Ramamirthammal and to pass a decree based on the mortgage executed by her. The objection of the third executed by her. The objection of the third respondent is that the official Liquidators having originally failed to show in the application for settlement of debtors the particulars required by Rule 3 in schedule four they should be deemed to have given up their claim on the security and in any case they cannot ask either for an amendment of the personal decree passed in February 1955 or a fresh mortgage decree on the basis of a fresh application for settlement of debtors. The argument derives support from a principle analogous to O. II R. 2 C.P.C. It is contended that O. XXXIV Rule 14, which is applicable to suits cannot be invoked by the Official Liquidators. I find no difficulty in rejecting the contention of the third respondent. Neither O. II R. 2 nor O. XXXIV Rule 14 C.P.C. will be directly applicable to proceedings under S. 45-D. But I think the principles of those rules can well be extended to settlement of list of debtors and passing of orders under S. 45-D(4). Section 45-D(1) only says that the section will have overriding effect over any other law which is contrary to is provisions. Order XXXIV Rule 14 clearly enables the mortgagee who has obtained a decree for the payment of money in satisfaction of a claim arising under his mortgage, to bring a suit for the sale of the mortgaged property notwithstanding anything contained in O. II. R. 2. To such a case therefore the bar under O. II R. 2 will not be applicable. If the mortgagee gives up his right over the security, it is quite another matter. But where without giving up his right, be sues for recovery of money due under the mortgage, his right to file a separate suit for bringing the property to sale in order to realise the debt is preserved. The contention of the third respondent that the omission on the part of the Official Liquidator when the list was settled on the bared the present application, cannot therefore be accepted.
(4) The next contention for the third respondent is based on S. 45-D(10). Prima facie, the argument of the third respondent that if a third party has an interest in the immovable property which is subject to a mortgage, Section 45-D will have no application appears to be plausible. Sub-section (10)(a) reads as follows:
'Nothing in this section shall--(a) apply to a debt which has been secured by a mortgage of immovable property, of a third party has any interest in such immovable property.' The argument is that a subsequent encumbrancer has an interest in immovable property and therefore, literally, such a person will be within the ambit of this provision. In my opinion, this is not a correct construction to be placed on S. 45-D(10)(a). It does not seem to apply to a case of subsequent encumbrance. As it appears to me, the whole object of S. 45-D is to enable the High Court, on an application for settlement of a list, to pass a decree against the debtors settled in the list, including mortgage debts, and there is no indication in S. 45-D that merely because the subsequent encumbrance is having an interest in the immovable property, no order for payment of money can be made under S. 45-D(4). Apparently, sub-section (10)(a) has application to the third party who claims a paramount title or has an interest which would be in conflict with the earlier mortgage, as for instance, a third party, who claims that the mortgagor had no right or interest in the property mortgaged but he has. In my view, sub-section (10)(a) does not cover the case of a second or subsequent encumbrancer. This objection too therefore fails.
(5) It is then argued for the third respondent that company appln. No. 207 of 1964 is too belated and that this court will not be justified in exercising its discretion and excusing the delay. As I already mentioned, Section 45-D(2) requires the Official Liquidators to file an application for settlement of list of debtors within six months from the date of the winding up order. The proviso to the sub-section reads:
'Provided that such lists may, with the leave of the High Court, be filed after the expiry of the said period of six months'.
Whether the application now made is treated as one for amendment of the earlier list or for settlement of a list of debtors afresh, the question of delay will have to be considered in the light of the proviso. The proviso undoubtedly vests a discretion in this court. But the discretion has to be exercised only for proper reasons. The application now made comes after nearly nine years of the settlement of the list of debtors in 1955. Though time was given the report of the Official Liquidators has not set out any ground whatever explaining the delay. On the other hand, during the arguments what was suggested was that in the circumstances of this case, they even thought of asking this court to write off the debt as it was felt that it might not be possible to realise the debt. If that were the reason, the delay was a deliberate one. If that were not the reason, as the report stands at the moment, there is no ground mentioned which will justify this court to exercise the discretion vested in it by the proviso to S. 45-D(2).
(6) It is not as if the Official Liquidators are without a remedy. As I said, there is no period of limitation applicable to such debts by reason of S. 45-C. There is nothing in the Banking Companies Act, which takes away the right of the banking company under liquidation from instituting a suit on the mortgage and recovering the money by sale. In the circumstances, in the absence of any reason for the delay, which alone will enable this court to consider whether it could be excused, company appln. No. 207 of 1964 has to be dismissed. It follows that the prayers in Company Appln. No. 245 of 1963 cannot also be ordered and this application too is dismissed. No costs.
(7) Application dismissed.