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Comrade Bank Limited (In Liquidation) Vs. Jyoti Bala Dassi - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata High Court
Decided On
Case NumberCivil Revn. No. 1859 of 1960
Judge
Reported inAIR1962Cal86,[1962]32CompCas990(Cal),66CWN761
ActsBanking Companies Act, 1949 - Sections 45A and 45B; ;Code of Civil Procedure (CPC) , 1908 - Order 21, Rule 58
AppellantComrade Bank Limited (In Liquidation)
RespondentJyoti Bala Dassi
Appellant AdvocateSanti Prasad Banerjee, Adv.
Respondent AdvocateBanbehari Mukherjee, Adv.
Cases ReferredMt. Zamrut v. Peoples Bank of Northern India
Excerpt:
- .....to give effect to the petitioner's objection that by reason of the provisions contained in the banking companies act, the court at rampurhat suffered from want of jurisdiction to entertain a claim preferred by the opposite party under order 21 rule 58 of the code of civil procedure,2. it appears that the petitioner bank in liquidation instituted a suit on the 6th of august, 1952 against one krishnapada sadhu, the husband of the opposite party and her son dhwajahari sadhu for recovery of a sum of rs. 798-l-6p with interest and for other reliefs. the plaintiff's case was that the sum had become due and owing to the petitioner by the said defendants on a mutual, open and current account with over-draft facilities which the said defendants had with the petitioner bank. on the 3rd.....
Judgment:
ORDER

Debabrata Mookerjee, J.

1. This is an application under Section 115 of the Code of Civil Procedure directed against an order made by a Munsif at Rampurhat, declining to give effect to the petitioner's objection that by reason of the provisions contained in the Banking Companies Act, the court at Rampurhat suffered from want of jurisdiction to entertain a claim preferred by the opposite party under Order 21 Rule 58 of the Code of Civil Procedure,

2. It appears that the petitioner bank in liquidation instituted a suit on the 6th of August, 1952 against one Krishnapada Sadhu, the husband of the opposite party and her son Dhwajahari Sadhu for recovery of a sum of Rs. 798-l-6p with interest and for other reliefs. The plaintiff's case was that the sum had become due and owing to the petitioner by the said defendants on a mutual, Open and current account with over-draft facilities which the said defendants had with the petitioner Bank. On the 3rd February, 1956, a decree was made with interests and costs by this court in its Ordinary Original Civil Jurisdiction and the same was transferred for execution to the court of the Munsif at Rampurhat. In course of execution which commenced in 1959 certain immovable properties belonging to the judgment-debtors were attached by the Bank when the opposite party, wife of the Judgment-debtor Krishnapada Sadhu preferred a claim under Order 21 Rule 58 of the Code of Civil Procedure and prayed for removal of the attachment on the ground that the properties were not liable to be attached inasmuch as they belonged to her in her own right. A Miscellaneous Judicial Case (No. 129 of 1959) was accordingly started when the petitioner preferred an objection to the entertainment of the claim by the court on several grounds one of which was that the petitioner Bank having been directed to be wound up under the provisions of the Banking Companies Act for which proceedings were still pending in this Court before the Company Judge, the claim preferred by the opposite party could not be entertained by the executing court at Rampurhat but could be investigated by the Company Judge alone on the Original Side of this Court. It was also contended on the petitioner's behalf that no leave having been obtained, for preferring the claim, the claim could not be entertained. The learned Munsif disallowed the objection and held that the claim preferred could not be considered to constitute a proceeding distinct from the proceeding in execution and as such investigation of the claim must be held to have been impliedly authorised by the order transferring the decree for execution to that Court. In this view the claim of the opposite party was proposed to be investigated, such investigation being held not barred under the provisions of Section 45-B of the Banking Companies Act, It is against this order that the present Rule has been obtained.

3. The petitioner Bank contends in this Rule that in view of the specific provisions contained in Sections 45-A and 45-B of the Banking Companies Act the claim case cannot proceed before the Munsif and has to be investigated by this Court in its Original Jurisdiction.

4. Rule 58 of Order 21 provides for investigation of claims and objections to attachment made in execution of decrees. The attaching court would, normally, have jurisdiction to investigate a claim preferred or an objection made. It would require, therefore, a specific provision of the law to oust the jurisdiction of the executing court. The contention is that such provision has been made in the Banking Companies Act. I think this contention is sound and must prevail.

5. Special provisions have been made in the Banking Companies Act for speedy disposal of winding up proceedings. In Part III-A of the Act 'Court' means the High Court exercising jurisdiction in the place where the registered office of the Banking Company, which is being wound up is situate and Section 45-A provides that the law contained in Part III-A will override other laws; such laws may apply to winding up proceedings of a Banking Company only to the extent they are not inconsistent with the provisions of this Part. Section 45-B says that such court shall have full power to decide all claims made by or against any Banking Company and all questions of law Or fact which may relate to or arise in the course of the winding up of a Banking Company have to be determined by the Court as defined in Section 45-A of the Act. These two provisions, between them, would make it plain that the High Court is the only Court competent to decide all claims made by or against any Banking Company and no other court is competent to decide such question.

6. It has been argued on behalf of the opposite party that the investigation of the claim preferred under Order 21 Rule 58 is an integral part of the proceeding in execution, and that proceeding having been authorised by the Company Judge to be taken at Rampurhat, it must be held that no fresh order was necessary to be obtained for preferring the claim in terms of Section 171 of the Indian Companies Act. That section provides that when a winding up order has been made or a provisional liquidator has been appointed no suit or other legal proceeding shall be proceeded with or commenced against the company except by leave of the Court, and subject to such terms as the Court may impose. The contention is that the have to file an objection or prefer a claim in the execution proceeding must be presumed, in circumstances such as those of the present case, where the decree was transferred by the Company Judge to the Munsif at Rampurhat for the purpose of levying execution. The very act of transfer of the decree by the High Court must be held to be an implied permission to continue all proceedings in connection with the execution; and investigation of claim or an objection is an integral part of proceedings in execution. It is true, Section 171 provides for leave to be taken before any proceeding can be commenced. It may perhaps be argued that the decree having been sent to the court at Rampurhat for execution, disposal of claims and abjections under Order 21 Rule 58 by that court may, in that sense have been permitted. But Section 171 of the Indian Companies Act docs not stand alone. The Banking Companies Act makes it plain that the provisions of this Act shall be in addition and not, as otherwise expressly provided to be, in derogation of the Companies Act. That being so, the express provisions made in the Banking Companies Act must, therefore prevail; and those provisions contained in Sections 45-A and 45-B between them spell out for the Company Court an exclusive jurisdiction which can in no way be avoided. The provisions of the Banking Companies Act leave, no scope for doubt that the High Court alone, to the exclusion of other Courts, possesses the power to decide all claims by or against a Banking Company in liquidation.

7. It was then argued that investigation of the claim preferred by the opposite party cannot properly be said to relate to or arise in the course of winding up of the Banking Company. This question was decided by a Division Bench of this Court in the case of Hemanga Coomar Mookherjee v. M.C. Chakravarty : AIR1952Cal732 , where it was held that a proceeding under Order 21, Rule 58, was a proceeding arising in course of, and not out of, the winding up within the meaning of the Banking Companies Act. Apart from authority, it seems clear on principle that the real object of the special provisions for the winding up of Banking Companies is to enable the liquidator to collect the Bank's assets as speedily as possible so that the Bank's debts may be paid and its assets distributed as equitably as possible amongst those who are entitled to them.

8. It was faintly suggested on behalf of the opposite party that the decree could not have been properly transferred to the Munsif at Rampurhat for the purpose of executing the same. But no serious notice can be taken of the criticism inasmuch as it is quite plain that while the provisions of the Banking Companies Act create and confer exclusive jurisdiction On the High Court, they do not prevent that Court from seeking the assistance of other courts in aid of execution of its decrees and orders made in such jurisdiction. The question fell to be considered in the case of Bharati Central Bank Ltd. v. Ratindra Nath Sen, 54 Cal WN 975, where a similar contention was rejected and the High Court was held to have power to seek the assistance of other courts in matters of execution of orders and decrees made in the exercise of its exclusive jurisdiction.

9. Emphasis was laid upon the circumstance of the resultant unfairness that although the decree has been transferred to the court at Rampurhat, the claimant opposite party should be prevented from preferring a claim locally to the attached property in the execution proceedings. Reliance was placed upon decision in the case of Mt. Zamrut v. Peoples Bank of Northern India, 164 Ind Cas 1019 : (AIR 1936 Pesh 185), where it was held that it would be most inequitable that a company in liquidation should institute execution proceedings and rely upon Section 171, Companies Act, to debar persons from defending their property in those execution proceedings. The decision proceeds on the footing of supposed equities involved in such cases. This decision was rendered before the Banking Companies Act, 1949 was enacted. That being so, the specific provisions of this Act did not fall to be considered. After these provisions of the Banking Companies Act have been placed on the statute book, it is impossible to uphold the contention of the opposite-party on the basis of equitable considerations. Once exclusive jurisdiction of the High Court is established under the provisions of the Banking Companies Act, it is impossible to resist the conclusion that that Court alone has the power to decide all claims, whatever their nature and wherever made, against the Bank in liquidation. There can be no question that if the claim of the opposite party succeeds that will affect the assets of the Banking Company. Consequently the claim preferred must be investigated and decided by the High Court in terms of Sections 45A and 45B of the Banking Companies Act.

10. In my view the entire execution proceedings need not be sent up to this Court, Only the Miscellaneous Judicial Case No. 129 of 1959 arising in the course of Money Execution Case No. 21, of 1959 in the First Court of the Munsif at Rampurhat will be transmitted to this Court to be dealt with in its appropriate jurisdiction. After investigation and disposal of the claim preferred by the opposite party, the execution proceedings now pending before the First Court of the Munsif at Rampurhat, will proceed to termination in accordance with law.

11. The Rule is made absolute.

12. In the circumstances of the ease I make no order as to costs.


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