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Bank of Commerce Ltd. (In Liquidation) Vs. Arun Kumar Chowdhury and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtKolkata High Court
Decided On
Case NumberMatter No. 64 of 1950
Judge
Reported inAIR1965Cal333,68CWN858
ActsPartnership Act, 1932 - Section 44; ;Code of Civil Procedure (CPC) , 1908 - Order 40, Rule 1; ;Banking Companies Act, 1949 - Section 45B
AppellantBank of Commerce Ltd. (In Liquidation)
RespondentArun Kumar Chowdhury and ors.
DispositionApplication allowed
Cases ReferredUnion of India v. Hira Debi
Excerpt:
- orderb.c. mitra, j.1. this is an application by the official receiver of this court as official liquidator of bank of commerce ltd. (in liquidation) (hereinafter referred to as the bank) under section 45b of the banking companies act 1949, for determination of the rights of the bank and of the respondents nos. 1, 2 and 3 to the sum of rs. 1,00,000/- lying to the credit of the court, in title suit no. 36 of 1954, in the court of the 4th subordinate judge at alipore, for an order that the joint receivers appointed by this court in suit no. 289 of 1959 (bank of commerce ltd. (in liquidation) v. sailendranath sinha and another) be allowed to withdraw the sum of rs. 1,00,000/- and make over the same to the petitioner, for an injunction restraining the respondent no. 1 from interfering in the.....
Judgment:
ORDER

B.C. Mitra, J.

1. This is an application by the Official Receiver of this Court as official liquidator of Bank of Commerce Ltd. (In Liquidation) (hereinafter referred to as the bank) under Section 45B of the Banking Companies Act 1949, for determination of the rights of the bank and of the respondents Nos. 1, 2 and 3 to the sum of Rs. 1,00,000/- lying to the credit of the Court, in title suit No. 36 of 1954, in the court of the 4th Subordinate Judge at Alipore, for an order that the Joint Receivers appointed by this Court in Suit No. 289 of 1959 (Bank of Commerce Ltd. (In Liquidation) v. Sailendranath Sinha and another) be allowed to withdraw the sum of Rs. 1,00,000/- and make over the same to the petitioner, for an injunction restraining the respondent No. 1 from interfering in the matter of realisation and/or withdrawal or payment of the same to the petitioner and for costs.

2. The petitioner had filed a suit in this Court being Suit No. 289 of 1959 (Bank of Commerce Ltd. (in Liquidation) v. Sailendra Nath Sinha and another) claiming a declaration that an alleged assignment dated March 18, 1958, made by the respondent No. 2 in this application, was a sham and fictitious transaction and the same was invalid and void. In this suit a decree was passed by consent on August 30, 1963, upon leave being granted to the liquidator to enter into the compromise. By the said decree two solicitors of this Court Sambhunath Ghose and Asoke Kumar Dutt were appointed Joint Receivers and were directed to apply for withdrawal of a sum of Rs. 1,00,000/- out of the money lying to the credit of the court of the 4th Subordinate Judge at Alipur, in Title Suit No. 36 of 1954.

3. Pursuant to the direction given to the Joint Receivers under the said decree of this Court dated August 30, 1963, the Joint Receivers applied before the 4th Subordinate Judge at Alipore, in Title Suit No. 36 of 1954, for withdrawal of the said sum out of the money lying to the credit of the said court. The Subordinate Judge directed notice of the application to the parties in the Title Suit No. 36 of 1954. The respondent No. 1 in this application appeared in the said application by the Joint Receivers and filed a petition of objection, objecting to the withdrawal of money by the Joint Receivers, pursuant to and in terms of the said decree of this Court. The ground of objection of the respondent No. 1 was that, the money lying to the credit of the court of the Subordinate Judge was deposited to protect the claim of the respondent No. 1 against the respondent No. 2, if a decree was passed in favour of the respondent No. 1 against the respondent No. 2, in the said Title Suit No. 36 of 1954.

4. By an order dated October 3, 1963, the 4th Subordinate Judge at Alipore rejected the application of the Joint Receivers. This application has been occasioned by reason of the said order of the 4th Subordinate Judge at Alipore.

5. In order to appreciate the merits of the rival contentions of the parties in this application, it is necessary to refer to several proceedings in this Court, as a direct result of which certain sums have been deposited to the credit of the court of the 4th Subordinate Judge at Alipore.

6. On August 7, 1950, an order was made for winding up of the bank by this Court, and the petitioner was appointed the official liquidator. Thereafter misfeasance proceedings were commenced by the petitioner against the directors of the bank in this Court By an order dated March 28, 1956, made in the misfeasance proceedings various properties including premises No. 5, Sadananda Road, were attached, and by an order made on May 14, 1956, by this Court, the petitioner obtained an order of attachment of a sum of Rs. 2000/- payable monthly and every month as rent of premises No. 5, Sadananda Road, to the respondent No. 2 by one Chand Mohan Chakravarty, the Receiver appointed in Title Suit No. 36 of 1954 (Arun Kumar Chowdhury v. Sailendranath Sinha and Anr.) now pending in the court of the 4th Subordinate Judge at Alipore. In order to understand the dispute between the parties to the said title suit it is necessary to refer to certain events that happened prior to the institution of the said title suit.

7. In 1944 Ram Chandra Chowdhury, respondent No. 4, the father of the respondent No. 1, approached Sailendranath Sinha, the respondent No. 2, who was then a director of the bank for financial assistance in acquiring a long lease of premises No. 5, Sadhananda Road, and No. 19A, Kalidas Patitundi Road. On July 23, 1944, Sinha paid Rs. 20,000/- by cheque on the bank and on August 8, 1944, Sinha paid another sum of Rupees 20,000/- by cheque. The respondent No. 1 signed receipts for the said two cheques at the back of the counterfoil of the cheques. A third sum of Rs. 10,000/- was again paid by Sinha on September 5, 1944. This sum was also paid by cheque and a receipt for the same was signed by the respondent No. 1 at the back of counterfoil.

8. The arrangement between Sinha and Ramchandra Chowdhury, was that the land would be acquired and a theatre house would be constructed at the site. It was pursuant to this arrangement that Sinha who had the funds of the bank at his disposal, as a director, advanced the several sums of money mentioned above.

9. Between September 16, 1944, and December 4, 1944, Sinha paid several further sums aggregating Rs. 1,00,000/-, for the purchase of stage-outfits. All the payments made between the two dates mentioned above were also made by cheques. The total sum advanced by Sinha to the father of the respondent No. 1 was Rs. 5,00,000/-. The respondent No. 1 claims to have advanced larger sums of money than what was advanced by the respondent No. 8.

10. On November 20, 1944, a lease for 75 years was taken in the name of the respondent No. 1, of premises No. 1/1/1A Russa Road, 5, Nibaran Banerjee Road and 5, Sadananda Road. On December 21, 1944, the respondent No. 1 executed a declaration of trust in favour of Sinha as the beneficiary and had the said deed registered. This deed was attested by the father of the respondent No. 1, namely, the said Ram Chowdhury, who was then officiating Assistant Commissioner of Police. This deed was also read over and explained to the respondent No. 1 by a solicitor of this Court. It is with regard to this deed that it Is being contended in the affidavit, filed on behalf of the respondent No. 1 in these proceedings, that Sinha represented to the respondent No. 1 and his father that they were two deeds of partnership between Sinha and the respondents Nos. 1 and 4. It is further alleged in the said affidavit that the respondents Nos. 1 and 4 were told that they were mere paper transactions and were intended to facilitate business and the respondents Nos. 1 and 4 executed the deeds without understanding the meaning and purport thereof and without even going through them. It is claimed that the deeds are void, illegal and of no effect and that the recitals contained therein are false. It is also alleged that the said deeds were obtained fraudulently and on false representations

11. On the same day, namely, December 21, 1944, a partnership deed was executed and a partnership was constituted between the respondent No. 1 and Sinha, each having a half share in a theatrical business to he carried on under the name of Dakshina Kalika Theatrical Corporation. This deed was also attested by the father of the respondent No. 1. In this deed Sinha was acknowledged as the partnership firm at a monthly rent of Rs. 2500/- and the said rent was paid to Sinha as the proprietor of the theatre house. As the theatrical business sufferered a loss, it was converted into a cinema.

12. In 1954 the said Title Suit No. 36 of 1954 was filed in the court of the 4th Subordinate Judge, Alipore claiming partition, accounts, appointment of receiver etc. In this suit the claim for account was valued at Rs. 100/- only and ad valorem court fee was paid for Rs. 50/- only. Chand Mohan Chakravarty was appointed Receiver. There was an appeal against the order appointing the receiver, to this Court, and a rule was obtained by Sinha in this appeal. In disposing of this rule this Court directed that the Receiver should continue to pay Rs 2500/- per month to Sinha.

13. The effect of the several orders made by this Court in its Civil Appellate jurisdiction, Civil Revisional jurisdiction and the jurisdiction exercised under the Companies Act is of great importance in this case. It has to be seen how the fund which was credited to the court of the 4th Subordinate Judge at Alipore, and out of which the sum of Rs. 1,00,000/- was to be obtained by the applicants in this case, was created. It is also to be seen if the respondent No. 1 had any right to object to withdrawal of this sum of Rs. 1,00,000/-from the said fund, pursuant to the decree passed by this Court and also if the 4th Subordinate Judge at Alipore was justified in rejecting the application of the Joint Receivers for withdrawal of thesaid sum in terms of the decree of this Court. For that purpose I shall proceed to deal with the various orders made by this Court and also by the court of the 4th Subordinate Judge at Alipore in this matter.

14. On June 1, 1955, S.R. Dasgupta and P. C. Mallick, JJ. made an order in Civil Rule No. 1290 (M) of 1955 by which the Receiver appointed by the 4th Subordinate Judge was directed to take possession of the business and run the same. He was to make all collections out of the business. But their Lordships made it clear that the sum of Rs 2,500/- which was payable by the partnership to the proprietor of the land and the structure would continue to be paid by the Receiver to Sinha who is defendant No. 1 in the suit. It was provided however that the Receiver would not have to pay the rent of the land payable to the original lessor. Their Lordships in making the order did not think it necessary to make any provision for the alleged claims of the respondent No. 1, on accounts being taken in the partnership suit. There was a clear direction upon the Receiver to pay the entire sum of Rs. 2,500/- to Sinha. Their Lordships did not even think it necessary to deal with the prospective, contingent claim, of the respondent No. 1 that might arise in his favour, upon accounts bring taken in the partnership action.

15. On September 3, 1955,. S.N. Guha Ray and S.K. Sen, JJ. made an order in the Civil Appellate Jurisdiction of this Court, disposing of an application made by the respondent No. 1. The application was made by the respondent No. 1 for direction upon the defendant No. 1 in the partnership action, for paying the landlord his ground rent out of the sum of Rs. 2,500/- as already ordered by this Court on June 1, 1955. This application was dismissed as it was held that the application should have been moved before the trial court. It is to be noticed that the respondent No. 1 accepted the position that rent of the premises was being paid by the Receiver to Sinha and because of that order for payment of the rent to Sinha, that he came to court for an order upon Sinha to pay the ground rent to the landlord out of the sum of Rs. 2,500/-. Here again the respondent No. 1 did not raise any question of security of his prospective claims on accounting or protection of such alleged claim in any other shape or form. On the other hand he accepted the position that Sinha was entitled to the rent of the premises and accepting that to he so, he prayed for an order upon Sinha directing him to pay the ground rent to the landlord.

10. In February, 1956, the respondent No. 1 applied for payment to him of a lump sum of Rs. 2000/- out of the funds in the hands of the Receiver. On this application an order was made as prayed. Against this order Sinha obtained a rule from this Court being Civil Rule No. 421 of 1956. The said Rule was disposed of by an order made by P.N. Mukherji and Renupada Mukherji, JJ. on March 12, 1956, in which their Lordships observed that Sinha might ask for payment to him out of the fund in the hand of the Receiver and it was open to him to apply to the court below who should consider the application, if made, on its merits, Pursuant to this order Sinha applied to the 4th Subordinate Judge, Alipore, for payment to himof his shares of profits. This application made by Sinha was rejected by the 4th Subordinate Judge and thereupon he obtained a Civil Rule from this Court being Rule No. 2180.

17. This Rule was disposed of by an order also made by P.N. Mukherji and Renupada Mukherji, JJ., on December 19, 1956, in which their Lordships observed that the rule was directed against an order of the learned Subordinate Judge directing the Receiver appointed in the suit to make certain interim payments to the plaintiff, while refusing to pass a similar order in favour of the defendant. It was further observed that it was not disputed before their Lordships that the interim payments to the plaintiff in the partnership action had amounted to Rs. 13,000/-. Their Lordships directed the Receiver to deposit to the credit of the court of the 4th Subordinate Judge a sum of Rs. 13,000/- and make similar deposits of such further sums as would be paid by the Receiver to the plaintiff by way of interim payments in future, simultaneously with such payments. Their Lordships further ordered that the court below might take into consideration any application from Sinha for payment to him, and the court below was at liberty to give directions with regard to all these amounts deposited under that order.

18. This order is of considerable importance for this application, because the fund out of which the Joint Receivers have been directed by the decree of this Court to obtain the sum of Rupees 1,00,000/-, was created directly by the said order of this Court. It cannot be overlooked that their Lordships while directing the court below to consider any application from Sinha for payment out of the moneys so credited, did not consider it necessary to secure or protect prospective, contingent claims of the respondent No. 1, upon accounts being taken in the partnership action. Nor does it appear that it was urged on behalf of the respondent No. 1 at the hearing of the said Rule that he was entitled to protection of his claim or security for the same as he had a claim for accounts against Sinha. The fund now lying to the credit of the court of the 4th Subordinate Judge was created entirely by reason of the orders of this Court and has nothing whatsoever to do with any order made by the 4th Subordinate Judge at Alipore in the partnership action.

19. The order made by this Court on December 19, 1956, was followed shortly afterwards by an order made by the 4th Subordinate Judge Alipore on February 1, 1957, on a petition by Sinha, for a direction upon the Receiver, to deposit Rs. 13,000/- in terms of the said order of this Court dated December 19, 1956. After setting out the order made by this Court on December 19, 1956, the learned subordinate Judge directed the Receiver to deposit the said sum of Rs. 13,000/- to the credit of the court. The order made by the learned Subordinate Judge is as follows:

'The Receiver is accordingly directed to deposit the said sum of Rs. 13,000/- in court to the credit of the court in obedience to the Hon'ble Court's directions within a week from the date of this order.'

20. It was pursuant to the said order of this Court dated December 19, 1956 that various sum of money have been deposited to the credit of theCourt at Alipore by the Receiver. The particulars of the amount deposited to the credit of the court have been set out in an annexure to the affidavit affirmed by Sailendranath Sinha on March 10, 1964. 'It appears that a sum of Rs. 2,29,000/- is now lying to the credit of the court in terms of the orders made by this Court.

21. Sometime in September, 1957, the respondent No. 1 applied to the 4th Subordinate Judge at Alipore for a direction upon the Receiver, to pay to him a sum of Rs. 12,500/-. This application was disposed of by an order made by the 4th Subordinate Judge on September, 17, 1957, by which he directed the Receiver as follows:

'I accordingly direct the Receiver to pay Rs. 8000/- to the plaintiff and to deposit the similar sum on the account of the defendant No. 1 as per orders of the High Court.'

22. It is thus clear that the 4th Subordinate Judge in giving direction upon the Receiver from time to time to deposit moneys to the credit of the court was giving effect to the orders which have been made by this Court to that effect. It is also significant that in the applications which had been made by the respondent No. 1 for payment to him of various sums of money by the Receiver, he never asked for any orders for protecting his alleged claims against Sinha in the partnership action. The respondent No. 1, nowhere made out a case either in this Court, or in the court of the 4th Subordinate Judge at Alipore, that he had a claim to the money deposited to the credit of the court or that such claim should be protected.

23. I should next refer to an order made by H.K. Bose, J., (as he then was) on March 18, 1958, in the matter of Bank of Commerce Ltd. (in liquidation), on an application made by the Official Receiver of this Court, as the Official Liquidator of the bank, for various orders with regard to the bank's claims against Sinha, in the misfeasance proceedings. By this order Sinha, his servants and and agents were restrained from withdrawing and/ or receiving any money to his credit with Chand Mohan Chakravarty the Receiver in the Title Suit No. 38 of 1954, or any money lying in Alipore Court to his credit in the said Title No. 36 of 1954 till the final hearing of the application or till further order or orders of this Court.

24. On May 19, 1958, H.K. Bose, J., (as he then was) made another order in the matter of Bank of Commerce Ltd. (in liquidation). This application also was made by the official liquidator of the bank to secure the bank's claim arising out of the, misfeasance proceedings against Sinha and other directors of the bank. Execution proceedings were commenced in this Court and His Lordship in order to protect the claim of the bank against Sinha made the following order:

'It is ordered that the said Sailendranath Sinha, his servants and agents be and they are here by prohibited and restrained from withdrawing and/or receiving any money lying to his credit with Chand Mohan Chakravarty, Receiver appointed in Title Suit No. 36 of 1954 of the Court of the 4th Subordinate Judge at Alipore (Arun Kumar Chowdhury v. Sailendra Nath Sinha and another) or any money lying in Alipore Court to his credit in the said title suit No. 36 of 1954 till the final determination of the execution proceedings filed by the said applicant and now pending in this Court and except that the said Sailendranath Sinha be at liberty to withdraw a sum of Rs. 10,000/- from the fund that is lying in the said court of the 4th Subordinate Judge, Alipore, in the said title suit No. 36 of 1954.'

25. The said two orders made by this Court on March 18, 1958, and May 19, 1958, make it abundantly clear, that the money lying to the credit of the court at Alipore was being held under orders of this court and was to be dealt with in terms of the orders to be made by this Court It is to be noticed that but for the injunction obtained by the official liquidator of the bank restraining Sinha, (by the said orders of this Court), Sinha could have been at liberty to withdraw the money and in any event there was no bar to his withdrawing the same. Not only that, this court directed payment of Rs. 10,000/- to Sinha and that payment was accordingly made. No objection has been raised on behalf of the respondent No. 1 in this application to the payment of Rs. 10,000/- to anna pursuant to the order dated May 19, 1958 It was contended on behalf of the respondent No. 1 that he had no notice of the application on which the order for payment of Rs. 10,000/- was made. But even if the respondent No. 1 was unable to raise objections at the time when the order dated May 19, 1958, was made, as he had no notice of the application on which the said order was made, he has never raised objections at any time subsequently in any of the several proceedings that were taken subsequent to that order. Nor did he make out a case that he was entitled to protection with regard to the money lying to the credit of the court of the 4th Subordinate Judge at Alipore. Indeed if he had ever any claim to that money he would have immediately taken steps to protect his interests knowing that a sum of Rs. 10,000/-having been paid out to Sinha, similar orders might be made for payment to him. But the respondent No. 1 has done nothing so far to obtain any order protecting his claims to that fund, assuming he has any.

26. There are a few other proceedings to which I should refer, at this stage.

27. On March 28, 1956, this Court made an order in the matter of the Bank of Commerce Ltd. (in Liquidation) for attachment of the properties of Sinha or his benamdars and among the properties attached pursuant to that order was Kalika Theatre, 5, Sadananda Road. Pursuant to this order the sum of Rs. 2,000/- then due to Sinha was attached. The learned Subordinate Judge in his order dated May 26, 1956, took notice of the order for attachment of the sum of Rs. 2,000/- payable monthly to Sinha and he directed that this amount was not to be paid to him by reason of the attachment. This attachment order was again referred to by the learned Subordinate Judge in his order dated February 1, 1957. The attachment orders were made in order to protect the claims of the bank in the misfeasance proceedings. By an order subsequently made in September, 1957, Chakravarty, C. J. and Lahiri, J., directed that the attachment would subsist till the determination of the misfeasance proceedings.

28. The misfeasance proceedings came to an end on March 18, 1958, and terminated in a decree against the directors, including Sinha, for several lakhs of rupees. But as the proceedings came to an end, the attachment also ceased to have any effect as it was to remain in force till termination of the misfeasance proceedings. Taking advantage of the removal of the attachment, Sinha purported to transfer and assign on March 18, 1958, his interest in the rents, issues and profits of the cinema house and also of the business in favour of Bally-gunge Estates Private Ltd., the respondent No. 3, in this application. It was only after this purported transfer and assignment that the official liquidator of the bank filed the suit No. 289 of 1959 in which a consent decree was passed directing the Joint Receivers to withdraw the sum of Rs. 1,00,000/-.

29. In this application I am not concerned with the attachment orders which have been made by this Court and which have come to an end on the termination of the misfeasance proceedings. It is true that the attachment orders were made by this court in order to protect the bank's claims against the delinquent directors, but in this application I am not concerned with the funds which may be lying in the hands of the Receiver under the attachment orders made by this Court. Nor am I concerned in this application, with the funds in the hands of the Receiver as Receiver in Title Suit No. 36 of 1954, in the court of the 4th Subordinate Judge, Alipore. I am only concerned with the fund now lying to the credit of the court under orders of this court and out of which the Joint Receivers were directed to apply for withdrawal of Rs. 1,00,000/-.

30. I have dealt with several orders made by this Court in its Civil Revisional Jurisdiction, Civil Appellate Jurisdiction and also in the jurisdiction exercised by this Court under the Companies Act. It was necessary to deal with the orders separately, as a serious situation has been created by the order of the Subordinate Judge dated October 3, 1963, by which he rejected the application of the joint Receivers for withdrawal of Rs. 1,00,000/-. The situation is serious because a direction given by this court to the Joint Receivers appointed by its decree, for withdrawal of money out of a fund created by this court and held at the disposal of this Court, has been disregarded by the learned Subordinate Judge. Before proceeding to deal with the question of law, I shall make it clear that the learned Subordinate Judge entirely misdirected himself on facts regarding the rights of the parties to the money now lying to the credit of the court and also regarding the creation of the credit fund itself. If he had looked into the orders under which moneys have been deposited from time to time to the credit of the court, there should have been no doubt in his mind that the fund was created by this court and was lying at the disposal of orders to be made by this court. In fact payment has already been made out of this fund by orders of this court as noticed by me earlier in this judgment But it appears that the learned Subordinate Judge did not think it necessary to ascertain how and under what orders the money was lying to the credit of the court. The fund lying to the credit of the court was not only created by orders of this Court, but is also being maintained by injunctions issued by this court to protect the claims, of the liquidator of the bank. Before making the order by which learned Subordinate Judge so easily and lightly thwarted the efforts of the Joint Receivers appointed by this court, from carrying out the directions given upon them, much greater circumspection was called for as the joint Receivers were acting pursuant to a direction contained in a decree of this Court. The order shows a singular lack of that cautious approach which this court should have expected, to the application the Joint Receivers made in discharge of their duties under orders of this court.

31. Turning now to the law on the subject, It is to be seen if the law warrants a rejection of the application made by the Joint Receivers on the ground that the respondent No. 1 as plaintiff in Title Suit No. 36 of 1954 in the court of the 4th Subordinate Judge at Alipore, is entitled to any protection from that court in' regard to his future contingent claims on accounts being taken in the partnership action. Before doing so however, I should refer to the terms of the order made by the learned Subordinate Judge on October 3, 1963. In this, he first of all referred to the objections raised by the respondent No. 1, to the withdrawal of the money by the Joint Receivers. These objections, as recorded by the Subordinate Judge are

'that the money so deposited may be tar less than what may be ultimately found to be due from the defendant No. 1 in this suit for accounts and that the plaintiff cannot thus be deprived of his security by a consent order in a suit in which he is not a party.'

Relying upon these objections and accepting the same the learned Subordinate judge proceeded to make the following order:

'In my opinion, the objections taken by the plaintiffs are quite cogent. The money deposited by the Receiver in court in this suit cannot be said to belong to the defendant No. 1 until and unless there is a rendition of accounts and the liability of the defendant is fixed finally. If the plaintiff's allegations are true--and we cannot say at this stage that they are not--the defendant is in considerable debts and the plaintiff may, if the amount deposited here by the Receiver is allowed to be withdrawn this way, be quite at a loss to realise the money that may be ultimately found due to him from the defendant on accounting. And the security that the money in question offers to the plaintiff cannot certainly be taken away by an order in a suit in which he was not a party. The prayer is therefore rejected.'

32. The Title Suit No. 36 of 1954 in the court of the 4th Subordinate Judge at Alipore, is a partnership action. It is a suit by the respondent No. 1 as plaintiff against Sinha as one of the defendants for dissolution of partnership and accounts. The plaintiff chose to value his claims for account in this suit tentatively at Rs. 100/- and paid ad valorem court fee of Rs. 50/-. The first question to be considered is: Is the respondent No. 1 as the plaintiff in the partnership action, entitled to any protection or security for his future contingent claim, which may or may not arise upon accounts being taken in the partnership action? The second question is: Is there anything in any law which can justify or support an order of the Subordinate Judge giving to the plaintiff, in a partnership action, a special protection in respect of his claim? The thirdquestion is: Is the court justified in giving such protection to the plaintiffs contingent claims, keeping in mind the fact that he valued his claim for account, though tentatively at Rs. 100/- only and has done nothing more to make out a case for protection, beyond alleging that on accounting, a large sum will be found due to him from the defendant in the partnership action. The fourth question is: Is the learned Subordinate Judge entitled to deal with the claim of a banking company (in Liquidation), having regard to the provisions of Section 45B of the Banking Companies Act, 1949? The fifth question is: Is a third party entitled to interfere with the discharge of duties by a Receiver, without obtaining appropriate orders from the court appointing the Receiver? The said order made by the learned Subordinate Judge has to be examined in the light of the answers to these questions.

33. There is no provision in the Indian Partnership Act or in any other law in this country under which the plaintiff in a partnership action, is entitled to protection regarding his prospective future and contingent claim, merely because he alleges in his plaint, or in other proceedings, that a large sum of money would be due to him. Al-legation is no proof. And indeed if a plaintiff in a partnership action is to be regarded as entitled to special protection, the defendant also may claim similar protection If he alleges that large sums of money would be due to him on accounts being taken. The plaintiff in a partnership action is not entitled to any special protection regarding his alleged claims on mere allegations in the pleadings without anything more. Indeed in this application Sinha in his affidavit affirmed on March 10, 1964, has alleged that the partnership suffered a loss of Rs. 2,51,684/11/6 pies from the years 1946 to 1951, when the business was managed by one Prafulla Chandra Chowdhury, uncle of the respondent No. 1, and also Ramchandra Chowdhury, the respondent No. 4, who is the father of the respondent No. 1. It is also alleged that upto July 31, 1951, the entire affairs of the theatrical business including receipts, disbursement, production and appointment of staff, purchase and all other expenditure, were managed by the respondent No. 4. In this state of the allegations in the pleadings, is the court justified in assuming that the plaintiff is entitled to security in the sum now lying to the credit of the court at Alipore, under orders of this Court? I think not. There is nothing in law to justify the court's treating the plaintiff in a partnership action, in the privileged position of a secured creditor, merely, because he alleges that on accounting, large sums of money will be found due to him. To hold otherwise, namely, to treat the plaintiff in a partnership action in the privileged position of a secured creditor, would be to introduce entirely untenable principles in the law relating to partnership.

34. Mr. M.N. Banerjee appearing for the respondents Nos. 1 and 4 contended that a Receiver had been appointed in the partnership action and such appointment of the Receiver operates as an injunction. It is true that where a Receiver is appointed, the effect of the appointment is that the parties are restrained From dealing with the properties over which a Receiver is appointed. But in a partnership action If the appointment of a Receiveroperates as an order of injunction, it operates as such for both parties to the suit. Besides the Receiver is appointed by the court to receive and preserve a property in litigation pendente lite, when it does not seem reasonable to the court that either party should hold it. The Receiver is a representative of the court and he is not a representative of either party to the litigation. A Receiver is appointed not for the benefit of any party to the litigation, but to protect the property and preserve it for equal benefit of those who are interested in its distribution and to keep the property within the control of the court (vide Woodroffe on Receivers, 5th Ed. pages 1 and 3).

35. In this case, however, the position is entirely different. A Receiver was appointed in the partnership action to collect rents, issues and profits of the partnership Business, But the fund with which I am concerned and out of which the Joint Receivers applied for withdrawal of Rs. 1,00,000/-is not a fund in the hands of the Receiver. This fund which is now lying to the credit of the Court is entirely out of the control and custody of the Receiver. It was a fund created by orders of this Court, out of the moneys deposited in terms of the orders made by this Court. It was again a fund which was preserved by reason of the order for Injunction issued by this Court. It was out of this fund that this Court has previously directed payment to Sinha. It is, therefore, a fund over which the Receiver has no control whatsoever, nor is it a fund in his custody. Mr. Banerjee contended that the fund now lying to the credit of the Court should be treated on the same footing as a fund in the custody of the Receiver. I cannot accept this contention. There was a purpose for which this Court had directed moneys to be deposited to the credit of the Court, being equivalent to the sums which were paid to the plaintiff out of the funds in the hands of the Receiver. If it was intended that the fund now lying to the credit of the Court is to be treated as a fund in the custody of the Receiver, the money should not have been taken out of the Receiver's control altogether. It would have been enough if the Receiver would have been directed to keep a separate account of sums equivalent to those paid to the plaintiff. But that was not done. The amounts equivalent to those paid to the plaintiff, were taken entirely out of the control and custody of the Receiver by orders of this Court and they were directed to be put in to the credit of the Court It cannot be overlooked that at no time previously the respondent No. 1 had asked for any special protection of his claim by claiming a charge on this fund. The money now lying to the credit of the Court of the 4th Subordinate Judge at Alipore is held at the disposal of this Court and any distribution or payment out of this fund must be made on orders to be made by this Court, subject of course to this that before payment out of this fund, order has to be obtained from the Court of the 4th Subordinate Judge at Alipore, for payment out of this fund.

36. It was next urged by Mr. Banerjee that Sinha, his servants and agents were restrained by an injunction of this Court from withdrawing money lying to his credit with the Receiver or any money to the credit of the Court at Alipore. Sinha now has submitted to a compromise decree in suitNo. 289 of 1959 of this Court and is now seeking to do indirectly, what he was prevented from doing directly, by the order for injunction issued by this Court. It is to be noticed that the injunction was issued by this Court for protection of the claim of the official liquidator of the bank. The decree in the said suit No. 289 of 1959 of this Court is a decree in favour of the official liquidator against Sinha. By that decree the joint Receivers were directed to apply to the Alipore Court for withdrawal of the said sum of Rs. 1,00,000 and upon such withdrawal the injunction is to stand dissolved. The injunction being an injunction issued by this Court, this Court can modify the order of injunction or dissolve the same. The Court after consideration of the terms of compromise gave leave to the official liquidator to enter into the compromise. The withdrawal was directed to be made by a decree of this Court which had issued the injunction and such withdrawal was to be made by the Receivers as officers of this Court. There is, therefore, no question of Sinha's trying to do indirectly what he was prevented from doing directly.'

37. The next point to be considered is the jurisdiction of the 4th Subordinate Judge at Alipore to reject the application of the Receivers. This application has been made under Section 45B of the Banking Companies Act, 1949. Under the Section this Court has exclusive jurisdiction to decide any claim made by a banking company in liquidation or any other question whatsoever whether of law or fact which may relate to or arise in the course of the winding up of a banking company, whether such claim has arisen or arises before or after the date of winding up of the banking company. The powers conferred upon this Court under Section 45B are plenary in nature and embrace all claims made by a banking company in liquidation and all other questions of law or fact which may arise in the course of the winding up of a banking company and the powers exercised by this Court under Section 45B are exclusive in nature and no other Court has jurisdiction to deal with such questions.

38. Mr. R. Chowdhury appearing for the respondent No. 2 dealing with the question of jurisdiction of this Court under Section 45B referred to the decision of the Supreme Court in Shri Ramnarain v. Simla Banking and Industrial Co. Ltd., (S) : [1956]1SCR603 . In that case while dealing with the question of jurisdiction under Section 45B the Supreme Court held that the wide and comprehensive language of the section made it clear that the High Court alone had exclusive jurisdiction to deal with the questions relating to matters in which a banking company in liquidation was interested.

39. Mr. Chowdhury also referred to another decision of the Madras High Court in Thangia v. Hanumau Bank Ltd., AIR 1958 Mad 403, in which also it was held that Section 45B conferred exclusive jurisdiction on the High Court to entertain and decide any claim made by a banking company in liquidation, any claim made against a banking company in liquidation and any other questions which might arise in course of winding up of a banking company.

40. So far as jurisdiction of this Court is concerned to deal with questions arising in winding up of a banking company in liquidation, there canbe no doubt that this Court alone has exclusive jurisdiction. The learned Subordinate Judge has no power to deal with the claim of the bank under the decree passed by this Court. The sum of Rs. 1,00,000 was directed to be withdrawn to satisfy the claim of the bank under the decree. Firstly this is a claim by a banking company in liquidation and secondly this is a question arising in the course of the winding up of the bank. It is for this Court to determine the rights of the parties to this application, to the fund now lying to the credit of the 4th Subordinate Judge at Alipore.

41. There remains the last question of law to be discussed, namely, the right of a third party who alleges or claims to be aggrieved by the order appointing Receiver, and also by the directions given to the Receiver, to interfere with the Receiver in discharge of his duties. The joint Receivers were appointed by a decree of this Court and were directed under the terms of the decree, to apply to the 4th Subordinate Judge at Alipore for withdrawal of the sum of Rs. 1,00,000. The respondent No. 1 appears to have certain objections to the Joint Receivers' carrying out the directions given to them by this Court by the said decree. The law prescribes only one method by which a party aggrieved by an order appointing Receiver, can seek to have his grievances redressed either by modifying or recalling the order appointing Receiver. Such an aggrieved party should go to the Court by which the Receiver was appointed and move an application pro interesse suo for redress of his grievances either by an order recalling the order appointing the Receiver or by suitable modification of the same. This is the only procedure prescribed by law for a third party to seek redress of his grievances arising out of an order appointing a Receiver. The Court appointing the Receiver is the only Court which can deal with the matter, recalling or modifying the order appointing the Receiver, if a third party claims to have been aggrieved by the same, unless of course an appeal is preferred against the order appointing the Receiver, in which case the Appellate Court can make any order in the matter.

42. But in this case the respondent No. 1 has not chosen to adopt the only course open to him to have the order recalled or modified. He could have, and he should have, come to this Court with an application pro interesse suo for appropriate orders to remove his alleged grievances. He chose instead, to agitate his grievances before the Court of the 4th Subordinate Judge at Alipore, who indeed had nothing whatsoever to do with the appointment of the Joint Receivers or with the directions given upon them by the decree. The Joint Receivers appointed by this Court have been sought to be prevented from carrying out the directions given to them by this Court, in other proceedings, before a Court, which has nothing to do with the appointment of the Receivers or the directions given upon them. If the Joint Receivers were parties to the suit in which the order was made no doubt the Court which had jurisdiction in the suit could make that order. But they are not parties to the Title Suit No. 38 of 1954, in the Court of the 4th Subordinate Judge at Alipore.

43. The matter, however, does not rest there. It appears from a petition filed by the respondentNo. 1 in the Court of the 4th Subordinate Judge at Alipore, after the application made by the Joint Receivers for withdrawal of the sum of Rs. 1,00,000, that the respondent No. 1 had intended to move this Court for a direction regarding the withdrawal of the said sum of Rs. 1,00,000 by the Joint Receivers. This petition made by the respondent No. 1 is verified by a declaration made by Dr. Satya Sadhan Chowdhury on September 28, 1983. In paragraph 7 of the petition it was stated that having regard to the conflicting position created by the orders in suit No. 289 of 1959 and matter No. 239 of 1953, it had become absolutely necessary to obtain a direction from this Court regarding the withdrawal of the money. It was further stated that the petitioner (respondent No. 1 in that application) believed that the order directing the Joint Receivers would not have been made, if the petitioner (respondent No. 1 in this application) had been present and able to intervene in the matter. It was alleged that the respondent No. 1 was advised to move this Court for necessary orders.

44. It appears from the allegations in the said petition that the attention of the 4th Subordinate Judge was drawn to the necessity of obtaining orders from this Court in the matter of withdrawal of the sum of Rs. 1,00,000 by the Joint Receivers. It is also plain that the respondent No. 1 clearly contemplated moving this Court for removal of his alleged grievances. Yet that course was not adopted. Instead of moving this Court as the respondent No. 1 certainly contemplated to do at one stage, he chose to oppose the joint Receivers' application before the Court of the 4th Subordinate Judge at Alipore and prevent the Joint Receivers from discharging their duties by an order obtained from the Court of the 4th Subordinate Judge at Alipore. Strangely enough, the learned Subordinate Judge also proceeded to deal with the matter by rejecting the application of the Joint Receivers for withdrawal of the money, although, when that order was made he had before him the petition of the respondent No. 1 in which the respondent No. 1 had stated that:

'it has been absolutely necessary to obtain a direction from the Hon'ble High Court regarding such withdrawal in which your petitioner has serious objections.'

Law does not warrant this method of interference with the discharge of duties by Receivers appointed by a Court. In my view this method of preventing the Joint Receivers appointed by this Court from discharging their duties under orders of this Court should never have been adopted. The course adopted by the respondent No. 1 is an abuse of the process of Court which should not have been encouraged.

45. Law being what it is, firstly on the question of the right of the plaintiff in a partnership action to be treated in the privileged position of a secured creditor, secondly on the question of the right of a third party to interfere with the discharge of duties by a Receiver appointed by a Court of competent jurisdiction and thirdly on the question of jurisdiction of this Court under Section 45B f the Banking Companies Act, the learned 4th Subordinate Judge at Alipore misdirected himself on the question of law, also. In my judgment there is no provision in law for holding, as he hasheld, that the fund which is now lying to the credit of the Court of the 4th Subordinate Judge should be treated as a security for the prospective contingent claim of the plaintiff in the partnership action now pending in his Court. Nor is there any provision in law by which a third party can be allowed to interfere with the discharge of the duties of a Receiver, appointed by a Court of competent jurisdiction, by raising objections in an application made by the Receivers in their efforts to discharge their duties. Finally no Court, other than this Court, can assume jurisdiction to deal with the claim of a banking company in liquidation, which jurisdiction can be exercised only and exclusively by this Court, under Section 45B of the Banking Companies Act.

46. Mr. Meyer appearing for the applicant, contended that this Court had exclusive jurisdiction to deal with the question as to whether the applicant before me has a right to withdraw the sum of Rs. 1,00,000 as directed by the consent decree. He also argued that the respondent No. 1 had no right to object to the withdrawal of the sum of Rs. 1,00,000 by the Joint Receivers. The fund which is now lying to the credit of the Court of the 4th Subordinate Judge at Alipore is not a fund over which the respondent No. 1 has any right whatsoever. He further contended that the respondent No. 1 had never claimed any right to this fund at any stage since 1954 when the Title Suit No. 36 of 1954 was filed by him. He urged that it was for the first time in the petition of objection filed by the respondent No. 1 to the application of the joint Receivers for withdrawal of the money, that the respondent No. 1 made out a case that the various sums were deposited to the credit of the Court to protect his alleged claims against Sinha. In my opinion, Mr. Meyer's contentions are, sound. The allegation made by the respondent No. 1 in paragraph 6 of the petition of objection filed by him in the Court of the 4th Subordinate Judge at Alipore that various sums were deposited in order to protect his claim against Sinha, is entirely untrue. No order has been made either by this Court or by the Court of the 4th Subordinate Judge that the moneys now lying to the credit of the Court are lying so credited for the protection of the claim of the respondent No. 1. On the contrary the orders made by this Court, which have been discussed by me earlier in this judgment, leave no room for doubt that the money is being held to the credit of the Court of the 4th Subordinate Judge in order to protect the claim of the official liquidator of the bank against Sinha.

47. I shall now deal with the case cited by Mr. M. Banerjee. The first case referred to by Mr. Banerjee is Ajudhia Pershad Ram Pershad v. Shamsunder, AIR 1947 Lah 13, In this case the question of charging order under Order 21, Rule 49 under the Code of Civil Procedure was discussed and it was held that attachment under the Code is used as compendious term which may mean any of a variety of steps which may be taken in respect of different kinds of property belonging to the judgment-debtor. While dealing with the question of partnership property, it was held that no part of the partnership property could be treated as separate property of any partner so long as a partnership subsisted and no partner could claim any ofthe assets of the partnership as belonging to him alone. Mr. Banerjee relied upon this case in support of his contention that the fund now lying to the credit of the Court is part of the partnership assets and, therefore, should be preserved. I have already held that the fund now lying to the credit of the Court has been taken out of the control and custody of the Receiver under orders of this Court and this fund was created and is being maintained under orders of this Court. It cannot be treated as part of the partnership assets. This decision, therefore, does not assist Mr. Banerjee's client.

48. The next case relied upon by Mr. Banerjee is Panmal Keshrichand Javeri v. Dhanamal Laxmichand Karnawat AIR 1941 Nag 63. In this case It was held that - a judgment-creditor of an overdrawn partner cannot enforce his decree against the overdrawn partner's share of the profits, before the sum due to the said firm has been duly repaid. The other partners are entitled to priority over the overdrawn partner's shares in the profits. This case is of no assistance to Mr. Banerjee because except for bare allegations, that on accounts being taken a large sum of money would be found due from Sinha to the plaintiff in the partnership action, there is no proof that Sinha would at all be liable on accounts being taken. It may as well be that on accounts being taken in the partnership action, the plaintiff may be found liable to account for the assets of the partnership firm. In the Nagpur case a Commissioner was appointed to go into the accounts and he found that one of the partners withdrew large sums of money from time to time from the partnership funds. On facts, therefore, this case is entirely different from the instant case now before me.

49. The next case referred to by Mr. Banerjee is a decision of this Court in Province of Bengal v. Bholanath Sen, : AIR1950Cal174 . In this case the question of Section 60 of the Code of Civil Procedure was considered and it was held that where an appellant to the Privy Council deposited an amount in Court as security for costs, the appellant retained some disposing power over the amount deposited which he may exercise for his benefit. The deposit of the security in the name of an officer of file Court did not affect the question. It was held that Section 60 of the Code of Civil Procedure was used in a wide sense and included any right or power in respect of any property and not only proprietorship of the same. The security was deposited in that case to enable the respondents to realise costs which may be awarded to the latter in case the appeal failed. The facts of this case and the law involved there have nothing to do with the application now before me and I do not think that that decision has any application to the instant case now before me.

50. The next case referred to by Mr. Banerjee is St. Joseph's Tile Works, Ltd. v. Kottayam Bank, Ltd., AIR 1953 Trav Co 21. This case considered the question of the effect of moneys deposited to the credit of the Court and it was held that when money is deposited in Court and reliefs are claimed in the suit on the basis of the deposit, the amount deposited must be deemed to be in the custody of the Court to be disposed of by it according to the decision of the suit. Until the Courtdecides as to who is entitled to the money the money cannot be said to belong either to the plaintiff or to the defendant. I do not see any application of this decision to the instant case now before me. The money now lying to the credit of the Court was not deposited by any orders of the Court of the 4th Subordinate Judge in the partnership action. If the money was credited under orders made in the partnership suit by the Court of the 4th Subordinate Judge, it might have been argued that until decision of the suit the money so credited could not be touched. But in this case the amounts were credited under orders of this Court which was not dealing with the claims of the parties in the partnership action. This decision, therefore, in my view has no application to the facts of this case.

51. The next case referred to by Mr. Banerjee is a decision of this Court in Murli Tahilram v. T. Asoomal and Co., (S) : AIR1955Cal423 . In this case the only question discussed was that of priority between the State and a private litigant with regard to their respective claims. It was also considered whether the Bengal Public Demands Recovery Act and the Rules framed thereunder gave any priority to the State in regard to its claim for arrears of sales tax out of the moneys in the hands of a Receiver appointed by the Court. In my opinion neither the facts nor the law discussed in this decision has any application to the instant case, now before me.

52. The next case relied upon by Mr. Banerjee is a Division Bench judgment or this Court in R. E. Ramsay v. Pasupati Nath Malia, : AIR1955Cal255 . The question discussed in this case was whether a decree-holder could execute the decree against the assets of the judgment-debtor in a partnership firm of which he was a partner. The judgment-debtor raised objection under Section 47 of the Civil Procedure Code that his interest in the partnership could not be realised and sold in the manner prayed for and that the attachment could be made only in the manner provided in Order 21, Rule 49 of the Code of Civil Procedure. It was held that a decree-holder against a partner should make an application under Order 21. Rule49 of the Code of Civil Procedure and the Court might in its discretion pass an order charging the interest of a partner and if such charging order was made the other partners would be at liberty to redeem the interest. It was also held that the decree-holder against a partner could not proceed to execute the decree by sale of the partner's interest in the partnership property. It is to be seen that in this case the property sought to be attached and sold was a partner's interest in the partnership property. But in the instant case now before me, moneys have been directed to be withdrawn, not out of the partnership property or any other assets of the partnership which are held by the Receiver, but out of a fund which was created by orders of this Court in respect of the share of the profits payable to Sinha. The money now lying to the credit of the Court can no more be treated as a part of the partnership assets. It was money held under orders of this Court for the specific purpose of protecting the claim of the bank now in liquidation. The facts in this case, therefore, are entirely different from the Instant ease now before me.

53. The next case referred to by Mr. Banerjee is also a decision of this Court in Kuver Bank Ltd. v. State of West Bengal AIR I960 Cal 81. In this case the plaintiff filed a suit against three persons who were described as carrying on business in co-partnership in the name of a firm. There was a prayer in the plaint for a declaration that the stock-in-trade and assets of the partnership be charged and for sale of the partnership assets. A consent decree was passed in this suit in favour of the Bank and a declaration was also made that the stock-in-trade and assets of the firm stood charged for payment of the decretal amount. It was also held that the attachment of the interest of the Judgment-debtors in the partnership firm could only be made as provided in Order 21, Rule 49 of the Code of Civil Procedure. It is to be noticed that in this ease also the question was of the attachment of the interest of the partners in the assets of the partnership firm and not in any other assets. In the Instant case now before me the payment has been directed to be made out of a fund which cannot under any circumstances be treated as part of the partnership assets. As I have said earlier the fund has been created and is being preserved under orders of this Court. In my view the facts in this case are altogether different from the facts in the instant case now before me and this decision is of no assistance to Mr. Banerjee's client.

54. The next case referred to by Mr. Banerjee if a decision of the Supreme Court in the Union of India v. Hira Debi, : [1952]1SCR765 . In this ease the only question decided was that a receiver could not be appointed in execution in respect of provident fund money due to a judgment-debtor. The prohibition against assignment or attachment of the compulsory deposit in the provident fund is based on grounds of public policy and a judgment-debtor could not be allowed to get at that fund indirectly by means of the appointment of a Receiver. In my view this decision does not support any of the contentions made by Mr. Banerjee in this application.

55. This is an application under Section 45B of the Banking Companies Act, 1949. The applicant has in the summons, asked for determination of the rights of the parties to the sum of Rs. 1,00,000 now lying to the credit of the Court of the 4th Subordinate Judge at Alipore in Title Suit No. 36 of 1954. In my opinion, this Court alone has jurisdiction to deal with the claim of the official liquidator of the bank. For the reasons mentioned above I hold that in terms of the decree passed by this Court, dated August 30, 1963, the official liquidator alone is entitled to the said sum of Rs. 1,00,000. I further hold that the Joint Receivers appointed by the said decree are entitled to apply and withdraw the said sum of Rs. 1,00,000 from the Court of the 4th Subordinate Judge at Alipore in terms of the said decree. I also hold that none of the respondents to this application have any right to the said sum of Rs. 1,00,000 directed to be withdrawn by the Joint Receivers appointed by the said decree. The joint Receivers are hereby directed to apply to the Court of the 4th Subordinate Judge at Alipore for payment to them of the sum now lying to the credit of that Court, a sum of Rs. 1,00,000 in terms of the decree of this Court, dated August 30, 1963, in the said Suit No. 289 of 1959. The respondentsand each one of them and their servants, agents and assignees, if any, are restrained from raising any objection to the application to be made by the joint Receivers in terms of this order or from in any way interfering with the withdrawal of the said sum of Rs. 1,00,000 by the joint Receivers. No withdrawal in future by either of the respondents to this application or their servants, agents, transferees or assignees of any further sum out of the moneys which will remain to the credit of the Court of the 4th Subordinate Judge at Alipore should be made without an order to that effect from this Court.

56. Liberty is hereby given to the applicantto take such steps as he may be advised to protecthis claim to the balance of the said fund that willremain to the credit of the Court of the 4th Subordinate Judge at Alipore. The respondent No. 1would pay to the applicant and the respondentNo. 3 costs of this application. Certified forcounsel.


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