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Major General Mahabir Shum Sher Jung Bahadur Rana Vs. Lloyds Bank Ltd. and anr. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtKolkata High Court
Decided On
Case NumberSuit No. 2830 of 1956
Judge
Reported inAIR1968Cal371,72CWN94
ActsAir Corporations Act, 1953 - Sections 1, 17, 17(1), 17(3) and 22; ;Contract Act, 1872 - Sections 126 and 171; ;Constitution of India - Articles 14 and 31; ;Specific Relief Act, 1963 - Section 34
AppellantMajor General Mahabir Shum Sher Jung Bahadur Rana
RespondentLloyds Bank Ltd. and anr.
Appellant AdvocateA.K. Basu, Adv.
Respondent AdvocateB. Das and ;Sankar Ghosh, Advs.
DispositionSuit dismissed
Cases ReferredIn Mahomed Manjural Haque v. Bissesswar Banerjee
Excerpt:
- orderray, j.1. the plaintiff instituted this suit against the defendants lloyds bank and indian airlines corporation for a declaration that the defendant lloyds bank ltd. has wrongfully debited the plaintiff's current account mentioned in the plaint with the sum of rs. 1,86,491-3-0, for further declaration that the said sum of rs. 1,86,491-3-0 is duo and owing by the defendant lloyds bunk ltd. to the plaintiff on the said account and injunction ordering the defendant lloyds bank ltd. to credit the said account of the plaintiff with the said sum of rs. 1,86,491-3-0 and if necessary a decree for the said sum of rs. 1,86,491-3-0 with in-terest as against the defendant lloyds bank ltd., or in the alternative, decree for rs. 1,86,491-3-0 against the second defendant indian airlines.....
Judgment:
ORDER

Ray, J.

1. The plaintiff instituted this suit against the defendants Lloyds Bank and Indian Airlines Corporation for a declaration that the defendant Lloyds Bank Ltd. has wrongfully debited the plaintiff's current account mentioned in the plaint with the sum of Rs. 1,86,491-3-0, for further declaration that the said sum of Rs. 1,86,491-3-0 is duo and owing by the defendant Lloyds Bunk Ltd. to the plaintiff on the said account and injunction ordering the defendant Lloyds Bank Ltd. to credit the said account of the plaintiff with the said sum of Rs. 1,86,491-3-0 and if necessary a decree for the said sum of Rs. 1,86,491-3-0 with in-terest as against the defendant Lloyds Bank Ltd., or in the alternative, decree for Rs. 1,86,491-3-0 against the second defendant Indian Airlines Corporation.

2. The suit was instituted on 19th November, 1956.

3. The plaintiff's case in short is that the plaintiff had a current cash credit account with the defendant Lloyds Bank Ltd. The plaintiff was a director of a company called Himalayan Aviation Ltd. The said company had an overdraft account with the defendant Lloyds Bank Ltd. The plaintiff guaranteed the due repayment by the said Company of its dues under the overdraft account. The Central Government by a notification appointed I August, 1953 as the appointed date under the Air Corporations Act, 1953. Under the Act the undertakings of existing air companies including that of Himalayan Aviation Ltd. vested in Indian Airlines Corporation.

4. On or about 31st July, 1953 a sum of about Rs. 1, 86, 491-3-0 was due and owing by Himalayan Aviation Ltd. to the defendant Loyds Bank Ltd. The Himalayan Aviation Ltd. supplied to Indian Airlines Corporation particulars of book debts and investments belonging to and all liabilities and obligations of the company including the liability of Rs. 1, 86, 491-3-0 immediately before the said appointed date in terms of Section 22 of the said Act of 1953. The plaintiff further alleges that the second defendant accepted the particulars and acted thereon.

5. The further case of the plaintiff Is that by virtue of the provisions of the said Act and in particular by reason of provisions of Section 17 thereof as from the appointed date the liability of the said company for the sum of Rs. 1,86,491-3-0 vested in the defendant Indian Airlines Corporation and ceased to be enforceable against the Himalayan Aviation Ltd. or the plaintiff as surety or guarantor. The plaintiff it is alleged stood discharged from all obligations of surety or guarantor in the said overdraft account.

6. On or about 31st October, 1953 the defendant Lloyds Bank Ltd. wrongfully purported to debit the current account of the plaintiff for the sum of Rs. 1,86,491-3-0 for the purported discharge or satisfaction of the liabilities of the said company under the said overdraft account. The debit is alleged to be wrongful and unauthorised and not binding on the plaintiff. The defendant bank is denying that the current account of the plaintiff has been wrongfully debited or that there is due and owing from the defendant bank the said sum.

7. The further case of the plaintiff is that in the event of it being held that the action of the defendant bank in debiting the plaintiff's account was authorized, the plaintiff will in the alternative state that the second defendant was and is bound by law to pay Rs. 1,86,491-3-0 as the balance of the overdraft account of the company Himalayan Aviation Ltd. to the defendant Lloyds Bank Ltd. and that the plaintiff being interested in the payment of the said sum paid it and that as such the plaintiff is entitled to be re-imbursed by the second defendant to the extent of Rs. 1,86,491-3-0.

8. Written Statements were filed by both the defendants.

9. Counsel for the plaintiff at the trial stated that the plaintiff did not wish to proceed against the second defendant and as such the suit against the second defendant was dismissed.

10. The suit was contested by the defendant Lloyds Bank Ltd.

11. The defences of Lloyds Bank Ltd. will appear from the written statement and the issues. Broadly stated the defences are first, that the Himalayan Aviation Ltd. did not supply particulars of the alleged liability of Rs. 1,86,491-3-0 in terms of Section 22 of the Air Corporations Act, 1953, secondly, the liability did not vest in Indian Airlines Corporation, thirdly that the liability did not cease to be enforceable against the plaintiff as guarantor and the plaintiff was not discharged from obligations as alleged in the plaint. The other defences are that the suit is not maintainable and the defendant bank was entitled to debit the Cash Margin Account of the plaintiff with the sum mentioned in the plaint.

12. Counsel on behalf of the plaintiff contended first that the entire undertaking of Himalayan Aviation Ltd. vested on the appointed date, namely, 1st August, 1953 under the provisions of Section 16 of the Air Corporations Act, 1953 and therefore, undertaking would mean all assets and liabilities mentioned in Section 17 of the said Act with the result that the liability of Himalayan Aviation Ltd. in respect of the sum mentioned in the plaint vested in Indian Airlines Corporation. The second contention was that the furnishing of particulars of liabilities and obligations as contemplated in Sections 17 and 22 of the Air Corporations Act does not affect liabilities of third parties. Thirdly, it was contended that particulars were furnished by Lloyds Bank Ltd. Fourthly, it was contended that under the provisions of section 17 of the Act the plaintiff's guarantee stood discharged. Fifthly, it was contended that under the provi-sions of Section 17 the agreement was enforceable only against the Indian Airlines Corporation and not against the plaintiff. Finally, it was contended that the suit was maintainable in the form in which it was instituted.

13. Section 16 of the Air Corporations Act, 1953 enacts that on the appointed date there shall be transferred to and vest in Indian Airlines the undertakings of all the existing air companies other than Air India International Ltd. which latter undertaking would vest in Air India International Himalayan Aviation Ltd. is an existing air company within the definition of 'existing air companies' in Section 2(v) of the Act. In Section 17 it is stated as to what the general effect of vesting of undertakings in the Corporation is. The undertaking of each of the existing air companies which is transferred to and which vests in either of the Corporations under Section 16 shall, subject to the provisions of Section 22. be deemed to include all assets, rights, powers, authorities and privileges and all property, movable and immovable, including lands, works, workshops, aircraft, cash balances, reserve funds, investments and book debts and all other rights and interests arising out of such property as were immediately before the appointed date in the ownership, possession or power of the existing air company in relation to the undertaking, whether within or without India, and all books of accounts and documents relating thereto, and, subject to the provisions contained in Section 22, shall also be deemed to in-elude all borrowings, liabilities and obligations of whatever kind then subsisting of the existing air company in relation to the undertaking. It follows, therefore, that tke effect of vesting of undertakings is that subject to the provisions contained in Section (sic) all borrowings, liabilities and obligations of whatever kind subsisting on the appointed date, namely 1st August, 1953 of the existing air company in relation to the undertaking shall vest in the Corporation mentioned in the Act. If the vesting of undertaking included in the same process vesting of 811 assets and all liabilities the words 'subject to the provisions contained in Section 22' occurring in Section 17 and the other provisions contained in Section 17 would be superfluous. Counsel for the plaintiff contended that Sub-section (2) of Section 17 indicated that any lands, works, aircraft, assets or other property vesting in tke Corporation under Sub-section (1) of Section 17 shall by force of such vesting be freed and discharged from all trusts, obligations, mortgages, charges, liens and other encumbrances affecting it and therefore the provision showed that the effect of vesting of undertaking was that as property vested freed from trust and obligations, similarly liabilities also vested in the Corporation. I am unable to accept that contention for the obvious reason that vesting of property is made free from all trusts and obligations so that the property which vests in the Corporation is by statute rendered free from all encumbrances In Sub-section (1) of Section 17 the vesting of book debts, investments and borrowings, liabilities and obligations is expressly made subject to the provisions contained in Section 22.

14. It will appear from the provisions contained in Section 22 of the Air Corporations Act that where the undertaking of an existing air company vests in either of the Corporations under this Act, the existing air company shall, within 30 days from the appointed date or within such further time as the Corporaton concerned may allow in any case, supply to the Corporation particulars of book debts and investments belonging to and all liabilities and obligations of the company subsisting immediately before the appointed date, and also of all agreements entered into by the existing air company and in force on the appointed date, including agreements, whether express or implied, relating to leave, pension, gratuity and other terms of service of any officer or other employee of the existing air company, under which by virtue of this Act the Corporations have or will or may have liabilities except such agreements as the Corporation may exclude either generally or in any particular case from the operation of this Sub-section . It will, therefore, appear that Section 22 contemplates first supply of particulars of book debts and investments belonging to the company, secondly supply of particulars of all liabilities and obligations of the company subsisting immediately before the appointed date, thirdly, particulars of all agreements entered into by the existing air company and in force on the appointed date and fourthly, Sub-section (2) of Section 22 enacts that if the existing air company fails to supply to the Corporation concerned particulars of book debts, liabilities and obligations within the time allowed for the purpose under Sub-section (1), nothing contained in this Act shall have effect so as to transfer any such book debts, liabilities and agreements to or to vest the same in the Corporation. The provisions occurring in Sub-section (2) of Section 22 indicate that there is no automatic vesting of liabilities because of the provision contained in Section 16 of the Act. But the vesting of liabilities is dependent on the provisions contained particularly in Sections 17 and 22 of the Air Corporations Act. It follows that AN undertaking as contemplated in the Act vests in accordance with the provisions of the Act. To accede to the contention of the plaintiff that on the appointed date an undertaking vests is to overlook the provisions contained in Sections 17 and 22 of the Act and also to rob the provisions contained in Sec-tions 17 and 22 of the Act of their impact on the vesting of liabilities.

15. Counsel on behalf of the plaintiff contended that third party's rights could be made precarious in the hands of existing air companies by not giving particulars and therefore the Act showed a distinction between rights of third parties and immediate liabilities of existing air companies. It was contended by counsel for the plantiff that the provisions contained in Section 22(1) that the Corporation might allow further time for filing of particulars and that the Corporation might exempt agreements from the operation of Sub-section (1) of Section 22 indicated that the third party's right was not intended to be affected. Sub-section (3) of Section 22 of the Air Corporations Act shows that either Corporation may by notice in writing within a period of six months after submission of the particulars intimate to the existing air company submitting the particulars that such of the book debts and investments as are specified in the notice are not included in the properties vesting in the Corporation whereupon the compensation provided by Section 25 of the Act and the Schedule thereto shall be reduced by the amount of such excluded book debts and investments but the right of such existing air company to recover and retain such excluded book debts shall remain unaffected by this Act. The provision contained in Sub-section (3) of Section 22 shows that the Corporation may exempt certain book debts and investments from being included in the properties vesting and in such case the existing air company will have the right to recover and retain such book debts.

16. Again the provisions contained in Section 23 of the Air Corporations Act show that where it appears to either of the Corporations that the making of any such agreements as is referred to in Section 22 under which the Corporation has or will have or may have liabilities was not reasonably necessary for the purposes of the activities of the exsting air company or has not been entered into in good faith, the Corporation may within one vear from the appointed date, apply to the Tribunal for relief from such agreement, and the Tribunal, if satisfied after making such inquiry into the matter as it thinks fit that the agreement was not reasonably necessary for the purposes of the activities of the existing air company or has not been entered into in good faith, may make an order cancelling or varying the agreement. This provision is said to indicate that if rights, of third parties in respect of agreements are sought to be excluded from becoming a liability of the Corporation reference will be made to the Tribunal for variation or cancellation of agreements and there will be adjudication.

17. These two provisions in Sections 22 and 23 of the Air Corporations Act were contended by counsel for the plaintiff to show that third party's rights were specifically dealt with in those two Sections by enacting that book debts and investments might be excluded from the properties vesting in the Corporation and similarly agreements might be disclaimed by the Corporation and that it could not be the intention of the Legislature that the Corporation by allowing time to file particulars or by exempting agreements from the operation of Section 22(1) would be able to affect rights of third parties. I am unable to accept that contention. The provisions for excluding book debts, investments and for disclaiming agreements show that the Corporation even after submission of particulars may not accept all book debts and agreements. It therefore follows that vesting of undertaking is not equated with transfer of assets and liabilities. Sections 17 and 22 when they are read together show that liabilities become vested in the Corporation and when and how they become vested in the Corporation. If any third party is in any doubt as to whether the liability has vested in the Corporation or not, or if any third party has any doubts whether the particulars of liability have been furnished or not, such a third party will have the right to sue both the Corporation and the existing air company and it will depend on the facts anc circumstances of the case whether the liability has vested in the Corporation or not. The Air Corporations Act does not make any distinction between rights of third parties and liabilities of existing air companies for the obvious reason that they are the same. If liabilities of existing air companies do not vest until the happening of certain contingencies, they cannot be said to vest by resting the liability on rights of thin parties. Liabilities mean liabilities to third parties. If the existing air company has not furnished particulars the Corporation may contend that liabilities have not vested and third parties will have to enforce liabilities against the air companies and the Corporation and whoever is liable will pay.

18. The contention on behalf of the plaintiff that if particulars were not furnished to the Corporation the liabilities would yet vest and the Corporation might pay the liabilities and thereafter realise the same from the air company or deduct the amount paid from the compensation payable under Section 25 of the Act is contrary to provisions in the statute. First, the transfer of liability is to be worked out in accordance with the provisions of the Air Corporations Act. The provisions contained in Section 17 show that on the appointed date the undertaking vests but liability does not vest if particulars are not supplied in accordance with the provisions of Sections 17 and 22. Secondly, property which is freed from charges, obligations and encumbrances under Section 17(2) obviously means assets and not liabilities. Thirdly, Sub-section (3) of Section 17 indicates that all contracts and working arrangements which are subsisting immediately before the appointed date and affecting any of the existing air companies shall in so far as they relate to the undertaking of that company, cease to have effect or be enforceable against that company or any person who was surety or had guaranteed the performance thereof, and shall be of as full force and effect against or in favour of the Corporation in which the undertaking has vested by virtue of this Act and enforceable as fully and effectually as f, instead of the company, the Corporation had been named therein or had been a party thereto. The effect of Sub-section (3) of Section 17 is that contracts and working arrangements which are subsisting before the appointed date are contemplated within the scope of that sub-section . Liabilities which are contemplated in Sub-section (1) of Section 17 are not contracts and working arrangements which are subsisting immediately before the appointed date as contemplated in Sub-section (3) of Section 17 of the Act. A contract which subsists is in existence and is continuing. A liability which has already accrued and has fastened upon the Company is to vest in the Corporation subject to the provisions of the Act. Therefore surety or a person who guaranteed the performance of a contract as is contemplated in Sub-section (3) of Section 17 of the Act is in relation to a subsisting or an executory contract. Further, the guarantee which is rightly said to arise on the document is that the plaintiff guaranteed payment of liabilities and not that the plaintiff guaranteed the performance of a subsisting contract. I shall deal hereinafter with the rival contentions as to whether there was a guarantee. Fourthly, under Sub-section (4) of Section 17 of the Air Corporations Act it is indicated that any proceeding or cause of action pending or existing immediately before the appointed date by or against any of the existing air companies in relation to its undertaking may as from the date be continued and enforced by or against the Corporation in which it has vested by virtue of this Act as it might have been enforced by or against that company if this Act had been passed, and shall cease to be enforceable by or against that company, its surety or guarantor. Counsel for the plaintiff contended that the provisions contained in Sub-section (4) indicated that all causes of action in favour of or against the company are to be enforced by or against the Corporation and therefore the cause of action that the bank had against the company vested against the Corporation. In the first place Sub-section (4) is prefaced with the words 'subject to the other provisions contained in the Act'. These words indicate that full meaning and harmony is to be given to those provisions. Therefore, liabilities which become vested in the Corporation subject to the provisions of the Act cannot be indirectly brought within the ambit of Sub-section (4) of Section 17 without compliance with other provisions of the Act. Secondly, cause of action by or against the existing company in relation to the undertaking will also mean undertaking as contemplated in Section 17 of the Act. Any cause of action regarding undertaking cannot be equated with a cause of action on alleged liability where particulars have not been furnished. The fallacy lies in assuming that undertaking includes liability irrespective or regardless of compliance with the provisions of the Act.

19. The contention on behalf of the plaintiff that particulars were furnished in the present case is based on Ex. B. Ex. B contains a statement of loans secured and unsecured, outstanding and to be repaid as on the appointed date. That statement is dated 28th November 1953. In that statement there is an endorsement that the liability has since been recovered by the bank from General Mahabir's (meaning thereby the plaintiff) personal account and this overdraft account has not been transferred as on 1st August 1953 to Indian Air Lines Corporation. It was contended by counsel for the plaintiff that the endorsement that the liability had since been recovered by the bank from the plaintiff's personal account and hence deducted had no legal effect and secondly that the liability on the overdraft account had been shown as existing liability as at the end of 31st July 1953 and the fact that the company was not claiming compensation in respect of this liability from the Corporation was contended by counsel for the plaintiff not to affect the rights of the plaintiff. The endorsement that the overdraft account has not been transferred as on 1st August 1953 to Indian Air Lines Corporation was contended by counsel for the plaintiff to refer to the letter of the bank dated 3rd August 1953, to the effect that the account of Himalayan Aviation Ltd. did not show a credit balance on 31st July 1953 and therefore no account could be transferred to the new account. Therefore the contention on behalf of the plaintiff was first that particulars were supplied and secondly the endorsement by bank did not have any legal effect of wiping out the liability in the manner that the bank suggested. Counsel for the plaintiff contended that Section 22 of the Act did not anywhere state that particulars could not be furnished by agent. Reliance was placed on the decisions in Re Whitley Partners Ltd. (18868 32 ChD 337 and Japan Cotton Trading v. Jajodia Cotton Mills Ltd., reported in : AIR1927Cal625 in support of the contention that unless the statute contemplated a notice by the creditor under his hand a notice by the agent would suffice. If there was no such restriction then it was said what a per-son could do his agent could do as in the case of (1886) 32 Ch D 337.

20. The Air Lines Corporation filed a written statement and denied that particulars of liabilities were furnished within the statutory period. There is no pleading that there was extension of time to supply particulars and particulars were so supplied. The alleged particulars dated 28th November 1953 marked Ext. B do not show any liability. It was contended by counsel for the plaintiff that the remarks of the bank that liability had been recovered by the bank had no effect in law. I am of opinion that the particulars cannot be relied on because no case of bank being agent of air company was made. Ext. B shows that there is no liability.

21. In the present case the plaintiff did not make the case that particulars had been furnished by the bank as the agent. If the plaintiff did so the defendant would have met the case of agency. Secondly, the letters on which reliance was placed by counsel for the plaintiff treated Himalayan Aviation Ltd. as a third party and not as a principal. Thirdly, in the particulars furnished on behalf of the plaintiff it was said that particulars were supplied by Himalayan Aviation Ltd. and that will appear from page 57 of Ex. A as also in the plaintiffs solicitor's letter dated 30th December 1955 at page 50. The question of agency is one of fact and in the absence of pleadings I am unable to accept the case of agency. Further, Indian Air Lines Corporation in their written statement denied that particulars were furnished within the statutory period. No issue was raised as to whether the bank was the agent or not. Issue No. 1(b) was whether the company supplied to the defendant particulars as alleged in paragraph 6 of the plaint. There is no other evidence apart from letters and in the absence of any other evidence I am unable to hold that particulars were furnished within the time or that there was any extension of time.

22. The other contention on behalf of the plaintiff is that under Section 17(3) the contract of surety or guarantee is discharged. It is also said that the air company which was the principal debtor was changed by provisions of the Statute namely that the Corporation became the principal debtor and all securities with which the plaintiff held as guarantor vested in the Corporation free of all obligations and therefore the agreement of guarantee was discharged. Sub-section (3) of Section 17 speaks of contracts and working arrangements which are subsisting immediately before the appointed date. In the present case the plaintiff seeks to recover from the defendant bank the sum of money debited by the defendant bank for satisfaction of debts of air company to the defendant bank. It is said that the bank proceeded to realise the amount because of the agreement of guarantee. It is also said that guarantee agreements are neither liabilities nor obligations nor agreements entered into by air company. The air company borrowed money from the defendant bank in an overdraft account. The plaintiff not only guaranteed due payment of all advances by the bank to the air company but also became the principal debtor and accepted primary liability for the debt of the air company. It is true that in the letter of guarantee at page 1 of Ex. A the air company is referred to as the principal but the entire letter establishes that the plaintiff also accepted primary liability for payment. The relationship was that there were liabilities of the air company to the bank and the plaintiff agreed to pay the same. Financial liabilities had accrued. There was no contract or working arrangement subsisting immediately before the appointed date. Subsection (3) of Section 17 does not deal with liabilities. Liabilities will vest under subsection (1) of Section 17 subject to other provisions of the Act and liabilities are dealt with in Section 22 of the Act. A contract of guarantee is a tri-partite agreement. The letter of guarantee in the present case is a bilateral agreement between the plaintiff and the defendant bank. The plaintiff is the principal debtor to the defendant bank. If the defendant bank realised the amount from the plaintiff the plaintiff is unable to escape liability because the plaintiff agreed to pay the debts. The plaintiff cannot establish that the air company had no liability. The plaintiff could not also establish that the liability vested in the corporation.

23. It was contended that the defendant bank could not deny the contract of guarantee because of allegations in the written statement. Reference was made to paragraph 6 of the written statement where it is denied that the plaintiff stood discharged from all or any of the obligations as surety or guarantor of dues of the company in the overdraft account. One of the issues in the present suit is whether the plaintiff is discharged from his obligations as alleged in paragraph 7 of the plaint. It is alleged in paragraph 7 that by virtue of the provi-soins of the Act and in particular by reason of the provision in Section 17 thereof the liability of the company vested in the defendant and ceased to be enforceable against the company. As to whether it is a contract of guarantee it is a matter of construction. A contract of guarantee is a tripartite agreement which contemplates the the principal debtor, the creditor and the surety. The decisions reported in AIR 1926 Mad 554 and AIR 1940 Bom 315 also support the same construction. In the present case the allegations in the plaint are not that it was a tri-partite agreement. Secondly the document itself shows that there is a liabi-lity of the plaintiff to the bank on the basis of the principal debtor. Assuming that the plaintiff had entered into some contract with the bank as a guarantor it is indisputable that the plaintiff had liability of a principal debtor. The bank looked to the plaintiff for satisfaction of that debt. The bank wiped out the plaintiff's indebtedness to the bank.

24. Counsel for the plaintiff relied on the Bench decision in Surendra Nath Shukla v. Indian Airlines Corporation : AIR1966Cal272 in support of the contention that the duty of the existing Air company to supply particulars under Section 22 of the Air Corporation Act is as between existing Air Company and the Indian Airlines Corporation and therefore the third parties are outside the contemplation of such particulars. The decision does not support that contention. That was a case of the plaintiff suing two defendants Indian Airlines Corporation and Bharat Commerce and Industries Ltd. for damages for wrongful dismissal. The plaintiff claimed salary from November 1952 to 6 February 1956. It was held by the trial Court that the defendant company was not liable in so far as they supplied information and particulars of the arrears of salary amounting to Rs. 113/14/- and therefore the defendant company not having supplied the information would be liable for the difference between the total amount of salary due and the said sum of Rs. 113/14/-. It was held by the Appellate Court that the finding that the defendant company Bharat Commerce and Industries as was not liable for Rs. 113/14/- on the ground of arrears of salary could not be sustained because the duty of existing Air Company was to supply particulars under Section 22. Where no liability arose in law an erroneous supply of particulars of alleged liability would not create any liability in law.

25. Reference was made by counsel for the defendant to a Bench Decision in Bharat Commerce and Industries v. Surendra Nath Sukla : AIR1966Cal388 and to the observations in paragraph 15 at p. 396 of the report that unless particulars were furnished there will be no liability. Counsel for the defendant also placed reliance on the decision in T. Sanjeevi v. State of West Bengal : AIR1966Cal58 where it is stated that the liabilities under Section 22 of the Air Corporation Act would be such liabilities as were declared by the existing air companies.

26-28. Counsel on behalf of the defendant contended that the Air Corporations Act violated Articles 14 and 31 of the Constitution. It was said that there were no special classes of creditors and there was nothing in the Act to say that Air Companies were differentiated on any rational basis. It is therefore said that Article 14 was infringed. Secondly it was said that Article 31 of the Constitution was violated because no compensation was given. It appears that all creditors of all Air Companies are treated as one class and they have all been equally treated. There is power to nationalise Air Companies. If the power to nationalise par-ticular class of companies is not disputed and it was not disputed in this case, the creditors of that class will form a distinct class. With regard to the contention on behalf of the defendant that no compensation was given, what was said was that the right of the Bank under the agreement of guarantee was taken away without compensation. The Statute has provided liability of the Corporation. If the requirements of the Statute are complied with, the Air Corporation will assume that liability. Therefore, there is no merit in the contention that the Act infringed Articles 14 and 31 of the Constitution.

29. Counsel for the defendant relied on the decision in Calcutta Jute . v. United Commercial Bank Ltd., reported in (1957) 99 Cal LJ 19 in support of the contention that the plaintiff was not entiled to any declaration and that the suit was misconceived. It was contended first that the plaintiff could sue for general balance in a current account and secondly if there is no demand made there is no cause of action for moneys lent and advanced or moneys had and received. The plaintiff's remedy, it was said, was to close the account and sue for the balance. Reliance was placed on the decision in N. Jogachimson v. Swiss Bank Corporation, reported in (1921) 3 KB 110. There were three partners and the partners had a banking account with the defendant bank in London. One of the partners died and the partnership became dissolved. A sum was outstanding to the credit of the partnership on current account This was on the outbreak of war on August 4, 1914. In the year 1919 an action was commenced in the name of the firm for the purpose of winding up the affairs of the partnership and to recover the amount as money lent by the plaintiff to the defendant as bankers, or alternatively as money recei-ed by the defendant as bankers for the use of the plaintiff. No demand was made by the plaintiff firm on or before 1st August, 1914 for repayment. The defence was that no demand was made and no cause of action accrued. Bankes L. J. said that the question whether there was an accrued cause of action depended upon whether a demand upon a banker was necessary before he came under an obligation to pay his customer the amount standing to the customer's credit. A writ was ordinarily held to be a sufficient demand but in Joachimson's case (1921) 3 KB 110 demand became an important aspect because the plaintiff would have to prove cause of action as on 1st August 1914. The relation between a banker and a customer is the ordinary relation of debtor and creditor with a super-added obligation arising out of the custom of bankers to honour the customer's drafts and that relation is not altered by an agreement by the banker to allow the interest on the balances in the bank. Bankes L. J. further said that it was impossible to imagine the relation between banker and customer without the stipulation that if the customer sought to withdraw his loan, he must make an application to the banker for it. Warrington L. J. said that the banker contracted, having received the money to repay to the principal, when demanded, a sum equivalent to that paid into his hands. A banker is not at liberty to close an account in credit by payment of the credit balance without giving reasonable notice, and making provision for outstanding cheques. Atkin L. J, said that the bank undertook to receive money and to collect bills for its customer's account and the proceeds so received were not to be held in trust for the customer, but the bank borrowed the proceeds and undertook to repay them. 'The promise to repay', in the words of Atkin L. J., 'is to repay at the branch of the bank where the account is kept, and during banking hours'. A demand for the amount in the bank is the basis of the cause of action.

30. In the Calcutta Jute Manufacturing Co. case reported in (1957) 99 Cal LJ 19 it was held that relationship of banker and customer being that of debtor and creditor, no particular sum was earmarked for any particular customer and therefore, it could not be said that any declaration would lie in respect of a particular property of the plaintiff lying with the defendant. Counsel for the plaintiff contended that the money in the present case was a chose in action and therefore this aspect was not considered in the Calcutta Jute Manufacturing Co.'s case, (1957) 99 Cal LJ 19 and therefore the decision was distinguishable. A chose in action is debt or movable property. To equate the banking account with chose in action is to hold that the money is earmarked which it is not. The relationship of banker and creditor is such that when the duty of the banker is to pay when there is a demand for it, no creditor and no constituent can claim a particular fund in specie as belonging to the constituent. Therefore, there is no specific property and there is no chose in action. A constituent can sue on a cheque and if it is dishonoured he can sue for dishonour of the cheque. A constituent can demand balance of the money by closing his account. But the question is whe-ther a constituent is entitled to a declaration that the account is wrongfully debited. Counsel for the plaintiff relied on the form in Atkin's Precedents, 1st Ed. Vol. 3 Form No. 21 at page 172 and 2nd Ed., Vol. 6 Forms Nos. 29, 30, 31 at pages 245, 246 and contended that if the same were available in England the same should be available in India and particularly in this Court which exercised jurisdiction of Queen's Bench. It must be remembered that the right to grant declaration is derived from the Specific Relief Act. The Court cannot go outside the Specific Relief Act in regard to grant of declarations. The decision in Fischer v. Secretary of State for India in Council reported in (1899) 26 Ind App 16 related to the question whether a Collector who gave notice to the proprietor of a zemindary that separate registration and sub-assessment of the village would be made and thereafter the Government without notice to the appellant or to the Collector ordered the Collector to cancel the registration and a suit was filed for a declaration that the order was ultra vires, it was said by Lord Mac-naghten at pp. 27 and 28 of the report that if the so called cancellation were pronounced void, the order of the Government would fall to the ground and the decision of the Collector would stand good and be operative as from the date on which it was made. It was held to be in substance a suit to have the true construction of a statute declared. There is no such aspect in the present case.

31. In Mahomed Manjural Haque v. Bissesswar Banerjee reported in : AIR1943Cal361 the Bench decision is to the effect that the power of the Courts in India to make merely declaratory decrees is entirely governed by Section 42 of the Specific Relief Act. In that decision it was held that where the decree sought is not merely a declaratory decree but there is also a prayer for a decree for a specified sum by way of consequential relief, such a suit could lie. In the present case the plaintiff has not sued for a decree for any money due to him from the defendant bank on a closed banking account. The plaintiff does not say that the current account has been closed. The plaintiff proceeds on the basis that there is a subsisting current account. The plaintiffs' case is that the defendant has wrongfully debited the account. Such a wrongful debit formed the subject-matter of the proposed amendment in the Calcutta Jute Manufacturing Co's case, (1957) 99 Cal LJ 19. It was held that such a declaration which affected only pecuniary relationship could not come within the purview of Section 42. In the present case the declaration asked for suffers from the same vice of pecuniary relationship and if the declaration fails the other relief for wrongful debit also fails. Though I was invited to take a contrary view because of the contention that the debt would be a chose in action and that the jurisdiction of this Court would be that of the Queen's Bench. I am unable to accept either of the contentions because the jurisdiction of the Court to grant declaratory relief is guided by the Specific Relief Act and there is no substance in the contention that it is a chose in action because it is not a debt.

32. For all these reasons the suit fails. The suit is dismissed with costs. Certificate for two counsel.


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