1. This is an appeal from a judgment of Sarkar J., dated 1st March 1949, whereby he dismissed an application presented by a number of creditors of the Tripura Modern Bank Ltd., under Section 153, Companies Act.
2. This Bank had a subscribed capital of Rs. 22,50,000 and a paid up capital of Rs. 15,54,000. It was made a scheduled bank in the year 1945, but it got into difficulties thereafter. In the petition it was stated that by reason of various difficulties and the change in the political situation the business of the company was affected and it had to meet liabilities to the extent of over two crores of rupees. Owing to the suspension of business of a number of banks in Calcutta which were also scheduled banks, the company was unable to meet heavy demands and it was not possible for the bank to make further payments without realising its investments.
3. The petition discloses that the situation is really serious. The liability of the Bank on the date of the presentation of the petition was over two crores and three lacs of rupees and it says that it has assets valued over two crores and fifteen lacs of rupees. But these facts have got to be ascertained on proper materials. Its cash balance is practically exhausted and it had therefore to approach the Court with an application for a moratorium under Section 277 (n), Companies Act. The Court admitted the petition and adjourned the same till 24th January when a petition for winding up of the bank was fixed for hearing.
4. On 24th January the Court made an order for winding up and appointed a member of the Bar as liquidator. Thereafter the present petition under Section 153 was put forward for the consideration of a scheme by Her Highness Maharani Regent of Tripura and sixty-seven other creditors whose total claims amounted to over ten lacs of rupees.
5. The main difficulty in the way of the petitioner was Clause 12, Banking Companies (Control) Ordinance, 1948 (Ordinance No. XXV  of 1948). Under Clause 12 :
'Notwithstanding anything contained in any law for the time being in force -- (a) no Court shall entertain an application for sanctioning a compromise or arrangement between a banking company and its creditors .... unless the application made in respect thereof is accompanied by a report of the Reserve Bank certifying that such compromise or arrangement is not detrimental to the interests of the depositors of such company.'
Sarkar J. in a very careful judgment dealt with the arguments put forward by Mr. S. C. Bose in support of the application. Mr. Bose contended that on a proper construction Clause 12 was restricted to an application for sanctioning a scheme or compromise resulting in an amalgamation and to amalgamations by banking companies outside Court. There was some justification for putting forward this argument on the part of Mr. Bose, because Clause 12 had a heading which was in the following terms : 'Restrictions on amalgamation.'
6. After considering the relevant authorities cited before him Sarkar J. held, and in my opinion rightly, that the heading was somewhat misleading and he refused to cut down the natural meaning of the clear words of the enactment by reading into the same any restrictions derived from the heading. The learned Judge pointed out with considerable force that if the Court was to accede to Mr. Bose's contention, it would make Clause 12 practically nugatory. In our opinion Sarkar J. was justified in refusing the application as he did, in view of the Ordinance then in force.
7. On appeal, it was contended by Mr. S. C. Bose on behalf of the appellants that in view of the change in the law the Court of appeal is entitled to take into consideration the legislative changes effected after the decision given by Sarkar J. Pending appeal the law on the point has been changed and now an application under Section 153 can be entertained by the Court without any report or certificate of the Reserve Bank of India. The alteration in the law was effected by the Banking Companies Act, 1949 (Act X  of 1949) which received the assent of the Governor-General on 10th March 1949. According to its preamble it is an Act to consolidate and amend the law relating to banking companies. Under Section 45 of this Act
'Notwithstanding anything contained in any law for the time being in force -- (a) no Court shall sanction a compromise or arrangement between a banking company and its creditors,..... unless the compromise or arrangement is certified by the Reserve Bank as not being detrimental to the interests of the depositor of such company.'
8. In support of his contention Mr. Bose referred to a judgment of the Federal Court in Lachmeshwar Prasad v. Keshwar Lal . In that case the Patna High Court had declared Section 11, Bihar Money-lenders Act (Act III  of 1938) to be ultra vires. An appeal was preferred to the Federal Court. During the pendency of the appeal in the Federal Court, the Bihar Moneylenders Act (III  of 1938) was repealed and re-enacted as Act VII  of 1939. The appellants before the Federal Court sought to claim the benefit of the change in the legislation, that is, Section 7 of the Act of 1939. The learned Advocate-General of India, Sir Brojendra Mitter, urged that the Federal Court ought not to take any notice of the legislative changes which had supervened since the decision on appeal was given; but the Federal Court declined to accede to his argument and took into consideration the subsequent legislative alteration. The learned Judges pointed out that the hearing of an appeal under the procedural law of India is in the nature of a re-hearing and therefore in moulding the relief to be granted in a case on appeal the appellate Court is entitled to take into account facts and events which have come into existence after the decree appealed against. An appellate Court is competent therefore to take into account legislative changes since the decision in appeal and its powers are not confined only to see whether the lower Court's decision was correct according to the law as it stood when its decision was given. Accordingly the Federal Court gave effect to Section 7 of the Act of 1939 and the appellants were given the benefit of that section. It is to be observed, however, that the latter Bihar Act had in terms been made retrospective and therefore the Federal Court was in a position to give effect to the law as enacted by the later statute.
9. Mr. H. N. Sanyal, learned counsel for the liquidator, has pointed out with considerable force that the position is different when the later enactment is not made retrospective. He referred us to a judgment of Lord Wright in In re a, Debtor (NO. 490 of 1935), (1936) : Ch. 237: (105 L. J. Ch. 129). In that case the argument rested upon a construction of the Bankruptcy statutes. Under Section 125, Sub-Section (1), Bankruptcy Act of 1914 :
'Every married woman who carries on a trade or business, whether separately from her husband or not shall be subject to the bankruptcy laws as if she were a feme sole.'
A married woman entered into a large number of speculative Stock Exchange transactions with the petitioning creditors and was indebted to a very large extent. The creditors obtained judgment against her. The creditors then petitioned for a receiving order. The debtor disputed the petition on the ground that she was a married woman who was not carrying on a trade or business within the meaning of Section 125 of the Act of 1914. The Registration held that the transactions in which the debtor had been engaged constituted the carrying on by her of a business within the meaning of Section 125 and made a receiving order against her. Then an appeal was preferred. During the pendency of the appeal, the Law Reform (Married Women and Tortfeasors) Act, 1935 was passed. It was provided by Section 1 (d) of the Act of 1935 that a married woman shall be 'subject to the law relating to bankruptcy in all respects as if she were a feme sole'. By Sch. II of that Act Section 125, Bankruptcy Act of 1914 was repealed and by Section 4, Sub-section (1) it was provided as follows :
'Nothing in this Part of this Act shall .... enable any judgment or order against a married woman in respect of a contract entered into or debt or obligation, incurred before the passing of this Act, to be enforced in bankruptcy ...'
10. The Court of Appeal held that the Registrar was right in holding that the transactions in question constituted the carrying on by the debtor of a business within Section 125 (1) of the Act of 1914. An argument was advanced before the Court of Appeal on the basis of the new legislation which altered the law. Lord Wright in negativing that argument observed as follows :
'The same reasoning would, I think, justify the Court in proceeding under Section 125, Bankruptcy Act, 1914, even though the bankruptcy proceedings were not commenced until after the Act of 1935 came into operation so long as the act of bankruptcy was anterior to that Act. Counsel for the debtor relied on Quilter v. Mapleson, (1882) 9 Q. B. D. 672 : (52 L. J. Q. B. 44). That, however, was a ease merely dealing with matters of procedure or remedies to which a different rule applies. It is not necessary to quote any authority for that distinction save what was said by Jessel M. R. in In re Joseph Suche and Co., (1875) 1 Ch. D. 48 : (45 L. J. Ch. 12): 'It is a general rule that when the Legislature alters the rights of parties by taking away or conferring any right of action, its enactments, unles in express terms they apply to pending actions do not affect them. It is said that there is one exception to that rule, namely, that where enactments merely affect procedure and do not extend to rights of action, they have been held to apply to existing rights, and it is suggested here that the alteration made by this section (i. e.,. Section 10, Judicature Act, 1875) is within that exception. I am of opinion that it is not. This is an alteration not merely in procedure, but in the light to prove for a debt which is not distinguishable in substance from a right of action before winding up, being simply a legal proceeding to recover a debt against a company in liquidation. . . .'
'Thus while an Appellate Court is able, and bound, to give effect to new remedies which have been introduced by enactments passed after the order appealed from was made by the Court of First Instance, yet with regard to substantive rights it is well established that the Appellate Court must give effect to the same law as that which wag in force at the date of the earlier proceeding.'
11. With great respect we agree with what Lord Wright said in the above case. An appellate Court is entitled to give effect to remedies introduced by enactments passed pending appeal, but it must give effect to the same law regarding vested rights as that which was in force at the time the Court of first instance dealt with the matter.
12. Mr. Bose conceded that the views expressed by Lord Wright were applicable to the interpretation of Indian statutes. The real question we have got to decide is whether this is a matter of procedure or remedy or a matter affecting the substantive rights of parties. Learn-ed counsel for the Liquidator, Mr. Sanyal, urged that on a proper construction of Clasue 12 of the Ordinance of 1948, the jurisdiction of the Court was taken away and this Court had no power or authority to entertain any application for sanctioning a compromise and that the certificate of the Reserve Bank was a condition precedent to the accrual of the right on the part of the company or the creditors concerned to approach the Court with an application for sanctioning a scheme or an arrangement. Mr. Bose on the other hand argues that it is really a question of procedure or remedies and the appellate Court is able and bound, in the words of Lord Wright, to give effect to the new remedies which have been introduced by the later legislation passed in 1949 which really removed the fetter whereby a certificate of the Reserve Bank was made a condition precedent to the Court's entertaining a petition for sanctioning a compromise or an arrangement.
13. In my view, the correct law was laid down in a judgment of the Judge ordinary in Watton v. Watton, (1866) L. R. 1 P. 227:(85 L. J. Mat. 95). There the learned Judge observed as follows :
'And although a suitor may have a vested right to a decree, the mode and method in which he is to approach the Court in order to obtain it, and the time within which that or any other step in the cause is to be taken, are merely auxiliary to that right, and may be changed, either by the legislature or by the rules and orders of the Court, without any infringement of the right itself.'
13a. In that case the learned Judge observed that the later statute applied to pending actions as it really dealt with the mode and method in which a litigant was to approach the Court. In my view the relevant sections of the above statutes do not affect vested rights or substantive law, but deal with the mode and method in which persons who wanted a scheme to be approved by the Court had to approach the company Judge in order to obtain the appropriate order. Therefore provisions either with regard to certificate or report from a bank or any other authority were merely auxiliary to the substantive right which had been conferred by Section 153, Companies Act. In that view the later legislation would be retrospective.
14. The rule of construction is well settled. Retrospective operation is not to be given to a statute so as to impair an existing right or obligation. But the law is different with regard to matters of procedure. In re Athlumney, (1898) 2 Q. B. 547 : (67 L. J. Q. B. 935). No person has a vested right in procedure and if the Legislature alters the mode of procedure a litigant has to proceed according to the altered mode. Enactments dealing with procedure apply to pending actions unless a contrary intention is expressed or clearly implied.
15. In this case no existing rights or obligations are being impaired. With a view to meeting the emergency caused by a series of bank crises the Ordinance was enacted so as to help the Court with some prima facie evidence in the form of a certificate recommending the favourable consideration of a scheme. But that report or certificate was not binding on the Court. In my opinion the later statute which dispenses with such certificate at the initial stage does not impair or abrogate any substantive right but deals with the method or manner of invoking the Court's jurisdiction under Section 153, Companies Act. Braund J. in the case of Benares Bank Ltd. v. Shri Sri Prakasha Bhagawan Das : AIR1946All269 had to consider the effect of the amendment of Section 285 (1), Companies Act by Act XXII  of 1936. The learned Judge observed that the real question was whether there was an alteration of substantive law as opposed to a mere law of procedure, that is, whether there was an intention adversely to affect the subject in the sense of depriving him of some accrued right or interest. If it is a mere alteration of procedure, then the statute is retrospective. But if it is a question of taking away the accrued right or interest of the subject, then the statute should not be given retrospective effect.
16. In my view the later statute of 1949 has not abrogated or taken away arty vested or accrued right. It has only regulated procedure and there is no alteration of the substantive law on the subject affecting the rights of parties.
17. I would refer to a judgment of Sir Charles Sargent C. J. and Candy J. in Bal-krishna Pandharinath v. Bapu Yesaji, 19 Bom. 204, Under Section 254, Civil P. C. of 1882 uncertified adjustments could not be recognised by any Court. That section was altered by Section 27, Amending Act of 1888 by which uncertified adjustments could be recognised by Courts other than the Court executing the decree. The question was whether the later statute was applicable to adjustments previous to the Amending Act. The learned Chief Justice held that the effect of that section was to alter the practice or procedure of the Code. The ordinary rule is that changes in matters of procedure are retrospective. The same principle is applicable here and as the rights of parties are not being taken away or impaired, it is our duty to give effect to the subsequent change in the law relating to procedure and the appellants should be given the benefit of Section 46 of Act X  of 1949.
18. The order of Sarkar J. is set aside and this case will go back to the learned company Judge, Sinha J., who will give the appropriate directions with regard to the necessary advertisements and the summoning of the requisite meetings.
19. The Official Liquidator will be entitled to the costs of this appeal as between attorney and client. Mr. Bose's clients will bear their own costs of this appeal. Certified for two counsel.
20. An order for stay was granted by this Court which only asked the liquidator not to distribute the assets nor to sell any furniture. But otherwise the liquidator was to function as such. There is a question as to whether advertisements with regard to winding up should be forthwith published or not. Necessary directions will be obtained from Sinha J. in that behalf.