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Dr. Sailendra Nath Sinha Vs. Jasoda Dulal Adhikari and ors. - Court Judgment

LegalCrystal Citation
SubjectBanking;Company
CourtKolkata High Court
Decided On
Case NumberCriminal Revn. No. 1184 of 1959
Judge
Reported inAIR1962Cal490
ActsBanking Companies Act, 1949 - Section 45F, 45F(1) and 45J; ;Evidence Act - Section 34; ;Companies Act, 1913 - Section 237
AppellantDr. Sailendra Nath Sinha
RespondentJasoda Dulal Adhikari and ors.
Appellant AdvocateN.C. Banerjee and ;Mukti Prosanna Mukherjee, Advs.
Respondent AdvocateA.C. Mitra and ;N.C. Talukdar, Advs.
Cases ReferredMetropolitan Bank v. Pooley
Excerpt:
- .....for appreciation, of the points raised and decision thereon, in a liquidation proceeding of a banking company of the name of bank of commerce, limited an order for winding up was made by this court on 7-8-1950, and in course of that proceeding mr. g. k. dutt, bar-at-law was appointed liquidator. on 7th september, 1950, official receiver was appointed the official liquidator in place of mr. g. k. dutt. thereafter an order under section 179 of the indian companies act, 1913, was made by bachawat, j., on 15th january,1951 authorising the official liquidator to institute or defend any suit or prosecution or other legal proceeding civil or criminal in the name and on behalf of the company. thereafter upon an application of the said official liquidator praying for directions s.n......
Judgment:
ORDER

Amaresh Roy, J.

1. This Rule was issued upon an application tor Revision made On behalf of an accused person in a case which is now pending in the Court of a Presidency Magistrate and raises a question about the admissibility of books of account and documents produced on behalf of the Official Liquidator and also the manner of proof of the entries in those books of account and documents. A short history of the proceeding will be necessary for appreciation, of the points raised and decision thereon, in a liquidation proceeding of a banking company of the name of Bank of Commerce, Limited an order for winding up was made by this Court on 7-8-1950, and in course of that proceeding Mr. G. K. Dutt, Bar-at-Law was appointed Liquidator. On 7th September, 1950, Official Receiver was appointed the Official Liquidator in place of Mr. G. K. Dutt. Thereafter an order under Section 179 of the Indian Companies Act, 1913, was made by Bachawat, J., on 15th January,1951 authorising the Official Liquidator to institute or defend any suit or prosecution or other legal proceeding civil or criminal in the name and on behalf of the Company. Thereafter upon an application of the said Official Liquidator praying for directions S.N. Banerjee, J., passed an order under Section 237 (1) of the Indian Companies Act, 1913 on 22nd July, 1952. After that order was made a petition of complaint was filed On 23rd July, 1952, in the court of the learned Chief Presidency Magistrate, Calcutta by one Jasada Dulal Adhikari, an assistant incharge under the Official Liquidator and that petition of complaint stated that it was filed for and on, behalf of the Official Liquidator andan authority signed by the Official Liquidator was attached to the petition of complaint as Schedule A thereto. By that petition of complaint it was grayed that processes may be issued against the two accused persons named therein (1) Dr. Sailendra Nath Sinha (2) Sudhendu Prosad Roy Choudhury for alleged offences under Sections 120B, 406, 467 and 477A Indian Penal Code and also Section 282-A of the Indian Companies Act, 1913. Cognizance of the alleged offences was taken by the learned Chief Presidency Magistrate on 23rd July, 1952, upon that complaint. Thereafter the case passed through various stages which are rot relevant for the purpose of the present Rule except that on 10th October, 1958, an application was made for cancellation of bail bond of accused No. 1 by K.N. Ghosh Hazra, Advocate who stated that he had been appointed special public Prosecutor to conduct the case on behalf of the State and by an order dated the 16th December, 1958, directions were given to ascertain whether the complainant Jasada Dulal Adhikari had given instruction to the Public Prosecutor to proceed with the case on his behalf. On 6th January the complainant appeared in Court and informed the Court that he had entrusted his case with the Said Mr. K.N. Ghosh Hazra, Advocate. On 28th May, 1959, a point was raised on behalf of the accused persons that as the case was instituted upon a complaint it could not proceed as a 'State case' and by an order dated the 4th June, 1959 the learned Magistrate decided that point and rejected the defence contention and directed that the case should proceed as a case conducted by the Public Prosecutor on behalf of the State. Evidence commenced on 11th August, 1959 and while adducing evidence prosecution wanted to adduce in evidence certain books of account of Bank of Commerce, Limited under the provisions of Section 45F of the Banking Companies Act (Act X of 1949). This was objected to by the accused persons and the matter was heard on 13th August, 1959 and by an order dated the 20th August, 1959 the learned presidency Magistrate held that provisions of Section 45F of Banking Companies Act will apply and the documents wore admissible in evidence in conformity with those provisions.

2. Against that order of the learned Presidency Magistrate accused No. 1 Dr. Sailendra Nath Sinha has invoked the revisional powers of this Court and has prayed that the order of the learned Presidency Magistrate dated the 20th August, 1939 should be set aside. Rule issued on 13th August, 1959, pending the disposal of this Rule the proceeding before the learned Presidency Magistrate has remained stayed.

3. The learned Advocate Mr. Nalin Chandra Banerjee appearing in support of the Rule contended at the outset that:

(1) Section 45F of the Banking Companies Act (Act X of 1949) is limited in its application only to winding up proceedings of prosecution on criminal charges, (sic)

(2) That Section 45F applies on its own terms in proceedings 'By or against the banking company'. Mr. Banerjee contends that the criminal case now pending before the learned Presidency Magistrate is not a proceeding by the banking company.

(3) Even if Section 45F applies that makes the books of account and other documents admissible in evidence, and, according to Mr. Banerjee, proof according to the provisions of the Evidence Act is necessary before the contents of those books of account and documents can be accepted in evidence.

4. During his arguments, however, Mr. Banerjee abandoned the point No. 3 based on his contention that Section 45F does not prescribe the mode of proof, in view of the language employed in that section but added a new point based on the history of incorporating the present Section 45F in the Banking Companies Act (Act X of 1949) and contends that Section 45F in its present form for the first time was brought into force on 30th December, 1953 long after thecognizance in the present case was taken on 23rd July, 1952 and according to Mr. Banerjee that section embodies a substantive law and therefore cannot have retrospective effect and will not apply to the present prosecution at all. If this contention of Mr. Banerjee succeeds then hisother points need not be gone into. Therefore I will take up this point first.

5. The Banking Companies Act (Act X of-1949) came into force on 10th March, 1949 but as originally enacted it did not contain Section 45F and for the matter of that, Part IIIA in which Section 45F occurs was not in the Act. That Part was added in Act X of 1949 by the amending Act XX of 1950 which came into force on 18th March, 1950 and that part so added did contain a Section 45F but that Section 45F was very different from the present Section 45F which (was) incorporated in Act X of 1949 by the amending Act III, of 1953 which came into force on 30th December, 1953. Another amendment by Act XCV of 1956 Which came into force on 29th December, 1956 was also mentioned during arguments. This last amending Act by its Section 14 carried out amendments of several sections of the Act X of 1949 by a schedule which contained amendments of several sections in Part IIIA but Section 45F is not one of those. By Proviso to Section 14 of this amending Act it has been provided that amendments of sections in Part IIIA mentioned in the schedule shall not have retrospective operation.

6. Referring to this history of legislation Mr. Banerjee contends that Section 45F is a substantive law and not procedural and therefore it can only apply to a prosecution which had been commenced after the section came into existence because that section is not retrospective either by express words or by necessary implications.

7. The learned Standing Counsel Mr. A. C. Mitter appearing on behalf of the State to Oppose the Rule has recounted that history of legislation mentioned by Mr. Banerjee but has contended that Section 45F being a rule of evidence is only an adjective law that is, procedural law. Mr. Mitter has relied on the dicta of Lord Blackburn in the case of Gardner v. Lucas (1818) 3 A. C. 582 particularly the passage occurring at p. 603 which reads :

'Alterations in the form of procedure are always retrospective, unless there is some good reason or other why they should not be. Then, again, I think that where alterations are made in matters of evidence, certainly upon the reason of the thing, and I think upon authorities also, those are retrospective, whether civil or criminal.'

That by the law in India, in the absence of any special circumstance of indication in the Act itself, procedural legislation applies to all past transactions is well-settled by a series of decisions of this country including some of the decisions of the Judicial Committee of the Privy Council, and recently upon a review of authorities that has been emphasised by a decision, of a Division Bench of this Court in the case of Anadi Kumar Chatterjee v. State reported in 59 Cal WN 306 in which the judgment was delivered by my Lord K.C. Das Gupta J. as his Lordship then was. The relevant passage occurs at p. 308 of the report and reads :

'the settled law is that legislation as regards procedure is ordinarily retrospective. As Lord Manton observed in (1878) 3 AC 582. 'It is perfectly well settled that if the Legislature forms a new procedure that, instead of proceeding in this form or that, you should proceed in another and a different way clearly then bygone transactions are to be sued for and enforced according to the new form of procedure. Alterations in the form of procedure are always retrospective unless there is some good reason or other why they should not be.' A series of decisions in this country including some of the decisions of the Judicial Committee of the Privy Council has well settled the position that the law as stated by Lord Waston above is the law in India and that in the absence of any special circumstance or indication in the Act itself procedural legislation applies to all past transactions.'

Therefore if Mr. Mitter is right in his contention that Section 45F embodies, a rule of procedure then the contention of Mr. Banerjee in this respect must fail. On examining the provision in Section 45F there is no doubt whatsoever that it lays down certain special provisions in the first part analogous to Section 34 of the Indian. Evidence Act and in the second part of the first sub-section the modes of proof analogous to sections in Ch. V of the Evidence Act particularly Section 78 of that Act. The whole characteristic of this provision is admissibility and manner of proof of certain materials and therefore by its very nature it is a law of procedure and does not affect substantive rights. As a piece of legislation dealing merely with matters of procedure it should properly in my view have retrospective effect because that construction is by no means textually inadmissible. I am fortified in this view by the high authority of the Supreme Court in the case of Anant Gopal Sheorey v. State of Bombay reported in : 1958CriLJ1429 wherein the law has been succinctly en. undated as

'No person has a vested right in any courseof procedure. He has only the right of prosecution or defence in the manner prescribed for thetime being by or for the Court in which the caseis pending and if by an Act of Parliament themode of prosecution is altered he has no otherright than to proceed according to the alteredmode. See Maxwell on Interpretation of Statutes,225; Colonial Sugar Refinery Co. Ltd. v. Irving,1905 AC 369. In other words a change in thelaw of procedure operates retrospectively andunlike the law relating to vested right is not onlyprospective.'

That being the law and as I have already held that the provision embodied in Section 45F is only a procedure in the matter of admitting and proving evidence, I have no hesitation in holding that the provisions of Section 45F will apply to the present proceeding although the proceeding commenced before that section in its present form was embodied in the Act. Mr. Banerjee's contention to the contrary is accordingly overruled.

8. Now it is necessary to deal with the other points raised by Mr. Banerjee. The first of those contentions was that Section 45F is limited in its application only to winding up proceedings and has no application in criminal cases. The section is in these terms :

'45F. Documents of banking company to be evidence.

(1) Entries in the books of account or other documents of a banking company which is being wound up shall be admitted in evidence in all proceedings by or against the banking company; and all such entries may be proved either by the production of the books of account or other documents of the banking company containing such entries or by the production of a copy of the entries, certified by the official liquidator under his signature and stating that it is a true copy of the original entries and that such original entries are contained in the hooks of account or other documents of the banking company in his possession.

(2) Notwithstanding anything to the contrary contained in the Indian Evidence Act, 1872 (I of 1872), all such entries in the books of account or other documents of a banking company shall, as against the directors of the banking company in respect of which the winding up order has been made before the commencement of the Banking Companies (Amendment) Act, 1953, be prima facie evidence, of the truth of all matters purporting to be therein recorded.'

9. In its own terms it operates to have effect ''in all proceedings by or against the banking company' which words occur in Sub-section (1) of the section. By Sub-section (2) 'all entries in the books of account or other documents shall as against the Directors of the banking company ......... be prima facie evidence of the truth ofall matters purporting to be therein recorded.' These words are intentionally wide and there is no reason whatsoever to curtail its natural width as suggested by Mr. Banerjee's argument. According to Mr. Banerjee one reason for such curtailment is to be found in the heading of Part IIIA in which Section 45F occurs. That heading says 'Special provision for speedy disposal of winding up proceedings' and according to Mr. Banerjee the application of all the sections in that part is limited to winding up proceedings only. It was suggested by Mr. Banerjee that prosecution is not a prosecution of a Director and is not a winding up proceedings, but this argument of Mr. Banerjee is completely answered by Section 451 within Part IIIA which provides that High Court may, if it thinks fit, take cognizance of and try in a summary way any offence alleged to have been committed by any person who has taken part in the promotion and formation of the banking company which is being wound up or by any Director, Manager or officer thereof provided that the offence is punishable under this Act or under the Indian Companies Act, 1913. I have already mentioned that the present prosecution was commenced upon an order made in this Court under Section 237 of the Indian Companies Act, 1913 and that section deals with 'Prosecution of delinquent Directors' in the course of winding up. Therefore it is beyond doubt that a prosecution of the nature of the present proceeding is an integral part of winding up proceeding, be it in the High Court upon cognizance under Section 45J or be it before a Magistrate upon a complaint under direction of the Court under Section 237 of the Indian Companies Act, 1913.

10. Next contention of Mr. Banerjee was that even if it is a winding up proceeding it is not a proceeding by or against the banking company. I have already said that this prosecution was commenced upon an order under Section 237 of the Indian Companies Act, 1913 and the complaint was filed for and on behalf of the Official Liquidator under his authority by a senior assistant in his office. The question is whether the proceeding is by the company. The learned Standing Counsel has contended that every act of the Liquidator is act of the company and has referred to a Full Bench decision of the Allahabad High Court reported in AIR 1933 All 789 (FB), Shiam Lal J. Dewan v Official Liquidators of the U. P. Oil Mills Co. Ltd. in delivering the judgment in that Full Bench case Sulaiman C. J. Observed :

'It is also obvious that as no property vests in the official liquidator, he has no personal right to move in the matter. His power to sue in the name and on behalf of the Company is conferred upon him by Section 179 of the Act. It therefore follows that whatever suit he files or whatever legal proceedings, civil or criminal, he takes, he must take it in the name and on behalf of the company. No doubt the, liquidator is on officer of the Court having been appointed by the Court and he is under the direction and control of the Court. But when a proceeding is started by him that proceeding is not initiated in his personal capacity but in the name and on behalf of the company, and it must be deemed as if the proceeding is being continued not only in the interest of the company but actually by the Company through its liquidator.'

These observations of the learned Chief Justice are expressed in language of superb clarity and I have no hesitation in respectfully accepting that as a good law. The Division Bench of the Madras High Court has followed the decision of the Allahabad High Court I have quoted above in the case of Loomchand Sait v. Official Liquidators, Peerdan Joharmall Bank Ltd reported in : AIR1953Mad595 . Mr. Mitter has based his contention in this respect by pointing out that even when the company has been wound up and an Official Liquidator has been appointed the corporate powers of the company exist: Sea (1903) AC 220, Kent v. Communaute Des Soeurs De Charite De La Providence. He has further emphasised that the Liquidator acts as a representative of the company when directed by the Court to prosecute the officers of the company for various frauds in or prior to the winding up and also referred to Palmer's Company Precedents, 16th Edition, Part II, page 603.

11. Mr. Banerjee on the other hand has contended that the Liquidator acts as representative of the Court and not of the Company and has referred to (1885) 10 AC 210, Metropolitan Bank v. Pooley, as an authority for that proposition.

12. Even if in certain respects the Liquidator acts as representative of the Court, there is no conflict to his acting as representative of the Company as well in other respects. So I do not find any difficulty in accepting Mr. Matter's contention and as a result I hold that the proceeding now pending before the learned Presidency Magistrate is a proceeding in effect and for all intents and purposes a proceeding by the banking company, and that the prosecution is in the course of winding up proceeding within, the meaning of Section 45F of the Banking Companies Act.

13. The result is that the decision of thelearned Presidency Magistrate passed order datedthe 20th August, 1959 must be held to be acorrect decision and the present Rule must bedischarged.


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