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Jadunath Roy and ors. Vs. Bank of Calcutta Ltd. - Court Judgment

LegalCrystal Citation
SubjectBanking
CourtKolkata High Court
Decided On
Case NumberCivil Rule No. 90 of 1951
Judge
Reported inAIR1952Cal506,[1952]22CompCas69(Cal),56CWN92
ActsBanking Companies Act, 1949 - Section 45A and 45B; ;Banking Companies (Amendment) Act, 1950 - Section 11
AppellantJadunath Roy and ors.
RespondentBank of Calcutta Ltd.
Appellant AdvocateChandra Sekhar Sen and ; Bankim Chandra Banerji, Advs.
Respondent AdvocateR. Chaudhuri and ;Paritosh Sarkar, Advs.
DispositionApplication dismissed
Excerpt:
- .....learned judge's order is right. the question depends upon the meaning of the three sections of the banking companies act, 1949 (x (10) of 1949) as amended by the act of 1950. these sections are 45a and 45 b of the act of 1949 and section 11 of the act of 1950. sections 45 a and 45 b are in part 3 a of the act which makes special provisions for speedy disposal of winding up proceedings.10. section 45a defines the court.'in this part and part iii, 'court' means the high court exercising jurisdiction in the place where the registered office of the banking company which is being wound up is situate, and notwithstanding anything to the contrary contained in the indian companies act, 1913 (vii (7) of 1913), or in any notification, order or direction issued thereunder or in any other law for.....
Judgment:

Banerjee, J.

1. The petitioners before us who are the plaintiffs in suit No. 42 of 1946 pending in the Court of the Fifth Subordinate Judge Alipore, filed a suit for partition against the defendant bank which has its registered office at No. 3, Mangoe Lane, Calcutta, for partition of certain immovable properties.

2. A preliminary decree by consent was passed on the 24th June, 1948 and a commissioner for partition was appointed.

3. It appears that in respect of certain properties, the plaintiffs by subsequent transfer became the sole owners. No question arises as to the partition of these properties.

4. A compulsory winding up order of the bank was made by this Court and on 1st April, 1949, a liquidator appointed. The cause title of the suit was then amended by bringing on the records of the suit the liquidator as a party to the suit. Leave was obtained under Section 171 of the Indian Companies Act to continue the suit.

5. Thereafter the petitioners applied to the learned Subordinate Judge at Alipore for a direction on the Commissioner of partition to allot to them the properties of which they had become the sole owners by purchase as aforesaid. The Court granted the petitioner's prayer.

6. Another application was made before the learned Subordinate Judge by the plaintiffs for an order on the Commissioner of partition to file the final report in respect of the partition of the other properties.

7. On 27th November, 1950, an objection was taken by the bank (in liquidation) saying that the learned Judge had no longer any jurisdiction over the title suit and that it stood transferred to the High Court. The learned Judge upheld this objection by an order from which the petitioners have filed this revision petition.

8. It is contended on behalf of the plaintiffs that the Court below acted illegally and with material irregularity in the exercise of its jurisdiction in holding that the Court had no jurisdiction to try the suit or that it stood transferred to the High Court.

9. The question before us is as to whether the learned Judge's order is right. The question depends upon the meaning of the three sections of the Banking Companies Act, 1949 (X (10) of 1949) as amended by the Act of 1950. These sections are 45A and 45 B of the Act of 1949 and Section 11 of the Act of 1950. Sections 45 A and 45 B are in part 3 A of the Act which makes special provisions for speedy disposal of winding up proceedings.

10. Section 45A defines the Court.

'In this Part and Part III, 'Court' means the High Court exercising jurisdiction in the place where the registered office of the banking company which is being wound up is situate, and notwithstanding anything to the contrary contained in the Indian Companies Act, 1913 (VII (7) of 1913), or in any notification, order or direction issued thereunder or in any other law for the time being in force, no other Court shall have jurisdiction to entertain any matter relating to or arising out of the winding up of a banking company.'

11. The relevant portion of Section 45 B is as follows:

'Powers of Court to decide all claims by or against banking companies: (1) Notwithstanding anything to the contrary contained in the Indian Companies Act, 1913 (VII (7) of 1913) or in any other law for the time being in force, the Court shall have full power to decide all claims made by or against any banking company (including claims by or against any of its branches in any Province of India) and all questions of priorities and all other questions whatsoever; whether of law or fact, which may arise in the course of the winding up of the banking company coming within the cognizance of the Court, or which the Court may deem it expedient or necessary to decide for the purpose of doing complete justice or making a complete distribution of property in any such case.'

12. It is clear from these sections that it is the High Court and (no other Court) which has jurisdiction to decide any matter which relates to or arises out of the winding up of banking companies when the registered office is within the jurisdiction of this Court and that this Court alone has power to decide all questions of priorities and all other questions whatsoever, whether of law or fact, which may relate to or arise in the course of winding up of the banking companies coming within the cognizance of the Court.

13. Section 11 reads as follows:

'Transfer of pending proceedings in winding up to the Court exercising jurisdiction under this Act - Where any proceedings for the winding up of a banking company or any other proceeding, whether civil or criminal which has arisen out of or in the course of such winding up, is pending in any Court immediately before the commencement of this Act, it shall stand transferred on such commencement to the Court which would have had jurisdiction to entertain such proceeding if this Act had been in force on the date on which the proceeding commenced, and the Court to which the proceeding stands so transferred shall dispose of the proceeding as if this Act and the amendments made thereby were applicable thereto.'

14. We must read this section along with the two other sections which I have set out above. Section 11 says that any proceeding which has arisen out of or arises in the course of the winding up pending in any Court immediately before the commencement of the Banking Companies Act 'shall stand transferred' to the Court which would have had jurisdiction to entertain such proceeding if this Act had been in force on the date on which the proceeding commenced, and that Court alone shall dispose of the proceeding. Section 45 A creates exclusive jurisdiction in the Court. Section 45 B gives power to the Court to deal with matters which arise out of the winding up or which may in any way relate thereto. Section 11 provides for transfer.

15. It has been contended on behalf of the petitioners that the proceeding in question has not arisen out of or in the course of the winding up. Assuming for a moment that the proceeding has not arisen out of the winding up, there is no doubt that it arises in the course of the winding up. 'In the course of' means 'during' the winding up. As soon as an order for winding up was made and the liquidator appointed, it became necessary to make the liquidator a party to the proceeding. Why was it necessary? Because without him the suit could not further proceed. It was also necessary to obtain leave of the Court, Why was it necessary? Because under Section 171 of the Indian Companies Act, the suit could not proceed without the leave. These steps had to be taken because there was the winding up of the company. If there had been no winding up, these steps need not have been taken. So it is clear that all proceedings in the suit subsequent to the winding up arise in the course of winding up. The test seems to be that if at any stage of a proceeding the liquidator becomes a party to it, it arises in the course of the winding up.

16. We would have been happy if we could construe the section in the way the petitioners' counsel suggests. The High Court has become overloaded with cases which have been transferred under Section 11 to the High Court. And there are petty cases too, e.g. for the recovery of Rs. 100/- or Rs. 200/- on overdraft accounts. By reason of the banks going into liquidation, such suits have been transferred to the High Court. In many cases I have had to give leave to the liquidator to give up the petty claims because the costs to be incurred for the commencement and/or the continuance of the suit or proceeding for realising the amounts would not be commensurate with the amount of the claims of the Bank against the parties. Even so we cannot accept the construction suggested by counsel. We have got to construe the section as it is. There is no ambiguity in the section. The meaning is quite clear. The question of convenience is not pertinent.

17. The statute provides that the proceedings 'shall stand transferred'. The transfer is automatic. No order of the Court is necessary. On formal information from the High Court, the records of the proceeding must be sent to the High Court.

18. The Legislature in its wisdom has provided for the transfer and trial of all proceedings that arise out of or in the course of the winding up of a company to the High Court and this Court is bound to act accordingly. The Court cannot construe the section in a way that whittles down the intention of the Legislature.

19. Our Court of appeal had to construe these sections in 'BHARATI CENTRAL BANK LTD. v. RATHINDRA NATH', 54 Cal W N 975, and this judgment is in consonance to the judgment delivered in that case.

20. I think therefore that the order by the learned Subordinate Judge was rightly made and cannot be assailed. The application is dismissed with costs.

Harries, C.J.

21. I agree.

G.N. Das, J.

22. I agree.


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