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PETITIONER:

DHIRENDRA CHANDRA PAL

Vs.

RESPONDENT:

ASSOCIATED BANK OF TRIPURA LTD.(IN LIQUIDATION)

DATE OF JUDGMENT:

06/12/1954

BENCH:

JAGANNADHADAS, B.

BENCH:

JAGANNADHADAS, B.

MAHAJAN, MEHAR CHAND (CJ)

BHAGWATI, NATWARLAL H.

AIYYAR, T.L. VENKATARAMA

CITATION:

1955 AIR 213 1955 SCR (1)1098

ACT:

Banking Companies Act (X of 1949), ss. 45-B, 45-G (inserted

by Act XX of 1950)*-Claims decided under s. 45-B-Procedure

to be followed.

HEADNOTE:

The object of the Banking Companies Act, 1949 is to provide

a machinery for expeditious and speedy termination of

proceedings in liquidation and in the absence of any

specific provisions of the Act to the contrary or any rules

framed by the High Court under s. 45-G of the Act (inserted

by Act XX of 1950) the normal procedure for deciding all

claims under s. 45-B of the Act (inserted by Act XX of 1950)

should be a summary proceeding originating with an applica-

tion. But the court in its-discretion may think fit to

direct or the rules of the High Court may provide that a

suit is the proper remedy in view of the nature of claim

made and the questions involved in such claim.

Sree Bank v. Mukherjee ([1950] 55 C.W.N. 400), referred to.

JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 91 of 1953.

Appeal from the Judgment and Decree dated the 12th day of

June 1951 of the High Court of Judicature at Calcutta in

Appeal from Original Decree No. 56 of 1951 arising out of

the Decree dated the 8th day of March 1951 of the said High

Court exercising its Ordinary Original Civil Jurisdiction in

Suit No. 3993 of 1950.

H.J. Umrigar, Rameshwar Nath and Rajinder Narain for the

appellant.

A.N. Sinha and P. C. Dutta for the respondent.

1954. December 6. The judgment of the Court was delivered

by

JAGANNADHADAS J. -This is an appeal, by leave of the High

Court of Calcutta under article 133 (1) (c)

For these two sections 45-B and 45-G (inserted by Act XX of

1950) two now sections 45-B and 45-U wore inserted by s. 10

of Act LII of 1953.

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1099

of the Constitution, from its judgment in its appellate

jurisdiction confirming that of a Single Judge of the Court.

The point involved is a short one and arises on the

following facts. The respondent before us, Associated Bank

of Tripura Ltd., went into liquidation on the 19th December,

1949. A month prior to the liquidation, i.e., on the 19th

November, 1949, the appellant before us and the Bank entered

into an agreement whereby the appellant became a tenant of

the Bank in respect of a certain parcel of land. One of the

terms of the tenancy-agreement was that the appellant should

vacate the land demised on 24 hours' notice. After the Bank

went into liquidation the Liquidator served on the appellant

on the 18th April, 1950, a notice terminating his tenancy

and calling upon him to vacate the land and to hand over

possession by the end of April, 1950. This not having been

done, the Liquidator filed an application on the original

side of the High Court under section 45-B of the Banking

Companies Act for ejectment of the appellant and obtained an

ex parte decree against him on the 10th July, 1950. On the

28th August, 1950, the appellant applied for setting aside

the ex parte decree but the application was dismissed on the

7th September, 1950. Consequently the appellant filed the

present suit on the 12th September, 1950, in the original

side of the High Court, asking for a declaration that the ex

parte decree against him was made without jurisdiction and

was a nullity and that he continued to be a tenant

notwithstanding the said ex parte decree. The plaint does

not specifically mention the reason for claiming the decree

to be without jurisdiction or nullity. But the point taken

at the trial was that the Court had no power to deal with a

question relating to the ejectment of the appellant from the

demised land, in a summary proceeding initiated on an

application but could pass the decree only on a suit

regularly instituted.This contention was raised on the basis

of a judgment of the Calcutta High Court given on the 24th

August, 1950, that in respect of such a relief under section

45-B a summary proceed-

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ing is not maintainable but that a suit has to be filed.

This decision has since been reported in Sree Bank v.

Mukherjee(1). The learned trial Judge before whom the

present suit came up was of the opinion that though the ex

parte decree for ejectment was obtained on a wrong

proceeding, there was no inherent lack of jurisdiction in

the Court and that the fact of the decree having been

obtained in a wrong proceeding did not render it a nullity.

This view of the learned Judge was affirmed by the Appellate

Bench.

It has not been disputed before us that the relief by way of

ejectment. of the appellant from the land demised is one

which would fall within the scope of section 45-B of the

Banking Companies Act and that the Liquidator could obtain

the said relief by an appropriate proceeding in the High

Court. Indeed, the learned appellate Judges specifically

held that the Court had by virtue of section 45-B,

jurisdiction over the subject-matter of the dispute and this

view has not been challenged having regard to the wide and

comprehensive language of the section. But what is urged is

that the Court having followed the view taken in the Sree

Bank Case (supra) (whose correctness was not challenged

before it) that the appropriate proceeding to obtain such a

relief was only a suit, it should have, consistently

therewith, held the decree obtained on a mere application to

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be invalid. In the Court below the question as to whether

the decree obtained on a wrong proceeding was one so wholly

without jurisdiction as to be a nullity or whether it was

vitiated only by a mere irregularity in the mode of

obtaining the relief, and hence not open to attack in

collateral proceedings was the subject-matter of elaborate

consideration. It appears to us, however, that it would be

more satisfactory to consider and decide whether the basic

assumption which gave rise to this argument, viz. that the

appropriate proceeding under section 45-B was only a suit

and not an application, is correct. It is necessary for

this purpose to notice the relevant sections. Section 45-A

of the Banking Companies Act, 1949, as amended by Act XX of

1950

(1) [1950] 55 C.W.N. 400.

1101

defines 'Court' for the purposes of Part III and Part III-A

of the Act as "the High Court exercising jurisdiction in the

place where the registered office of the Banking Company

concerned, which is being wound up, is situated". The said

section also provides that "notwithstanding anything to the

contrary contained in the Indian Companies Act, 1913, or in

any notification, order or direction issued thereunder or in

any other law for the time being in force, no other court

(i.e. a court other than the one as above defined) shall

have jurisdiction to entertain any matter relating to or

arising out of the winding up of a banking company". Next

is section 45-B (1) which is in the following terms:

"Notwithstanding anything to the contrary contained in the

Indian Companies Act, 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 and all

questions of properties and all other questions whatsoever,

whether of law or fact, which may relate to or arise in the

course of the winding up of the banking company coming

within the cognizance of the Court".

Section 45-G authorises the Court to make rules -consistent

with the Act concerning the mode of proceedings for the

decision of claims and other proceedings under the Act.

This group of sections in Part III-A constitute a wide

departure from the corresponding provisions of the Indian

Companies Act. Under various sections thereof the

liquidator, after an order for winding up of a company is

made, can approach a Company-Court for exercising certain

powers in aid of and to expedite the process of liquidation.

The procedure normally adopted for the purpose is by way of

application. But the scope of matters in respect of which

the liquidator can obtain the help of the Company-Court by

summary procedure is rather limited. In respect of other

matters and particularly in the matter of collecting assets

or recovering properties from third parties, (not covered by

sections 185 and 186) the liquidator has to invoke the help

of the

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appropriate Court in the ordinary way. This as is wellknown

leads to a great deal of inevitable delay and expense. When

in 1949 special legislation in respect of Banking Companies

was taken up, it was one of the stated objects, to provide a

machinery by which proceedings in liquidation of Banking

Companies could be expedited and speedily terminated. It

was found, however, that the Act of 1949, as originally

enacted, was inadequate to achieve that purpose. It is in

this situation that the Amending Act of 1950 introduced into

the Act of 1949 an entire Chapter, Part III-A, consisting of

sections 45-A to 45-H under the heading "Special provisions

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for speedy disposal of winding up proceedings". It appears

to us that, consistently with this policy and with the

scheme of the Amending Act, where the liquidator has to

approach the Court under section 45-B for relief in respect

of matters legitimately falling within the scope thereof,

elaborate proceedings by way of a suit involving time and

expense, to the detriment of the ultimate interests of the

company under liquidation, were not contemplated. In the

absence of any specific provision in this behalf in the Act

itself and in the absence of any rules framed by the High

Court concerned under section 45-G, the procedure must be

taken to be one left to the judgment and discretion of the

Court, having regard to the nature of the claim and of the

questions therein involved.

In the Sree Bank Case (supra), the question that arose for

direct consideration was one of limitation. But in

considering it and when pressed with the argument that, if

the appropriate proceeding was by way of an application and

not a suit, difficulties might arise as to the question of

limitation, the learned Judges felt it unnecessary to

consider whether or not the Limitation Act applies to the

applications under section 45-B and if so what would be the

period which would govern such applications. They proceeded

to decide the particular case before them, viz. a case

relating to a debt due to the Bank, on the view that "there

is nothing in the Companies Act or the Banking Companies Act

which permits a

1103

liquidator to recover debts from debtors of a Banking

Company by a summary proceeding such as an application to

the Company Judge" and therefore held that no application

for recovery would lie and that only a suit should have been

brought for which the period of limitation was the ordinary

period provided in the Limitation Act. It appears to us,

with great respect to the learned Judges, that this approach

as to the nature of the proceeding required or permitted

under section 45-B of the Banking Companies Act was not

correct. The question is not whether section 45-B permitted

summary proceedings but the question is whether the section

prescribed definitely a particular method of proceeding and

whether consistently with the policy of the Act it was not

to be presumed that a speedy and cheap remedy was to be

available to the Liquidator, unless the Court in its

discretion thought fit to direct or the rules of the High

Court provided that a claim of a particular nature had to be

pursued by a suit. It is to be remembered that section 45-B

is not confined to claims for recovery of money or recovery

of property, moveable or immoveable, but comprehends all

sorts of claims which relate to or arise in the course of

winding up. Obviously the normal proceeding that the

section contemplated must be taken to be a summary

proceeding by way of application.

We are clearly of the opinion that in the present case the

Court which passed the ex parte decree was fully competent

to decide the matter raised before it on summary application

and to pass the ex parte decree which has been challenged by

the suit and that the decree of the Courts below dismissing

the suit is correct. We are not to be supposed to have

expressed any opinion on the question of limitation which

was raised before the High Court in the Sree Bank Case

(supra). That is a question which may have to be decided in

an appropriate case when it is raised directly.

The appeal is accordingly dismissed with costs.

Appeal dismissed,

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