9911796707
TMI Blog1965 (3) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... section 37 of the said Act. The learned judge, however, granted moratorium and also called for a report from the Reserve Bank on the affairs of this bank. On the 14th January, 1958, the learned judge appointed a special officer also to take charge of the assets of the bank. In pursuance of his order, the Reserve Bank submitted a report on March 14, 1958, stating that there was no reasonable chance of the Chotanagpur Banking Association Ltd. paying its debts within a period of six months beyond which the order of moratorium could not last. Soon after, i.e., on the 17th March, 1958, the bank filed an application proposing a scheme under section 391 of the Companies Act, 1956, and prayed for the consideration of the same by the creditors and the shareholders at a meeting to be held under the direction of the court. About a month later, i.e., on the 17th April, 1958, an association called the Chotanagpur Banking Depositors' Association filed an application praying for an order for the winding up of the bank. In view of the Reserve Bank's report regarding the affairs of the bank, the learned judge rescinded the order of moratorium on the 22nd April, and appointed provisionally a liqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... joined first as respondents in April, 1964, long after the order of winding up was passed and long before they joined as appellants in January, 1965. Admittedly, they accepted in 1961 a sum of Rs. 868.59 from the official liquidator through a cheque drawn on the State Bank of India, Hazaribagh, on account of dividend. The important question is whether this acceptance of the dividend debars the appellants from prosecuting the appeal Mr. Sreenath Singh also relied upon the same decision of the Supreme Court and contended that the present case falls outside the ambit of the principle laid down by their Lordships in the aforesaid decision. I think that the contention of Mr. Singh is correct. Their Lordships of the Supreme Court have observed as follows : " When an order shows plainly that it is intended to take effect in its entirety and that several parts of it depend upon each other, a person cannot adopt one part and repudiate another. Upon this principle a person who takes benefit under an order de kors the claim on merits cannot repudiate that part of the order which is detrimental to him because the order is to take effect in its entirety. This principle, however, can have no ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after having taken the benefit. Learned counsel's further contention is that the decision of the Supreme Court shows that a person is precluded from challenging the validity of an order if it is found that restitution is impossible or inequitable and in the present case restitution is obviously impossible for the reason that most of the assets of the bank have been sold and the sale proceeds and realisations made so far have been distributed amongst the various creditors. After reviewing several English and Indian decisions, their Lordships of the "Supreme Court have laid down that the doctrine of approbation and reprobation, which has a I Scottish origin and is akin to the law of election and estoppel, applies to those cases where a person has elected to take benefit otherwise than on merits of the claim in the litigation under an order to which benefit he could not have been entitled except for the order. Another criterion which their Lordships have laid down to the applicability of the doctrine is that the person receiving a benefit under the order must have a choice between two rights and that, after the exercise of the choice, restitution was impossible or inequitable. Judgi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n account of "the events that had taken place as a result of the winding up order. The present case stands on a firmer ground and, I think, on this short point, the appeal fails and the appellants cannot be allowed to question the correctness of the said order. On merits also the appellants have no case. Mr. J. C. Sinha contended that the order of winding up was wrong inasmuch as the bank was possessed of sufficient assets to pay its debts. It cannot be doubted that the High Court has powers to order winding up of a banking company on the fulfilment of the conditions laid down in section 38 of the Banking Companies Act, 1949. There is no denying the fact that the Chotanagpur Banking Association Limited was, at the relevant period, governed by the provisions of the Banking Companies Act, 1949, and the Companies Act, 1956. Section 2 of the Banking Companies Act, 1949, provides that the provisions of this Act shall be in addition to, and not, save as hereinafter expressly provided, in derogation of the Companies Act, 1956, and any other law for the time being in force. Section 616(b) of the Companies Act, 1956, provides that the provisions of this Act shall apply to banking companie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subject-matter of consideration in a decision of the Calcutta High Court in the case of Dwarkadas Agarwalla v. Dharam Chand Jain [1954] 24 Comp. Cas. 283 ; AIR. 1954 Cal. 583, 587, in which a Division Bench of that court held as follows : "...is that so far as section 38(1) is concerned, its provisions are attracted as soon as it is proved that a company is a banking company and it is unable to pay its debts either within the meaning of section 163(1) (which corresponds to section 434 of the new Act), Companies Act, or within the meaning of section 38(3), Banking Companies Act. So far as sub-section (3) of section 38 is concerned, the effect, it seems to me, is only to add a fourth case where also a company, if it is a banking company, shall be deemed to be unable to pay its debts". In a decision of the Andhra Pradesh High Court in the case of State of Andhra Pradesh v. Hyderabad Vegetable Products Co. Ltd. [1962] 32 Comp. Cas. 64, his Lordship S. Raju J., while considering the provisions of section 433(e)of the Companies Act, observed that, where on the materials placed before the court the only conclusion possible is that the object for which the company was incorporated ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the bank were far from satisfactory. After examining the various items of assets and liabilities of the bank it was found that the liabilities of the bank were to the tune of Rs. 1,12,20,000, whereas the assets did not exceed Rs. 91,45,000 and the expert of the Reserve Bank reported that the bank's assets were not sufficient to meet the liabilities payable within the period of moratorium. The learned company judge, on a consideration of all the financial aspects and after examining every item of assets and liabilities, found that the assets fell short of the liabilities by Rs. 21,35,000 and that also on a liberal estimate of the assets. Therefore, he came to the conclusion that the bank was unable to pay its debts and as such he had no option but to pass an order of winding up. Mr. J. C. Sinha did not, however, challenge the report of the Reserve Bank or the finding of the learned judge relating to the various items. He advanced his argument with reference to only one item of the assets, namely, the premises and other immovable properties which had been estimated at Rs. 7,69,000. According to him, the market value of these properties was not less than Rs. 30,84,000, because of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also noticed that a sum of Rs. 35,59,000, that is, 49.9 per cent, of the total advances, were unsecured and there were many other undesirable features in the affairs of the bank such as cases of fraud and misappropriation had also been discovered. From the report of the Reserve Bank it also appeared that about Rs. 16 to 17 lakhs of the loan advanced and partly decreed debts had become unrealisable. The learned judge, therefore, found that the realisable amount in no circumstance could be more than Rs. 54,55,000. It was for these reasons that the learned company judge came to the conclusion that the bank was not at all in a position to pay its debts and the scheme which was submitted before him by some of the depositors was, on the face of it, worthless and unworkable and it was impossible for any agency to run the bank with such a huge deficit. According to the provisions of section 45 of the Banking Companies Act, 1949, notwithstanding anything contained in any law for the time being in force, no High Court shall sanction a compromise or arrangement between a banking company and its creditors or any class of them or between such company and its members or any class of them, unles ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
