9911796707
TMI Blog1965 (4) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... them by execution was made on August 26, 1957. In the meantime a petition for winding up the appellant bank had been presented on May 11, 1948 and an order for winding up had been made on August 3, 1948. Since then the appellant bank has been in the course of winding up. The application for execution was made by the liquidator in the course of the winding up. Under Art. 182(7) of the First Schedule to the Limitation Act 1908 an application for execution is barred if not made within three years from the date on which the amount sought to be realised was payable under the decree. On December 30, 1953, s. 45-O was introduced in the Banking Companies Act, 1949 by the Banking Companies (Amendment) Act, 1953. Sub-section (1) of that section is in these terms: S. 45-0. (1) Notwithstanding anything to the contrary contained in the Indian Limitation Act, 1908 or in any other law for the time being in force, in computing the period of limitation prescribed for a suit or application by a banking company which is being wound up, the period commencing from the date of the presentation of the petition for the winding up of the banking company shall be excluded. The appellant bank claims that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efit of that option." The learned Chief Justice held in view of the option, that "the starting point of limitation will be the dates On which each instalment became due." He could have held this only in the view that the option had not been exercised. None of the parties appears to have contended to the contrary in the High Court. This being a question of fact it cannot be raised for the first time in this Court. On such a question of fact, the High Court's finding is binding on us. Furthermore, undoubtedly if the respondents wished to contend that the option had been exercised, it was for them to have given evidence of such exercise but they did not do so. No such evidence has been brought to our notice from the records of the case. It has, therefore, to be held that the right to apply for execution in respect of the instalments under the decree arose on the dates on which they respectively fell due. The next question as to whether s. 45-0 (1) has a retrospective operation is of real difficulty. Having. given the matter my most anxious consideration, it seems to me that the better view would be to hold that it has such an operation. The general rule no doubt is, as was stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll for ever be disqualified from selling spirits by retail ...... and if any person shall, after having been so convicted, take out or have any licence to sell spirits by retail, the same shall be void to all intents and purposes" were applied to a person who had been convicted of felony before the Act was passed though by doing so vested rights were affected. Melior J. observed (pp. 200-201). "It appears to me to be the general object of this statute that there should be restraints as to the persons who should be qualified to hold licences, not as a punishment, but for the public good, upon the ground of character ... A man convicted before the Act passed is quite as much tainted as a man convicted after; and it appears to me not only the possible but the natural interpretation of the section that any one convicted of felony shall be ipso facto disqualified, and the licences, if granted, void." Now the object of the present Act is beyond doubt. It is well known that prior to 1949 in our country a large number of mushroom banks had come into existence and were in the control of persons not very scrupulous or competent. Many banks came to grief and failed with the result that the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... winding up has been presented before the commencement of the Banking Companies (Amendment) Act, 1953. It expressly makes sub-s. (1) applicable to a banking company being wound up on a petition presented before the amending Act. That would indicate that the first sub-section was intended to apply to suits and applications by a banking company in liquidation even where the winding up petition had been filed before the amending Act. It should, therefore, apply to all such suits or applications even when they had become barred before the amending Act. Again it is indubitable that as a result of the third subsection a period which had started to run before the amending Act is to be excluded under the first sub-section. The third subsection gives no hint that such exclusion is to be confined to cases where the right had not become barred before that Act. 1t expressly gives the first sub-section a retrospective operation by permitting exclusion of an antecedent period. All this is strong indication that sub- s. (1) is to have a retrospective operation. If that is not the intention, then it is clear to me that sub-s. (3) need not have been enacted at all for clearly the first sub-.section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll retrospective effect to s. 45-0 including sub-s. (1) of that section. It remains now to deal with the last point. It is said that' since sub-s. (1) allows the period commencing from the date of the presentation of the petition for winding up to be excluded in the computation of the period of limitation, it can only apply to a case where the period of limitation had commenced to run before that date. The contention is, unless it did so, the whole of the period cannot be excluded and the section permits exclusion of the whole or none. It is, therefore, said that even if the first subsection had a retrospective operation, it could result in saving the bar of limitation only so far as the application concerned the instalment which fell due on December 30, 1947 for the petition for the winding up of the appellant bank had been presented on May 11, 1948 and, hence, before the other instalments became due and the period of limitation in respect of them commenced to run. I am not inclined to accept this contention. I see no reason why it should have been intended that debts which fell due before the winding up petition was presented but were not barred on that date could be recove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading to the view that debts which became due after the presentation of the petition for winding up were not intended to be protected. In my view, the first sub-section should be read as permitting the exclusion of the entire period commencing from the date of the presentation of the petition for winding up where the debts became due before that date and in cases where the debt became due subsequently, such part of that period as commences from the date of the accrual of the debt. I think such a reading has the support of authority. In Cortis v. The Kent Water-works Company(7 B.& C. 314.) it was held that a statute which enabled a rate to be made upon certain persons and permitted a person against whom the rate had been made to file an appeal against the order making it on his entering into a recognizance, allowed a corporation which could not enter into a recognizance, to prefer the appeal without doing so. It was said that any other reading of the Act would defeat the object of the statute which was to subject corporations to rates. Bailey J. observed, "But assuming that they cannot enter into a recognizance, yet if they are persons capable of being aggrieved by and appealing ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... graph 5 of the compromise, which was part of the decree provided that if the judgment debtor did not pay any instalment and committed default, then four months after such default, all the instalments shall be deemed to be in default and the decree-holder would be entitled to recover the entire amount of the decree by execution proceedings. It appears that the appellant attempted by applications presented in 1948 and 1950 to execute decree. It is, however, unnecessary to set out the details of those proceedings at this stage. Suffice it to say that nothing was realised in those proceedings and that the proceedings started on the application presented in 1950 were subsequently transferred to the High Court in view of the relevant provisions of the Act, which had come into force meanwhile. On August 24, 1957, the appellant presented an application in tabular form for execution of the decree on the ordinary original civil side of the Calcutta High Court, and the present appeal has arisen out of the proceedings following thereon. It was stated in the application that the respondent had failed to pay the amount of the decree under execution and that the appellant had been wound up by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nking Companies (Amendment) Ordinance No. IV of 1953 was promulgated and lastly on December 30, 1953, the Banking Companies (Amendment) Act. No. LII of 1953 came into force. The case of the appellant throughout has been that the period from May 11, 1948 (when the winding-up petition was made) to August 26, 1957 (when the execution application was made) had to be excluded in computing the period of limitation in view of sub-ss. (1) and (3) of s. 45-O of the Act. This contention was rejected by the High Court. It was held that s. 45-O did not have retrospective effect in the sense of reviving rights which had become barred on the date it came into force and in this view an application for execution of the entire amount was barred by time counting from the first default. In the alternative it was held that instalments 2, 3 and 4 had become time barred before the coming into force of s. 45-O on December 30, 1953 and as there was nothing in s. 45-O which could revive claims which had become time barred no execution could be taken out in respect of them. The High Court further held that s. 45-O could not apply to instalments 5, 6 and 7 as the cause of action to execute the decree for rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion should be by a banking company which is being wound up. Thus s. 45-O (1) will not apply to a banking company which is not being wound up or where the winding up is over. It thus applies to a banking company between the date of the winding up petition and the conclusion of the winding up proceedings after a winding up order has been made. Where a suit or application is made by a banking company which is being wound up, the sub-section provides for exclusion of a certain period in computing the period of limitation prescribed in the Indian Limitation Act, 1908. The exclusion is of the time commencing from the date of presentation of the petition for the winding up of a banking company to the date of suit or application. Thus where a banking company which is being wound up files a suit or makes an application on or after December 30, 1953, when s. 45-O (1) came into force, the subsection directs that in such circumstances the period of limitation shall be calculated by excluding the period commencing from the date of presentation of the petition for winding-up upto the date of the filing of the suit or application. These words in my opinion are categorical and lay down what period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (1). It will be giving full effect to the intention of the legislature and advancing the remedy intended to be given to depositors if sub-s. (1) and sub-s. (3) are read together to be retrospective in the manner indicated above. The language of sub-s. (D on its plain reading necessarily implies that it was meant to be retrospective and that conclusion becomes inevitable when it is read with sub-s. (3) in the background of the remedy that the legislature intended to provide for the benefit of depositors. It may be mentioned that the Banking Companies (Amendment) Act, No. XX of 1950, had also provided a special period of limitation by s. 45-F which was in these terms:-- "45-F. Special period of limitation--Notwithstanding anything to the contrary contained in the Indian Limitation Act, 1908 (IX of 1908) or in any other law for the time being in force, in computing the period of limitation prescribed for any suit or application by a banking company, the period of one year immediately preceding the date of the order for the winding up of the banking company shall be excluded." That provision however only excluded one year immediately preceding the date of the order for the winding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the words of s. 45-O. Therefore, in order that s. 45-O (1) should apply, it is necessary firstly that the banking company should be in the process of being wound up when the suit or application is being filed, and secondly that the period of limitation for the suit or application should have begun to run before the date of the winding-up petition but should not have run out before such date. Otherwise there can be no question of excluding the period beginning from the date of presentation of the petition for winding-Up of the banking company. Further in view of sub-s. (3) of s. 45-O, sub-s. (1) thereof will apply to all banking companies which are in the process of being wound up, even if the petition for winding-up was made before s. 45-0 (1) came into force and even if the winding- up order was made in such case whether before or after the date on which s. 45-O (1) came into force i.e. December 30, 1953. It is however urged that on this interpretation there may be some anomalies, particularly in the cases of instalment decrees. For example, it is said that where an instalment decree provides for six yearly instalments and does not provide for any default clause it may happen t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he liquidator should get some breathing space and that is why the period from the date of the winding-up petition is excluded. But where the time has not begun to run before the windings petition, the liquidator would have ample time within which to know the true state of affairs and in such a case the legislature did not intend that there should be no limitation as provided in the Indian Limitation Act. That is why one finds the language of exclusion in s. 45-O (1). The benefit of that provision is meant for cases where time has begun to run but has not run out before the presentation of the winding-up petition; it is not meant to provide that there would be no limitation in all cases where banking companies are in the process of liquidation. In any case if the legislature wanted to make such a sweeping provision I should have found appropriate language for that purpose in s. 45-O (1). In the absence of such appropriate language, the provisions of s. 45-O (D which appear to be clear and unambiguous, must receive their only proper construction already set out above. Let me now see how this construction applies to the facts of the present case. The present case is governed by s. 45 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alternative. Besides it appears that two execution applications were made in this case one in February 1948 and the other in. July 1950. When the first execution application was made the default clause had not come into operation and the appellant only wanted execution of the second instalment of Rs. 2,000/- and prayed for attachment for Rs. 2,030/-, including interest. So there could be no waiver then. The second execution application was made not only after the first default but after two other defaults also of the instalments of Rs. 4,000/- each due on December 30, 1948 and December 30, 1949. The total of instalments then in default was only Rs. 10,000/-. Though a copy of the second execution application is not printed in the record, it is clear from the particulars in the present tabular form filed in 1957 that the relief sought at the second execution was by attachment for Rs. 26,070/-. Clearly therefore the appellant was executing the whole decree after the default and there can be no question of waiver in the circumstances: (see also the appellant's statement of case paragraph 20). Bachawat J. (as he then was) who delivered a short separate judgment has certainly said t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for consideration. Suffice it to say that nothing was realised in these proceedings and that the proceedings started on the application presented in 1950 were subsequently transferred to the High Court in view of the relevant provisions of the Act. On August 24, 1957, the appellant presented an application in a Tabular form for execution of the decree, on the ordinary original civil side of the Calcutta High Court. It was stated in column 10 meant for noting the mode in which the assistance of the Court was required that the defendant judgment debtor had failed to pay any portion of the decretal amount or interest, that the decree-holder Bank was wound up by an order of the Court dated August 3, 1948 on a petition for winding-up presented to it on May 11, 1948 and that the Court Liquidator, High Court, and the Official Liquidator of the decree-holder Bank, be appointed receiver without security and without remuneration, to collect and realise the amount payable to the defendant firm and/or Sukumar Dutta. one of its partners, by the Executive Engineer, Works & Building Department, Midnapur Division, upto a maximum limit of Rs. 35,000/-. A further prayer was made that an interim re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relate to banking companies being wound up, shall also apply to a banking company in respect of which a petition for the winding up has been presented before the commencement of the Banking Companies. (Amendment) Act, 1953." To appreciate the contention based on this section it is necessary to mention a few more facts. On May 11, 1948, a petition for winding-up by the Bank was presented. The winding-up order was made by the High Court on August 3, 1948. The Act came into force on March 16, 1949. On March 18, 1950, the Banking Companies (Amendment) Act, 1950 (Act XX of 1950) came into force. On October 24, 1953, the Banking Companies (Amendment) Ordinance IV of 1953 was promulgated and lastly, on December 30. 1953, the Amending Act came into force. The contention for the appellant before the High Court and in this Court is that the period between May 11, 1948 when the windings application was filed and August 1957 when the execution application was presented, is to be excluded from the computation of the period of limitation, in view of sub-ss. (I) and (3) of s. 45-O of the Act. This contention was rejected by the High Court on the ground that instalments Nos. 2, 3 and 4 had become ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lways be deemed to have been excluded. The use of the future tense in sub-section (1) indicates that the Legislature did not intend its provisions to operate on decrees which had before the date of its commencement become unenforceable by lapse of time. There is therefore neither any express word nor any necessary implication in section 45-0 to indicate that its provisions were intended by the Legislature to have retrospective effect." Bachawat J., practically took the same view and said that sub-s. (1) of s. 45-0 did not provide that the period from the date of presentation of the petition for winding-up of the banking company would be always deemed to have been excluded and that though sub-s. (3) of s. 45-O specially provided for the retrospective application of the section to a banking company the Legislature deliberately had not provided that sub-s. (1) of s. 45-O would have a larger retrospective operation. I am of opinion that sub-s. (1)--and specially when read with sub-s. (3)of s. 45--0.) operates retrospectively and that the appellant's application for execution presented to the High Court in 1957 for executing the decree for the realisation of the instalments in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the provisions which would indicate such a purpose of the Legislature. The expeditious disposal of the winding-up proceedings is clear by the provisions by s. 40 which provides that notwithstanding anything to the contrary contained in s. 466 of the Companies Act, 1956, the High Court shall not make any order staying the proceedings in relation to the winding-up of a banking company, unless the High Court is satisfied that an arrangement has been made whereby the company can pay its depositors in full as their claims accrue. In Joseph Kuruvila Vellukunnel v. The Reserve Bank India([1962] Supp. 3 S.C.R. 632, 656.), it was observed: "An examination of the Banking Companies Act reveals two things prominently. The first is that the whole intent and purpose of that Act is to secure the interests of the depositors..." It can be presumed that companies which are wound-up had been usually mismanaged. Mismanagement can also account for the failure of the banking company to sue the debtors for the recovery of the amounts due to the banking company within limitation. This injures the interests of the depositors and others concerned in the proper running of the banking company. It is ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tition for winding- up with the result that limitation would run in the ordinary course upto the winding-up petition. There is much logic behind it. Non-action upto the date of the petition for winding--up was on account of the mismanagement of the banking company. The debtor of the banking company gets advantage of the negligence of the company to sue him or apply against him within the period of limitation. Since the presentation of the petition for winding-up of the company, the Court gets control over the affairs of the company and supervises the acts of the liquidator, in accordance with the provisions of the Act which, to secure necessary action in all matters within a reasonable time, provide certain periods for certain actions to be taken by the liquidator of the Court. It is to be presumed therefore that any delay in the taking up of any legal action by the Banking Company would be for good reasons. The Legislature seems to have been of the opinion that the interests of the banking companies, especially of its depositors, should not suffer on account of the delay which could not be avoided even when the Court was in charge of the affairs of the banking company. Viewed in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against her, and any damages or costs recovered by her in any such action or proceeding shall be her separate property ...... " Brett, M.R. said at p. 787 that the section dealt with an action for tort and that after the Act came into operation a married woman might bring such an action in her own name and the damages and costs recovered shall be her separate property. He continued: "It is said that this is a retrospective construction, because the cause of action arose before the statute came into operation; but the section does not say anything about cause of action; it deals with bringing the action. and there is nothing in it to limit its provisions to causes of action arising after the statute came into operation. I think, therefore, that an action brought after the statute came into operation is within the plain words of s. 1, and it is necessary to distort the grammatical meaning of the words to arrive at the interpretation proposed by the defendant's counsel." These remarks can apply aptly to the construction of sub-s. (1) of s. 45-O. That sub-section deals with the computation of limitation with respect to suits and applications filed after the coming into force of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ads to the inference that sub,S. (1) by its own language applies to banking companies which were being wound-up on December 30, 1953. Further, this would be apparent if we combine the provisions of sub-ss. (1) and (3) together, which could be read thus: "Notwithstanding.. in force, in computing the period of limitation prescribed for a suit or application by a banking company which is being wound up, or in respect of which a petition for the winding-up has been presented before the commencement of the Banking " Companies (Amendment) Act, 1953, the period commencing from the date of the presentation of the petition for winding-up of the banking company shall be excluded." So read, it becomes clear that the period of exclusion would be available in connection with suits or applications by a banking company which is being wound-up or with respect to which a petition for winding-up has been made prior to December 30, 1953. I am further of opinion that if a restricted construction be placed on the provisions of sub-s. (1) of s. 45-O, the effect of sub-s. (3) would be very much reduced. In fact, it will probably have no utility. If the cause of action for a suit or application had laps ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f s. 45-0 is that if suits or applications made by a ,banking company which is being wound-up or for whose winding-up a petition has been presented prior to December 30, 1953, the period of limitation is arrested on the date of the presentation of the petition for winding-up of the company and that it is not material whether such a date is earlier than December 30, 1953, or not and that therefore suits can be instituted and applications made even in regard to matters with respect to which such action could be taken on the date of presentation of the application for winding- up of the company but could not be taken on the date the Amending Act of 1953 came into force. I may now refer to the case law on the point which is so far quite meagre. In Punjab Commerce Bank v. Brij Lal(A.I.R, 1955 Punj, 45.) the suit was filed on March 31, 1952 under s. 45-B of the Banking Companies Act, 1949, as amended by Act XX of 1950. The cause of action arose on October 9, 1946. The application for winding-up was made on February 17, 1948 and the winding-up order was made on October 11, 1952. The suit was dismissed on December 2, 1952 as barred by time and an appeal against the dismissal was pending ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 45. Winding-up application was made on May 12, 1948; the winding-up order was passed on June 30, 1948 and the suit was instituted on December 3, 1949 when s. 45-F of the Banking Companies Act, introduced by the Amending Act 23 of 1949, provided a special period of limitation. The suit was clearly time-barred in view of art. 59 of the Limitation Act and s. 45-F of the Banking Companies Act. Consequently, the question arose as to whether s. 45-O, in view of the alteration of the law during the pendency of the suit, could apply to that suit. It was held that the question whether the proceeding is barred by the law of limitation must depend on the law in force when the proceeding was instituted and that sub-s. (1) of s. 45-O does not refer to pending proceedings either in express words or by necessary implication. When considering the effect of s. 45-O, it was said at p. 175: "The general words 'a suit or application' can be given full effect by limiting them to suits and applications commenced after the sub-section came into force. " No occasion arose to consider the effect of the provisions of sub-s. (3) of s. 45-O in proceedings instituted after it came into force. In M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as nothing in the section to show that it was intended to be retrospective in effect in the sense that it revived remedies which had already come to art end and reliance was placed on the earlier Calcutta, Punjab ,and Assam cases referred to above. I therefore hold that the provisions of sub-s. (1) of s. 45-0 are retrospective in effect and are applicable to suits or applications by a banking company in respect of causes of action for the suit or an application about which suits could be instituted or applications made on the date of the presentation of the winding-up petitions made before the commencement of the Amending Act of 1953, even though the specified period of limitation for such action had expired before the enforcement of the Amending Act. In the present case, judgment-debtor respondent defaulted in payment of the second installment due on December 30, 1947. On May 1, 1948, the appellant's right to execute the decree for the entire amount due under the decree arose. The petition for the winding-up of the company was made on May 11, 1948. The appellant's application for execution presented in 1957 for the entire decretal amount due to it would not be time-barred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t appears to me that the object and intention of the Legislature in enacting sub-s. (1) of s. 45-O was that the period subsequent to the presentation of the petition for winding-up be not taken into consideration in computing the period of limitation. The entire period will be excluded from consideration if the limitation had begun to run prior to the presentation of the petition for winding-up and the relevant lesser period i.e., the period commencing from the accrual of the cause of action subsequent to the date of presentation of the petition for winding-up of the company would be excluded from the period of limitation which also commences from the accrual of the cause of action. It may be said that this means that the entire period of limitation is abrogated with respect to causes of action arising subsequent to the date of presentation of the petition for winding-up. Such may be the result, but that does not mean construing the provisions of sub-s. (1) of s. 45-O in the context of the circumstances and reasons for the enactment of those provisions. It would be anomalous to hold that action can be taken with the help of the provisions of sub-s. (1) of s. 45-O with respect to ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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