TMI Blog1987 (11) TMI 381X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-Court, Eluru, on February 10, 1975 against the respondents including the respondent firm and its partners to recover a sum of ₹ 18,14,817.91 being the balance (inclusive of interest) of three principal amounts of ₹ 3.00,000, ₹ 7,00,000 and ₹ 80,000 severally advanced by the Bank to the firm under cash credit account on 28-11- 1967, 3-4-1968 and 17-2-1972 respectively. It may be noticed here that the Bank was nationalised on July 7, 1969 under the Banking Companies (Acquisition and Transfer of Undertakings) Act V of 1970, hereinafter referred to as `the Banking Companies Act'. The sum of ₹ 80,000 was admittedly advanced by way of loan by the Bank after its nationalisation. The respondent firm owns certain motor vehicles which are mentioned in A and Schedules to the plaint of the said suit. The firm was carrying on its business at Madras as fleet owners and gasolene carriers. It had two partners, namely, one S. Doranna Choudhury, since deceased, the father of the respondent No. 3 and the respondent No. 2, Sunkavali Rajlaxmi. The case of the Bank was that in addition to the hypothecation of the A and Schedule properties made in its favour to sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the firm and its partners. Being dissatisfied with the judgment and decree of the learned Subordinate Judge, the Bank preferred an appeal to the High Court. The High Court, after elaborately considering the facts and circumstances of the case and the evidence adduced by the parties, set aside the judgment and decree of the learned Subordinate Judge including the decree allowing the counter-claim of the firm and its partners and decreed the suit instituted by the Bank. In decreeing the suit, the High Court held that the Bank was entitled to recover the amount claimed by it only after the scaling down of the debt in accordance with the provisions of the Act. Hence this appeal. The Act contains provisions granting reliefs to indebted agriculturists. One of such reliefs is that as contained in section 13 of the Act providing for the scaling down of the debt of an agriculturist. It is not disputed that the partners of the respondent firm are agriculturists. Mr. G. Ramaswamy, learned Additional Solicitor General appearing on behalf of the appellant Bank, submits that in view of section 4(e) of the Act, the provisions of the Act were not applicable to the Bank and, as such, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urthy's case (supra), also submits that the expression should be interpreted in the light of the setting of the same in the words of the provision of section 4(e). In support of the contention, the learned Counsel has drawn our attention to an observation made by this Court in R.L. Arora v. State of Uttar Pradesh, [1964] 6 SCR 784 that a literal interpretation is not always the only interpretation of a provision in a statute and the court has to look at the setting in which the words are used and the circumstances in which the law came to be passed to decide whether there is something implicit behind the words actually used which would control the literal meaning of the words used. Accordingly, it is submitted by the learned Counsel that as the words `special Indian law' are placed after the words `an Act of Parliament of the United Kingdom' and before the words `Royal Charter or Letters Patent', it must be held in view of the setting that the expression`special Indian law' refers or relates to a special law enacted by an Act of British Parliament for India. We are unable to accept the contention. It may be that interpreting the words of the provision of a st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that there is a good deal of distinction between the formation of a corporation `in pursuance of' and `by or under', a special Indian law. It is urged as the appellant Bank has been formed by or under and not in pursuance of the Banking companies Act. it is not a corporation within the meaning of section 4(e) of the Act. In support of this contention, the respondents have placed reliance on Krishna Murthy's decision where it has been observed that the words `in pursuance of' refer to the action taken under the law and not by the law itself, and that the phrase `formed in pursuance of' in section 4(e) signifies a process of formation of a corporation under the law and not by the law itself. Further, it has been observed that the words `in pursuance of' can be said to have been used appropriately by the Legislature only to signify the activity or formation of a corporation carried on by an intermediary third party acting under a law as different from an activity of formation carried on by that law itself. We are afraid, such a narrow and technical interpretation of the words `in pursuance of' is contrary to the intention of the Legislature. Althou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indian law, for an ordinance is as much a law as an enactment of Parliament or Legislature. In this connection, it may also be pointed out that under sub-section (2) of section 1 of the Banking Companies Act, the provisions of the Banking Companies Act (except section 21 which shall come into force on the appointed day) shall be deemed to have come into force on July 19, 1969. Sub-section (1) of section 3 of the Banking Companies Act provides that on the commencement of the Banking Companies Act, there shall be constituted such corresponding new Banks as are specified in the First Schedule. Therefore, it is manifestly clear that the appellant Bank, which is mentioned in the First Schedule, has been created under the provisions of the Banking Companies Act with effect from July 19, 1969. The contention of the respondents that the Bank has been nationalised or formed under the Ordinance VIII of 1969 is without any substance whatsoever and is rejected. We may refer to a decision of this Court in Life Insurance Corporation of India v. Kota Ramabrahmam, AIR 1977 SC 1704. Gupta J. while delivering the judgment of the Court, observes that there is no dispute that the corporation estab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the United Kingdom or any special Indian law or Royal Charter or Letters Patent' is offensive to Article 14 of the Constitution and, accordingly, void. The learned Counsel for the respondents submits that in view of the decision in Krishna Murthy's case, this Court should declare the latter part of section 4(e) of the Act to be void as offending Article 14 of the Constitution, although no such point has ever been taken by the respondents up to this Court. On the other hand, it is submitted by the learned Additional Solicitor General that the said finding of the Division Bench in Krishna Murthy's case to the effect that the latter part of section 4(e) of the Act is void, is erroneous. The reasons given by the Division Bench of the Andhra Pradesh High Court in Krishna Murthy's case for holding the latter part of section 4(e) of the Act as void, are that section 4(e) of the Act was enacted to protect the British economic interests and although such a law could permissibly be enacted under the Constitutional Scheme of the 1953 Government of India Act, that law after the inauguration of our Sovereign Democratic Republic cannot but be held to have become void as making ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
