TMI Blog1957 (11) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1949, read with Sec. 11 of that Amending Act, that came into force on 18-3-1950. These suits were filed on or after 5-5-1951. Hence these second appeals by the defeated plaintiffs. 3. Before discussing the points raised before me by the learned Advocate-General on behalf of the appellants, I shall set out the relevant provisions of law to be considered. 4. Part III-A of the Banking Companies Act, 1949, deals with the special provisions for speedy disposal of winding up proceedings. Secs. 45-A, 45-B and 45-C of the said Act are as follows: 45-A : The provisions of this Part and the rules made thereunder shall have effect notwithstanding anything inconsistent therewith contained in the Indian Companies Act, 1913 (VII of 1913), or the Civil Procedure Code, 1908 (Act V of 1908) or the Criminal Procedure Code, 1898 (Act V of 1898) or any other law for the time being in. force or any instrument having effect by virtue of any such law but the provisions of any such law or instrument in so far as the same are not varied by, or inconsistent with the provisions of this Part or rules made thereunder shall apply to all proceedings under this Part. Part III-A to over-ride other law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch proceeding shall be continued in the court in which the proceeding was pending. 5. Nothing in this section shall apply to any proceeding pending in appeal before the Supreme Court or a High Court. Section 11 of the Banking Companies (Amendment) Act, 1950, runs as follows : 'Transfer of pending proceedings in winding up to the Court exercising jurisdiction under this Act' : Where any proceeding 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. 5. Articles 245 to 255 of the Constitution of India, deal with the respective powers of the Union Parliament and the State Legislatures and the subjects assigned to each of those legislatur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be avoided by a provision that if a State Legislature legislates after the consent of the President, then that Legislation will prevail even over an existing Union legislation. We shall now examine the three lists in so far as the subject-matter on hand is concerned. List I - Union List 43. Incorporation, regulation and winding up of trading corporations, including banking, insurance and financial corporations but not including co-operative societies. 45. Banking. 95. Jurisdiction and powers of all courts, except the Supreme Court, with respect to any of the matters in this List; List II - State List 18. Land, that is to say, rights in or over land, land tenures, including the relation of landlord and tenant, and the collection of rents; transfer and alienation of agricultural land, land improvement and agricultural loans, colonisation; 65. Jurisdiction and powers of all courts except the Supreme Court with respect to any of the matters in this list. There is no evidence that in regard to this subject-matter of enquiry there is nothing in the Concurrent List to be referred to. 6. The distribution of legislative powers is set out in Art. 246 of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company which is being wound up; (b) any claim made against a banking company which is being wound up (c) any question of priorities arising in the course of the winding up of a banking company and (d) any other question whatsoever of law or fact which, may relate to or arise in the course of the winding up of a banking company. It does not matter whether the claims in question be by or against a particular branch of the banking company so long as the branch is situated in India and the claim or question has arisen or arises before or after the date of the order for the winding up of the banking company or before or after the commencement of the Amendment Act of 1953. 10. The expression 'relating to winding up' which is wide and does not admit of any narrowing down has been construed to cover the following questions. In Jadunath v. Bank of Calcutta, AIR 1953 Cal 506 (SB) (A), the facts were: The petitioners before the High Court filed a suit for partition against the defendant bank which has its registered office at Calcutta for partition of certain immovable properties. A preliminary decree by consent was passed on 24-6-1948 and a Commissioner for partition was ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provides special period of limitation in case of certain proceedings, one year immediately preceding the date of the order for winding up of banking company could be excluded and on 26-4-1951 when the application under S. 151, C.P. Code was filed, the execution case had not become barred. In H. Naik v. Jitendranath Das, AIR 1954 Orissa, 139 (D), it was held: Section 45-B(1) , Banking Companies Act, is very similar in language to S. 4 (1), Provincial Insolvency Act, with two important distinguishing features. Firstly, the opening words of Section 45-B(1) make it absolutely clear that even the provisions of the Provincial Insolvency Act must give way before the provisions of the Banking Companies Act Again, while S. 4(1) of the provincial Insolvency Act is limited to questions which may 'arise in' any case of insolvency, S. 45-B(1) is wider and refers to questions which may 'relate to or arise in the course of the winding up of the banking company.' The question as to whether a debtor of a banking company under liquidation should be adjudged an insolvent and should get the protection of the insolvency court is a matter relating to the winding up of the banki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and speedily terminated. It was found, however, that the Act of 1949, as originally enacted, was inadequate to achieve the purpose. It is in this situation that that Amending Act of 1950 introduced into Act of 1949 an entire chapter, Part III-A consisting of Ss. 45-A to 45-H under the heading 'special provisions for speedy disposal of winding up proceedings. Consistently with this policy and with the scheme of the Amending Act, where the liquidator has to approach the court under S. 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 rules framed by the High Court concerned under S. 45-G the procedure mast 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. The normal proceeding that S. 45-B contemplated must be taken to be a summary proceeding by way of application. In Ramnarain v. Simla Banking and Industrial Co., ((S) 1956 SCJ 579 : AIR 1956 SC 614) (H), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of irreconcilable conflict. But in this case the learned Advocate General points out that there is no such overlapping or conflict, winding up of banking business, and jurisdiction and powers of all courts with respect to the same are in the Central List, Land, that is to say, rights in or over land, land tenures including the relation of landlord and tenant, etc., and the jurisdiction and powers of all courts with respect to the same are in the State List, It would be too much to say that every law which in its operation might affect the property or interest of a bank would come within items 43 and 45 of List I. They must be limited to laws which affect amounts to be recovered from or recoverable by banks in their winding up proceedings. These two Central and State entities can peacefully coexist and there is no necessity to invoke the non-obstante clause and the predominance or supremacy of the Union Legislature if the claims by or against are properly construed. 12. This construction, according to the learned Advocate General, is brought out by S. 2 of the Banking Companies Act, 1949 and the use of the word claim in S. 45-B. Section 2 lays down: The prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solvency Act it has been laid down repeatedly that only those orders can be made under S. 7 which are necessary for facilitating the distribution of the assets among the creditors. In re Iguslins Rodrick, AIR 1940 Cal 192 : ILR (1939) 2 Cal 434 (J). The insolvency court it has been held exists to distribute the assets between the creditors and not for deciding partition suits or other questions between the insolvent and the rest of the world : M. R. M. S. Chettyar Firm v. Official Assignee, Rangoon, AIR 1937 Rang 214 : ILR 14 Rang 652 (K). 15. The learned Advocate General also seeks to derive support for his argument from the phrase entertain and decide used in Section 45-B as connoting the seizure of a matter required for the winding up or liquidation and not a fugitive seisin of a controversy outside the ambit of the winding up and constituting the subject-matter of day to day administration under State Acts, of the relationship of landlord and tenant, for which special tribunals specially equipped and located have been installed by State Governments having jurisdiction and powers relating thereto. In this connection it is pointed out by the learned Advocate General that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iorities arising in the course of the winding up of a banking company and (iv) any other question whatsoever of law or fact which may relate to or arise in the course of the winding up of a banking company. The expression relating to winding up is also wide and does not admit of any narrowing down; Fortune Commercial Bank Ltd. v. Vidyagarui J. Mehta 1951-21 Comp. Cases 122 : AIR 1951 Bom 274) (L); it is wider and more extensive than the expression arising out of winding up. Matter relating to winding up includes an application for winding up itself. There is no contextual reason at all to restrict the meaning of the words. Therefore, the term claim relating to or arising in the case of winding up of a banking company is sufficiently wider enough to take in decisions of questions like the determination of occupancy rights claimed and denied. 18. This wide interpretation has been favoured by the Supreme Court. In ((S) 1956 SCJ 579 at p. 583 : AIR 1956 SC 614 at p. 619) (H), their Lordships of the Supreme Court state, In our opinion this contention (i.e., the questions that arise in execution in this case and particularly the question relating to attachment which has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stablished by it, by reason of the non-obstante clause the supremacy of Parliamentary legislation clothes the High Courts with exclusive jurisdiction to determine such questions notwithstanding this being in the exclusive sphere of the State legislation. Besides, there is really no irreconcilable conflict also because here the principle of pith and substance comes into play. The Indian Legislature has not purported to legislate in regard to the subject covered by item 18 of List II, in enacting S. 45-B of the Banking Companies Act. The decision regarding the tenability of the claim for occupancy right or not is only incidental to the decision of a claim by or against the Banking Company for the settlement of debtors under the Banking Companies Act. Though the claim by a Banking company in regard to a property liable to satisfy the debt due to it involves the question whether it is private land or ryoti land or occupancy or non-occupancy holding, that question will have to be incidentally determined as otherwise it will have only a speculative value and nobody would buy, because as the English Lombard street phrase goes they would be buying a pig in a poke.'' That is why ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision either in the Indian Companies Act, 1913 or in the Banking Companies Act, as observed in Sree Bank Ltd. v. P.C. Mukherjee, 1952-22 Com. Cas. 73 (N) at p. 74; which enables a liquidator of a banking company to recover debts of the company by summary proceedings, such as an application to the company Judge, or in any way other than by suit. The Banks Liquidation Proceedings Committee considered this a major evil which was one of the causes for delay and expense in liquidation proceedings. They said Every liquidator finds it difficult to realise the assets of a banking company under his control within a reasonable time, as the ordinary legal machinery for collecting debts by filing suits is slow and subject to delaying facts on the part of debtors. The Committee came to the conclusion that a procedure for settlement of a list of debtors on the analogy of settlement of the list of contributories under the Indian Companies Act was possible and would result in the saving of much time costs. Such rules are undoubtedly desirable said their Lordships of the Calcutta High Court (N) (ibid) because the costs incurred for filing suits in a multitude of small claims ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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