- Bookmark
- Share
- CaseIQ
Jadunath Roy v. Bank Of Calcutta Ltd.
Factual and Procedural Background
The petitioners, plaintiffs in suit No. 42 of 1946 pending before the Fifth Subordinate Judge, Alipore, filed a suit for partition against a defendant bank for certain immoveable properties. A preliminary decree by consent was passed on 24th June 1948, appointing a Commissioner for Partition. Subsequently, the plaintiffs became sole owners of some properties, removing the need for partition of those. A compulsory winding up order of the bank was made by the Court and a liquidator appointed on 1st April 1949. The cause title was amended to include the liquidator as a party, with leave obtained under section 171 of the Indian Companies Act to continue the suit. The petitioners applied for directions to the Commissioner of Partition for allotment of properties they purchased, which was granted. Later, the petitioners sought an order for the Commissioner to file the final report on the partition of remaining properties. The bank in liquidation objected that the learned Judge had no jurisdiction as the suit stood transferred to the High Court. The learned Judge upheld this objection, prompting the petitioners to file the present revision petition.
Legal Issues Presented
- Whether the learned Judge was correct in holding that the Subordinate Court had no jurisdiction over the suit after the winding up of the bank and that the suit stood transferred to the High Court under the Banking Companies Act provisions.
- Whether the proceedings in the suit arose out of or in the course of the winding up of the bank, thereby attracting mandatory transfer to the High Court under section 11 of the Banking Companies Act, 1949.
Arguments of the Parties
Petitioners' Arguments
- The learned Judge acted illegally and with material irregularity in holding that the Court had no jurisdiction or that the suit was transferred to the High Court.
- The proceeding in question did not arise out of or in the course of the winding up of the bank.
Respondent Bank's Arguments
- The learned Judge had no jurisdiction as the suit stood transferred to the High Court by operation of law under the Banking Companies Act.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Bharati Central Bank Ltd. (In Liquidation) v. Rathindra Nath Sen (54 C.W.N 975) | Interpretation of sections 45A, 45B, and 11 of the Banking Companies Act regarding jurisdiction and transfer of proceedings in winding up. | The Court relied on this precedent to affirm that jurisdiction over matters arising out of winding up vests exclusively in the High Court and that pending proceedings must be transferred accordingly. |
Court's Reasoning and Analysis
The Court analyzed sections 45A, 45B of the Banking Companies Act, 1949, and section 11 of the Act of 1950, which collectively establish that the High Court exercising jurisdiction where the banking company's registered office is located has exclusive jurisdiction over all matters arising out of or in the course of winding up. The Court emphasized that "in the course of" includes proceedings ongoing during winding up, especially where the liquidator becomes a party and leave under section 171 of the Indian Companies Act is required to continue the suit. The Court rejected the petitioners' contention that the proceeding did not arise out of the winding up, holding that the necessity of involving the liquidator and obtaining leave clearly shows the proceeding arises in the course of winding up. The statutory language was held to be clear and unambiguous, mandating automatic transfer of such proceedings to the High Court without requiring any further order. The Court also noted the legislative intent to centralize winding up proceedings in the High Court to ensure complete justice and efficient distribution of property, despite practical inconveniences. The Court found the learned Subordinate Judge's order consistent with this interpretation and affirmed it, referencing the prior Court of Appeal decision in Bharati Central Bank Ltd. (In Liquidation) v. Rathindra Nath Sen.
Holding and Implications
The Court held that the learned Subordinate Judge was correct in ruling that the suit stood transferred to the High Court under the provisions of the Banking Companies Act, and that the Subordinate Court no longer had jurisdiction over the matter.
The direct consequence is the dismissal of the petitioners' revision petition and confirmation of the transfer of proceedings to the High Court for disposal. The Court emphasized that this decision is in accordance with clear statutory mandates and prior authoritative rulings. No new precedent was established beyond affirming the existing legal framework governing jurisdiction and transfer in banking company winding up cases.
Banerjee, J.:— The petitioners before us who are the plaintiffs in suit No. 42 of 1946 pending in the Court of the Fifth Subordinate Judge, Alipore, filed a suit for partition against the defendant bank which has its registered office at No. 3, Mangoe Lane, Calcutta, for partition of certain immoveable properties.
2. A preliminary decree by consent was passed on the 24th June, 1948, and a Commissioner for Partition was appointed. It appears that in respect of certain properties, the plaintiffs by subsequent transfer became the sole owners. No question arises as to the partition of these properties.
3. A compulsory winding up order of the bank was made by this Court and on 1st April, 1949, a liquidator was appointed. The cause title of the suit was then amended by bringing on the records of the suit the liquidator as a party to this suit. Leave was obtained under sec. 171 of the Indian Companies Act to continue the suit.
4. Thereafter the petitioner applied to the learned Judge at Alipore for a direction on the Commissioner of Partition to allot to them the properties of which they had become the sole owners by purchase as aforesaid. The Court granted the petitioner's prayer.
5. Another application was made before the learned Subordinate Judge by the plaintiffs for an order on the Commissioner of Partition to file the final report in respect of the partition of the other properties.
6. On 27th November, 1950, an objection was taken by the bank (in liquidation) saying that the learned Judge had no longer any jurisdiction over the title suit and that it stood transferred to the High Court. The learned Judge upheld this objection by an order from which the petitioners have filed this revision petition.
7. It is contended on behalf of the plaintiffs that the Court below acted illegally and with material irregularity in the exercise of its jurisdiction in holding that the Court had no jurisdiction to try the suit or that it stood transferred to the High Court.
8. The question before us is as to, whether the learned Judge's order is right. The question depends upon the meaning of the three sections of the Banking Companies Act, 1949 (X of 1949), as amended by the Act of 1950. These sections are 45A, 45B of the Act of 1949 and sec. 11 of the Act of 1950. Sections 45A and 45B are in Part 3A of the Act which makes special provisions for speedy disposal of winding up proceedings.
9. 45A defines the Court: “In this Part and Part III, ‘Court’ means the High Court exercising jurisdiction in the place where the registered office of the banking company which is being wound up is situated, and notwithstanding anything to the contrary contained in the Indian Companies Act, 1913 (VII of 1913), or in any notification, order or direction issued thereunder or in any other law for the time being in force, no other Court shall have jurisdiction to entertain any matter relating to or arising out of the winding up of a banking company.”
10. The relevant portion of sec. 45B is as follows: “Power of Court to decide all claims by or against banking companies:— (1) Notwithstanding anything to the contrary contained in the Indian Companies Act, 1913 (VII of 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 (including claims by or against any of its branches in any Province of India) and all questions of priorities and all other questions whatsoever, whether of law or fact, which may arise in the course of the winding up of the banking company coming within the cognizance of the Court, or which the Court may deem it expedient or necessary to decide for the purpose of doing complete justice or making a complete distribution of property in any such case.”
11. It is clear from these sections that it is the High Court (and no other Court) which has jurisdiction to decide any matter which relates to or arises out of the winding up of banking companies when the registered office is within the jurisdiction of this Court and that this Court alone has power to decide all questions of priorities 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 companies coming within the cognizance of the Court.
12. Section 11 reads 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.”
13. We must read this section along with the two other sections which I have set out above. Section 11 says that any proceeding Which has arisen out of or arises in the course of the winding up pending in any Court immediately be fore the commencement of the Banking Companies Act “shall stand transferred” 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. Section 45A creates exclusive jurisdiction in the Court. Section 45B gives power to the Court to deal with matters which arise out of the winding up or which may in any way relate thereto. Section 11 provides for transfer.
14. It has been contended on behalf of the petitioners that the proceeding in question has not arisen out of or in the course of the winding up. Assuming for a moment that the proceeding has not arisen out of the winding up, there is no doubt that it arises in the course of the winding up. “In the course of” means “during” the winding up. As soon as an order for winding up was made and the liquidator appointed, it became necessary to make the liquidator a party to the proceeding. Why was it necessary? Because without him the suit could not further proceed. It was also necessary to obtain leave of the Court. Why was it necessary? Because under sec. 171 of the Indian Companies Act, the suit could not proceed without the leave. These steps had to be taken because there was the winding up of the company. If there had been no winding up, these steps need not have been taken. So it is clear that all proceedings in the suit subsequent to the winding up arise in the course of the winding up. The test seems to be that if at any stage of a proceeding the liquidator becomes a party to it, it arises in the course of the winding up.
15. We would have been happy if we could construe the section in the way the petitioners' counsel suggests. The High Court has become overloaded with cases which have been transferred under sec. 11 to the High Court. And there are petty cases too, e.g, for the recovery of Rs. 100 or Rs. 200 on overdraft accounts. By reason of the banks going into liquidation, such suits have been transferred to the High Court. In many cases I have had to give leave to the liquidator to give up the petty claims because the costs to be incurred for the commencement and or the continuance of the suit or proceeding for realising the amounts would not be commensurate with the amount of the claims of the bank against the parties. Even so, we cannot accept the construction suggested by Counsel. We have got to construe the section as it is. There is no ambiguity in the section. The meaning is quite clear. The question of convenience is not pertinent.
16. The statute provides that the proceedings “shall stand transferred”. The transfer is automatic. No order of the Court is necessary. On formal information from the High Court, the records of the proceeding must be sent to the High Court.
17. The legislature in its wisdom has provided for the transfer and trial of all proceedings that arise out of or in the course of the winding up of a company to the High Court and this Court is bound to Act accordingly. The Court cannot construe the section in a way that whittles down the intention of the legislature.
18. Our Court of Appeal had to construe these sections in Bharati Central Bank Ltd. (In Liquidation) v. Rathindra Nath Sen.* (1) (54 C.W.N 975) and this judgment is in consonance with the judgment delivered in that case.
19. I think therefore that the order by the (learned Subordinate Judge was rightly made and cannot be assailed.
20. The application is dismissed with costs.
21. Costs will bear interest at the rate of six per cent, per annum from the date of the judgment of this Court until realisation.
Harries, C.J:— I agree.
Das, J.:— I agree.
P.S
Alert