Koshal, J. - (1.) For a proper appreciation of the dispute giving rise to this appeal by special leave against the judgment dated 20th of January, 1969, of a Division Bench of the High Court of Kerala, a reference to various provisions of the Travancore Chitties Act (hereinafter called the 'Chitties Act') being Act XXVI of 1120 (which year corresponds to years 1944 and 1945 of the Christian era) is necessary. Clause (2) of Section 3 of the Chitties Act defines a 'chitty' thus:"A 'chitty means a transaction by which one or more persons hereinafter called the foreman or foremen enter into an agreement with a number of persons, that every one of the contracting parties shall subscribe a certain amount of money or quantity of grain by periodical instalments for a certain definite period and that each in his turn, as determined by lot or by auction or in such other manner as may be provided for in the variola, shall be entitled to the prize amount." "Chitty amount" is defined in clause (3) of Section 3 to mean the sum total of the contributions payable by all the subscribers for any instalment without any deduction for discount. In clause (4) the terms 'discount' is stated to mean the amount of money or quantity of grain which a prize winner has under the terms of the variola to forego for payment of veethapalisa, foreman's commission or other expenses. A 'foreman' as per clause (6) is the person who, under the variola, is responsible for the conduct of the chitty. 'Variola' is defined in clause (14) to be a document containing the articles of agreement between the foreman and the subscribers in relation to the chitty while, under clause (15) 'veethapalisa' is the share of a subscriber in the discount available under the variola for reteable distribution among the subscribers at each instalment of the chitty. 'Prize amount', says clause (9), means the chitty amount reduced by the discount. Section 9 enumerates 13 particulars which a variola must contain and they are, (1) the full name and residence of every subscriber, (2) the number of tickets or the fraction thereof held by each subscriber; (3) the number of instalments and the amount payable for each ticket at every instalment; (4) the date on which the chitty is to begin and the date on which it is to terminate; (5) the mode of ascertaning the prize winner at the successive instalments; (6) the amount of discount which a prize winner at any instalment has to forego: (7) the mode and proportion in which the discount is distributable by way of veethapalisa, forman's commission and other allowance, if any; (8) the time and place at which the chitty is to be conducted; (9) the instalment at which the foreman is to get the prize; (10) the approved banks in which chitty moneys shall be invested by the foreman under the provisions of the Act; (11) the consequence which a non-prized or prized subscriber or the foreman, will be able to in case of any violation of the variola; (12) the nature and particulars of the security offered by the foreman under Section 17; and (13) any other particulars that may from time to time be prescribed by the Government. Section 14 deals with the time and place where the drawing of prizes in a chitty shall be conducted Section 17 to 24 relate to the rights and liabilities of a foreman while the next three sections following provide for non-prized subscribers. Sections 29 to 32 embrace provisions regarding prized subscribers. Sections 38, 39 and 41 relate to termination of chitties and may be reproduced here with advantage: "38 (1) When a foreman dies or becomes of unsound mind his legal representative or his guardian as the case may be, shall, in the absence of any provision in the variola to the contrary, take the place of the foreman and have the right to continue the chitty or to make suitable arrangements for the further conduct of the chitty. (2) When a foreman is adjudicated an insolvent under the law relating to insolvent debtors for the time being in force or withdraws from the chitty under Section 24 or fails to conduct the chitty at any instalment or any other date before the next succeeding instalment as may have been agreed upon by a special resolution in that behalf, any one or more of the non-prized subscribers authorised by a special resolution may, in the absence of any provision in the variola for the future conduct of the chitty, take the place of the foreman and have the right to continue the chitty or to make suitable arrangements for the further conduct of the chitty. "39. A chitty shall be deemed to have terminated only- (1) When the period fixed in the variola or the period as altered by a subsequent special resolution for the duration of the chitty has expired, or (2) When the legal representative of a deceased foreman or the guardian of a foreman of unsound mind or the subscriber or subscribers selected therefore fail to conduct the chitty or make suitable arrangements for the further conduct of the chitty as provided for in Section 38" Provided however that if there are more foremen than one and one or more such foremen are living and are not disqualified to act under Section 38, the chitty shall not be deemed to have terminated under this clause if there is provision in the variola enabling the remaining foreman or foremen to conduct the chitty or if the non-prized subscribers agree by a special resolution to the conduct of the chitty by the remaining foreman or foremen." "41. Except in the case of clause (1) of Section 39, every non-prized subscriber shall, unless otherwise provided for in the variola and subject to the provisions of Section 27, be entitled to get back his contributions at the termination of the chitty without any deduction for veethapalisa, if any, received by him."
(2.) The facts are undisputed and may be briefly stated. The plaintiff, the Goodland Plantations (P) Ltd., (hereinafter referred to as the 'Company') became a subscriber to a monthly chitty run by the Kottayam Orient Bank Limited ('the Orient Bank' for short) as foreman. The company was to pay like all other subscribers a sum of Rs. 20,000/- in 50 monthly instalments of Rs. 400/- each. The conduct of the chitty was governed by variola exhibit P-1, apart from the various provisions of the Chitties Act. The chitty started on the 10th of September 1960, when the Company paid the first instalment due from it. Three other instalments were paid by the Company on 10-10-1960, 10-11-1960 and 10-12-1960 to the foreman. On the date last mentioned an auction was held for the prize amount for which the Company was declared to be the successful bidder, it having elected to accept a sum of Rs. 11,075/- in lieu of the full amount of Rs. 20,000/-. The prize amount was to be paid to the Company a month later, i.e., on the 10th of January, 1961,(when the fifth instalment was to become payable) subject to the Company furnishing security for the continued performance of its part of the variola in future. However, before that stage was reached, the Central Government, on the 17th of December, 1960, imposed a moratorium on the Orient Bank under Section 45 (2) of the Banking Regulation Act, 1949, (hereinafter referred to as 'the Banking Act') with the consequence that the Orient bank had to suspend all business activity. The moratorium was enforced originally for the period ending with 18th of March, 1961 which was later on extended up to the 16th of June, 1961, (exhibits D-1, D-2 and D-4). The suspension of business resulted in the conduct of the chitty being discontinued so that under sub-section (2) of Section 39 of the Chitties Act read with Section 41 thereof as also clause (14) of the variola, the chitty stood terminated and the Orient Bank in its capacity as the foreman of the chitty incurred the obligation to pay back all the contributions made by non-prized subscribers. On the 16th of May, 1961, the Central Government sanctioned under sub-section (7) of Section 45 of the Banking Act a Scheme prepared by the Reserve Bank of India under sub-sections (4) to (6) of that section for the amalgamation of the Orient Bank with the State Bank of Travancore (hereinafter called the "Travancore Bank"). The Scheme provided inter alia that all the assets and liabilities of the Orient Bank would stand transferred to the Travancore Bank with effect from the 17th of June, 1961. In relation to chitties the Scheme laid down: "If the transferor bank was acting immediately before the prescribed date as a foreman in respect of any kuri or chitty as defined in the Travancore Chitties Act (XXVI of 1120) or the Cochin Kuries Regulation (VII of 1107) the rights, duties and obligations in relation to the kuri or chitty shall be regulated in accordance with the following provisions, namely, (i) the transferee bank shall become the foreman of the kuri or chitty and shall continue to exercise all powers and to do all such acts and things as would have been exercised or done by the transferor bank, in so far as they are not inconsistent with this scheme; (ii) the funds, if any of the kuri or chitty lent to or deposited with the transferor bank, or otherwise due from that bank to the kuri or chitty shall be transferred to the transferee bank, and the liabilities corresponding to such funds shall also be payable by the transferee bank in accordance with the other provisions of this scheme; (iii) if on the prescribed date the transferor bank in its capacity as the foreman of any kuri or chitty has deposited any security for the due performance of its duties and obligations in relation to the said kuri or chitty, the said security shall continue to be available for the purposes for which it was intended, but shall if and to the extent that it is subsequently released be transferred to and vest in the transferee bank provided that the said security or as the case may be, the surplus, if any, after providing for the discharge of the duties or obligations in respect of the kuri or chitty shall be valued and utilised for the purposes of this scheme." Later on it was realised that the Travancore Bank would not be able to continue the chitties for which the Orient Bank had acted as foreman earlier because those chitties had terminated owing to the failure of the Orient bank to continue to conduct them by reason of the moratorium; and in order to cross this hurdle the Central Government passed another order dated the 4th of Dec., 1961, which was described as the Kottayam Orient Bank Limited (Amalgamation with the State Bank of Travancore) (Removal of Difficulties) Order 1961. That order (here in after called the "impugned order') was passed under sub-s. (10) of S. 45 of the Banking Act and its relevant portion is extracted below: "2. Notwithstanding anything contained in the Travancore Chitties Act or the Cochin Kuries Regulation, the suspension of any kuri or chitty for the period from the 18th December, 1960, to the 31st December. 1961, or for any part of that period and any consequent prolongation of the kuri or chitty shall have effect as though the articles in the variola(s) were altered or added to for that purpose by special resolution (s) of the subscribers of the kuri or chitty and as though the relevant provisions, if any, of the Travancore Chitties Act or the Cochin Kuries Regulation were complied with, and notwithstanding anything contained in the Travancore Chitties Act or the Cochin Kuries Regulation, the failure of the foreman to conduct the kuri or chitty during the said period shall not be deemed to have terminated the kuri or chitty. "3. Notwithstanding anything contained in the variola (s) the period fixed for the duration of the kuri or chitty shall be deemed to have been extended by the period referred to in 2 above. "4. Notwithstanding anything contained in the Travancore Chitties Act or the Cochin Kuries Regulation, the State Bank shall continue the kuri or chitty as if the provisions, if any, of the said Act or the said Regulation relating to continuance of the kuri or chitty have been complied with. "5 All the words and expressions used herein but not defined shall have the meanings respectively assigned to them in the Travancore Chitties Act. or as the case may be, the Cochin Kuries Regulation." By another order dated the 15th of January, 1962, (Exhibit P-4) the impugned order was amended so that the words "the 31st March, 1962" were substituted for the words "31st of December, 1961" occuring in para 2 thereof. The effect of the impugned order as amended by order Exhibit P-4 was to obliterate the termination of the chitties as resulting from the suspension thereof by reason of the moratorium during the period from the 18th of December, 1960, to the 31st of March 1962, and to enable the Travancore Bank to continue those chitties as if there had been no suspension thereof at any point of time so that they could be continued as if the relevant provisions of the Chitties Act and the relevant variolas had throughout been complied with.
(3.) The litigation started with a suit instituted by the Company on the 6th of December, 1961, claiming refund of the four instalments paid by it along with interest. No reference was made in the plaint to the impugned order presumably because the Company had no knowledge of the existence thereof as it had been passed only a couple of days before the suit was filed. The claim of the Company was based on the averment that the Orient Bank had failed to conduct the chitty to which the Company had subscribed, that the chitty had come to a termination by reason of the default made by the Orient Bank, that the Orient Bank had in consequence become liable for payment back to the Company of the instalments deposited by it and that the Travancore Bank (the sole defendant) had inherited the liability of the Orient Bank. The suit was resisted on the strength of the impugned order (as amended by order Exhibit P-4) but the vires of that order were challenged by the Company on whose behalf it was urged that the impugned order did not fall within the ambit of sub-s.(10) of S. 45 of the Banking Act and that in any case that sub-section itself was constitutionally invalid inasmuch as its enactment amounted to an abdication of the legislative power which, under Art. 245 of the Constitution of India, vested in Parliament and in Parliament alone.;