RAM KARAIA Vs. SIMLA BANKING INDUSTRIAL COMPANY LIMITED

JUDGEMENT

(1.) This is an appeal by special leave against an order of the High Court of Punjab dated 12-5-1955, in the following circumstances.

(2.) The appellant was a resident of Lahore who came over to India in or about November, 1947 and took up residence at Banaras as a displaced person. He had, prior to 15-8-1947, a fixed deposit of Rs. 1,00,000 in the Lahore Branch of the Simla Banking and Industrial Co. Ltd. (hereinafter referred to as the Bank) which has its head-office at Simla. He had also at the time a cash-credit account in the Bank. The fixed deposit matured in 1948. The Bank did not pay the amount to the appellant in spite of repeated demands but seems to have adjusted in towards party payment of a sum of Rs. 4,00,000 which is alleged to have been due from the appellant to the Bank in his cash credit account and which the appellant disputed and denied. On 7-11-1951, the Displaced Persons (Debt Adjustment) Act 1951 (70 of 1951) was passed providing certain facilities and reliefs to displaced debtors and displaced creditors. Section 4 of that Act empowered the State Government to specify any civil Court or class of Civil Courts, as the Tribunals having authority to exercise jurisdiction under the Act for areas to be defined therein. Section 13 of the Act enabled a displaced creditor claiming a debt from any person who is not a displaced person to make an application for recovery thereof to the Tribunal having local jurisdiction in the place where the said creditor resides, and provided for the purpose a special limitation of one year from the date when the Act came into force. Admittedly the appellant is a displaced person, and the Bank is not a displaced Bank, within the meaning of those expressions as defined in the said Act. Taking advantage of these provisions, the appellant filed on or about 24-4-1952, an application (Case No. 1 of 1952) to the Tribunal at Banaras constituted under S. 4 of the Act, claiming the fixed deposit amount of Rs. 1,00,000 as a debt due from the Bank. During the tendency of this proceeding there was an application on 27-12-1952, under the Indian Companies Act, 1913 (7 of 1913) in the High Court of Punjab by some creditors from the winding up of the Bank. On 29-12-1952, an ex parte interim order was passed by the High Court under S. 171, Indian Companies Act, staying proceedings in all suits and applications pending against the Bank, at the time, The application - Case No. 1 of 1952 - filed by the appellant before the Banaras Tribunal was also specified therein. It would appear however that before the order was communicated to the Tribunal, the said case before it was disposed of and a decree was passed on 3-1-1953, against the Bank for the sum claimed with future interest at three per cent, per annum. On 6-1-1953, the appellant filed an application before the Tribunal for execution of the decree and it was numbered as Execution Case No. 8 of 1953. It appears that on or about 27-1-1953, one Mr. D. D. Dhawan was appointed by the Punjab High Court as a Provincial Liquidator of the Bank. On the application of certain petitioning creditors in the winding up proceedings, the High Court passed another order under S. 171, India Companies Act, on 30-1-1953, staying execution of the decree against the Bank obtained by the appellant. This order also does not appear to have been communicated to the Tribunal by the Court. But the Tribunal was informed generally about the situation by a letter of the provisional Liquidator dated 13-3-1953. Thereby, the attention of the Tribunal was invited to S. 171, Indian Companies Act which enacted that pending proceedings could not be proceeded with except with the leave of the Court. The Tribunal was accordingly requested by this letter of the Liquidator to stay further proceedings before it in Case No. 1 of 1952. In view of this intimation, the Tribunal passed an order dated 20-3-1953, staying execution, notwithstanding a further application by the appellant dated 16-3-1953, to proceed with the execution. On 21-3-1953, the Provisional Liquidator filed an appeal in the Allahabad High Court, against the decree of the Tribunal obtained by the appellant against the Bank. That appeal is said to be still pending. On 24-9-1953, the winding up of the Bank was finally ordered by the Company Judge and the Provisional Liquidator was appointed as the Official Liquidator for the purpose. It is said that as against this order of single Judge, there is a Bench appeal now pending in the High Court of Punjab. At this stage the Banking Companies (Amendment) Ordinance, 1953, (Ordinance No. 4 of 1953), was promulgated on the 24-10-1953. This was repealed and substituted, on 30-12-1953, by the Banking Companies (Amendment) Act, 1953, (52 of 1953). On 17-2-1954, the appellant filed a further application before the Tribunal asking that the execution case filed before the Tribunal on 6-1-1953, which was stayed in view of the letter of the Liquidator dated 13-3-1953, should now be proceeded with having regard to the various reasons set out in that application. Curiously enough two of the reasons alleged were (1) that S. 171, Indian Companies Act was overridden and varied by S. 45-C, Banking Companies (Amendment) Ordinance (Act), and (2) that the Tribunal under the Displaced Persons (Debt Adjustment) Act is not a Court and hence the stay under S. 171, Indian Companies Act or under S. 45-C, Banking Companies Act has no application to proceedings pending before the Tribunal. The application of 17-2-1954, above-mentioned also prayed for an order to send the case for execution to the Bombay High Court on the ground that the Bank had property within the local limits of the jurisdiction of the said High Court against which it was intended to seek execution. On this application, notice was issued to the Official Liquidator to appear and show cause by 24-4-1954. The Liquidator however did not appear. The Tribunal made an order on the 24-4-1954, transferring to the Bombay High Court under S. 39, Civil P. C. the said decree for execution. On 8-6-1954, the appellant filed an application for execution before the Bombay High Court (Appln. No. 123 of 1954) and asked for attachment and sale of the right, title and interest of the Bank in certain shares and securities belonging to the Bank and lying with the Central Bank of India Ltd., Bombay, subject to the charge if any on the said Bank. The attachment was ordered on 18-6-1954 and was effected on or about 19-6-1954.

(3.) At this stage the Official Liquidator obtained an order on 26-6-1954, from the Punjab High Court purporting to be one under S. 45-C, Banking Companies Act, transferring from the Court of the Banaras Tribunal, the proceedings before it for execution of the decree in Case No. 1 of 1952, obtained against the Bank by the appellant. It would appear that the Tribunal on receipt of this order, informed the High Court by letter dated 14-7-1954, that the execution proceedings had already been transferred to the High Court of Bombay and that no proceedings relating to the execution case were at the time pending before it. Thereafter the Liquidator made an application dated 28-10-1954, to the Punjab High Court for setting aside the order of the Bombay High Court dated 18-6-1954, directing attachment of the shares and securities belonging to the Bank in the possession of the Central Bank of India Ltd., Bombay. The main grounds on which this application was made are -