ASSOCIATED BANKING CORPORATION OF INDIA LTD Vs. NAZARALLI KASSAMBHAI

JUDGEMENT

(1.) THIS appeal arises out of the decision of Mr. Justice Shah Holding that the suit of the Associated Banking Corporation of India Ltd. , which is in liquidation, by its Official Liquidator, should be dismissed on the ground that this court had no jurisdiction to try this suit The suit was to recover a sum of Rs. 20,000 and odd, and it is not disputed that but for certain special legislation to which I shall presently refer the suit would have been trouble by the City Civil Court in Bombay as the subject-matter of the suit is below Rs. 25,000.

(2.) THE question that we have to consider is whether the jurisdiction of the City Civil Court has been ousted and whether special jurisdiction has been conferred upon the High Court by reason of the suit having been filed by the Official Liquidator in the course of the winding up of the Associated Banking Corporation of India Ltd. An Act was passed by the Dominion Legislature, being the Banking Companies Act, 1949 (X of 1949), to amend the law relating the banking companies, and Part II of that Act deals with suspension of business and winding up of banking companies. When one turns to some of the provisions in that Part it is clear that the object of the Legislature was as far as possible to expedite the disposal of winding up of banking companies. For instance. Section 41 provides that the liquidator must make his report within two months to the court from the date of the order giving the information required by Section 177b of the Indian Companies Act, 1913. Section 42 provides that meetings of creditors may be dispensed with. Section 43 provides for a special mode of proof of amounts deposited by depositors with banks. The Act was amended by the Banking Companies (Amendment) Act, 1950 (XX of 1950), and Section 45a, which falls in Part IIIA, the heading of which is "special provisions for speedy disposal of winding up proceedings : defined the "court" in Part IIIA and in Part III of the earlier Act as the High Court exercising jurisdiction in the place where the registered office of the banking company which is being wound up is situated or, in the case of a banking company incorporated outside which is being wound up, where its principal place of business is situated, and Section 45a further provided that notwithstanding anything to the contrary contained in the Indian Companies Act 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. Therefore, jurisdiction of all courts other than the High Court as defined in Section 45a was clearly ousted with regard to all matters which relate to or arise out of the winding up of a banking company. Section 45b conferred power upon the High Court to decide all claims made by or against any banking company including claims by or against any of its branches in India, and all questions of priorities and all other questions whatsoever, whether of law of fact, which may relate to or arise in the course of the winding up of the banking company, coming within the cognizance of the court.

(3.) NOW, the narrow question that we have to consider is whether a suit filed by the Official Liquidator to recover a claim due to a banking company from its debtor is a matter relating to or arising out of the winding up of a banking company. It may be pointed out that the Legislature has used a slightly different expression in Section 45b. The expression used in Section 45b is "which may relate to or arise in the course of the winding up. " It is difficult to hold that the Legislature intended to convey something different by the use of the expression in Section 45a "arising out of the winding up" form the use of the expression in Section 45b "arise in the course of the winding up. " Sections 45a and 45b are co-related. Section 45a ousts the jurisdiction of courts other than the High Court, and Section 45b confers a special jurisdiction upon the High Court. There can be no doubt that by reason of these two sections extra-territorial jurisdiction has been conferred upon the High Court which it did not possess or enjoy before. Wherever the party may be resident, wherever the cause of action may have arisen, if the matter satisfies the test laid down, viz. , that it relates to or arises out of the winding up of a banking company, then the High Court is invested with the jurisdiction to decide that matter. The view taken by the learned Judge below was that there must be a direct connection or a nexus between the winding up and the matter which comes for the decision of the court before Section 45a or Section 45b would be applicable, and the view taken by the learned Judge was that the present suit arises out of contractual relations between the bank and the debtor, that the suit does not arise out of the winding up, that it is not by reason of the supervention of the winding up that the Official Liquidator became entitled to recover this amount, that the cause of action was already there, and the cause of action did not arise by reason of the banking company being wound up. According to the learned Judge these provisions only apply when a right is conferred upon the banking company by reason of the winding up. The claim must arise directly by reason of the supervention of the winding up. But if the claim does not so directly arise and the claim a matter relating to or arising out of the winding up of a banking company. The learned Judges has further taken the view that the mere fact that the official Liquidator is dominus lite by reason of the winding up does not in any way affect the question to be decided. I must frankly confess that there is considerable force in the view taken by the learned Judge below and the matter we have to consider is by no mans entirely free from doubt or difficulty.