# [1955] 1 S.C.R. 1098

- **Citation:** [1955] 1 S.C.R. 1098
- **Court:** Supreme Court of India
- **Decided:** 1955
- **Case number:** Civil Appeal r CIVIL APPELLATE No. 91 of 1953
- **Bench:** Mehr Chand Mahajan C.J, Bhagwati, Jagannadhadas, Venkatarama Ayyar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1955-1-s-c-r-1098-313
- **Pages:** 6

## Headnote

Banking Companies Act (X of 1949), ss. 45-B, 45·G (insmed by
Act XX of 1950)"-Claims decided under s. 45-B-Procedure to be
followed.
The object of the Banking Companies Act, 1949 is to provide a
machinery for expeditious and speedy termination 9£ proceedings in
liquidation and in the absence of any specific provisions of the Act
to the contrary or any rules framed by the High Court under s. 45.G
of the Act {inserted by Act XX of 1950) the normal procedure for
deciding all claims under s. 45-B of the Act (inserted by Act XX of
1950) should be a summary proceeding originating with an application. But the court in its discretion may think fit to direct or the
rules of the High Court may provide that a suit is
the
proper
remedy in view of the nature -0£ claim made and the questions in·
volved in such claim.
Sree Bank v. Mukherjee ([1950] 55 C.W.N. 400), referred to.
J
JURISDICTIOJ< :
Civil
Appeal
r
CIVIL
APPELLATE
No. 91 of 1953.
Appeal from the Judgment and Decree dated
the
the 12th day of June 1951 of the High Court of Judicature at
Calcutta in Appeal
from Original Decree
No. 56 of 1951 arising out of the
Decree
dated
the
8th day of March 1951 of the saicl.
High
Court exercising its Ordinary Original Civil
Jurisdiction in Suit
No. 3993 of 1950.
H. f. Umrigar,
Rameshwar
Nath
and
Rajinder
Narain for the appellant.
A. N. Sinha and P. C. Dutta for the respondent.
1954.
December 6.
The judgment of the
Court
was delivered by
JAGANNADHADAS
J.-This is an
appeal,
by
leave
of the High Court of Calcutta under article 133(1) (c)
*For these two sections 45-B and 45-G (inserted by Act XX of 1950) two
new sections 45-B and 45-U \Vere inserted bys. 10 of Act Lil of 1953.
-
-
..
,
S.C.R.
SUPREME COURT REPORTS
1099
'( of the Constitution, from its judgment in its appellate
jurisdiction confirming that of a Single Judge of the
Court. The point involved is a short one and arises on
the following facts.
The respondent
before us,
As-
(•
' 'i
'
'
sociated
Bank of
Tripura Ltd., went into liquidation
on the 19th
December, 1949.
A month prior to
the
liquidation, i.e., on the 19th
November,
1949,
the
appellant before us and the
Bank
entered into
an
agreement whereby the appellant
became a tenant
of
the Bank in respect of a certain parcel of land. One of
the terms of the tenancy-agreement was
that
the appellant should vacate the land demised on 24 hours'
notice.
After the
Bank
went into
liquidation
the
Liquidator served on the appellant on the 18th April,
1950, a notice terminating
his tenancy
and
calling
upon him to
vacate the land and to hand
over possession by the end of April, 1950. This not having
been done, the
Liquidator
filed an application on
the original side of the High Court under section 45-B
of the Banking Companies Act for ejectment of the
appellant and obtained an ex parte decree against
him
on the 10th
July, 1950.
On the 28th
August,
1950,
the appellant applied
for setting
aside
the
ex parte
--. decree but the application was dismissed
on the 7th
September, 1950.
Consequently the appellant filed the
present suit on the 12th September, 1950, in the original side of the High Court, asking for a declaration
that the ex parte decree against him was made
without jurisdiction and was a nullity
and that
he continued to be a tenant notwitl1standing the · said ex parte
decree.
The plaint
does not specifically mention
the
reason for claiming the decree to be without
jurisdiction or nullity.
But the point taken at the trial was
that the Court had no power to deal with a question
relating to the ejectment
of the
appellant from the
demised land, in a summary
proceeding initiated
on
an application but could pass the decree only on a
suit regularly
instituted.
This contention
was raised
on the basis of a judgment of the Calcutta High Court
I
Y-"t
given on the 24th August, 1950, that in respect of
such a relief under
section 45-B a summary
proceedDhirendra
Chandra Pal
v.
Associated Bank of
T ripura Ltd.
Jagannadhadas J.
1954
Dhirmdrd
Chandra Pal
v.
Assoc

## Text

•954
· Dectmber 6
1098
SUPREME COURT REPORTS
DHIRENDRA CHANDRA PAL
"·
ASSOCIATED BANK OF TRIPURA LTD.
(IN LIQUIDATION)
(1955]
(MEHR CHAND MAHAJAN C.J., BHAGWATI, JAGANNADHADAS and VENKATARAMA AYYAR JJ.]
Banking Companies Act (X of 1949), ss. 45-B, 45·G (insmed by
Act XX of 1950)"-Claims decided under s. 45-B-Procedure to be
followed.
The object of the Banking Companies Act, 1949 is to provide a
machinery for expeditious and speedy termination 9£ proceedings in
liquidation and in the absence of any specific provisions of the Act
to the contrary or any rules framed by the High Court under s. 45.G
of the Act {inserted by Act XX of 1950) the normal procedure for
deciding all claims under s. 45-B of the Act (inserted by Act XX of
1950) should be a summary proceeding originating with an application. But the court in its discretion may think fit to direct or the
rules of the High Court may provide that a suit is
the
proper
remedy in view of the nature -0£ claim made and the questions in·
volved in such claim.
Sree Bank v. Mukherjee ([1950] 55 C.W.N. 400), referred to.
J
JURISDICTIOJ< :
Civil
Appeal
r
CIVIL
APPELLATE
No. 91 of 1953.
Appeal from the Judgment and Decree dated
the
the 12th day of June 1951 of the High Court of Judicature at
Calcutta in Appeal
from Original Decree
No. 56 of 1951 arising out of the
Decree
dated
the
8th day of March 1951 of the saicl.
High
Court exercising its Ordinary Original Civil
Jurisdiction in Suit
No. 3993 of 1950.
H. f. Umrigar,
Rameshwar
Nath
and
Rajinder
Narain for the appellant.
A. N. Sinha and P. C. Dutta for the respondent.
1954.
December 6.
The judgment of the
Court
was delivered by
JAGANNADHADAS
J.-This is an
appeal,
by
leave
of the High Court of Calcutta under article 133(1) (c)
*For these two sections 45-B and 45-G (inserted by Act XX of 1950) two
new sections 45-B and 45-U \Vere inserted bys. 10 of Act Lil of 1953.
-
-
..
,
S.C.R.
SUPREME COURT REPORTS
1099
'( of the Constitution, from its judgment in its appellate
jurisdiction confirming that of a Single Judge of the
Court. The point involved is a short one and arises on
the following facts.
The respondent
before us,
As-
(•
' 'i
'
'
sociated
Bank of
Tripura Ltd., went into liquidation
on the 19th
December, 1949.
A month prior to
the
liquidation, i.e., on the 19th
November,
1949,
the
appellant before us and the
Bank
entered into
an
agreement whereby the appellant
became a tenant
of
the Bank in respect of a certain parcel of land. One of
the terms of the tenancy-agreement was
that
the appellant should vacate the land demised on 24 hours'
notice.
After the
Bank
went into
liquidation
the
Liquidator served on the appellant on the 18th April,
1950, a notice terminating
his tenancy
and
calling
upon him to
vacate the land and to hand
over possession by the end of April, 1950. This not having
been done, the
Liquidator
filed an application on
the original side of the High Court under section 45-B
of the Banking Companies Act for ejectment of the
appellant and obtained an ex parte decree against
him
on the 10th
July, 1950.
On the 28th
August,
1950,
the appellant applied
for setting
aside
the
ex parte
--. decree but the application was dismissed
on the 7th
September, 1950.
Consequently the appellant filed the
present suit on the 12th September, 1950, in the original side of the High Court, asking for a declaration
that the ex parte decree against him was made
without jurisdiction and was a nullity
and that
he continued to be a tenant notwitl1standing the · said ex parte
decree.
The plaint
does not specifically mention
the
reason for claiming the decree to be without
jurisdiction or nullity.
But the point taken at the trial was
that the Court had no power to deal with a question
relating to the ejectment
of the
appellant from the
demised land, in a summary
proceeding initiated
on
an application but could pass the decree only on a
suit regularly
instituted.
This contention
was raised
on the basis of a judgment of the Calcutta High Court
I
Y-"t
given on the 24th August, 1950, that in respect of
such a relief under
section 45-B a summary
proceedDhirendra
Chandra Pal
v.
Associated Bank of
T ripura Ltd.
Jagannadhadas J.
1954
Dhirmdrd
Chandra Pal
v.
Associated Bank of
Tripura IJd.
Jagaanadhadas ].
llOO
SUPREME COURT REPORTS
[1955J
ing is not maintainable but that a suit has to be filed.
This decision has since been reported in Sree Bank. v.
Mukherjee(').
The learned trial
Judge before
whom
the present suit
came up was of the
opinion
that
though the ex parte decree for ejectment
was obtained
on a wrong proceeding, there was no inherent lack of
jurisdiction in the
Court and
that the
fact
of the
·c·
decree having been obtained in
a wrong
proceeding ,
~
did not render it a nullity.
This view of
the
learned
"-
Judge was affirmed by the Appellate Bench.
It has not been disputed
before us that the relief
by way of enjectment of the appellant
from the land
demised is one which would fall within the scope
of
section 45-B of the Banking
Companies Act and that
the Liquidator could obtain the said relief
by an appropriate proceeding in the High Court. Indeed, the
I"
learned appellate
Judges
specifically
held
that
the
Court had by virtue of section 45-B, jurisdiction
over
the subject-matter of the dispute and this view has not
been challenged having regard to the wide and comprehensive language of the section.
Bnt
what
is urged
is that the
Court having followed
the view
taken in
the Sree Bank Case
(supra) (whose correctness
was
not challenged
before it)
that the
appropriate
pro-
'
ceeding
to
obtain such a relief was
only a suit, it
should have, consistently therewith, held the decree
obtained on a mere application to be invalid.
In the
Court below the
question
as to whether
the decree
obtained on a wrong proceeding was one so
wholly
without jurisdiction as to be a nullity or whether it was
vitiated only by a mere irregularity
in the
mode of
obtaining the relief. and hence not open to attack in
collateral proceedings was the
subject-matter of elaborate consideration.
It appears to us,
however,
that
it would be more satisfactory to
consider
and decide
whether the basic assumption
which gave rise to this
argument, viz. that the appropriate proceeding
under
section 45-B was only a suit
and
not
an application,
is correct.
It is necessary for this
purpose
to notice
r
the relevant
sections.
Section 45-A of the
Banking
~
Companies Act, 1949, as amended
by
Act XX of 1950
(•) [•950] 55 C.W.N. 400.
(•
-
S.C.R.
SUPREME COURT REPORTS
1101
defines 'Court' for the purposes of Part III and
Part
III-A of the Act as "the
High
Court exercising jurisdiction in the place where the registered office of the
Banking Company concerned,
which is being
wound
up, is situated".
The said
section also
provides
that
"notwithstanding anything to
the contrary contained
in the
Indian Companies Act, 1913, or in any notification, order or direction issued
thereunder or in any
other law for the time being in force, no
other court
(i.e. a court other than the one as above defined) shall
have jurisdiction to entertain
any matter relating
to
or arising out of the winding
up of a banking company". Next is section 45-B (1) which is in the following terms:
"Notwithstanding
anything
to
the
contrary
contained
in
the
Indian
Companies
Act,
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
and
all questions of properties 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 company coming within the cognizance
of the
Court".
Section 45-G authorises the
Court to make rules consistent with the
Act concerning the
mode of proceedings for the decision of claims and other
proceedings
under the Act. This group of sections in Part III-A
constitute a wide departure
from
the
corresponding
provisions of the
Indian Companies Act.
Under various sections thereof the liquidator,
after
an
order for
winding up of a company is made, can
approach
a
Company-Court for exercising certain powers in aid of
and to expedite the process of
liquidation.
The procedure normally
adopted for the purpose is by way of
application.
But the scope of matters in
respect of
which the liquidator can obtain the help of the
Company-Court by summary
procedure is rather
limited.
In respect of other matters and particularly in the
matter of collecting
assets
or recovering
properties
from third parties, (not covered by sections 185
and
186) the liquidator has
to invoke the
help
of the
Dhirendm
Chandra Pal
v.
Associated Bank ef
Tripura Ltd.
Jagannadhadas J.
1954
Dhirentba
Chandra Pal
v.
Associated Bank of
T ripura Ltd.
Jagannadhadas J.
1102
SUPREME COURT REPORTS
[1955]
appropriate Court in the ordinary way. This as is wellknown leads to a great deal of inevitable
delay
and
expense.
·when in 1949 special legislation
in respect
of Banking Companies was taken up, it was one of the
stated objects, to provide a machinery
by
which proceedings in liquidation of
Banking
Companies
could
be expedited and
speedily terminated.
It
was found,
however, that the
Act of 1949, as
originally
enacted,
was inadequate to achieve that purpose.
It is in this
situation
that the
Amending
Act of. 1950 introduced
ihto the
Act of 1949 an entire Chapter, Part III-A,
consisting of sections 45-A to 45-H under the heading
"Special provisions for speedy disposal
of winding up
proceedings".
It appears
to
us
that,
consistently
with this policy and with the scheme of the
Amending Act,
where the liquidator
has
to approach
the
Court under
section 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
specific provision in this behalf in the
Act itself and in the absence
of any rules framed by the
High
Court
concerned
under section 45-G, the
procedure must
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.
In the Sree Bank Case (supra), the question that
arose for direct consideration
was one
of limilation.
But in considering it and
when
pressed
with
the
argument
that,
if the appropriate
proceeding was
by way of an application and not a suit, difficulties might arise as
to the question
of
limitation,
the learned
Judges
felt it unnecessary
to
consider
whether or not the Limitation Act applies to the applications under section 45-B and if so what would be
the period
which would
govern
such
applications.
They proceeded to decide the
particular case
before
them, viz. a case relating to a debt due to the
Ban_k,
on the view that "there is nothing in the Companies
Act or the Banking Companies Act which permits a
.,
..
y
..
.•
•
'
,
-
y
'
-
S.C.R.·
SUPREME COURT REPORTS
1103
liquidator to recover
debts from
debtors of a Banking Company by a summary
proceeding
such as an
.application to
the
Company
Judge"
and
therefore
held that no application
for recovery
would
lie and
that only a suit should have been
brought for which
the period of limitation was the ordinary period
provided in the
Limitation
Act.
It appears to us, with
great respect to
the learned
Judges,
that
this
approach as to the nature of the proceeding required or
permitted
under section
45-B of the
Banking Companies Act was not correct.
The question is not whether section 45-B permitted s\1mmary
proceedings
but
the question is whether the section prescribed definitely a particular method of proceeding and whether consistently with the policy of the
Act it was not to be
presumed that a speedy and cheap remedy was to be
available to the
Liquidator, unless
the
Court in its
discretion thought fit to direct or the rules of the High
Court provided
that a claim of a particular
nature
had to be pursued
by a suit.
It is to be remembered
that section 45-B is not confined to claims for recovery
-of money or recovery of property,· moveable
or immoveable, but comprehends all sorts of claims
which
relate to or arise in the course of winding up.
Obviously the normal proceeding
that
the section
contemplated must be taken to be a summary
proceeding
by
way of application.
We are clearly of the
opinion that in the present
case the Court which passed the
ex parte decree was
fully competent to decide
the matter raised before it
on summary application and to pass the ex parte decree
which has been challenged by the suit
and
that the
decree of the Courts below dismissing the suit is correct.
We are not to be supposed to
have expressed
any opinion on the question of limitation
which was
raised before the High Court in the Sree Bank Case
{supra). That is a question
which
may have to be
decided
m
an
appropriate
case
when
it is raised
directly.
The appeal is accordingly dismissed with costs.
Appeal dismissed.
1954
Dhirendra
Chandra Pal
v.
Associated Bank of
T ripura Ltd.
Jagannadhadas J.