In Re: Pacific Bank Ltd. (In Liquidation)

Datta, J.—On March 31, 1947, the said Pacific Bank was wound up. On March 10, 1949, the Banking Companies Act came into force. On April 3, 1951, an application was made inter alia, against Raghubar Narayan Singh, the Managing Director of the company. In 1953 an Act was passed amending the Banking Companies Act, 1949. On December 23, 1955, Raghubar Narayan Singh was jointly and severally directed to pay a total sum of Rs. 4,97,000.

On or about August 27, 1957, an order was made u/s 45H(2) for the attachment of immovable properties of the Respondent situate in Monghyr and the Sheriff of Calcutta was directed to send the writ of attachment to the Court of the District Judge of Monghyr for examination against the said Raghubar Narayan Singh. On or about April 12, 1958, the immovable properties were attached. The attachment is still continuing. Thereafter, similar application for attachment of other properties were made and attachments were effected.

On or about December 21, 1960, an appeal filed by Mr. Singh was dismissed. He made an application for leave to appeal without success. His application for special leave to the Supreme Court was dismissed on August 29, 1961.

On August 8, 1962, this application was made to the winding-up Court for an order for sale of the properties attached at Monghyr u/s 45H by the Sheriff of Calcutta or alternatively direction be given to the District Judge, Monghyr, for the sale of the properties or alternatively a Receiver be appointed to sell the attached properties and other directions.

Raghubar Narayan Singh in his affidavit in opposition resisted the application on, inter alia, the ground that the Banking Companies (Amendment) Act, 1953, which came into force on December 30, 1953, had no retrospective effect, that the order dated August 27, 1957, u/s 45H was without jurisdiction for the same is not applicable and that this Court has no jurisdiction to direct the sale of the attached properties for they are not only situate outside the said jurisdiction but also in a different State. He also asserted that attached properties are the subject-matter of a trust created on January 7, 1937.

Raghubar Singh also assailed the application on the grounds that there was no tabular statement and there was no notice under Rule 22 of Order 21 of the Code of Civil Procedure.

In these circumstances, Mr. Siddhartha Ray and following him Mr. Mitter, his junior, submitted that this Court has no jurisdiction to direct or order the sale of the properties under attachment. In order to support this contention reliance was placed on several sections of the Banking Companies Act, 1949, as amended, including Section 45T. On the other hand, it was strenuously urged by Mr. B. Das, learned Counsel appearing for the bank, that in view of the provisions of Section 45B, the High Court is competent to make the order for sale.

There are two well-defined stages in any proceeding in a, Court of law. An Applicant or Applicants who seek certain reliefs are more often resisted by an opposite party or opposite parties. This calls for a decision or decisions by the Court. This decision is embodied either in a decree or an order. The jurisdiction of the Court to entertain try and decide are defined generally by the Code of Civil Procedure. In the case of the High Court, it is controlled by the Letters Patent. In some cases, special jurisdictions are vested under Special Acts. It is at this point of time when an order is made that the first stage is complete.

Once the decree or order is made, the second stage commences. The decree or order more often has to be enforced through the machinery of the Court. The jurisdiction as to execution is governed generally by the Code of Civil Procedure. There may again be Special Acts providing for special modes and manner of execution.

Section 45A does not take away the jurisdiction of the other Courts, or divest them of their jurisdiction in all matters and confer exclusive jurisdiction to the High Court in all matters. It only pro vides that where there are provisions which are inconsistent with the provisions made in the Banking Companies Act, those provisions of the CPC or Code of Criminal Procedure or Companies Act, 1956, must yield to the same. Hence, it does not take away the jurisdiction of all Courts for all purposes.

Section 45B confers extensive exclusive jurisdiction to the High Court.

Section 45B, however, is not unlimited in its scope.

It must refer to a claim made by or against banking company. It, however, is not confined to claims only. It also includes question of priorities. It does not end there. It also refers to any other question whatsoever whether of law or fact. This subject matter must, however, relate to or arise in the course of winding-up of a banking company or u/s 391 of the Companies Act, 1956.

Once these two conditions are satisfied, Section 45B comes into play whether such claim or question has arisen or arises or the application has been made or is made before or after the date of the order of winding-up of the banking company or before or after the commencement of the Banking Companies Act.

Hence, it is crystal clear that claims, question of priorities or any other questions whatsoever whether of law or fact which arise before the stage of execution fall directly within its ambit. It is, however, debatable whether Section 45B attracts claims or questions of priorities or any other question whatsoever, whether of law or fact, which arise at the stage of execution and/or in execution of the order made under this Act. The language of Section 45B does not put any limitation. Consequently, it suggests that the High Court has exclusive jurisdiction to entertain and decide claims, questions of priorities and any other questions whether of law or fact, whether they arise before the order is made or after the order is made. In the case of Shri Ram Narain Vs. The Simla Banking and Industrial Co. Limited, this section came for consideration. His Lordship Jagannath Das of the Supreme Court who delivered the judgment after quoting Section 45B observed as follows:

There has been some faint argument before us that the questions that arise in execution in this case and particularly the question relating to attachment which has been effected by the Bombay High Court, are not questions which fall within the scope of Section 45B. In my opinion, this contention is so obviously untenable, in view of the very wide and comprehensive language of the section that it require no more to be mentioned and rejected.

The next point for consideration is whether Section 45B is wide enough to embrace and include a simple application for execution.

Section 45B does not divest the other Courts of their jurisdiction to execute, in a proper case, the orders of the High Court and does not confer exclusive jurisdiction to execute its orders irrespective of the ordinary manner of execution laid down in the CPC and/or its rules. Hence, in the absence of any other provision in the Act itself execution will be governed by the CPC in cases where the controversies do not attract Section 45B and if it does, the matters which are outside the ambit of Section 45B, will be governed by the Code of Civil Procedure. If that be the true position, as it is, in my opinion, the High Court is incompetent to make an order for sale of the immoveable properties situate outside original jurisdiction.

There are, however, special provisions in the Act itself which require consideration before a firm view is enforced.

Clause(6) of Section 45D, Clause (1) of Section 45T and Clause (2) of Section 45T are special provisions. Clause (6) of Section 45D suggests that the order of the High Court is executable in Courts other than the High Court. Clause (1) of Section 46T clearly suggests that the order made by the High Court in this Act are enforceable in a proper case in Courts other than the High Court. It is difficult to explain the presence of Clause (6) of Section 45D, Clauses (1) and (2) of Section 45T in the Act if the Legislature meant to confer exclusive jurisdiction in execution to the High Court u/s 45B of the Act. The last paragraph of Section 45H which contains only the power of attachment also to my mind suggests that the CPC is otherwise applicable in execution including proceedings for sale of the attached properties.

Hence, the provisions of the Act support the conclusion arrived at.

This question arose in 1951 before the amendment of 1953 in Bharati Central Bank Ltd. v. Rathindra (1950) 54 C.W.N. 975 where a Bench of the High Court held that, according to the rules of construction, Section 45H (same as Clause (1) of Section 45T of the present Act) was an exception to Sections 45A and 45B and Section 11 (the forerunner of Section 45C) and makes special provisions for the enforcement of the orders. Hence, according to this decision execution matters or jurisdiction relating to execution do not fall within the ambit of Section 45B. In the matter of Dhakuria Banking Corporation Ltd. Vs. Sm. Surabala Debi and Others, Mukharji, J. expressed a discordant note by indicating that according to him Section 45H is not an exception to Sections 45A, 45B and 11 and does not make any special provision for enforcement of the orders. He however held that Section 45H, which is the same as Clause (1) of Section 45T in the present Act, only lays down the modes of execution open to in the High Court. Mr. Justice Bachawat In Re Dhakuria Banking Corporation Ltd. (in liqn.) Re Surabala Debi (1954) 58 C.W.N. 641 held, inter alia,

that Section 45A and 45B of the Banking Companies Act, 1949, as amended by the Act of 1950 and Section 11 of the Act of 1950 standing by themselves did not give the High Court exclusive powers to enforce its decree and orders. Also, in my view Section 45H did not create an exception to Section 45A and Section 45B. Section 45H did not say how decrees passed under Sections 45A and 45B were to be enforced. Section 45H merely provided that orders were to be enforced in the same manner in which decrees could be enforced. If Sections 45A and 45B vested in the High Court exclusive jurisdiction to enforce its decree, Section 45H could not recreate in other Courts jurisdiction to enforce it and if other Courts had no jurisdiction to execute decrees passed u/s 45A and Section 45B, Section 45H could not give other Courts jurisdiction to enforce the orders passed under Sections 45A and 45B. The comments of P.B. Mukharji, J., on that decision made by him In the matter of Dhakuria Banking Corporation Ltd. Vs. Sm. Surabala Debi and Others, are, therefore, justified. But my learned brother in the last mentioned case also assumed that the jurisdiction of other Courts to execute the decree had been taken away by Sections 45A and 45B of the Act as it stood before the 1953 (Amendment) Act. That assumption was based upon the observations in Bharati Central Bank Ltd. (in liquidation) Vs. Rathindra Nath Sen, , but I am unable to agree with these observations.

The decision in Bharati Central Bank Ltd. (Supra) and the second decision in Dhakuria Banking Corporation Ltd. (Supra) fortify my conclusion though the reasons are not identical.

Hence, I have no hesitation in holding that though the High Court is the only Court to decide the claim or claims, question of priorities and any other question of law and fact the High Court has not been conferred exclusive jurisdiction to enforce the orders in execution. Therefore, the High Court cannot entertain an application for a sale of immovable properties situate outside the jurisdiction and direct the sale of the same whether it has been attached u/s 45H or not.

It was strenuously urged on behalf of the Official Liquidator, the Applicant, that the word ''claims'' in Section 45B is wide enough to include a simple application in execution for it is nothing but a claim by the holder of the order to execute the order against a property or a sum of money.

In my opinion, a claim ends and ripens into a legal enforceable right through the machinery of the Courts upon adjudication by the Court. It is formally embodied in an order. In any event, the provisions contained in Section 46D, Clause (6), Section 46H and in particular, Section 46T militate against such an wide construction. Hence, the word ''claim'' does not bear such an extensive meaning in this Act.

Mr. Siddhartha Ray secondly submitted that the High Court had no jurisdiction to attach on or about August 27, 1957, the immovable properties of the Respondent, u/s 45H of the Banking Companies Act, which was incorporated by amendment in 1953, for in this matter, the application u/s 235 was made as far back as April 3, 1951.

The Banking Companies Act, 1949, did not originally contain Pt. 3A, that is to say, Sections 45A to 45X, the special provisions for the speedy disposal of the winding-up proceedings.

Part IIA, including Sections 45A to 45X, was incorporated in the Banking Companies Act, 1949, by the amending Act of 1953.

Therefore, it is clear from the facts that the application u/s 235 was made in this case long before the relative provisions of the Banking Companies Act, to wit, Sections 45A to 45X including Section 45H had been enacted.

Hence, the intention of the Legislature would determine whether the Banking Companies Act, in particular Section 45H, is applicable to such a case or not.

It is one of the established principles of construction that there is a presumption that no legislation regarding substantive right is retrospective unless the statute gives retrospective effect by express words or by necessary implication and further, the retrospective operation even in such a case will be limited only to the extent to which it has been so made by express words or by necessary implication.

It is equally established that in the case of the construction of the procedural or adjective law it is prima facie construed as retrospective.

See Maxwell on Interpretation of Statute, 9th ed., pp. 223, 229 and 232; 31 Halsbury''s Laws of England (2nd ed.), p. 516, Article 71; Suburban Bank Ltd. (in liqdn.) Vs. Nistaran Chakrabarti, ; Mahadeolal Kanodia Vs. The Administrator-general of West Bengal, .

It is equally well-settled that curtailment or abridgement of the extent of the right of appeal is not procedural but affects substantive rights: State of Bombay Vs. Supreme General Films Exchange Ltd., . In my opinion, the expansion or alteration of the rights of appeal is also not procedural for it affects vested rights of the Respondent.

Therefore, keeping these principles in mind it is necessary to consider whether Section 45H affected substantive law embodied in Section 235 or affected only the procedural law.

Section 235 applied to past directors. Section 45H does not. Section 235 did not provide for joint and several liability of the delinquent directors and/or officers. Section 45H makes the liability of such persons joint and several.

The right of appeal u/s 235 was governed by the Code of Civil Procedure. The right of appeal u/s 45H is governed by Section 45N.

Hence, on these grounds Section 45H clearly affected substantive rights.

Section 235 requires the Official Liquidator to prove the case. Section 45H requires the Official Liquidator to prove a prima facie case of the Respondents who are liable unless they can displace the prima facie case.

Section 235 does not enable the High Court to attach properties outside the jurisdiction. Section 45, on the other hand, empowers the High Court to attach properties outside the jurisdiction at any stage of the proceedings before or after the order. Hence, taking the most favourable of view of these provisions, they affect procedural law. Therefore, Section 45H affects both substantive and procedural law.

In my opinion, when both substantive rights as well as procedural rights are affected simultaneously by a section it should be considered as a whole prospective for the procedure is consequential to the altered substantive rights and are not independent of them.

Hence, in this view of the matter there could not be any attachment u/s 45H of the Act.

There is another way of gathering the intention of the Legislature.

The words ''is made'' in the clause "when an application is made to the High Court" suggest that it has prospective effect. There fore, it does not refer to the application pending at the material time in 1953 u/s 235.

There is still another way of looking at the matter. In general, where the law is altered during the pendency of action the rights of the parties are decided according to law as it existed when the action was begun, unless the new statute shows clear intention to vary such rights. See Maxwell on Interpretation of Statute, 9th ed. p. 229. See also Ramprosad Singh v. Sonatan Ghosh (1955) 95 C.L.J. 236. In my opinion, in the present case the statute does not show clear intention to vary such rights.

Therefore, on these considerations Section 45H is not retrospective but prospective and consequently, the High Court had no jurisdiction to levy attachment and cannot sell the same. The attachment and sale, if any made, would be without jurisdiction and a nullity: In Re Dhakuria Banking Corporation Ltd. (Supra).

Mr. Das, learned Counsel appearing for the Official Liquidator, in order to dissuade from arriving at the above conclusion, relied strongly upon Section 14 of the Banking Companies (Amendment) Act (95 of 1956):

Section 14:

The principal Act shall be further amended in the manner specified in the Schedule:

Provided that the amendments specified in the Schedule relating to Section 2 and to the sections contained in Part III and Part IIIA of the principal Act shall not apply to a banking company the winding up of which commenced before the 1st day of April, 1956 and the provisions of the principal Act shall apply to such banking company as if the amendments aforesaid had not been made.

Section 14 of the amending Act of 1956 does not, keeping, in view the same rules of construction, expressly or by necessary implication do what the Legislature had not done by the amending Act of 1953, that is to say, does not, for the first time, give retrospective effect of the amendments made in 1953 to an application made before the amendment of 1953. Section 14 is directed against orders made u/s 235 after the amendment of 1953.

In this case, the application was filed long before 1953-Hence Section 14 cannot make any difference to the legal position. The change in the procedural law as to burden of proof is a consequential adjunct of the change in the vested rights brought about by Section 45H. Consequently, in my opinion, attachment made u/s 45H was void in this particular case.

Mr. Siddhartha Ray, learned Counsel appearing for: the Respondent submitted that the immovable properties are not liable to attachment or sale for the properties are trust properties. This was controverted on behalf of the Official Liquidator. Hence, in my opinion, a claim arose in execution which this. Court and this Court only can decide.

It will be noticed that the trustees are not parties in this application.

It is, however, necessary to go into the question of facts on the materials before me.

On the materials before me, it appears that on January 7, 1937, Rai Bahadur Dilip Singh and his son the Respondent executed a deed of trust in respect of certain immovable properties and securities and appointed Rai Bahadur Dilip Singh as a trustee thereof. In 1948, there was a family arrangement and/or deed of partition by which or under which the joint family properties including the properties which was the subject-matter of the said trust dated January 7, 1937, were dealt with. On December 22, 1958, in Title Suit Nos. 24 of 1958 and 36 of 1958, it was declared by a competent Court that the family arrangement did not affect the said trust dated January 7, 1937 and the said trust subsisted. Hence, on these facts, prima facie, the said immovable properties are not liable to attachment. It was, however, contended on behalf of the Applicant that no particulars of the said mortgage and/or the properties covered by it are given in the petition and the terms of the said deed of trust have not been set out. The trust deed has not been annexed in the petition nor did the Respondent crave leave to refer the same in the affidavit-in-opposition. Moreover, they did not annex the copy of the said decree declaring the validity of the trust deed in December, 1958 and even did not crave reference to the same. Moreover, the Respondent in his public examination had admitted that the trust deed had been revoked. In the decree made in December, 1958, the Official Liquidator was not a party. The said suit was filed by one of the wives of the Respondents after an order u/s 235 had been made for payment of a sum of over rupees four lakhs against the Respondents. Hence, the onus of proving that the properties are trust properties has not been in my opinion discharged and consequently the Respondent fails on this ground.

Mr. Siddhartha Ray further submitted, in the alternative, that in case it is held that the properties are not trust properties, it is obvious that the interest of the Respondent, who is a member of an undivided Hindu joint family governed by mitakshara school of Hindu Law, cannot be attached in execution.

It will be noticed, firstly, that there is no averment that the properties were governed by the mitakshara school of Hindu Law. It again does not appear from the petition whether the properties were joint family properties or they were the separate properties in distinct share of Rai Bahadur Dilip Singh and his son the Respondent. Hence, this plea should not be allowed to be taken at this stage when it had not been indicated in the opposition. Assuming, however, that the properties belonged to a Hindu joint family governed by mitakshara school of Hindu Law, it is to be considered whether such properties can be attached. It seems from the decision that the High Court of Calcutta has held that such undivided interest cannot be attached in execution of a decree against him. This is binding on me. It may, however, be noted that the Madras High Court has held in the case of Shunmugam v. Rayaloo Ayyar that the prorata interest of a member of Hindu joint family governed by mitakshara school in the properties of the joint family is liable to be attached.

In the result, in my opinion, no order can be passed for the sale of the attached properties by the High Court for reason already given. The application is dismissed.

I do not express any view on the two questions relating to procedure raised on the assumption that the High Court has jurisdiction to direct the sale of the attached properties.

Certified for two counsel.

The Official Liquidator will retain the costs out of the assets in his hands.