MADHAVA NAIK Vs. POPULAR BANK LTD

JUDGEMENT

(1.) ALL those appeals are directed against one and the same order. The order appealed against is the order passed by a learned Judge of this Court on 19-10-1959 directing a public examination of all these appellants under Section 478 of the Indian Companies Act and Section 45g of the Banking Companies Act. The order was passed in the course of liquidation proceedings carried on in Banking Company petition No. 8/1956 on the file of the High Court. These proceedings relate to a Banking Company known by the name, "the Popular Bank Ltd. , Alleppy". The bank commenced its business on 3-9-1944 and owing to financial difficulty it had to suspend its business on 16-8-1956. The Court passed an order on 19-12-1956 directing a winding up of this Bank. On 10-1-1958, the Official Liquidator filed a petition C. M. P. No. 113/1958 in B. C. P. No. 8/1956 under Sections 478, 531. 539 and 541 to 545 of the Companies Act, I of 1956, and under Sections 45c, 45h and 45j of the Banking Companies Act, 1949, as amended by Act 52 of 1953. The counter-petitioners to this petition are the Directors and other office bearers of the Bank. The legal representatives of a deceased director were also made counter-petitioners to this pctiiion. The following are the prayers contained in this petition:

(2.) WHEN the appeals came on for hearing, a preliminary objection as to the maintainability of the appeals was raised on behalf of the Official Liquidator who is the respondent in all these appeals. It is argued on his behalf that an appeal shall lie from any order or decision of the High Court in proceedings under the Banking Companies Act only in respect of matters coming under Section 45h of the Banking Companies Act. That section provides for appeals against orders or decisions of a Single Judge of a High Court to a superior Court. That section cannot affect the right of appeal from the orders or decisions of a Single Judge of a High Court to a larger Bench of the same court, if there is a statutory provision to that effect. Matters regulating the internal working of this High Court are now governed by the Kerala High Court Act (Act V of 1959 ). Section 5 of that Act states that "an appeal shall lie to a Bench of two Judges from a judgment or order of a Single Judge in the exercise of original jurisdiction". Liquidation proceedings under the provisions of the Banking Companies Act are carried on by a Single Judge of this Court in the exercise of the original jurisdiction of the High Court and hence under Section 5 of the Kerala High Court Act, an appeal shall lie to a Bench of two Judges from a judgment or order of a Single Judge, passed in the exercise of such original jurisdiction in respect of liquidation proceedings. Such an order or judgment will become a final order or judgment of the High Court only with the decision in the appeal as provided for in Section 5. If no appeal is preferred against the judgment or order of the Single Judge and if such order or judgment is allowed to become final, then also it would become the final judgment or order of the High Court. The appeals contemplated by Section 45h of the Banking Companies Act are appeals against the final orders or decisions of the High Court in civil proceedings under the Banking Companies Act. The present appeals are only appeals against the order of a Single Judge to a Bench of two Judges of the same Court as provided in Section 5 of the Kerala High Court Act. The right to prefer such appeals has been expressly conferred by Section 5 of that Act and accordingly we overrule the preliminary objection and hold that these appeals are competent.

(3.) THE main point urged on behalf of the appellants in all these appeals is that the order appealed against is hit by Clause (3) of Article 20 of the Constitution. We will therefore at the outset examine the circumstances under which the said order was passed, to see if the point raised on behalf of the appellants is tenable or not. It has already been found that the impugned order is an order passed on C. M. P. 113/58 filed by the Liquidator. Even though by a subsequent order passed by the Court on 13-61958, it was directed that this petition will be treated as a report under Section 455 (2) of the Companies Act and Section 45-G of the Banking Companies Act, the petition with all the reliefs claimed therein has been maintained intact and has been kept on the file of the Court. The Liquidator has not chosen to give up any of those reliefs or to amend the petition so as to restrict its scope to a mere application for a public examination of the directors and other officers of the company. Thus the position as it stands is this. As soon as the public examination is over, the Liquidator will be at liberty to apply or press for any of the other reliefs asked for in C. M. P. 113/58. That the petition is not confined to a request for a public examination of the directors and officers of the company under Section 478 of the Companies Act and Section 45-G of the Banking Companies Act, is clear from the petition itself. The petition expressly states that it is a petition for all the reliefs sanctioned by Sections 478, 531, 538, 539 and 541 to 545 of the Companies Act and by Sections 45-G, 45-H, and 45 J of the Banking Companies Act, 1949 as amended by Act LII of 1953. Sections 538, 539, 541 and 545 of the Companies Act are of particular significance so far as the point raised in the present appeals is concerned. Section 538 deals with offences by officers of companies in liquidation. That section states that if any person being a past or present officer of a company, is found guilty of any of the acts of commission or omission enumerated in that section, he shall be liable to punishment under Clauses (m), (n) and (o) of that section with imprisonment for a term which may extend to 5 years or with a fine or with both; and in the case of any other offence, with imprisonment for a term which may extend to two years or with fine or with both. Similarly Section 539 provides for punishment for the offences of falsification of the books of the company and states that a person who is found to be guilty of the offences enumerated in that section shall he punishable with imprisonment which may extend to 7 years and shall also be liable to fine. Section 541 provides for punishment for not maintaining proper accounts in respect of the business of the company. Section 545 provides for prosecution of delinquent officers and members of the company. Sub-section (1) of that section states that if it appears to the court in the course of a winding up that any past or present officer or any member of the company hag been guilty of any offence in relation to the company the court may direct the Liquidator either himself to prosecute the offender or to refer the matter to the Registrar. The Liquidator in his petition C. M. P. 113/58 has specially invoked the jurisdiction of the High Court under Section 45-J of the Banking Companies Act to proceed against the counter-petitioners. Sub-section (1) of that section states that the High Court may, if it thinks fit, take cognizance and try in a summary way any offence alleged to have been committed by any person who has taken part in the promotion or formation of the banking company which is being wound up or by any director, manager or officer thereof, provided that the offence is one punishable under this Act. Sub-section (3) states that in any case tried summarily under Sub-section (1) High Court need not summon any witness if it is satisfied that the evidence of such witness will not be material, that the High Court shall not be bound to adjourn tbe trial for any purpose unless such adjournment is, in the opinion of the High Court, necessary in the interests of justice, and that nothing contained in Sub-section (2) of Section 262 of the Cr. P. C. shall apply to any such trial. Sub-section (5) states that notwithstanding anything to the contrary contained in the Code of Criminal Procedure, the High Court may take cognizance of any offence under this section without the accused being committed to it for trial. It is clear from these provisions that the High Court is empowered to summarily try offences under the Companies Act and under the Banking Companies Act and to punish the directors and officers of the company who are found to be guilty of such offences. Such summary trials may even be concluded without the examination of any independent witnesses. The evidence brought out by a public examination of the directors and officers of the company may itself be sufficient to sustain the conviction of such persons.