GOODLAND PLANTATIONS PRIVATE LTD Vs. SBT

JUDGEMENT

(1.) THIS suit, instituted in the Munsiff 's Court, kottayam has been withdrawn to this Court under Art. 228 of the Constitution because the constitutionality of subsection (10) of S. 45 of the Banking companies Act is questioned.

(2.) THE plaintiff was a subscriber to a fifty month, 20 000 rupee, monthly chitty run by a banking company known as the Kottayam Orient bank, Ltd. as foreman. THE conduct of the chitty was governed by the agreement, ex. P-1, variola as it is called, entered into between the foreman bank and each individual subscriber, and by the provisions of the Travancore Chitties act, the Chitties Act for short. THE plaintiff prized the chitty for Rs. 11,075 at the fifth auction held on 10th December 196 0 - he had by then paid four instalments of Rs. 400 each. (THE plaintiff's a company but it is more convenient to use the pronoun, "he" than "it" ). But, before he could be paid the money, the Central Government granted the bank a moratorium under S. 45 (2) of the banking Companies Act on terms and conditions which made it impossible for it to pay the plaintiff or continue the chitty. This moratorium was in force up to 16th June 1961 and for this period, therefore, the conduct of the chitty had necessarily to be suspended. This, under S. 39 (2) of the Chitties Act, amounted to a termination of the chitty and, both by reason of Clause. 14 of the variola and S. 41 of the Act, the failure to conduct the chitty cast on the foreman bank the obligation to pay every non-prized subscriber the contributions made by him. By Ex. P-2, dated 16th May 1961 the Central Government, acting under S. 45 (7) of the Banking companies Act, sanctioned a scheme for the amalgamation of the Kottayam-Orient bank with the State Bank of Travancore, the defendant herein, by which all the assets and liabilities of the former bank were transferred to the latter with effect from 17th June 1961. This scheme provided in relation to chitties that: "if the transferor bank was acting immediately before the prescribed date as a foreman in respect of any kuri or chitty as defined in the Travancore Chitties Act (XXVI of 1120) or the Cochin (Curies regulation (VII of 1107) the rights, duties and obligations in relation to the kuri or chitty shall be regulated in accordance with the following provisions, namely, (1) the transferee bank shall become the foreman of the kuri or chitty and shall continue to exercise all powers and to do all such acts and things as would have been exercised or done by the transferor bank, in so far as they are not inconsistent with this scheme; xxxxx By reason of this clause therefore the defendant bank was to continue the chitties that were being conducted by the Kottayam Orient Bank ltd. , but, there arose the difficulty that by reason of their suspension during the moratorium, the chitties had terminated so that what the defendant bank was left with was the obligation to pay the non-prized subscribers the contributions made by them. To remove this difficulty, the Central Government made the order, Ex. P-3 dated 4th December 1961- called the Kottayam Orient bank Ltd. (Amalgamation with the State Bank of Travancore) (Removal of difficulties) Order, 1961- under S. 45 (10) of the Banking Companies Act by which (as amended by the order Ex. P-4 dated 15th January 1962), notwithstanding anything contained in the Chitties Act, the suspension of any chitty for the period from 18th December 1960 to 31st March 1962 or any part thereof, and the consequent prolongation of the chitty, was to have effect as though the articles in the variola were altered for that purpose by special resolution of the subscribers and as though the relevant provisions of the chitties Act were complied with. And, notwithstanding anything contained in the chitties Act, the failure of the foreman bank to conduct the chitty during the said period was not to have the effect of having terminated the chitty. Notwithstanding anything contained in the variola, the period of the chitty was to be deemed to have been extended by the period aforementioned, and the defendant bank was, notwithstanding anything contained in the Chitties Act, to continue the chitty as if the provisions of the Act relating to the continuance of the chitty had been complied with.

(3.) ISSUES 6,9, 10 & 11 mean much the same thing. The question is whether the impugned order, Ex. P-3, falls within the scope of sub-section (10) of S. 45 of the Banking Companies Act. On a plain reading of the sub-section, I have no doubt that it does.