JWALA BANK LTD Vs. SHITLA PARSHAD SINGH

JUDGEMENT

(1.) This purports to be an appeal Under Section 10 of our Letters Patent read with the United Provinces High Courts (Amalgamation) Order 1948. There was a private Bank in Agra known as the Jwala Bank carrying on banking business. In 1938 it was incorporated as a limited liability company under the name of the Jwala Bank Limited. The Memorandum and Articles of Association show that the primary object of the company was to carry on banking business in India and outside. In the year 1946 an Ordinance known as the Banking Companies (Inspection) Ordinance, 1946, (NO. IV of 1946) was issued by the Government of India in which a banking company was defined as meaning a banking company as defined in Section 277-F, Companies Act, 1913. Section 3 of the Ordinance provided for inspection and was as follows: "Notwithstanding anything to the contrary contained in Section 138, Companies Act 1913 (VII of 1913), the Central Government may at any time direct the Reserve Bank to cause an inspection to be made of any banking company and its books and accounts, and to make a report thereon to the Central Government." Under the power given Under Section 3, an enquiry was held in the affairs of the Jwala Bank Limited in the year 1947 and a report was made to the Government of India. Acting under the powers given Under Section 5 of the Ordinance, the Government of India prohibited the Jwala Bank Ltd., from receiving fresh deposits. The relevant portion of the order No. F. 7/94-F. 1/46, Government of India, Ministry of Finance, New Delhi, 6th April 1948, is as follows: "Now, therefore, in exercise of the powers conferred by Clause (a) of Sub-section (1) of Section 5 of the said Ordinance the Central Government is pleased with effect from Monday the 12th April 1948, to prohibit the said bank from receiving fresh deposits at any of its offices, branches or agencies." We are informed by learned counsel that after the said order was published there was a rush on the bank and a large number of depositors, who were willing to take 75 per cent in full satisfaction of their claims, were paid off. On 1st August 1949, one of the creditors, Shitala Pd. Singh, who claimed that a sum of Rs. 10,000/- odd was due to him, gave notice Under Section 163, Companies Act, and not having received payment, filed an application for compulsory winding up of the Jwala Bank Limited. On 16th September 1949, Mr. Sanyal, on behalf of the Jwala Bank, filed an application Under Section 153, Companies Act proposing a composition scheme and praying for a meeting to be called of the creditors of the Bank. This application was opposed by Mr. Hazari Lal Kapoor appearing for Shitala Parsad Singh on the ground that the Jwala Bank Limited being a bank, the Banking Companies Act of 1949 (X [10] of 1949) applied and Under Section 45 (a) of this Act no Court could sanction a compromise or arrangement between a banking company and its creditors or any class them, or between such company and its members or any class of them, unless the compromise or arrangement was certified by the Reserve Bank as not being detrimental to the interests of the depositors of such company. Mr. Sanyal, however, claimed that the Banking Companies Act of 1949 did not apply to the Jwala Bank as after the order issued by the Government of India, dated 6th April 1948, prohibiting receipt of fresh deposits, the Jwala Bank Limited had ceased to be a banking company. Reliance is placed by Mr. Sanyal on the definition of the words 'banking company' in the Banking Companies Act of 1949, which is as follows : " 'banking company' means any company which transacts the business of banking in any Province of India." Banking has been defined as meaning the accepting, for the purpose of lending or investment, of deposits of money from the Public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise. Mr. Sanyal has urged that as the Jwala Bank Limited cannot accept any fresh deposits it has ceased to be a banking company within the meaning of the Banking Companies Act of 1949.

(2.) The learned Company Judge did not agree with this contention and he was of the opinion that the Jwala Bank Limited had not ceased to be a banking company because of the issue of the order by the Government of India, dated 6th April 1948, prohibiting receipt of fresh deposits. It is against the order passed by the learned Company Judge that Mr. Sanyal has filed this appeal.

(3.) A preliminary objection was taken by Mr. Hazari Lal Kapoor that no appeal lies. Under the Letters Patent, Section 10, an appeal lies only against a judgment passed by a learned single Judge. A judgment has been defined in various decisions of this Court as meaning an adjudication which conclusively determines the rights of the parties. We have not allowed appeals to be filed against mere interlocutory orders during the pendency of a case. All that the learned Company Judge has decided is that the Banking Companies Act is applicable and the opinion of the Reserve Bank of India might, therefore, have to be obtained. We do not think that it is a judgment against which an appeal would lie.