BENARES BANK LTD Vs. OFFICIAL ASSIGNEE

JUDGEMENT

(1.) THE suit out of which this appeal arises was tried in the Court of the Subordinate Judge, of Dhanbad. THE real question for decision is whether that Court had jurisdiction to grant the relief sought or whether it was a matter which could only be dealt with by the Calcutta High Court in its insolvency jurisdiction. THE answer requires the consideration of a scheme of composition, a deed of transfer executed in connection therewith, and proceedings in insolvency extending over a period of more than 20 years.

(2.) THE appellant is a limited liability company which is now in liquidation. Its business was banking and it will be convenient to refer to it hereinafter as "the bank. " In 1909 the bank advanced large sums of money to a partnership of five persons, trading under the style of M. L. Laik and Bantierjee. THE loans were made against hundis, which were secured by mortgages of immoveable property. Default was made in the repayment of the loans and the bank was compelled to bring mortgage suits. Three suits were filed and a final mortgage decree was obtained in each of them. On June 15, 1911, by an order of the Calcutta High Court three of the partners were adjudicated insolvents under the provisions of the Presidency-towns Insolvency Act, 1909, and on July 14, 1911, an order of adjudication was made by the same Court against the other two partners. In the month of May, 1913, the insolvents made proposals for a composition in settlement of their debts. On June 4, 1918, the Official Assignee submitted the proposals to a meeting of the creditors. With certain amendments, the proposals were approved by a majority in number and exceeding three-fourths in value of the creditors. By this time the amount due to the bank was Rs. 8,25,558-12-1. On September 15, 1913, the Calcutta High Court in its insolvency jurisdiction approved the scheme.

(3.) IN spite of his undertaking contained in Clause 12 (1) of the deed of composition Ram Ranjan Roy declined to execute the proposed deed of transfer, and it was discovered that an omission had been made from the deed embodying the scheme. The important factor was the refusal of Ram Ranjan Roy to fulfill his undertaking; the omission was easy of rectification. The insolvents and the guarantors did not want the scheme of composition to fail, but it was necessary to satisfy the bank. Consequently it was agreed between the bank, certain of the guarantors, the insolvents and the Official Assignee that the words "with interest at the rate of 12 per cent, per annum with yearly rests" should be inserted after the words "secured debts" appearing in Clause 12 of the deed of composition, that Ashutosh Roy alone should transfer his half share in the Benahir, Bhalgora and Khas Jheria properties and that out of the income from these properties the Official Assignee should pay to the bank Rs. 2,500 per annum, subject to a limit of Rs. 17,500. This meant that instead of simple interest at 12 per cent, per annum the bank was to receive compound interest at the same rate with yearly rests, but the Official Assignee would receive from Ashutosh Roy Rs. 2,500 per annum, subject to a total sum of Rs. 17,500, instead of Rs. 5,000 and no limit from Ram Ranjan Roy and Ashutosh Roy jointly.