DWARKADAS AGARWALL Vs. DHARAM CHAND JAIN

JUDGEMENT

(1.) These are two appeals arising out of the affairs of the Calcutta National Bank Ltd. Appeal No. 157 of 1952 being directed against an order dismissing an application for a scheme and Appeal No. 169 of 1952 being directed against an order for the winding up of the company. The appellant in both the appeals is one Dwarkadas Agarwalla, who has described himself as the President of the Depositors* Association of the Bank.

(2.) The appeals form the last chapter of a long story which commenced as long as on 14-5-1951, if not a little earlier. It appears that the Calcutta National Bank Ltd. is a fairly large undertaking with an authorised capital of Rs. 50,00,000/-, divided into 5,00,000 shares of Rs. 10/- each, all of which are fully subscribed and paid up. The assets of the Bank, as would appear from a report submitted by certain auditors under the directions of the Company Court, are considerable, but so are the liabilities of the Bank not inconsiderable. Apparently, the affairs of the Bank were not being conducted in a prudent and businesslike manner which attracted the attention of the Reserve Bank of India, and shortly before the date which I have mentioned, namely, 14-5-1951, the Reserve Bank of India appears to have carried out some kind of investigation, presumably under Section 35, Banking Companies Act. As a result of the examination of the affairs of the Bank made by it, the Reserve Bank of India felt it necessary to take some action and the action it took, or caused to be taken, was to direct the Bank not to accept any fresh deposits and not to do any further banking business. Upon that direction being given, the Bank suspended payment on 14-5-1951, and applied for a moratorium to this Court under Section 37, Banking Companies Act. An interim moratorium was granted, but within seven days thereof, an application was made by one Sachindra Bhattacharyya for a winding up of the Bank on 21-5-1951. While that application was still pending, the present appellant, Dwarkadas Agarwalla, appeared on the scene and on 3-9-1951, he made an application under Section 153, Companies Act, for the adoption of a scheme of arrangement which he proposed. Reference to the details of the scheme will have to be made later. On that application being made, Mr. Justice Banerjee, who was the Company Judge at the time, directed meetings of the creditors and depositors and of the shareholders to be held on October 14, to consider the scheme. On October 14 the scheme was considered and passed at two meetings.

(3.) The Reserve Bank of India gave its blessings to the scheme under Section 45(a), Banking Companies Act, and certified that the arrangement would not be detrimental to the interests of the depositors of the company. When the scheme came up finally before Mr. Justice Banerjee with the certificate of the Reserve Bank of India, he sanctioned it on 11-2-1952, but before he did so, he made extensive, modifications in it himself. The scheme, as so modified by the learned Judge, was not sent back for reconsideration by the creditors, depositors and shareholders, nor was any certificate of the Reserve Bank asked for or obtained. All that was done was that a copy of the scheme, as revised and modified, was sent to the solicitors for the Reserve Bank of India who were acting in the matter for the Reserve Bank in its capacity as a secured creditor. It also appears that although by the initial order the learned Judge had directed individual notices to be issued to all the creditors and depositors, no such notice was issued to the creditors in Pakistan.