PRAFULLA CHANDRA SINHA Vs. CHOTANAGPUR BANKING ASSOCIATION LTD

JUDGEMENT

(1.) This appeal under the Letters Patent has been preferred by Raja Kamakshya Narain Singh, his wife Smt. Lalita Rajyalakshmi and his son Tika Indra Jitendra Narain Singh against an order dated the 21st August, 1958, passed by a single Judge of this Court directing winding up of a bank named the Chotanagpur Banking Association Ltd.

(2.) It appears that an application was filed in this court on the 6th January, 1958, on behalf of the Bank for an order of moratorium under Section 37 of the Banking Companies Act (Act X of 1949). When the matter was placed before the learned Company Judge, it was found that the application was not accompanied with a report from the Reserve Bank of India as required by Sub-section (2) of Section 37 of the said Act. The learned Judge, however, granted moratorium and also called for a report from the Reserve Bank on the affairs of this bank On the 14th January, 1958. the learned Judge appointed a Special Officer also to take charge of the assets of the bank. In pursuance of his order, the Reserve Bank submitted a report on 14-3-58 stating that there was no reasonable chance of the Chotanagpur Banking Association Ltd. paying its debts within a period of six months beyond which the order of moratorium could not last. Soon after, i. e., on the 17th March, 1958, the bank tiled an application proposing a scheme under section 391 of the Companies Act, 1956, and prayed for the consideration of the same by the creditors and the share-holders at a meeting to be held under the direction of the Court. About a month later, i. e., on the 17th April, 1958, an association called the Chotanagpur Banking Depositors" Association filed an application praying for an order for the winding up of the bank. In view of the Reserve Bank's report regarding the affairs of the bank the learned Judge rescinded the order of moratorium on the 22nd April, and appointed provisionally a Liquidator with the common consent of the parties on the 13th May, 1958. A number of depositors, however were against the proposal of winding up and supported the scheme. The learned Judge, after taking into consideration the assets and liabilities of the bank, found that it was not in a position to pay the debts and the scheme proposed was not workable in the background of the financial position. Accordingly, lie ordered the winding up of the bank, as contemplated under section 38 of the Banking Companies Act. It is against this order that six of the depositors, i. e.. Profulla Chandra Sinha and five others, preferred the present appeal challenging the validity of the said order. They impleaded the Official Liquidator as respondent. During the pendency of this appeal Raja Kamakshya Narain Singh, his wife and son claiming to be the trustees of a religious and charitable trust and having account with the bank in question applied to be impleaded as respondents and their prayer was allowed on 9-4-64. Subsequently on their application they were transposed to the category of the appellants on 7-1-65 by an order of a Bench of this Court. At the time of the hearing of this appeal, the original appellants, namely, Prafulla Chandra Sinha and 5 others, who were being represented by Mr. S.C. Ghose, Advocate, did not press their appeal. Hence, this appeal was heard only on behalf of Raja Bahadur Kamakshya Narain Singh, his wife and son.

(3.) Before coming to the merits, I shall first dispose of a preliminary objection taken by Mr. Sreenath Singh, Counsel for the respondent, based on the contention that having received dividend after the order of winding up was passed, the appellants have lost the right of appeal and on this short ground alone the appeal must be dismissed. Mr. J.C. Sinha appearing on behalf of the appellants, on the other hand, countered the argument by saying that the right of appeal is a statutory right and acceptance of nay benefit under a decree ami order, in this case the order of winding up, does not preclude the appeal. In support of his contention he relied upon a derision of the Supreme Court in the case of Bhau Ham v. Baijnath Singh, AIR 1961 SC 1327.