OFFICIAL LIQUIDATOR Vs. RAJA BAHADUR KAMAKHYA NARAIN

JUDGEMENT

(1.) Raja Bahadur Kamakhya Narain Singh has filed this application on the 6th July, 1965, praying that an order passed by the company judge on the 22nd December, 1961, in Companies Act Case No. 1 of 1958 may be set aside or rescinded. By that order passed under Section 45D of the Banking Companies Act (Act X of 1949) it was held that the petitioner was liable to pay as a debtor of Chotanagpur Banking Association Limited (In Liquidation) two sums of money, namely, (1) Rs. 11,62,215.31 and (2) Rs. 3,35,681, together with interest at 6 per cent. per annum from 29th November, 1958, till realisation.

(2.) The facts and circumstances under which this application has been filed are as follows. In January, 1958, on the application of Chotanagpur Banking Association Limited, Hazaribagh, this court had made an order staying commencement or continuance of actions and proceedings against the company for a fixed period and had ordered investigation into the affairs of the company by the Reserve Bank of India. A special officer had been appointed to take into custody and control the assets and the books of account of the bank. This moratorium had continued to some date in April, 1958. On the 13th May, 1958, an application for winding up this company had been registered as Companies Act Case No. 1 of 1958, and on that date the official liquidator was appointed by this court as provisional liquidator. Under orders of this court, the provisional liquidator had filed two suits against the petitioner, on the 26th May, 1958, in the court of the Subordinate Judge, Hazaribagh, which were numbered as Money Suits Nos. 5 and 6 of 1958. The suits were based on debts said to have been due to the bank from the petitioner and the amounts claimed were Rs. 3,28,374 and odd and Rs. 11,43,013 and odd respectively. On the 21st August, 1958, the banking company was ordered to be wound up by this court. Thereafter, Money Suits Nos. 5 and 6 of 1958 were transferred to this court under provisions of Section 45 C of the Banking Companies Act, 1949, and were renumbered as Money Suits Nos. 1 and 2 of 1960 in this court. In the meantime, on the 28th November, 1958, under Section 45D of the said Act the official liquidator had filed a list of debtors in the Companies Act Case, and on the 21st October, 1960, this court had passed orders for issue of notices to the debtors of the company, under Rule 14 of the Rules framed by this court under Section 45D of the Banking Companies Act. It is alleged by the petitioner that, according to the official liquidator, two notices had been sent to him by registered post, but they were not received by him. Then followed certain proceedings in this court and before the Supreme Court of India and they must be narrated in some detail. On the 11th April, 1961, the petitioner filed an application in the Companies Act Case praying that his name may be struck off from the list of debtors, as Money Suits Nos. 1 and 2 of 1960 were still pending in this court for the same claims. This application was disposed of by Order No. 100 passed in the Companies Act Case on the 5th May, 1961. It was observed by this court that, if and when an application for special leave, as contemplated by Rule 14(7) of the Rules of this court is filed, it will be considered on its own merits and the application for striking off the debtor's name from the list of debtors will be treated as having been dismissed. Thereafter, on the 30th June, 1961, the petitioner filed his application under Rule 14(7) of the Rules aforesaid, praying for special leave to file his affidavit of defence beyond the prescribed time. Both the applications, dated the 11th April, 1961, and the 30th June, 1951, were disposed of by Order No. 106 (item No. 2) on the 21st November, 1961. It was held that no case had been made out for grant of special leave under Rule 14(7) to file an affidavit stating the defence to the proceeding under Section 45D of the Banking Companies Act. Thus, both the applications mentioned above failed and were rejected. The petitioner filed Letters Patent Appeal No. 86 of 1951 against the order dated the 21st November, 1961, which is said to have been withdrawn. An application for special leave to appeal to the Supreme Court was also not pursued. On the 22nd December, 1961, the debtor's list was settled ex parte with respect to the petitioner and he was held to be a debtor to the company in liquidation for two sums of Rs. 3,35,681 and Rs. 11,62,215.31 as stated earlier. As against this ex parte order, the petitioner took two steps. He filed an application under Section 45D(9) of the Banking Companies Act, 1949, which application was dismissed on the 23rd August, 1962. Letters Patent Appeal No. 29 of 1962 had been filed against the order dated the 23rd August, 1962, and this Letters Patent Appeal was dismissed by this court on the 5th April, 1963. An application for a certificate to appeal against this order was filed in this court which was dismissed. The petitioner then applied before the Supreme Court for special leave to appeal against the order of this court of the 5th April, 1963, and leave was granted and the case was numbered in that court as Civil Appeal No. 770 of 1964. Ultimately, this appeal was dismissed by the Supreme Court on the 8th March, 1965. The petitioner had also filed Letters Patent Appeal No. 4 of 1962 under Section 45N of the Banking Companies Act against the order dated 22nd December, 1961, which had the force of a decree. This Letters Patent Appeal was dismissed by this court on the 3rd May, 1962. An application for a certificate to appeal to the Supreme Court failed on the 10th January, 1953. Thereafter, a petition for special leave to appeal against the order dated the 3rd May, 1962, failed in the Supreme Court also. On the 1st August, 1963, the official liquidator filed an appeal under Order XXI, Rule 41, of the Code of Civil Procedure, read with Sections 45A and 45B of the Banking Companies Act, praying that the Raja may be ordered to attend this court for examination as to whether any or what debts are owing to him and whether he has any and what other property or means of satisfying the decrees obtained by the company on the 22nd December, 1961. This case has been registered as Miscellaneous Judicial Case No. 3 of 1963. (At one stage proceedings in this miscellaneous judicial case had been stayed by the Supreme Court, which order now stands vacated). Thus the present application has been filed which has been argued by Sri N.C. Chatterji for the petitioner as an application in Miscellaneous Judicial Case No. 3 of 1963.

(3.) Sri Chatterji has referred to Sections 45C and 45D of the Banking Companies Act, and has contended that when this court had transferred Money Suits Nos. 5 and 6 of 1958 of the Court of the Subordinate Judge, Hazaribagh, to this court (which became Money Suits Nos. 1 and 2 of 1960 respectively of this court), these suits had to be disposed of by this court and, until the decision of these two suits, Section 45D could not be applied to the case of the petitioner, and, therefore, no order under Section 45D(4) could have been passed against the petitioner on the 22nd December, 1961, in the Companies Act Case. According to the learned counsel, Section 45D(2) could not be applied for including the petitioner in the list of debtors when suits were pending against him for the same claims. That is to say, it is urged that if any suit is pending against a person (in this court or anywhere else) that person cannot be held to be a debtor by a proceeding envisaged by Section 45D until the suit is decided on its merits. Reliance is placed on the Fourth Schedule mentioned in Section 45D(2) and it is urged that under that Schedule no details of pending suits are required to be given, because Section 45D(2) does not apply when suits are pending against any person for realisation of any moneys said to be due from him. In substance, it has been contended by Sri Chatterji that the order passed in the Companies Act Case on the 22nd December, 1961, which amounts to a decree under Section 45D(5) is a nullity and as the official liquidator is executing this decree by his application under Order XXI, Rule 41, of the Code of Civil Procedure, this court as an executing court may hold that the decree is incapable of being executed. Learned counsel has relied upon the House of Lords case of Mary Seward v. Owner of the " Vera Cruz", [1885] 10 App. Cas. 59, for his contention that the general provision contained in Section 45D of the Banking Companies Act cannot override the special provisions mentioned in Section 45D, according to which the money suits pending against the petitioner in this court must first be disposed of before any liability can be imposed on him by the procedure mentioned in Section 45D. Sri Shreenath Singh appearing for the official liquidator has contended, on the other hand, that Section 45D is a special provision for ascertaining the dues of a banking company in liquidation from its debtors and the company judge had complete jurisdiction to settle the list of debtors on the 22nd December, 1961, and pass orders to the effect that the petitioner must pay the two amounts involved in this case to the company in liquidation. It is contended that there is no clash between Section 45C and Section 45D and the suits pending in this court against the petitioner will be disposed of in due course as required by Section 45D. It is argued that under Section 45D(2) the official liquidator had to file a list of debtors including the name of the petitioner, Raja, within six months from the date of the winding up order and that the list had to be settled by virtue of Section 45D(4). It is contended that it was open to the petitioner, Raja, to defend himself in the Companies Act Case and his belated attempt to do so has failed. According to Shreenath Singh, all attempts made by the petitioner to have the order dated the 22nd December, 1961, vacated, by taking recourse to Letters Patent Appeal or otherwise, having failed, the petitioner has made out no case for having that order set aside in this proceeding. Some other arguments have also been advanced by Sri Singh to which I will advert later on, but it appears to me that the first contention raised on behalf of the official liquidator upon the interpretation of Sections 45C and 45D must be accepted as valid. It is difficult to accept the arguments of Sri N. C. Chatterji and hold that when the money suits filed in the court of the Subordinate Judge, Hazaribagh, were transferred to this court for disposal, the liability of the petitioner to the company in liquidation could not be settled under Section 45D at all, because the same claims against the petitioner were the subject-matter of litigation in the money suits. No doubt the money suits pending in this court will have to be disposed of in due course, but that cannot mean that the suits must have such preference that other legal proceedings against the defendant of the suits must be postponed until the decision of the suits on merits. Under Section 45D the official liquidator had to file in this court a list of debtors, containing the particulars specified in the Fourth Schedule within six months from the date of the winding up order (in this case the 21st August, 1958) and this matter could not, normally, have been postponed, only because suits against the petitioner were pending. Section 45D and the Rules framed by the High Court under Section 45U gave enough scope to any alleged debtor to contest the claims made on behalf of the company in liquidation on merits. That is to say, the petitioner could very well have contested the bank claim against him in the course of the settlement of the list of debtors envisaged by Section 45D on the same grounds on which he could contest the suits. The facts given above indicate how the ex parte order was passed on the 22nd December, 1961, and how the petitioner's attempts to reopen the matter have failed so far. In my opinion, it is not possible now to hold that the order passed on the 22nd December, 1961, was without jurisdiction as is contended by Sri Chatterji, on the ground that the suits transferred under Section 45C were then pending for disposal. The suits will be disposed of in due course, and if the order passed, which has the force of a decree under Section 45D(5), affects the decisions in these suits, law must take its course. The decision reported in Mary Seward v. Owner of the "Vera Cruz", [1885] 10 App. Cas. 59. relied upon by Sri Chatterji, is of no avail to him in this case, and, as a matter of fact, the proceeding under Section 45D must be taken to be a special proceeding, which must have preference over the general scope of disposal of suits mentioned in Section 45C. The contention raised by Sri Chatterji upon the Fourth Schedule of the Banking Companies Act is also not valid. I fail to appreciate how it can be argued that when suits are pending against a particular person, a proceeding against him cannot be resorted to under Section 45D only because particulars of pending suits are not required to be given in the list of debtors filed by the official liquidator. Several other arguments have also been advanced by Sri Shreenath Singh and they appear to be of substance. For instance, by order passed on the 29th September, 1961, the two money suits were ordered to be stayed during the pendency of the question of settlement of the debtor's list. These orders were passed in the presence of the petitioner as a defendant. Therefore, when the suits were stayed, the settlement of the list of debtors with respect to the petitioner had to proceed under Section 45IX Then, it appears that the contentions now raised by Sri Chatterji based on Sections 45C and 45D of the Banking Companies Act had really been taken by the petitioner on more than one of the earlier occasions without success. For instance, in the memorandum of Letters Patent Appeal No. 4 of 1962 grounds Nos. 11, 12, 14 and 16 ran as follows :