CHOTANAGPUR BANKING ASSOCIATION LTD Vs. STATE OF BIHAR

JUDGEMENT

(1.) The question which arises for consideration in this case is whether this Court should order the winding up of a Bank named Chotanagpur Banking Association Ltd. (hereinafter to be referred to as the Bank) or direct that the scheme of composition put up by the Bank under Section 391 of the Companies Act, 1956, be considered by the creditors and share-holders of the Bank at meetings to be held for the purpose.

(2.) The Bank filed an application in this Court on 6-1-1958, praying for an order of moratorium under Section 37 of the Banking Companies Act (X of 1949), It was not accompanied with a report from the Reserve Bank as required by Sub-section (2) of the section. Acting under the proviso to that sub-section, however, I granted moratorium and called for a report from the Reserve Bank on the affairs of this Bank. By my order dated 14-1-1958, I appointed a Special Officer to take over charge of the assets of the Bank. In accordance with my order, the Reserve "Bank submitted a report dated the 14th March, stating that there was no reasonable chance of the Bank paying its debts within the period of six months beyond which the order of moratorium could not last. On the 17th March, the Bank filed an application proposing a scheme under Section 391 of the Companies Act, 1956, and praying for an order that the scheme be considered by the creditors and shareholders at meetings to be held in accordance with the directions of this Court. The Chotanagpur Banking Depositors' Association (hereinafter called the Depositors' Association) filed an application on the 17th April, praying that an order for the winding up of the Bank be passed. The order of moratorium was rescinded in view of the Reserve Bank's report on the 22nd April. On the same date, a number of depositors, who are represented by Mr. S. C. Ghose, filed an application, supporting the scheme proposed by the Bank and suggesting some modifications in it. The Special Officer could not remain in charge of the Bank as the order of moratorium had been rescinded. With the agreement of all the parties who appeared before me on 13-5-1958, therefore, I appointed the Official Liquidator attached to this Court as the Provisional Liquidator of the Bank on that date, and directed that he should take charge of all its assets and affairs. He is accordingly in charge.

(3.) I may mention that one Sri Abdul Hai Khan filed an application dated the 13th May, praying for an order for him to be added as a petitioner along with the Depositors' Association in the application dated the 17th April. By my order dated 6-8-1958, I have rejected that application.