SERAJGUNJ LOAN OFFICE, LTD Vs. NIL KANTA LAHIRI

JUDGEMENT

(1.) The Serajgunj Loan Office Limited, a banking corporation registered under the Companies Act, found itself in financial difficulties, but no winding up proceedings were taken. Instead of that a composition with its creditors was proposed, accepted and sanctioned by the Court under Section 153, Companies Act. The relevant dates on which the respective contentions of the parties have been advanced before me are the following: 8 January, 1933.-A meeting by the share-holders of the Bank for the purpose of devising means for stopping payment of interest and withdrawal of deposits. 21 February 1933,-A resolution was passed by the share-holders authorising the filing of an application on behalf of the Bank in the High Court under Section 153, Companies Act, proposing an arrangement between itself and its creditors. 20 April 1933.-The said application was moved and the preliminary order was passed by the High Court directing a meeting of the creditors to be held. 21 May 1933.-The said meeting was held and the majority of creditors representing more than three-fourths in value agreed to the arrangement proposed. 19 June 1933.-Sanction was given to the said arrangement by the High Court.

(2.) The substance of the arrangement sanctioned by this Court is that the creditors of the Bank shall not be able to demand payment of their dues within ten years, interest was reduced, a consultative body of six persons selected by the creditors was constituted and the directors in consultation with the consultative body were directed to distribute pro rata amongst the creditors a certain portion of the collections annually made.

(3.) The respondent, who received notice of the meeting which the High Court directed to be held did not attend it. He had before the date of the preliminary order of the High Court, that is, on 20 March 1933, instituted a suit to recover his dues. That suit was decreed on 24th April 1933. It is this decree which he seeks to execute against the Bank. The Bank has taken up the position that the respondent must come and accept payment in pursuance of the arrangement sanctioned by the High Court. The first Court gave effect to the Bank's contention and dismissed the execution case, but the lower appellate Court has held otherwise. In my judgment the view taken by the first Court so far as this case is concerned is the correct view, notwithstanding the fact that the decree was obtained by the respondent before the date when the majority of creditors at a meeting held under the preliminary order of the High Court agreed to the arrangement proposed by the Bank. This view accords with the decision of my learned brothers Guha and Lodge, JJ., in Appeal No. Barisal Loan Office Ltd., V/s. Sasthi Charn, Appeal No 70 of 1934, decided on 26 June 1935. It is no doubt in conflict with the decision on my learned brother Henderson, J., in Sushila Bala Basu v. Anjuman Trading and Banking Corporation, 1935 Cal 398, but I prefer to follow the decision in Appeal No. Barisal Loan Office Ltd., V/s. Sasthi Charn, Appeal No 70 of 1934, decided on 26th June 1935 not only because it is the decision of a Division Bench, and so binding on me, but also because its ratio recommends itself to me.