HAROON MOTEN Vs. MAHALUXMI BANK LTD.

JUDGEMENT

(1.) This appeal by special leave arises from a judgment and decree of the High Court Division in Letters Patent Appeal No. 4 of 1967 confirming that of the trial Court in Transfer Suit No.1 of 1965.

(2.) Mahaluxmi Bank Limited (In Liquidation) filed the suit against Haroon Moten and Alia Rakhi Bai (Defendents Nos. 1 and 2 respectively) on 9th August, 1960 in the First Court of Subordinate Judge, Chittagong, where it was registered as O.S. No. 28 of 1960. It was transferred to the High Court on 29th March, 1965 under the Banking Companies Ordinance 1962. Defendent No.3 was impleaded on 8th March, 1966.

(3.) The plaintiff was a Banking Company carrying on banking business with its principal office at Terri Bazar, Chittagong. But on account of its failure to transact the Banking business and inability to meet the demands of its creditors the bank closed its business and sought moratorium from the High Court and for that purpose submitted a Scheme of Arrangement duly approved in a general meeting of the creditors. The Court sanctioned the Scheme of Arrangement by an order dated 4th August, 1950 and allowed the moratorium in terms of the Scheme of Arrangement, but the bank still failed to improve its position and could not implement the Scheme. Its banking business was totally stopped under an order of the State Bank. The Scheme of Arrangement expired on 6th June, 1954 and the Bank's prayer for extension of time was rejected by the High Court. Ultimately, on an application filed by the creditors the bank was wound up by an order of the High Court dated 18th March, 1960, An Official Liquidator appointed by the High Court took charge of the affairs of the Bank. The Liquidator, on enquiry, came to learn that N. L. Sinha, who was appointed by the Board of Directors as Director in charge of the bank under the Scheme of Arrangement, executed two Deeds of lease in favour of Defdt Nos. 1 and 2 transferring certain immovable property of the bank on 14.6.1954 for a total consideration of Rs. 21.000/-. This property measuring 18.77 acres of land, as shown in Schedule 2 of the plaint, had been purchased by the Bank in Mortgage Execution Case No. 63/44 and Mortgage Execution Case No. 51/52 against the judgment-debtor, one Madhavi Lata Lala. N. L. Sinha also sold away the rent receiving interests of this demised property by executing two Deeds of Conveyance on 26.6.54 in favour of the brother of Defendant No.1 and another. The official liquidator further learnt that when the sale in Mortgage Execution Case No. 51 of 1952 was set aside at the instance of the judgement-debtor Madhabi Lata in Misc. Case No. 2 of 1953 the lessee, Deft. No.1, instituted Money Suit No. 5 of 1957 for refund of the proportionate share of the consideration money of the lease alleging that the Bank lost its title in 8-annas' share of the demised property and also that the Bank has not acquired any title in R.S. Plot No. 2956 though it was included in the Lease-Deeds. This suit was decreed on 14.2.59 and in execution of the decree, another property of the bank, namely the land shown in Schedule 1 with a two storied building thereon was sold on 10.11.59 in Execution Case No. 25 of 1959 to Defdt. No.3, father of Defendant No.1, for a paltry sum of Rs. 17,517/- though this property valued over of lakhs of rupees. The plaintiff bank, represented by the Official Liquidator, alleged that the two lease deeds were fraudulent and collusive executed by N. L. Sinha who had no authority to transfer any property of the Bank and who, taking advantage of the chaotic condition of the Bank, misappropriated the entire consideration Money. It was further alleged that the decree in Money Suit No. 5 of 1957 and the sale in execution of the decree were also brought about in the same fraudulent and collusive manner causing great loss to the Bank. The plaintiff therefore, prayed, among other things, for setting aside the decree in money suit No. 1957 dated 14.2.59 as well as the sale held on 10.11.59 in execution of the decree.