Sree Bank Ltd. Vs. Sarkar Dutt Roy and
Co [1965] INSC 99 (9 April 1965)
09/04/1965
ACT:
Banking Companies Act (10 of 1949'), s. 45-O
and Banking Companies (Amendment) Act (52 of 1953)--Applicability to installment
decree.
HEADNOTE:
In 1949, the Banking Companies Act was passed
with a view to protect and secure the interests of depositors. In 1953 s. 45-O
was enacted by the Banking Companies (Amendment) Act, in pursuance of the
recommendations of the Banking Companies Liquidation Proceedings Committee.
Section 45-O (1) provided that in computing
the period of limitation prescribed for an application by a banking company
which is being wound up, the period commencing from the date of the
presentation of the winding up petition shall be excluded; and s. 45-O (3)
provided that sub-s. (1) shall also apply to a banking company in respect of
which the winding-up petition was presented before the commencement of the
Amendment Act, that is, 30th December 1953.
On 1st May 1947, a decree for a sum of money had been passed in favour of the appellant--Bank, against the respondents. The
decree provided that the amount which was due on 30th May should be paid in 6
annual installments each payable on 30th December from 1947 to 1952. The decree
also provided that if the respondents failed to pay any installment within 4
months of its becoming due, the appellant shall be entitled to realise all the
amounts then due, by execution. None of the installments was paid. On May 11,
1948 a petition for winding up of the appellant was presented and it was
ordered to be wound up on August 3, 1948. In August 1956 the liquidator filed
an execution application on the original side of the High Court, for realising
the amounts. The application was allowed, but the High Court, in Letters Patent
Appeal, held that the application was barred by time.
In appeal to this Court, the appellant
contended that in view of s. 45-O the application was within time:
while the respondents contended that: (1) all
the installments fell due by 1st May 1948 by operation of the default clause,
and therefore, the application was barred by Art. 182 (7) of the Limitation
Act, 1908, by the time s. 45- 0 was brought on the statute book; (ii) the
section has no retrospective operation so as to revive a debt which had become
barred at the date of its enactment; and (iii) if the default clause gave only
an option to the appellant so that it could apply for execution as and when an installment
fell due, then, the installments which fell due in 1947, 1948 and 1949 had
become barred before the enactment of the section;
and the installments which fell due during
the years 1948 to 1952 were also not saved from the bar of limitation, as the
section applied only to those cases where the right to execute had arisen
before the presentation of the winding-up petition.
709
HELD: (By full Court): Section 45-0 saved the
execution application from the bar of limitation imposed by Art.
182(7) of the Limitation Act. [712H; 719A;
727D; 742A] (i) Per Sarkar, J: The right to apply for execution in respect of
the installments under the decree arose on the dates on which they respectively
fell due. [713H] The default clause was only intended for the benefit of the
appellant and gave an option to the appellant to sue for the entire amount or
waive the benefit of the option, and the appellant had not taken advantage of
it. [713D, E, H] Ram Culpo Bhattacharji v. Ram Chunder Shome, (1887) I.L.R. 14
Cal. 352, referred to.
(ii) Per Sarkar, J: There is no reason why a
distinction should have been intended between debtors, the claims against whom
might have become barred before the section was enacted and those, the claims
against whom, became barred thereafter. In fact, the object of the section
would be better achieved by applying it to both classes. [715 F-G] One of the
methods by which, the object of the Act which was to protect depositors, could
be achieved is by extending the period of limitation for enforcement of the
claims of a bank in liquidation, so that more money may be collected for
payment to the depositors. That being so, the largest extension of the period,
which the language used is capable of, must have been intended. [715E-F]
Besides, s. 45-O(3) expressly makes sub-s. (1), applicable to a banking company
being would up on a petition presented before 30th December 1953 Under s.
45-0(1) and (3) a period which had started to run before that date could be
excluded, and, there is no hint that such exclusion is confined to cases where
the right had not become barred by that date. Subs. (3) must have been intended
to give full retrospective effect to subs. (1), as otherwise, it need not have
been enacted, because, sub-s. (1) would, by its own terms, apply to cases of
winding up on a petition presented before the Amending Act, and, considering the
intention of the Act, sub-s. (3) could not have been enacted as a surplusage or
ex abundanti cautela. Therefore, s. 45-0(1) applies to applications by the
banking company, even when they had become barred before the Amending Act. [716
B-E H;
717 C] Per Wanchoo, J: The appellant would be
entitled to exclude the entire period from 11th May 1948--the date of
presentation of the winding-up application--upto the date of the execution
application and would thus be entitled to execute the decree for the total of the
6 installments due.
[726 E] The language of s. 45-0(1) implies
that it was meant to be retrospective and that conclusion becomes inevitable
when it is read with sub-s. (3), in the background of the remedy that the
legislature intended to provide for the benefit of depositors. Section 45-0(1)
imperatively lava down that where an application is filed by a banking company
which was being would up on or after 30th December 1953 the Court must exclude
the period commencing from the date of presentation of the winding up petition
to the date of the application in computing the period of limitation. Further
by virtue of subs (3), subs. (1) applies not only to those banking companies
which were being wound up on petitions presented on or after the section came into
force, but also to those banking companies where the winding-up petition was
made before 30th December 1953 and whether the winding up order was made before
or after that date provided the banking company was in the process of being
wound up when the application was filed; and, there is no scope for the court
to consider 710 whether the application, if filed before 30th December 1953,
would barred by limitation or not. [722H; 723 A-B, D-E; 724 E] Per Raghubar
Dayal J: The appellant's application for execution is maintainable and not
barred by time, because, the effect of s. 45-0(1) is that, in applications made
by a banking company which is being would up, or for whose winding up a
petition has been presented before 30th December 1953, the period of limitation
is arrested on the date of the presentation of the winding up petition, and it
is not material whether such date is earlier than 30th December 1953 or net.
Therefore, the sub-section is retrospective, and an application can be made
even in regard to matters with respect to which such action could be taken on
the date of the presentation of the windup petition, but could not be taken,
because of efflux of time, on 30th December 1953. [731C; 736G. 737E] One of the
conditions for the application of the sub- section is that a "banking
company is being wound up", and this condition would be satisfied by all
companies with respect to which winding up orders had been made either before
30th December 1953 or thereafter. There is nothing in the language of the
sub-section to limit the expression to those companies which respect to which
winding up orders are made subsequent to that date. The provision is not for
the benefit of such companies only, but, is for the benefit of all companies
which would be in the process of winding up during the enforcement of the Act.
This is also apparent when sub-ss. (1) and (3) are read together. So read, the
period of exclusion would be available in connection with applications by a
banking company which is being wound up or with respect to which a petition for
winding up has keen made prior to 30th December 1953. If the provisions of sub-
s. (1) can apply to the banking companies with respect to which proceedings on
a winding petition were pending on 30th December 1953, there is no reason why
they should not apply to banking companies with respect to which winding up
orders had been made prior 'to that date. Further, if a restricted
interpretation is given to sub-s. (1), by confining it to cases where the cause
of action was not barred on 30th December 1953, then sub-s. (3) will have no
utility, because, that sub-section only provides that whatever advantage a
banking company can derive from the provisions of sub-s. (1) when it is being
wound up, would be available to it even if it is not being wound up, if a
petition for its winding up had been presented prior to 30th December 1953. The
only case in which the banking company can take advantage of sub-s. (3), then,
would be when the cause of action for the application has not lapsed by that
date and the proceedings on a winding up application were pending on that date.
But, such cases would be covered by the language of sub-s. (1)itself, for, the
cause of action would be alive on 30th December 1953 and the winding up order
would be made subsequent to that date. [734-B-E; 736B, E-H] Case law referred
to.
(iii) Per Sarkar and Raghubar Dayal, JJ.:
Section 45- 0(1) should be read as permitting the exclusion of the entire
period commencing from the date of the presentation of the winding up petition
where the debts became due before that date, and, in cases There the debt
became due subsequently such part of that period as commences from the date of
the accrual of the debt. [718E; 741F] Per Sarkar, J.: There is no reason why it
should have been intended that debts which fell due before the presentation of
the winding up petition but were not barred by that date could be 711
recovered, and not those which became due thereafter. No doubt, if the
sub-section is applied to the case of a debt accruing due to a banking company
after the presentation of a winding up petition, such a debt would be
completely free from the bar of limitation, but since it has that effect in the
case of debts which accrued due prior to the presentation of the petit,ion and
had not become barred on that date, the section must be construed as permitting
the whole of the period commencing from the presentation of the petition to be
excluded where in fact it could be done, and a part of that period only where
the whole of it could not be excluded. [717F, H; 718C, H] Cortis v. The Kent
Water Works Company, 7 B & C 314, referred to.
Per Raghubar Dayal, J: The appellant waived
its right under the default clause of the decree and sought execution for the
realisation of the various installments. Even so the execution application was
within time, because, a banking company is entitled to exclude, the period from
the date on which the winding up petition was presented upto the date of the
institution of the application, from the period of limitation prescribed, and
it would be illogical to hold that it is not entitled to ask that a shorter
period, as the case would be, when the cause of action arose subsequent to the
presentation of the winding up petition, should be excluded. It may be that
this means, the entire period of limitation is abrogated with respect to causes
of action arising subsequent to the date of the winding up petition, but it
would be anomalous to hold that action can be taken with the help of the
sub-section with respect to causes of action' which had arisen much earlier
than the date of the presentation of the winding up petition, but action cannot
be taken with respect to causes of action arising subsequent to such a date if
it had not been taken within the prescribed period of limitation. [740G, 741C,
G-H] Per Wanchoo J.: The present case is governed by s. 45- 0(3)' because, the
winding up petition was presented before s. 45-0(1) came into force, but by
virtue of sub-s. (3), sub-s. '(1) would apply. As there was default in the
payment of the installment due on 30th December 1947, the right to execute all
the remaining installments arose on ist May 1948 and since that right was not
waived, limitation for all the installments began even on ist May 1948, while
the winding up application was filed on 11th May 1948, and so, the appellant
could take advantage of the section and execute the decree for the entire
amount. [726A-E; 727C-D] Exclusion of time cannot take place where time has not
begun to run before the date from which the exclusion begins. Therefore, in
order that s. 45-0(1) should apply, it is necessary that the period of
limitation for the application should have begun to run before the date of
winding up petition, but should not have run out. [724-C] On this interpretation,
in the case of installment decrees without a default clause, the installments
which became due and were not paid before the winding up petition may be
recoverable by execution, while in the case of installments which became due
after the presentation of the petition, the exclusion provided by the section
would not come into play. But if the sub-section is interpreted as stopping
limitation in all cases, after the presentation of the winding up petition, it
will result in another anomaly, that there would be no limitation at all in a
case where the liquidator files a suit and gets a decree. [7241; 725A] 712
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 76 of 1952.
Appeal from the judgment and order dated
September 22, 1959 of the Calcutta High Court in Appeal from original order No.
230/1958.
A.N. Sinha and P.K. Mukherjee, for the
appellant. D.N.
Mukherjee, for the respondent.
The following judgments were delivered:
Sarkar, J. On May 1, 1947, a decree was
passed in favour of the appellant bank against the respondents by consent of
parties for payment of Rs. 31,000/- in the manner specified.
The decree provided that if the respondents
failed to pay any of the installments mentioned in it within four months of the
date of its becoming due, the appellant bank "shall deem all ... installments
in default and shall be entitled to realise all the said amounts by
execution". The amounts payable under the decree by May 30, 1947 were all
duly paid.
That left a sum of Rs. 21,000/- payable by
six annual installments, each payable on the 30th December of a year, the first
installment being payable in 1947 and the last in 1952. None of these installments
was paid and an application for realising them by execution was made on August
26, 1957.
In the meantime a petition for winding up the
appellant bank had been presented on May 11, 1948 and an order for winding up
had been made on August 3, 1948. Since then the appellant bank has been in the
course of winding up. The application for execution was made by the liquidator
in the course of the winding up.
Under Art. 182(7) of the First Schedule to
the Limitation Act 1908 an application for execution is barred if not made
within three years from the date on which the amount sought to be realised was
payable under the decree.
On December 30, 1953, s. 45-O was introduced
in the Banking Companies Act, 1949 by the Banking Companies (Amendment) Act,
1953. Sub-section (1) of that section is in these terms:
S. 45-0. (1) Notwithstanding anything to the
contrary contained in the Indian Limitation Act, 1908 or in any other law for
the time being in force, in computing the period of limitation prescribed for a
suit or application by a banking company which is being wound up, the period
commencing from the date of the presentation of the petition for the winding up
of the banking company shall be excluded.
The appellant bank claims that this section
saves its application for execution from the bar of limitation imposed by Art.
182(7). The respondents' answer to this contention is first that s. 45-O has no
retrospective operation; it does not revive a debt which was already barred at
the date of its enactment. Then they say that 713 all the installments fell due
on April 29, 1948 by the operation of the default clause and therefore, they
were all barred under Art. 182(7) by December 30, 1953 when s. 45-O was brought
on the statute book. Thirdly they say that if it is held that the default
clause gave the appellant bank an option which it had not exercised and the
right to apply for execution in respect of the installments arose on the dates
they respectively fell due, the installments which fell due on December 30 of
the years 1947, 1948 and 1949 had become barred before the date of the
enactment of s. 45-0 and that section could not revive them and the installments
which fell due in the years 1948, 1949, 1950, 1951 and 1952 were not saved from
the bar of limitation by s. 45-0 as it provided for exclusion of a period
commencing from the presentation of the petition for winding and was, therefore,
confined to cases where the right had arisen before such presentation, which
the right in regard to these installments had not.
First, as to the effect of the default
clause, no real difficulty arises. It obviously gave an option to the appellant.
As was said in Ram Culpo Bhattacharji v. Ram Chunder Shome(1), "The
proviso by which the whole amount of the decree becomes due upon default in
payment of any one installment is a proviso which, look at it how you will, is
put in for the benefit of the creditor, the decree-holder, and his benefit
alone; and when a proviso is put into a contract or security, and in 'security'
I include 'decree,' for the benefit of one individual party, he can waive it,
if he thinks fit." There is not the least doubt that the default clause in
the case in hand was intended for the benefit of the appellant bank; the clause
had no operation till the appellant bank wanted to take advantage of it. The
High Court took that view and with that I am in full agreement. The High Court further
held that the appellant bank had not exercised the option to enforce that
clause.
Bachawat J. expressly said that the appellant
"in fact has waived the benefit of that option." The learned Chief
Justice held in view of the option, that "the starting point of limitation
will be the dates On which each installment became due." He could have
held this only in the view that the option had not been exercised. None of the
parties appears to have contended to the contrary in the High Court.
This being a question of fact it cannot be
raised for the first time in this Court. On such a question of fact, the High
Court's finding is binding on us. Furthermore, undoubtedly if the respondents
wished to contend that the option had been exercised, it was for them to have
given evidence of such exercise but they did not do so. No such evidence has
been brought to our notice from the records of the case. It has, therefore, to
be held that the right to apply for execution in respect of the installments
under the decree arose on the dates on which they respectively fell due.
The next question as to whether s. 45-0 (1)
has a retrospective operation is of real difficulty. Having.
given the matter my (1) (1887) I.L.R 14 C.I
352, 354.
714 most anxious consideration, it seems to
me that the better view would be to hold that it has such an operation. The
general rule no doubt is, as was stated by Wright J. in In re. Athlumney,(1)
"Perhaps no rule of construction is more firmly established than
this--that a retrospective operation is not to be given to a statute so as to
impair an existing right or obligation, otherwise than as regards matter of
procedure, unless that effect cannot be avoided without doing violence to the
language of the enactment. If the enactment is expressed in language which is
fairly capable of either interpretation, it ought to be construed as
prospective only." It can no doubt be argued with force that no violence
will be done to the language used in sub-s.
(1) of s. 45-O if it is read as applying only
to cases where the right to apply has not become barred at the date of its
enactments. But there are other considerations.
Two reasons have operated on my mind to lead
me to the conclusion that the general rule should not be applied in the present
case. First, it is recognised that the general rule is not invariable and that
it is a sound principle in considering whether the intention was that the
general rule should not be applied, to "look to the general scope and
purview of the statute, and at the remedy sought to be applied, and consider
what was the former state of the law and what it was that the Legislature
contemplated.": see Pardo v. Bingharn(2). Again in Cries on Statute Law,
6th ed., it is stated at p. 395, "If a statute is passed for the purpose of
protecting the public against some evil or abuse, it may be allowed to operate
retrospectively, although by such operation it will deprive some person or
persons of a vested right." To the same effect is the observation in
Halsbury's Laws of England, 3rd ed., vol. 36 p. 425. This seems to me to be
plain commonsense. In ascertaining the intention of the legislature it is
certainly relevant to enquire what the Act aimed to achieve.. In Pardo v.
Bingham(2) a statute which took away the
benefit of a longer period of limitation for a suit provided by an earlier Act
was held to have retrospective operation as otherwise it would not have any
operation for fifty years or more in the case of persons who were at the time
of its passing residing beyond the seas. It was thought that such an
extraordinary result could not have been intended. In R.v. Vine(3) the words
"Every person convicted of felony shall for ever be disqualified from
selling spirits by retail ...... and if any person shall, after having been so
convicted, take out or have any licence to sell spirits by retail, the same
shall be void to all intents and purposes" were applied to a person who
had been convicted of felony before the Act was passed though by doing so
vested rights were affected. Melior J. observed (pp. 200-201). "It appears
to me to be the general object of this statute that there should be restraints
as to the persons who should be (1) (1898) 2 Q.B.D. 547, 551-552.
(2) (1869) L.R. 4 Oh. A. 735, 740.
(3) (1875) 10 Q.B. 195.
715 qualified to hold licences, not as a
punishment, but for the public good, upon the ground of character ... A man
convicted before the Act passed is quite as much tainted as a man convicted
after; and it appears to me not only the possible but the natural interpretation
of the section that any one convicted of felony shall be ipso facto
disqualified, and the licences, if granted, void." Now the object of the
present Act is beyond doubt. It is well known that prior to 1949 in our country
a large number of mushroom banks had come into existence and were in the
control of persons not very scrupulous or competent.
Many banks came to grief and failed with the
result that the depositors largely lost their moneys. It was with the object of
giving relief to these innocent depositors that the original Act of 1949 and
the Acts amending it were passed. A few of the sections may be referred to by
way of illustration. Section 43 of the Act provides that every depositor shall
be deemed to have proved his claim for the amount shown in the books of the
bank until the liquidator showed reasons for doubting the correctness of the
entry.
Section 43A gives a right to preferential
payment upto a sum of Rs. 250/- to such depositors. Indeed in Joseph Kuruvilla
Vellukunnel v. The Reserve Bank of India) it was observed by this Court at p.
656, "the whole intend (sic.) and purpose of that Act is to secure the
interests of the depositors." There need now be no doubt about the object
of the Act. One of the methods by which that object can be achieved clearly is
by extending the period of limitation for the enforcement of the claims of a
bank in liquidation so that more money may be collected for payment to the
depositors. That is why s. 45-O and its predecessor s. 45-F had been enacted.
Both extended the existing period of limitation in regard to claims by a bank
against its debtors. That being so, it would be natural to think that the
largest extension which the language used is capable of giving was intended.
Then I find no reason why a distinction should have been intended between
debtors the claims against whom might have become barred before the section was
enacted and those the claims against whom became barred thereafter. The object
would be better achieved by applying the section to both classes. I, therefore,
think that the Act was intended to have a retrospective operation.
The other reason why I think that sub-s. (1)
of s. 45-0 has a retrospective operation is provided by the terms of sub-s. (3)
of that section. Retrospective operation is of course a question of the
intention of the legislature and that intention has to be gathered from the
whole statute.
The two sub-sections have, therefore, to be
considered together: see Barber v. Pigden(1) and Hutchinson v. Jauncey (3). How
sub-s. (3) is in these terms:
The provisions of this section, in, so far as
they relate to banking companies being wound up, shall also apply to a banking
company in respect of which a petition (1) [1962] Suppl. 3 S. C.R. 622. (2)
(1937)IK.B. 664.
(3) (1950)IK.B. 574. (D)5SCI--7 716 for the
winding up has been presented before the commencement of the Banking Companies
(Amendment) Act, 1953.
It expressly makes sub-s. (1) applicable to a
banking company being wound up on a petition presented before the amending Act.
That would indicate that the first sub-section was intended to apply to suits
and applications by a banking company in liquidation even where the winding up
petition had been filed before the amending Act. It should, therefore, apply to
all such suits or applications even when they had become barred before the
amending Act. Again it is indubitable that as a result of the third subsection
a period which had started to run before the amending Act is to be excluded
under the first sub-section. The third subsection gives no hint that such
exclusion is to be confined to cases where the right had not become barred
before that Act. 1t expressly gives the first sub-section a retrospective
operation by permitting exclusion of an antecedent period. All this is strong
indication that sub- s. (1) is to have a retrospective operation.
If that is not the intention, then it is
clear to me that sub-s. (3) need not have been enacted at all for clearly the
first sub-.section would by its own terms have applied to cases of winding up
on a petition presented before the amending Act. It applies to all banking
companies being wound up and. therefore, also to such companies as are being
wound up on a petition presented before that Act. It could be said that even
then the first sub-section not have a retrospective operation but would only
apply prospectively to a banking company being wound up on a petition presented
before the Act. This may be illustrated by two cases. In R.v. St. Mary,
Whitechapel (Inhabitants)(1) Lord Denman C.J. said that a statute "is not
properly called a retrospective statute because a part of the requisites for
its action is drawn from time antecedent to its passing." Again in Master
Ladies Tailors Organisation v. Minister of Labour and National Service(2) it
was observed, "The fact that a prospective benefit is in certain cases to
be measured by or depends on antecedent facts does not necessarily ...... make
the provision retrospective." Why then was sub-s. (3) enacted? It must
have been to give sub-s. (1) full retrospective operation, to make it affect
vested rights. If it were not so, sub-s. (3) would have been a mere surplusage
or enacted ex abundanti cautela.
A statute is not to be so read unless that
reading is compelled by the words used. There are no such words and I do not
think that reading is justified by the rule of presumption that a. statute is
not intended to have a retrospective operation. In this case particularly
because of the clear intention of the Act to protect a sizable section of the public
consisting of the depositors, I feel that a reading of sub-s.
(1) (1848) 12 Q.B. 120 at. p. 127.
(2) (1950) 2 All. F.R. 525, 527.
717 (3) as a surplusage or ex abundanti
cautela would be unwarranted. Furthermore, if that sub-Section was enacted merely
ex abundanti cautela, then why did it not also say that the provisions of s.
45-O would apply to a case where the winding up order had been made before the
Act? Why was it not thought that caution was necessary to provide for such a
case also? I am not saying that sub-s. (3) does not make the section apply to a
case where the winding up order had been made before the amending Act. All that
I am saying is that the omission of a reference to the case of a winding up
under such an order shows that sub-s. (3) was not ex abundanti cautela. It must
have been intended to give full retrospective effect to s. 45-0 including
sub-s. (1) of that section.
It remains now to deal with the last point.
It is said that' since sub-s. (1) allows the period commencing from the date of
the presentation of the petition for winding up to be excluded in the
computation of the period of limitation, it can only apply to a case where the
period of limitation had commenced to run before that date. The contention is,
unless it did so, the whole of the period cannot be excluded and the section
permits exclusion of the whole or none. It is, therefore, said that even if the
first subsection had a retrospective operation, it could result in saving the
bar of limitation only so far as the application concerned the installment
which fell due on December 30, 1947 for the petition for the winding up of the
appellant bank had been presented on May 11, 1948 and, hence, before the other installments
became due and the period of limitation in respect of them commenced to run.
I am not inclined to accept this contention.
I see no reason why it should have been intended that debts which fell due
before the winding up petition was presented but were not barred on that date
could be recovered and not those which became due thereafter. It has to be
remembered that a liquidator is not always appointed on the presentation of the
petition for winding up and It does not infrequently happen that a long time
elapses between the two. It has also to be remembered that liquidator would
require quite some time after his appointment to get acquainted with the state
of affairs of the company in liquidation and start taking steps for the
recovery of its dues. Therefore, there is no reason to think that it was not
intended to give the benefit of the Act to a debt accruing due to a banking
company after the presentation of a petition for its winding up. No doubt if
sub-s. (1) is applied to a case of a debt accruing due after the presentation
of the petition for winding up, such a debt would be completely free from the
bar of limitation. But, is there any reason to think that this was not
intended? I find none apart from a rigid and somewhat technical reading of the
words used and this I am unable to accept, as it, to my mind, manifestly
defeats the object of the Act. I here wish to point out that the bar of
limitation is completely lifted in the case of a debt accruing due before the
presentation of the petition for winding up which had not become time barred
718 then, and it is natural to think that the intention must also have been to
lift the bar completely in the case of debts accruing due subsequently. There
is no reason to make a distinction between the two classes of debts. I may add
that the complete lifting of the ban of limitation would not produce an
astounding result or a great hardship. It has to be remembered that the Act is
geared up to seeing that the winding up proceedings are concluded as quickly as
possible.
To ensure that, large powers have been given
to the Reserve Bank of India. Therefore, the removal of the bar of limitation
should not keep a debtor in suspense for an inordinately long time. It is true
that the sub-section does not expressly say that the bar of limitation is
totally removed in certain cases. That however is no reason for saying that it
has not that effect. It clearly has that effect in the case of debts which
accrued due prior to the presentation of the winding up petition and had not
become barred on that date, even though the sub-section does not expressly say
so. The absence of these words, therefore, is not a reason leading to the view
that debts which became due after the presentation of the petition for winding
up were not intended to be protected.
In my view, the first sub-section should be
read as permitting the exclusion of the entire period commencing from the date
of the presentation of the petition for winding up where the debts became due
before that date and in cases where the debt became due subsequently, such part
of that period as commences from the date of the accrual of the debt. I think
such a reading has the support of authority. In Cortis v. The Kent Water-works
Company(1) it was held that a statute which enabled a rate to be made upon
certain persons and permitted a person against whom the rate had been made to
file an appeal against the order making it on his entering into a recognizance,
allowed a corporation which could not enter into a recognizance, to prefer the
appeal without doing so. It was said that any other reading of the Act would
defeat the object of the statute which was to subject corporations to rates.
Bailey J. observed, "But assuming that they cannot enter into a
recognizance, yet if they are persons capable of being aggrieved by and
appealing against a rate, I should say that part of the clause which gives the
appeal applies to all persons capable of appealing, and that the other part of
the clause which requires a recognizance to be entered into applies only to
those persons who are capable of entering into a recognizance, but is
inapplicable to those who are not." (p. 331). On the same principle I
would hold that the section permitted the whole of the period commencing from
the presentation of the petition for winding up to be excluded where it could in
fact be so done and a part of that period only where the whole of it could not
be excluded. Any other reading would, to my mind, defeat the object of the Act
and should, therefore, be avoided.
(1).7 B.& C. 314.
719 In the result 1 would allow the appeal,
set aside the judgment of the appellate bench of the High Court, and hold that
the decree was fully executable. The appellant will be entitled to take all
steps for such execution as arc permitted to it in law. The appellant will get
the costs here and below.
Wanchoo, J. This appeal on a certificate
granted by the Calcutta High Court raises a question as to the interpretation
of s. 45-0 of the Banking Companies Act, No.
X of 1949, (hereinafter referred to as the
Act). The section was enacted in the present form by the Banking Companies
(Amendment) Act, No. LII of 1953.
It is necessary to state certain facts which
are not in dispute now in order to see how the question arises. The
appellant-bank (in liquidation) through its Midnapore branch got a compromise
decree against the respondent on May 1, 1947, for the sum of Rs. 31,000/- of
which Rs. 2,155 were paid by the respondent that very day. The decree provided
that Rs. 6,885/- were to be paid by May 9, 1947 and the balance of Rs. 22,000/-
in seven installments as under: -- 1. Rs. 1,000/- on May 30, 1947.
2. Rs. 2,000/- on December 30, 1947.
3. Rs. 4,000/- on December 30, 1948.
4. Rs. 4,000/-on December 30, 1949.
5. Rs. 4,000/- on December 30, 1950.
6. Rs. 4,000/- on December 30, 1951.
7. Rs. 3,000/- on December 30, 1952.
The sum of Rs. 6,885/- and the first installment
of Rs. 1,000/were duly paid, but the respondent did not pay the second installment
due on December 30, 1947, nor did he pay the subsequent installments. On May
11, 1948, a winding-up petition was presented in consequence of which the
appellant-bank was wound-up by an order dated August 3, 1948. Paragraph 5 of
the compromise, which was part of the decree provided that if the judgment
debtor did not pay any installment and committed default, then four months
after such default, all the installments shall be deemed to be in default and
the decree-holder would be entitled to recover the entire amount of the decree
by execution proceedings.
It appears that the appellant attempted by
applications presented in 1948 and 1950 to execute decree. It is, however,
unnecessary to set out the details of those proceedings at this stage. Suffice
it to say that nothing was realised in those proceedings and that the
proceedings started on the application presented in 1950 were subsequently
transferred to the High Court in view of the relevant provisions of the Act,
which had come into force meanwhile.
On August 24, 1957, the appellant presented
an application in tabular form for execution of the decree on the ordinary
original 720 civil side of the Calcutta High Court, and the present appeal has
arisen out of the proceedings following thereon.
It was stated in the application that the
respondent had failed to pay the amount of the decree under execution and that
the appellant had been wound up by an order of the court dated August 3, 1948
on a petition for winding-up presented to it on May 11, 1948. It was prayed
therefore that the High Court liquidator who was the official receiver of the
appellant be appointed receiver without security and without remuneration to
collect and realise amounts payable to the respondent by the Executive
Engineer, Works and Buildings Department, Midnapore Division up to a maximum
limit of Rs. 35,000/-. A prayer was also made for the appointment of an interim
receiver and an interim order for appointment of such receiver was made on
August 26, 1957, which order was confirmed on June 2, 1958. The respondent
thereupon appealed and the main question that was raised then on its behalf was
that the execution of the decree was barred by limitation. The appellant the
other hand contended that in view of the provisions contained in s. 45- 0 of
the Act, the application was within time. The appeal court held on an
interpretation of s. 45-O that the execution was barred by limitation. It is
against this order that the present appeal has been flied on a certificate
granted by the High Court.
The contention of the respondent was that the
execution application flied in 1957 was a fresh application and was clearly
barred by time.
The appellant met this objection on the basis
of the provisions of s. 45-O of the Act which reads as under:-- "(1)
Notwithstanding anything to the contrary contained in the Indian Limitation
Act, 1908 or in any other law for the time being in force, in computing the
period of limitation prescribed for a suit or application by a banking company,
which is being wound up, the period commencing from the date of presentation of
the petition for the winding up of the banking company shall be excluded.
(2) .........
(3) The provisions of this section, insofar
as they relate to banking companies being wound up, shall also apply to a
banking company in respect of which a petition for the winding up has been
presented before the commencement of the Banking Companies (Amendment) Act,
1953." I have already mentioned that the application for winding up the
appellant was presented on May 11, 1948. The winding up order was made by the
High Court on August 3, 1948. The Act came into force on March 16, 1949. On
March 18, 1950, the Banking Companies (Amendment) Act, No. XX of 1950 721 came
into force. On October 24, 1953 the Banking Companies (Amendment) Ordinance No.
IV of 1953 was promulgated and lastly on December 30, 1953, the Banking Companies
(Amendment) Act. No. LII of 1953 came into force. The case of the appellant
throughout has been that the period from May 11, 1948 (when the winding-up
petition was made) to August 26, 1957 (when the execution application was made)
had to be excluded in computing the period of limitation in view of sub-ss. (1)
and (3) of s. 45-O of the Act. This contention was rejected by the High Court.
It was held that s. 45-O did not have retrospective effect in the sense of
reviving rights which had become barred on the date it came into force and in
this view an application for execution of the entire amount was barred by time
counting from the first default. In the alternative it was held that installments
2, 3 and 4 had become time barred before the coming into force of s. 45-O on
December 30, 1953 and as there was nothing in s. 45-O which could revive claims
which had become time barred no execution could be taken out in respect of
them.
The High Court further held that s. 45-O
could not apply to installments 5, 6 and 7 as the cause of action to execute
the decree for realisation of amounts due under those installments arose
subsequent to the date on which the petition for winding up was presented and
the language of sub-s. (1) of s. 45-O indicated that its provisions were to
apply only to cases where the period for the presentation of an application had
commenced to run prior to presentation of the winding-up application. The High
Court consequently held the application for execution to be barred by time.
It is well-settled that provisions of an
enactment operate prospectively. and that the right to sue or apply, which has
become barred by lapse of time under the previous law, does not revive unless
the new law, expressly or by necessary implication, so provides. The High Court
held that there was nothing in s. 45-0 which could lead to the conclusion that
its provisions had retrospective effect in the sense that the right to apply
which had become time- barred on December 30, 1953 when the Amendment Act came
into force, could revive, and consequently enable the appellant to apply for
execution.
The principal question therefore is whether
the language of s. 45-O (1) read with s. 45-O (3) is retrospective in operation
and revives claims that might have become barred by Limitation on the date when
that section came into force i.e. December 30, 1953. Now so far as sub-s. (3)
is concerned, that provision is certainly retrospective in the sense that it
applies the provisions of s. 45-O (1) to all banking companies which were being
wound up on December 30, 1953, and thereafter, even though the application for
winding up might have been made before December 30, 1953.
The main purpose of sub-s. (3) obviously is
to make it clear that s. 45-O (D applies not only to those cases of banking
companies where application for winding up is made on or after December 30,
1953 but also to those where the application for winding-up had 722 been made
before December 30, 1953 so long as the conditions for the application of s.
45-0 (1) are fulfilled. The effect of this on the construction of sub-s. (1)
will be considered presently.
Section 45-O (1) begins with a non-obstante
clause and prescribes a special manner of computing the period of limitation in
cases governed thereby notwithstanding anything to the contrary in the Indian
Limitation Act, 1908.
The first condition that is necessary for the
application of s. 45-O O) is that the suit or application should be by a
banking company which is being wound up. Thus s. 45-O (1) will not apply to a
banking company which is not being wound up or where the winding up is over. It
thus applies to a banking company between the date of the winding up petition
and the conclusion of the winding up proceedings after a winding up order has
been made. Where a suit or application is made by a banking company which is
being wound up, the sub-section provides for exclusion of a certain period in
computing the period of limitation prescribed in the Indian Limitation Act,
1908. The exclusion is of the time commencing from the date of presentation of
the petition for the winding up of a banking company to the date of suit or
application. Thus where a banking company which is being wound up files a suit
or makes an application on or after December 30, 1953, when s. 45-O (1) came
into force, the subsection directs that in such circumstances the period of
limitation shall be calculated by excluding the period commencing from the date
of presentation of the petition for winding-up upto the date of the filing of
the suit or application. These words in my opinion are categorical and lay down
what period shall be excluded when a suit or application is filed by a banking
company. which is being wound up. I cannot agree with the High Court that in
applying s. 45-O (1) the court has to consider whether the relief claimed in
the suit or application by a banking company which is being wound up had become
barred by limitation before December 30, 1953. when s. 45-0 came into force.
The condition necessary for the application of s.
45-O (1) is that the suit or application
should be filed by a banking company which is being wound up. Once it is clear
that the suit or application is filed by a banking company which is being wound
up, the court must exclude the period of limitation from the date of
presentation of the petition for winding upto the date of the filing of the
suit or application. In what manner the exclusion can be made will be
considered later. But these words leave no scope to the court to consider
whether the suit or application, if filed before December 30, 1953, would be
barred by limitation or not. They imperatively lay down that where an
application or suit is flied by a banking company (which is being wound up) on
or after December 30, 1953, when s. 45-O (1) came into force, the court must
exclude the period commencing from the date of presentation of the petition for
winding-up to the date of the suit or application in computing the period of
limitation. Further by virture of sub-s. (3), sub-s. (1) applies not only 723
to those banking companies which were being wound up on applications presented
on or after s. 45-O (1) came into force, but also to those banking companies
where the application for winding-up was made before December 30, 1953,
provided the banking company was in the process of being wound up when the suit
or application was filed. The Act was passed for the benefit of depositors and
to give time to liquidators to familiarise themselves with the affairs of
banks. That is why sub-s. (3) applied sub-s. (1) to all banking companies in
liquidation even though the petition for winding-up might have been made before
the Act came into force. It follows that the legislature intended to help
depositors in all banks in which liquidation proceedings were not over. Sub-section
(3) would lose a large part of its efficacy if sub-s. (1) and sub-s. (3) read
together are not interpreted to provide for retrospective operation of the
provisions of sub-s. (1). It will be giving full effect to the intention of the
legislature and advancing the remedy intended to be given to depositors if
sub-s. (1) and sub-s. (3) are read together to be retrospective in the manner
indicated above. The language of sub-s. (D on its plain reading necessarily
implies that it was meant to be retrospective and that conclusion becomes
inevitable when it is read with sub-s. (3) in the background of the remedy that
the legislature intended to provide for the benefit of depositors.
It may be mentioned that the Banking
Companies (Amendment) Act, No. XX of 1950, had also provided a special period
of limitation by s. 45-F which was in these terms:-- "45-F. Special period
of limitation--Notwithstanding anything to the contrary contained in the Indian
Limitation Act, 1908 (IX of 1908) or in any other law for the time being in
force, in computing the period of limitation prescribed for any suit or
application by a banking company, the period of one year immediately preceding
the date of the order for the winding up of the banking company shall be
excluded." That provision however only excluded one year immediately
preceding the date of the order for the winding-up of the banking company. It
seems thereafter the Banking Companies Liquidation Proceedings Committee 1952
was appointed and had recommended that "provisions may be made by the
legislature to the effect that limitation will stop running against a banking
company from the date of the winding-up order." This recommendation
appears to be the basis of s. 45-0.
Even so the words of s. 45-O have to be
interpreted as they stand whatever may have been the recommendation of the
committee and on a plain construction of those words it is quite clear that
sub-s. (1) of s. 45-0 provides in the case of a suit or application filed by a
banking company which is being wound up that the period commencing from the
date of presentation of the petition for winding-up of the banking company 724
to the date of suit or application shall be excluded.
It will however be seen that though the
committee recommended that limitation should stop running against a banking
company from the date of the winding-up order, the legislature made two changes
when it proceeded to enact s.
45-O (1) of the Act. In the first place it
did not provide for stopping of the running of limitation; it provided for
exclusion of a certain period. It further provided for exclusion of the period
commencing from the presentation of a winding-up petition and not from the
winding-up order as recommended by the committee. Now exclusion has been
provided in ss. 12 to 16 of the Limitation Act also. It is well settled that
exclusion of time cannot take place where time has not begun to run before the
date from which the exclusion begins or the time limited has already expired
before such date. There can thus be no question of exclusion where the time has
not begun to run and is not continuing to run. Therefore, though the committee
might have recommended that limitation should stop running from the date of the
winding-up order, the legislature adopted the well-known device of exclusion in
order to help banking companies in realising their dues. I may add that in the
earlier provision in Act XX of 1950 also. the legislature had only provided for
exclusion and the same device was continued when s. 45-O (1) was introduced by
the Amendment Act of 1953. It is therefore clear that when the legislature
enacted s. 45-O (1) it made two changes already indicated in the recommendation
of the committee and those changes are clear from the words of s. 45-O.
Therefore, in order that s. 45-O (1) should apply, it is necessary firstly that
the banking company should be in the process of being wound up when the suit or
application is being filed, and secondly that the period of limitation for the
suit or application should have begun to run before the date of the winding-up
petition but should not have run out before such date. Otherwise there can be
no question of excluding the period beginning from the date of presentation of
the petition for winding-Up of the banking company. Further in view of sub-s.
(3) of s. 45-O, sub-s. (1) thereof will apply to all banking companies which
are in the process of being wound up, even if the petition for winding-up was
made before s. 45-0 (1) came into force and even if the winding- up order was
made in such case whether before or after the date on which s. 45-O (1) came
into force i.e. December 30, 1953.
It is however urged that on this
interpretation there may be some anomalies, particularly in the cases of installment
decrees. For example, it is said that where an installment decree provides for
six yearly installments and does not provide for any default clause it may
happen that some installments may become due and may not be paid before a
winding-up petition while other installments may become due after the
winding-up petition. In such a situation, the installments which became due and
were not paid before the winding-up petition may be recoverable by execution
725 under s. 45-0 (1) for the period of limitation having begun and not having
run out the exclusion provided by s. 45-O (1) comes into play, while in the
case of installments, which became due after the presentation of the winding-up
petition, the period of limitation not having begun exclusion could not come
into play. It is said that it would be rather anomalous that earlier installments
should be recoverable but not later ones. It is submitted that if the
subsection is interpreted to lay down stoppage of the period of limitation
after the presentation of the winding-up petition it will equally cover all installments.
It may be accepted that there would be this anomaly on the interpretation which
I have accepted. But the language is clear and provides for exclusion which can
only take place after the period of limitation has begun and before it has run out.
Therefore, whatever the anomaly where the language is clear and unambiguous it
has to receive the only construction of which it is capable. As against this I
may point out that if the language of s. 45-O (1) is interpreted as stopping of
limitation in all cases after the presentation of the winding-up petition it
will result in equal anomalies. Take a case where a liquidator files a suit and
gets a decree. Was it the intention of the legislature by this provision to lay
down that there would be no limitation in such a case for the execution of the
decree? That would be the result if the provision in s. 45- 0 (1) is
interpreted as meaning stoppage of all limitation from the date of the
presentation of winding-up petition.
But it could hardly be the intention of the
legislature that the liquidator in such a case should not execute the decree
which he gets within the period of limitation provided by the Indian Limitation
Act. The reason for exclusion provided in s. 45-0 (1) appears to be that after
a winding- up order the liquidator takes charge and he will naturally take time
to familiarise himself with the affairs of the company. So in all cases where
time has begun to run before the winding-up petition and has not run out, the
liquidator should get some breathing space and that is why the period from the
date of the winding-up petition is excluded. But where the time has not begun
to run before the windings petition, the liquidator would have ample time
within which to know the true state of affairs and in such a case the
legislature did not intend that there should be no limitation as provided in
the Indian Limitation Act. That is why one finds the language of exclusion in
s. 45-O (1).
The benefit of that provision is meant for
cases where time has begun to run but has not run out before the presentation
of the winding-up petition; it is not meant to provide that there would be no
limitation in all cases where banking companies are in the process of
liquidation. In any case if the legislature wanted to make such a sweeping
provision I should have found appropriate language for that purpose in s. 45-O
(1). In the absence of such appropriate language, the provisions of s. 45-O (D
which appear to be clear and unambiguous, must receive their only proper construction
already set out above.
726 Let me now see how this construction
applies to the facts of the present case. The present case is governed by s.
45-O (3) because the winding-up petition was presented before s. 45-O (1) came
into force, but by virtue of sub-s.
(3) of s. 45-O, sub-s. (1) would apply to the
present case.
The question then is whether limitation had
begun to run before May 11, 1948 on which date the winding-up petition was
presented and if so for which installments or for the whole of the amount. If
limitation had begun to run before May 11, 1948. the period from May 11, 1948
upto the date of the application for execution on August 26, 1957, would have
to be excluded. Now the evidence is that there was default in payment of the installment
due on December 30. 1947. So the period of limitation for that installment
certainly began to run from that date. Further paragraph 5 of the compromise to
which I have already referred lays down that if payment was not made of any installment
within after four months of the due date, the entire remaining decretal amount
would also become due. These four months expired on April 30, 1948 and from May
1, 1948 the appellant bank was entitled to execute the entire decretal amount
that remained due. Therefore the right to execute all the remaining installments
arose on May 1, 1948. Thus limitation for all the installments from second to
seventh began on May 1, 1948 while the application for winding up was made on
May 11, 1948. In view of the interpretation of s. 45-0 (1) which I have
accepted, the appellant would be entitled to exclusion of the entire period
from May 11, 1948 upto the 6ate of the execution application, and would thus be
entitled to execute the decree for Rs. 12,000/which is the total of installments
2 to 7 with interest.
But it is said that the appellant cannot
execute the whole decree as it had waived the first default. I have already
indicated that the High Court had considered the matter both from the point of
view of the whole amount and of each installment. No question of waiver was
raised by the respondent in his objection-petition. On the other hand it seems
to have been urged before the High Court that limitation started from the first
default i.e., May 1, 1948 and so there was no question of considering the
matter of later installments at all. This was negatived by the High Court on
the authority of Ranglal Aggarwalla v. Shyrnlal Tamuli(1) and that is how the
High Court came to consider the question of installments in the alternative.
Besides it appears that two execution
applications were made in this case one in February 1948 and the other in.
July 1950. When the first execution
application was made the default clause had not come into operation and the
appellant only wanted execution of the second installment of Rs. 2,000/- and
prayed for attachment for Rs. 2,030/-, including interest. So there could be no
waiver then. The second execution application was made not only after (1)
(1945-46) 50 C.W.N. 735.
727 the first default but after two other defaults
also of the installments of Rs. 4,000/- each due on December 30, 1948 and
December 30, 1949. The total of installments then in default was only Rs.
10,000/-. Though a copy of the second execution application is not printed in
the record, it is clear from the particulars in the present tabular form filed
in 1957 that the relief sought at the second execution was by attachment for
Rs. 26,070/-. Clearly therefore the appellant was executing the whole decree
after the default and there can be no question of waiver in the circumstances:
(see also the appellant's statement of case
paragraph 20).
Bachawat J. (as he then was) who delivered a
short separate judgment has certainly said that the present appellant could
waive and had in fact waived the benefit of the default. But that with respect
does not appear to be accurate. I am therefore of opinion that there was no
waiver of the first default and so the appellant can take advantage of s. 45-0
and execute the decree for the entire amount.
I would therefore allow the appeal and set
aside the order of the High Court, and order that execution should proceed
according to law. The appellant will get its costs incurred before the appeal
court and this court from the respondent. The remaining costs will abide the result.
Raghubar Dayal, J. This appeal, by
certificate under art. 133(1)(a) of the Constitution, requires the construction
of s. 45-0 of the Banking Companies Act, 1949 (Act X of 1949), hereinafter
called the Act. This section was enacted in its present form by the Banking
Companies (Amendment) Act, 1953 (Act LII of 1953). hereinafter called the
Amending Act.
The question arises on these facts. The
appellant bank, through its Midnapore Branch, obtained a compromise decree
against the respondent in O.S. No. 25 of 1947 of the First Court of the
Subordinate Judge, Midnapore, on May 1, 1947.
The decree was for an amount of Rs. 31,000/-
of which Rs.
2,115/were paid by the respondent that very
day. The decree provided that Rs. 6,885/- were to be paid by May 9, 1947 and
the balance of Rs. 22,000/- in seven installments as under:
1. Rs. 1,000/- on May 30, 1947.
2. Rs. 2,000/- on December 30, 1947.
3. Rs. 4,000/- on December 30, 1948.
4. Rs. 4,000/- on December 30, 1949 5. Rs.
4,000/- on December 30, 1950.
6. Rs. 4,000/- on December 30, 1951.
7. Rs. 3,000/- on December 30, 1952.
The judgment-debtor respondent did not pay
the second and subsequent installments. Paragraph 5 of the compromise which
formed part of the decree provided that if the plaintiff decree-holder 728 did
not get the amount due to it on account of the installments within 4 months
from the time of default, it was to deem, on the expiry of the said 4 months,
all the other installments to be in default and would be entitled to realise
the entire amount of the decree then due through execution proceedings.
The appellant attempted, by applications
presented in 1948 and in 1950, to execute the decree. The details relating to
these applications and the proceedings thereon need not be set out here as they
do not affect the question for consideration. Suffice it to say that nothing
was realised in these proceedings and that the proceedings started on the
application presented in 1950 were subsequently transferred to the High Court
in view of the relevant provisions of the Act.
On August 24, 1957, the appellant presented
an application in a Tabular form for execution of the decree, on the ordinary
original civil side of the Calcutta High Court. It was stated in column 10
meant for noting the mode in which the assistance of the Court was required
that the defendant judgment debtor had failed to pay any portion of the
decretal amount or interest, that the decree-holder Bank was wound up by an
order of the Court dated August 3, 1948 on a petition for winding-up presented
to it on May 11, 1948 and that the Court Liquidator, High Court, and the
Official Liquidator of the decree-holder Bank, be appointed receiver without
security and without remuneration, to collect and realise the amount payable to
the defendant firm and/or Sukumar Dutta. one of its partners, by the Executive
Engineer, Works & Building Department, Midnapur Division, upto a maximum
limit of Rs. 35,000/-. A further prayer was made that an interim receiver be
appointed before issue of any notice of the application to the judgment debtor.
On this application an interim order for the appointment of a receiver was made
on August 26, 1957. This order was confirmed on June 2, 1958. The
judgment-debtor respondent appealed against this order contending that the
execution of the decree was barred by limitation. The High Court agreed with
the contention and dismissed the application and also set aside the order for
appointment of receiver. It is against this order that this appeal has been
presented under a certificate from the High Court.
The contention for the judgment-debtor is
that the execution to realise installments number 2 to 7 had expired long
before August 24, 1957 when the execution application in tabular form had been
presented as the date for the payment of the last installment was December 30,
1952. The period of 4 months after the expiry of December 30, 1952 within which
the decree-holder could execute the decree expired on May 1, 1953. The
execution application was presented after the expiry of 3 years of this date.
This 729 objection on the ground of limitation was met by the decree- holder
Bank on the basis of the provisions of s. 45-O of the Act which reads:
"(1) Notwithstanding anything to the
contrary contained in the Indian Limitation Act, 1908 or in any other law for
the time being in force, in computing the period of limitation prescribed for a
suit or application by a banking company which is being wound up, the period
commencing from the date of presentation of the petition for the winding up of
the banking company shall be excluded.
(2) Notwithstanding anything to the contrary
contained in the Indian Limitation Act, 1908 or section 543 of the Companies
Act, 1956 or in any other law for the time being in force, there shall be no
period of limitation for the recovery of arrears of calls from any director of
a banking company which is being wound up or for the enforcement by the banking
company against any of its directors of any claim based on a contract, express
or implied;
and in respect of all other claims by the
banking company against its directors, the period of limitation shall be twelve
years from the date of the accrual of such claims or five years from the date
of the first appointment of the liquidator, whichever is longer.
(3) The provisions of this section, in so far
as they relate to banking companies being wound up, shall also apply to a
banking company in respect of which a petition for the winding up has been
presented before the commencement of the Banking Companies.
(Amendment) Act, 1953." To appreciate
the contention based on this section it is necessary to mention a few more
facts. On May 11, 1948, a petition for winding-up by the Bank was presented. The
winding-up order was made by the High Court on August 3, 1948. The Act came
into force on March 16, 1949. On March 18, 1950, the Banking Companies
(Amendment) Act, 1950 (Act XX of 1950) came into force. On October 24, 1953,
the Banking Companies (Amendment) Ordinance IV of 1953 was promulgated and
lastly, on December 30. 1953, the Amending Act came into force. The contention
for the appellant before the High Court and in this Court is that the period
between May 11, 1948 when the windings application was filed and August 1957
when the execution application was presented, is to be excluded from the
computation of the period of limitation, in view of sub-ss. (I) and (3) of s.
45-O of the Act. This contention was rejected
by the High Court on the ground that installments Nos. 2, 3 and 4 had become
time barred before the coming into force of s. 45-O on December 30, 730 1953
and that there was nothing in s. 45-0 to revive the claims which could not be
enforced due to the lapse of time under the provisions of the Limitation Act.
Section 45-0 was not held to apply to the case of installments 5, 6 and 7 as
the cause of action to execute the decree for the realisation of the amounts
due under these installments arose subsequent to the date on which the petition
for winding-up was presented and the language of sub-s. (1) of s. 45-O
indicated that its provisions were to apply only in cases where the period for
the presentation of an application had commenced to run prior to the
presentation of the winding-up application. The High Court, consequently, held
the application for execution to be barred by time and dismissed it.
The contentions urged before the High Court
by the respective parties have been repeated before us. It is thus that the
question of the construction of s. 45-O of the Act has arisen.
It is no doubt true that the provisions of an
enactment operate prospectively and that the consensus of opinion is that
unless they expressly or by necessary implication provide otherwise. the right
to sue or apply which had become barred by lapse of time under a previous
enactment is not revived by the succeeding enactment. The High Court was of
opinion that there is nothing in s. 45-0 which could lead to the conclusion
that its provisions had retrospective effect in the sense that the right to
apply which had become time-barred on December 30, 1953, when the Amending Act
came into force, could revive and consequently enable the Banking Company to
apply for that relief. Lahiri, C.J. said:
"On this point it is significant to note
that sub-section 3 of section 45-O makes the provisions of the section
applicable only to a banking company in respect of which a petition for
winding-up has been presented before the commencement of the Banking Companies
(Amendment) Act of 1953; but does not make the provisions of the section
applicable to debts due to the banking company which had become barred by lapse
of time before the date of such commencement. Then again sub-section 1 of
section 45-0 provides that the period commencing from the date of the
presentation of the petition for winding-up of the banking company shall be
excluded and does not say that this period shall always be deemed to have been
excluded. The use of the future tense in sub-section (1) indicates that the
Legislature did not intend its provisions to operate on decrees which had
before the date of its commencement become unenforceable by lapse of time.
There is therefore neither any express word nor any necessary implication in
section 45-0 to indicate that its provisions were intended by the Legislature
to have retrospective effect." 731 Bachawat J., practically took the same
view and said that sub-s. (1) of s. 45-0 did not provide that the period from
the date of presentation of the petition for winding-up of the banking company
would be always deemed to have been excluded and that though sub-s. (3) of s.
45-O specially provided for the retrospective application of the section to a
banking company the Legislature deliberately had not provided that sub-s. (1)
of s. 45-O would have a larger retrospective operation.
I am of opinion that sub-s. (1)--and
specially when read with sub-s. (3)of s. 45--0.) operates retrospectively and
that the appellant's application for execution presented to the High Court in
1957 for executing the decree for the realisation of the installments in the
payment of which the respondent judgment-debtor made default was maintainable
and not barred by time.
It is not necessary for the retrospective
operation of the provision of an Act that it must be stated that its provisions
would be deemed to have always existed. That is one mode and may be an
effective mode of providing that the provisions would have retrospective
effect. Retrospective effect of an enactment can also be gathered from its
language and the object and intent of the legislature in enacting it.
In The Queen v. Vine(1) an enactment which
was penal in nature was construed to have retrospective effect despite the rule
that when an enactment is penal in nature it is not to be construed retrospectively
if the language is capable of having a prospective effect given to it and is
not retrospective, as the object of the' enactment was not to punish offenders
but to protect the public against public-houses in which spirits were retailed
being kept by persons of doubtful character.
Government had been making laws for
exercising control over the Banks since 1936 upto which time the Indian Companies
Act, 19 13, governed the working of Banking Companies as well. In that year, Part
10A was added to the Indian Companies Act. Amendments were made to this Part
subsequently and, ultimately, it was repealed by the Banking Companies Act,
1949. In this Act too, Part 3A was added by the Amending Act of 1950. The
Amending Act of 1953 substituted the present Part 3A in the Act for the Part
originally introduced in 1950.
Section 45-F which was inserted in the Act by
the Amending Act of 1950 may be quoted, as some reference to it would be made
subsequently. It reads:
"45F. Special period of
limitation--Notwithstanding anything to the contrary contained in the Indian
Limitation Act, 1908 (IX of 1908), or in any other law for (1) L.R. 10 Q.B.
195.
(D)5SCI-- 8 732 the time being in force, in
computing the period of limitation prescribed for any suit or application by a
banking company, the period of one year immediately preceding the date of the
order for the winding-up of the banking company shall be excluded." A
scrutiny of the provisions of the Act and especially of Part 3A clearly
indicates that the object of the Legislature in enacting these measures was to
protect the interests of the depositors of the banking company and to expedite
winding-up proceedings. We need not refer to the provisions which would
indicate such a purpose of the Legislature. The expeditious disposal of the
winding-up proceedings is clear by the provisions by s. 40 which provides that
notwithstanding anything to the contrary contained in s.
466 of the Companies Act, 1956, the High
Court shall not make any order staying the proceedings in relation to the
winding-up of a banking company, unless the High Court is satisfied that an
arrangement has been made whereby the company can pay its depositors in full as
their claims accrue.
In Joseph Kuruvila Vellukunnel v. The Reserve
Bank India(1), it was observed:
"An examination of the Banking Companies
Act reveals two things prominently. The first is that the whole intent and
purpose of that Act is to secure the interests of the depositors..." It
can be presumed that companies which are wound-up had been usually mismanaged.
Mismanagement can also account for the failure of the banking company to sue
the debtors for the recovery of the amounts due to the banking company within
limitation. This injures the interests of the depositors and others concerned
in the proper running of the banking company. It is again within the range of
possibility, nay probability, that the liquidator appointed for the banking
company when it is ordered to be wound up would require some substantial time
to acquaint himself with the complete position about the affairs of the company
and that during such period limitation for instituting suits or making
applications in the interests of the banking company may expire. This aspect is
fully explained in paragraph 57 of the Report of the Banking Companies
Liquidation Proceedings Committee, 1952, which is set out below:
"The Committee has also considered the
question as to whether the law of limitation should be further relaxed in
favour of the Liquidator. The Liquidator has already been granted a year's
grace by Section 45F of the:
(1) [1962] Supp. 3 S.C.R. 632, 656.
733 Banking Companies Act. Most of-the
witnesses examined by us were of opinion that the Liquidator's year was
inadequate. They urged that in many cases it takes the Liquidator a long time
to ascertain who the debtors are and the amounts due from them, particularly
where the records are distributed in different parts of India or are
incomplete. Under the procedure envisaged above the debtor is liable to be
arraigned in the winding-up proceedings, and is entitled to claim relief in
such proceedings. As regards creditors, it is settled law that 'the Limitation
Act ceases to run as from the winding-up order so that a creditor whose claim
is not then barred will not be barred by subsequent delay'. We see no reason
why limitation should not cease to run against the banking company from the
date of the winding-up order. If the procedure envisaged above is adopted, the
necessity for the Liquidator to file suits against the debtors of the bank will
rarely arise.
Further, the Liquidator shall have no scope
for unconscionable delay in proceeding against the debtor. He is required to
bring the debtor before the Court within 6 months from the date of the
winding-up order unless further time is granted by the Court. We therefore
recommend that provision may be made by the Legislature to the effect that
limitation will stop running against a banking company from the date of the
winding-up order." It appears that the Legislature mostly accepted this
view of the Committee and enacted s. 45-O providing mainly that there would be
no running of limitation against the banking company subsequent to the date of
the petition for winding- up with the result that limitation would run in the
ordinary course upto the winding-up petition. There is much logic behind it.
Non-action upto the date of the petition for winding--up was on account of the
mismanagement of the banking company. The debtor of the banking company gets
advantage of the negligence of the company to sue him or apply against him
within the period of limitation. Since the presentation of the petition for
winding-up of the company, the Court gets control over the affairs of the
company and supervises the acts of the liquidator, in accordance with the
provisions of the Act which, to secure necessary action in all matters within a
reasonable time, provide certain periods for certain actions to be taken by the
liquidator of the Court. It is to be presumed therefore that any delay in the
taking up of any legal action by the Banking Company would be for good reasons.
The Legislature seems to have been of the opinion that the interests of the
banking companies, especially of its depositors, should not suffer on account
of the delay which could not be avoided even when the Court was in charge of
the affairs of the banking company. Viewed in this 734 perspective, it should
appear that the relevant date for considering whether action can be taken by
the banking company by suit or application is the date of presentation of the
winding-up petition. If the banking company had a right to sue or to apply on
the date the petition for winding-up was presented, that right should not be
lost to it.
I may now consider how far the legislature
succeeded in making s. 45-0 of the Act, specially its sub-sections (1) and (3)
carry out this object and intention. For the application of sub-s. (1), two
things are necessary: (i) that a company is being wound-up and (ii) that a suit
is instituted or an application is made by such a banking company. If these two
things exist, the period commencing from the date of presentation of the
petition for winding up is to be excluded in computing the limitation
prescribed for such a suit or application.
The first condition would be satisfied by all
companies with respect to which winding-up orders had been made either before
the commencement of the Amending Act of 1953 or thereafter. There is nothing in
the language of the sub- section to limit the expression companies being wound
up' to those companies with respect to which winding-up orders are made
subsequent to December 30, 1953. There seems to be no good reason why such a
limitation on this expression be imposed. The provision is not for the benefit
of such companies only but is for the benefit of all the companies which would
be in the process of winding-up during the enforcement of the Act. The process
might have commenced before or after the enforcement of the Act. Naturally,
petitions for the winding-up of companies with respect to which winding-up
orders had been made prior to December 30, 1953, must have been made before
that date. The language of sub-s. (1) plainly applies to companies which were
being wound up when the Act came into force. I may refer to certain cases in
which expressions of general import have been so construed.
In Weldon v. Winslow(1) the provision of law
for construction was:
"a married woman shall be capable ......
of suing and being sued either in contract or in tort, or otherwise, in all
respects as if she were a feme sole, and her husband need not be joined with
her as plaintiff or defendant, or be made a party to any action or other legal
proceeding brought by or taken against her, and any damages or costs recovered
by her in any such action or proceeding shall be her separate property ......
" Brett, M.R. said at p. 787 that the section dealt with an action for
tort and that after the Act came into operation a married woman (1) I.R.13
Q.B.D. 784.
735 might bring such an action in her own
name and the damages and costs recovered shall be her separate property. He
continued:
"It is said that this is a retrospective
construction, because the cause of action arose before the statute came into
operation;
but the section does not say anything about
cause of action; it deals with bringing the action. and there is nothing in it
to limit its provisions to causes of action arising after the statute came into
operation. I think, therefore, that an action brought after the statute came
into operation is within the plain words of s. 1, and it is necessary to
distort the grammatical meaning of the words to arrive at the interpretation
proposed by the defendant's counsel." These remarks can apply aptly to the
construction of sub-s. (1) of s. 45-O. That sub-section deals with the
computation of limitation with respect to suits and applications filed after
the coming into force of the Amending Act of 1953 and do not apply to suits and
applications which had been filed earlier. The provisions say nothing about the
time when the petition for winding-up be presented. There is nothing to limit
the provisions to petitions for winding-up which had been presented after the
Amending Act came into force.
In Bank of Athens Societe Anonyme v. Royal
Exchange Assurance(1) an application under sub-s. (1) of s. 3 of the Law Reform
(Miscellaneous Provisions) Act, 1934, empowering the Court to award interest on
the whole or any part of the debt or damages for the whole or any part of the
period between the date when the cause of action arose and the date of the
judgment, was construed not to be restricted to proceedings taken after the Act
had come into force. It was said by Branson J., at p. 773:
"I think that on the true construction
of that section the court in any proceeding, whenever commenced, whether before
or after the Act, has the discretion which the section gives it. The words as
they stand are applicable in that sense." The construction I put on the
provisions of sub-s. (1) gets support from the provisions of sub-s. (3). It is to
be noticed that sub- s. (3) does not provide that the provisions of sub-s. (1)
would apply to banking companies with respect to which winding-up orders had
been made prior to the commencement of the Amending Act of 1953. If it had said
so, the question we are considering now would not have arisen as that would
expressly apply the provisions of sub-s. (1) to the companies which were being
wound-up on December 30, 1953. Sub-s. (3) provides that the provisions of the
section, viz., of sub-ss. (1) and (2), shall also apply in so far as they
relate to banking companies being wound-up to a banking (1) L.R. [1938] 1 K.B.
771.
736 company in respect of which a petition
for winding-up has been presented before the commencement of the Amending Act.
Sub-s. (3) contemplates cases in which the petitions for winding-up had been
made prior to the enforcement of the Act but no orders for the winding-up of
the company had been made. If the provisions of sub-s. (1) can apply to the
companies with respect to which proceedings on a winding-up petition were
pending on December 30, 1953, it would be very anomalous if they would not
apply to the companies with respect to which winding-up orders had been made
prior to December 30, 1953. This leads to the inference that sub,S. (1) by its
own language applies to banking companies which were being wound-up on December
30, 1953.
Further, this would be apparent if we combine
the provisions of sub-ss. (1) and (3) together, which could be read thus:
"Notwithstanding.. in force, in computing
the period of limitation prescribed for a suit or application by a banking
company which is being wound up, or in respect of which a petition for the
winding-up has been presented before the commencement of the Banking "
Companies (Amendment) Act, 1953, the period commencing from the date of the
presentation of the petition for winding-up of the banking company shall be
excluded." So read, it becomes clear that the period of exclusion would be
available in connection with suits or applications by a banking company which
is being wound-up or with respect to which a petition for winding-up has been
made prior to December 30, 1953.
I am further of opinion that if a restricted
construction be placed on the provisions of sub-s. (1) of s.
45-O, the effect of sub-s. (3) would be very
much reduced.
In fact, it will probably have no utility. If
the cause of action for a suit or application had lapsed by efflux of time
prior to or on December 30, 1953, the advantage of sub-s. (1) will not be
available to the banking company on account of the provisions of sub-s. (3).
Sub-s. (3) itself does not give any particular right to the banking company.
It only provides that whatever advantage a
banking company can derive from the provisions of sub-s. (1) when it is being
wound-up, would be available to it even if it be not being wound-up, if a
petition for its winding-up had been presented prior to the enforcement of the
Amending Act of 1953. The only case in which the banking company can take
advantage of sub-s. (3) then would be when the cause of action for the suit or
application has not lapsed by December 30, 1953 and the proceedings on a
winding-up application were pending on that date. Such cases would be covered
by the language of sub-s. (1) if the cause of action was alive on December 30,
1953. The order for the winding- up of the company would be made subsequent to
the date and therefore suits or 737 applications covered by sub-s. (1) would
get the advantage of the provisions of that Act. The expression 'the period
commencing from the date of the presentation of the petition for the winding-up
of the banking company shall be excluded' fixes the point of time from which
the excluded period will commence, and cannot be limited to the dates of such
petitions which be presented after December 30, 1953.
It is true, as stated in Jwala Prasad v.
Official Liquidator(1), that the only purpose which sub-s. (3) of s.
45-0 serves is to make it clear that sub-s.
(1) will apply even when the petition for the winding-up of a company is
presented prior to the commencement of the Amending Act of 1953. I do not think
that a separate subsection was enacted merely for the clarification of the
point that the provisions of sub-s. (1) of s. 45-O would take in such cases
firstly because such cases would be covered by the language of sub-s. (1) and,
if not, it could have been stated in sub- s. (1) itself that those provisions
would apply where the petition for winding up was presented before or after the
commencement of the Act by simply adding the expression 'presented before or
after the commencement of the Act' between the words 'banking company' and
'shall be excluded'.
I am therefore of the view that the effect of
sub-s. (1) of s. 45-0 is that if suits or applications made by a ,banking
company which is being wound-up or for whose winding-up a petition has been
presented prior to December 30, 1953, the period of limitation is arrested on
the date of the presentation of the petition for winding-up of the company and
that it is not material whether such a date is earlier than December 30, 1953,
or not and that therefore suits can be instituted and applications made even in
regard to matters with respect to which such action could be taken on the date
of presentation of the application for winding- up of the company but could not
be taken on the date the Amending Act of 1953 came into force.
I may now refer to the case law on the point
which is so far quite meagre.
In Punjab Commerce Bank v. Brij Lal(2) the
suit was filed on March 31, 1952 under s. 45-B of the Banking Companies Act,
1949, as amended by Act XX of 1950. The cause of action arose on October 9,
1946. The application for winding-up was made on February 17, 1948 and the
winding-up order was made on October 11, 1952. The suit was dismissed on
December 2, 1952 as barred by time and an appeal against the dismissal was
pending in the High Court on December 30, 1953 when the Amending Act of 1953
came into force. The suit was certainly time-barred as the law (1) A.I.R. 1962
All. 486. (2) A.I.R, 1955 Punj, 45.
738 stood on the date of its institution. It
was urged for the appellant that the Amending Act was retrospective in effect,
that it applied to all suits which were pending on the date it came into force
and as the appeal was a re-hearing of the case the suit would still be within
time as the Amending Act would be applicable to the case on the date of its
decision.
This contention was repelled. Bishan Narain
J., said at p.
46:
"I have carefully read this section and
in my opinion section 45-0 is not retrospective in effect expressly or by
necessary implication and further there is nothing in this section so
retrospective in effect as to revive a claim which before that date had become
unenforceable by lapse of time." These observations apparently go against
the appellant. They were, however, made in connection with the provisions of s.
45-O applying to a suit pending on the date the Amending Act came into force
and their import is limited by the other observations made when dealing with
the provisions of s. 45-O. These observations, on pp. 46 and 47, are:
"It will be noticed that neither sub-s.
(D nor sub-s. (3) makes any mention of a pending suit at the time when the
Amending Act of 1953 came into force although the legislature does provide
under s. 45-C provisions for transferring such a suit to the High Court.
In the absence of any specific mention of
pending suits it not possible to hold that the section would apply to them.
Sub-section (3) is to a certain extent retrospective in effect because it makes
sub-s. (1) applicable to those cases in which a petition for winding-up had
been presented before the Amending Act, 1953 came into force, but this
retrospective effect cannot be extended to claims or suits pending in the High
Court at the time that the Amending Act came into force." "Applying
this test I hold that s. 45-O does not apply to pending suits." Sub-s. (3)
of s. 45-O has been considered to be retrospective to a certain extent. It was
not necessary for the purpose of this case to consider in what cases and in
what manner its retrospective provisions could be used.
In Suburban Bank Ltd., v. Nistaran(1) the
plaintiff had claimed inter alia several sums advanced as loans to the
defendant on June 27, 1945. Winding-up application was made on May 12, 1948;
the winding-up order was passed on June 30, 1948 and the suit was instituted on
December 3, 1949 when s.
45-F of the-, (1) A.I.R. 1955 Cal. 172.
739 Banking Companies Act, introduced by the
Amending Act 23 of 1949, provided a special period of limitation. The suit was
clearly time-barred in view of art. 59 of the Limitation Act and s. 45-F of the
Banking Companies Act. Consequently, the question arose as to whether s. 45-O,
in view of the alteration of the law during the pendency of the suit, could
apply to that suit. It was held that the question whether the proceeding is
barred by the law of limitation must depend on the law in force when the
proceeding was instituted and that sub-s. (1) of s. 45-O does not refer to
pending proceedings either in express words or by necessary implication. When
considering the effect of s. 45-O, it was said at p. 175:
"The general words 'a suit or
application' can be given full effect by limiting them to suits and
applications commenced after the sub-section came into force.
" No occasion arose to consider the
effect of the provisions of sub-s. (3) of s. 45-O in proceedings instituted
after it came into force.
In M/s. Kesarichand v.S.B. Corporation(1) the
period of limitation was to commence from December 29, 1950.
Article 85 of the Limitation Act was held
applicable to the case. The application for winding-up of the company was made
on February 26, 1953 and winding-up order was made on May 26, 1953. An
application under s. 45-D of the Act was presented on June 28, 1954, more than
three years from the commencement of the period of limitation but within 6
months from the commencement of the Amending Act of 1953. December 29, 1950,
being the starting point for limitation, the period of limitation for the
application expired before December 30, 1953, a day before the Amending Act
came into force and the question did arise whether the applicant could be
allowed to get the advantage of s. 45-O. It was contended that even if the
benefit of s. 45-O was given to the plaintiff bank, the application would be
barred by limitation as the period which was to be excluded in view of sub-s.
(1) of s. 45-O commenced from the date of the presentation of the petition for
winding-up and ended on the date on which the winding-up order was made. This
contention was negatived. It was held that s. 45-O was retrospective in
operation.
In Jwala Prasad's Case(2) the period of
limitation for taking proceedings under s. 235 of the Indian Companies Act,
1913, commenced on November 1, 1947. The period prescribed was 3 years from the
date of the first appointment of the liquidator or from the arising of the
cause of action. The application for winding-up was made on February 17, 1950
and the liquidator was appointed the same day. The liquidator applied for
action under s. 235 on (1) A.I.R. 1959 Assam 162. (2) A.I.R. 1962 All. 486.
740 September 30, 1953, before the
enforcement of the Amending Act of 1953. It was not a case therefore where an
application was made by the banking company subsequent to the enactment of s.
45-O. The question about the application being made within ,time was to be
decided on the law of limitation as it stood on September 30, 1953. The law of
limitation as laid down in s. 235 was to apply taking into consideration the
provisions of s. 45-F of the Act as it stood on September 30, 1953. The Court
held that the application could not be held to be in time even if the advantage
of the provisions of s. 45-F be given. It however considered the effect of s.
45-O and said at p. 494 that there was nothing in the section to show that it
was intended to be retrospective in effect in the sense that it revived
remedies which had already come to art end and reliance was placed on the
earlier Calcutta, Punjab ,and Assam cases referred to above.
I therefore hold that the provisions of
sub-s. (1) of s. 45-0 are retrospective in effect and are applicable to suits
or applications by a banking company in respect of causes of action for the
suit or an application about which suits could be instituted or applications
made on the date of the presentation of the winding-up petitions made before
the commencement of the Amending Act of 1953, even though the specified period
of limitation for such action had expired before the enforcement of the
Amending Act.
In the present case, judgment-debtor
respondent defaulted in payment of the second installment due on December 30,
1947.
On May 1, 1948, the appellant's right to
execute the decree for the entire amount due under the decree arose. The
petition for the winding-up of the company was made on May 11, 1948. The
appellant's application for execution presented in 1957 for the entire decretal
amount due to it would not be time-barred if it had exercised its option to
have realised the entire decretal amount in default of payment of the second installment.
The right to exercise such an option arose on May 1, 1948, earlier than the
presentation of the winding-up application, but the appellant-decree holder,
however, appeared to have waived its such right and to have sought execution
for the realisation of the various installments. Bachawat J., said in his
judgment:
"The respondent could waive and in fact
has waived the benefit of that option and became entitled to enforce payment of
each installment as and when it fell due." It was therefore that an
objection was raised to the execution of the decree for the installments
failing due after the presentation of the winding-up application on May 11,
1948 on the ground that the provisions of sub-s. (1) of s. 45-0 applied only to
such suits or applications the causes of action for which accrued before the
relevant date, i.e., the date of the presentation of the application for
winding-up. The contention is that the provision about the 741 exclusion of
time in the period of limitation predicate that the period of limitation had
commenced to run prior to the beginning of the period to be excluded and that
therefore the provisions of sub-s. (1') of s. 45-O would apply only to suits or
applications with respect to such causes of action which had accrued prior to
the date of the winding-up petition. This contention for the respondent has
been accepted by the High Court. In this the High Court was in error.
It is clear that the object of the
Legislature was that the running of time during the period when the winding-up
proceedings were pending in Court and when the Court supervised those
proceedings be not included in the period of limitation prescribed under the
ordinary law of limitation. The banking company is entitled for the exclusion
of the period from the date on which the application for winding-up had been
presented up to the date of institution of the suit or filing of an
application, from the period of limitation prescribed for any suit or application
and it would be illogical to hold that it is not entitled to ask that a shorter
period, as the case would be when cause of action arose subsequently to the
presentation of the application for winding-up, be also excluded from the
period of limitation prescribed for any suit or application.
It appears to me that the object and
intention of the Legislature in enacting sub-s. (1) of s. 45-O was that the
period subsequent to the presentation of the petition for winding-up be not
taken into consideration in computing the period of limitation. The entire
period will be excluded from consideration if the limitation had begun to run
prior to the presentation of the petition for winding-up and the relevant
lesser period i.e., the period commencing from the accrual of the cause of
action subsequent to the date of presentation of the petition for winding-up of
the company would be excluded from the period of limitation which also
commences from the accrual of the cause of action.
It may be said that this means that the
entire period of limitation is abrogated with respect to causes of action
arising subsequent to the date of presentation of the petition for winding-up.
Such may be the result, but that does not mean construing the provisions of
sub-s. (1) of s. 45-O in the context of the circumstances and reasons for the
enactment of those provisions. It would be anomalous to hold that action can be
taken with the help of the provisions of sub-s. (1) of s. 45-O with respect to
causes of action which had arisen much earlier than the date of the
presentation of the petition for winding-up but action cannot be taken with
respect to causes of action arising subsequent to such a date if it had not
been taken within the prescribed period of limitation. There is nothing in the
language of the sub-section, in my opinion, to accept the contention for the
respondent whose acceptance would lead to results which would not have been
contemplated by the Legislature.
742 I am therefore of opinion that the
appellant's application for execution presented in August 1957 was presented
within limitation. I would accordingly allow the appeal with costs, set aside
the order of the Division Bench of the High Court on Letters Patent Appeal and
restore that of the Single Judge.
ORDER This appeal is allowed. The appellant
will get its costs in this Court and in the High Court.
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