1956 (5) TMI 31 - SC - Companies Law

Whether there is anything in the Displaced Persons (Debts Adjustment) Act, 1951, which overrides this jurisdiction? Whether in view of the fact that the original execution application to the Tribunal was made before the Banking Companies (Amendment) Ordinance and Act of 1953, came into force., there has been any valid order under section 45-C of the Banking Companies Act by the Punjab High Court transferring the pending execution proceeding to itself? Held that - The view taken by the High Court that it bad exclusive jurisdiction in respect of the present matter and that there was a valid transfer to itself by its order dated the 25th June, 1954, is correct. In the proceedings before the High Court a good deal has been made as to the alleged suppression of material facts by the appellant from the Bombay High Court, in obtaining the impugned order of attachment from that Court and the learned Judge s order also indicates that be was to some extent influenced thereby. It appears to us that the alleged suppression has no bearing on the questions that arose for decision before the learned Judge, on this application. The learned Attorney-General frankly conceded the same. We have been told that there has been some application for contempt in the Court on the basis of the alleged suppression. We do not, therefore, wish to say anything relating to that matter which may have any bearing on the result of those proceedings. Appeal dismissed.

Issues Involved:
1. Validity of the Tribunal's execution proceedings.
2. Overriding effect of the Banking Companies Act over the Displaced Persons (Debts Adjustment) Act.
3. Jurisdiction of the Punjab High Court to transfer execution proceedings.
4. Validity of the attachment order by the Bombay High Court.

Issue-Wise Detailed Analysis:

1. Validity of the Tribunal's Execution Proceedings:
The appellant, a displaced person, filed an application to the Tribunal at Banaras under the Displaced Persons (Debts Adjustment) Act, 1951, seeking recovery of a fixed deposit amount from the Bank. The Tribunal passed a decree in favor of the appellant. However, the Bank was undergoing liquidation, and the Punjab High Court had issued a stay on execution proceedings against the Bank. Despite this, the Tribunal proceeded with the execution, leading to a conflict of jurisdiction.

2. Overriding Effect of the Banking Companies Act over the Displaced Persons (Debts Adjustment) Act:
The appellant argued that the provisions of the Displaced Persons (Debts Adjustment) Act should prevail over the Banking Companies Act. However, the court held that sections 45-A and 45-B of the Banking Companies Act, which provide for exclusive jurisdiction and overriding effect, take precedence. The court emphasized that the Banking Companies Act aims for the speedy disposal of winding-up proceedings, which is crucial for maintaining financial stability.

3. Jurisdiction of the Punjab High Court to Transfer Execution Proceedings:
The Punjab High Court had the authority to transfer the execution proceedings under section 45-C of the Banking Companies Act. The court found that the Tribunal under the Displaced Persons (Debts Adjustment) Act is considered a civil court for executing decrees. The Official Liquidator made a report within the prescribed period, and the High Court issued a transfer order. The appellant's contention that the Tribunal's proceedings should continue was rejected, as the High Court had exclusive jurisdiction.

4. Validity of the Attachment Order by the Bombay High Court:
The Bombay High Court's order of attachment was invalidated by the Punjab High Court. The court held that the execution proceedings and any incidental matters, such as attachment, fall within the exclusive jurisdiction of the Punjab High Court under section 45-B of the Banking Companies Act. The appellant's attempt to execute the decree without the High Court's leave was seen as an effort to gain preferential creditor status, which is not permissible.

Conclusion:
The Supreme Court dismissed the appeal, upholding the Punjab High Court's decision. The court affirmed that the Banking Companies Act has an overriding effect over the Displaced Persons (Debts Adjustment) Act in matters of jurisdiction and execution proceedings related to banking companies under liquidation. The transfer of execution proceedings to the Punjab High Court was valid, and the attachment order by the Bombay High Court was set aside. The appellant was ordered to bear the costs.

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