1961 (3) TMI 119 - HC - Indian Laws

Summary

Issues Involved:
1. Applicability of Section 45F of the Banking Companies Act (Act X of 1949) to criminal proceedings.
2. Retrospective application of Section 45F.
3. Nature of the proceeding as "by or against the banking company."

Detailed Analysis:

1. Applicability of Section 45F of the Banking Companies Act to Criminal Proceedings:
The first issue raised was whether Section 45F is limited in its application only to winding-up proceedings and does not apply to criminal cases. The section states: "Entries in the books of account or other documents of a banking company which is being wound up shall be admitted in evidence in all proceedings by or against the banking company." The court noted that the language of Section 45F is intentionally wide and does not restrict its application solely to winding-up proceedings. The court also referenced Section 451 within Part IIIA, which allows the High Court to take cognizance of offences committed by individuals involved in the banking company, indicating that criminal proceedings are integral to winding-up processes. Thus, the court concluded that Section 45F does apply to criminal proceedings.

2. Retrospective Application of Section 45F:
The second issue was whether Section 45F, introduced on 30th December 1953, could be applied retrospectively to a case where cognizance was taken on 23rd July 1952. Mr. Banerjee argued that Section 45F embodies substantive law and cannot have retrospective effect. However, the court held that Section 45F is procedural, dealing with admissibility and proof of evidence, and procedural laws are generally retrospective. The court cited several precedents, including the Supreme Court's ruling in Anant Gopal Sheorey v. State of Bombay, which stated that procedural changes apply retrospectively unless explicitly stated otherwise. Therefore, the court ruled that Section 45F applies to the present proceeding despite its enactment after the initiation of the case.

3. Nature of the Proceeding as "By or Against the Banking Company":
The third issue was whether the criminal proceeding could be considered as "by or against the banking company." The prosecution was initiated upon an order under Section 237 of the Indian Companies Act, 1913, and the complaint was filed on behalf of the Official Liquidator. The court referred to a Full Bench decision of the Allahabad High Court, which stated that actions taken by the Liquidator are in the name and on behalf of the company. The court also noted that the corporate powers of the company continue to exist even after winding up, and the Liquidator acts as a representative of the company. Consequently, the court concluded that the proceeding is indeed "by the banking company" within the meaning of Section 45F.

Conclusion:
The court upheld the decision of the learned Presidency Magistrate dated 20th August 1959, affirming that the books of account and documents were admissible in evidence under Section 45F of the Banking Companies Act. The Rule was discharged, and the proceeding was allowed to continue with the application of Section 45F.