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Issues:
1. Interpretation of section 38(1) of the Banking Companies Act, 1949 in relation to the powers of the court to sanction a scheme of arrangement under section 153 of the Indian Companies Act, 1913 for a banking company unable to pay its debts. Analysis: The judgment by Harnam Singh, J. addresses the issue of whether the court has the power to sanction a scheme of arrangement under section 153 of the Indian Companies Act, 1913 for a banking company that is unable to pay its debts despite the provisions of section 38(1) of the Banking Companies Act, 1949. The argument presented was that once a banking company is unable to pay its debts, the court cannot approve a scheme of arrangement. The contention was based on the interpretation that section 38(1) of the Banking Companies Act may have repealed the relevant provisions of the Indian Companies Act. However, the judge ruled that such interpretation lacks merit as the Banking Companies Act, specifically section 45, allows the court to sanction a compromise or arrangement between a banking company and its creditors under certain conditions certified by the Reserve Bank, without repealing section 153 of the Indian Companies Act. The judgment further delves into the argument that section 38(1) of the Banking Companies Act is repugnant to section 153 of the Indian Companies Act. It is noted that the Banking Companies Act is intended to complement existing laws, including the Indian Companies Act, and not derogate from them unless expressly provided. The judge highlighted that there is no explicit provision in the Banking Companies Act that contradicts the powers granted to the court under section 153 of the Indian Companies Act. The ruling emphasizes that the two Acts can coexist unless they are so fundamentally inconsistent that they cannot operate simultaneously. Moreover, the judgment clarifies that the powers granted under section 38(1) of the Banking Companies Act, pertaining to the winding up of a banking company unable to pay its debts, do not impede the court's authority to approve a scheme of arrangement under section 153 of the Indian Companies Act. It is emphasized that section 153 applies to both going concerns and companies in liquidation, affirming the court's jurisdiction in such matters. The judge concluded that section 38 of the Banking Companies Act does not diminish the court's ability to act under section 153 of the Indian Companies Act for a banking company facing insolvency. In conclusion, the objection raised regarding the court's power to sanction a scheme of arrangement for a banking company unable to pay its debts was overruled. The judge ordered further proceedings for the cases in question, emphasizing that section 38 of the Banking Companies Act does not restrict the court's authority under section 153 of the Indian Companies Act in such scenarios.
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