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TMI Blog1968 (8) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany since July 1, 1953. The Rangoon branch of the Punjab National Bank gave details of various deposits made which showed that a sum of Kayats 16,101.75 (each K. is said to be worth roughly Re. 1 in Indian currency) stood to the company's credit up to 30th of June, 1957. The liquidator was also informed that, on the closing down of the company's Rangoon office, the account had become a "non-resident" account automatically so that the Burmese Exchange Control Department had to be given a full account of the concern and of the circumstances leading to its liquidation before any transfer could be made to the liquidator in India. The liquidator gave the required details, but he was informed on November 25, 1957, by the Rangoon branch of the bank that an application made for the transfer of K. 16,101 75 to India had been rejected by the Burmese Exchange Control Department. For a long time the liquidator did nothing more. But in 1963 the liquidator learnt, as a result of further inquiries, that the account of Indo-Allied Industries in the Rangoon branch was closed on May 23, 1961. The liquidator protested against the closure of this account without his authority and after information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a foreign country. Its case also is that the applicant could only enforce his claim, if at all, in Burma against the successor of the Rangoon branch of the bank according to the law in Burma. It denied that the petitioner had any cause of action against it in India. It is also pleaded that the liquidator's claim was barred by limitation. A further plea is that payments to Ram Samujh Singh satisfied the demand which could be made against the Rangoon branch of the bank. The liquidator had prayed for the determination of only three questions under section 518 of the Act and did not ask for anything more, but, after an examination of the detailed pleas taken by the two sides, the proceedings practically assumed the form of a suit. Issues were framed and evidence was taken by my learned brother, Satish Chandra J., when he was the company judge of this court. The issues, as finally reframed, are as follows : . (1)Was the liquidator appointed in accordance with law ? (2)Did the authority of Ram Samujh Singh, opposite party No. 2, to operate upon the account in dispute in the Rangoon branch of the Punjab National Bank come to an end on or after January 6, 1957. (3)Was there any coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt a copy of the resolution of the meeting duly certified by the chairman of the board of directors and a duly certified copy of the information published in daily newspapers in India showing that the applicant had been acting as the liquidator of the company. On 19th of August, 1957, the manager of the Rangoon branch sent information about the deposits made showing a balance of K. 16,101.75 standing in the account of the company at Rangoon. The manager also informed the liquidator that the account had been opened as a "resident account" on July 25, 1950, but that it had become a "non-resident " account after the closing down of the company's Rangoon office. Further details relating to the company, from its inception to its liquidation, were asked for to satisfy the Burmese Exchange Control Department. Presumably, the Rangoon branch wanted to transmit the money to the liquidator after having been duly satisfied that the liquidator and not Ram Samujh Singh had the authority to receive the amount in deposit in a "non-resident" account. On August 26, 1957, the liquidator sent the required information, but he never wrote that the authority of Ram Samujh Singh to operate on the account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the Rangoon branch of the Punjab National Bank at first recognised the authority of the liquidator rather hesitatingly, but, after the rejection, by the Burmese Exchange Control Department, or the application for transmission of the amount to the liquidator, the Rangoon branch did not consider itself bound to retain the money for the liquidator but treated Ram Samujh Singh as duly authorised to withdraw the deposits. It did not even address any letters or send any intimation about the account to the liquidator after that. It had permitted the director, Ram Samujh Singh, opposite party No. 1, who was then residing at Rangoon, to withdraw the whole amount on behalf of the company. In other words, the Rangoon branch of the bank recognised the authority of Ram Samujh Singh to operate on the account as continuing notwithstanding the appointment of a liquidator in this country whose application to transmit the deposits of the company to him had been turned down by the Burmese Exchange Control Department. The terms of the actual contract between the Rangoon branch of the bank and Ram Samujh Singh were only available, if at all, to the People's Bank No. 7 at Rangoon or to R. S. Sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the court, has the power to take charge of and to assume control ever all the properties and claims to which the company is or appears to be entitled. Therefore, a bank in this country will be bound to recognise the authority of the liquidator as superseding that of a director after the winding up has commenced and the liquidator appointed. But our Companies Act does not provide for the recognition of the authority of a liquidator in another country. It is not possible to assume that there is some statutory rule in Burma on the subject. Such a question will, in the absence of a specific provision in the laws of a country, be governed by international law. The rule of Private International Law, adoped by the English courts, is stated in Dicey's Conflict of Laws (7th edition, page 491), as follows: "Rule 82,-A liquidiator duly appointed and authorised under the law of the place of incorporation can act on behalf of the corporation in England, but a foreign winding up order has no other effect in England". Comments on the rule indicate that the first part of the rule is based on the principle that the law of the place of incorporation determines who is entitled to act on behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Government restricted transfer of deposits and then took over the branch as a State-owned bank, the very opening of an account at a particular branch of a bank connotes reciprocal obligations circumscribed by the fact that the account was opened at that branch. The position is thus stated in Hart's Law of Banking (4th edition, volume 1, page 96): "In the absence of special agreement upon the matter, a banker is only bound to recognise a balance in favour of his customer at the office upon which his cheque is drawn ; and the customer is entitled to draw cheques only upon the office at which he keeps an account and to have them paid only at that office. From the nature of the case the undertaking on the part of the banker implied by the opening of an account must be limited in this way". In Henry Prince v. Oriental Bank Corporation [1878] 3 App. Cas. 325 (P.C.). the Privy Council held that, although the branch banks are in principle and in fact "agencies of one principal banking corporation or firm", yet "they may be regarded as distinct for special purposes, e.g., that of estimating the time at which the notice of dishonour should be given or of entitling a banker to refuse paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of an express contract to the contrary, there is an implied contract in such cases, which carries with it the duty of the bank to pay the customer only at the branch where the account is kept subject to instructions to transfer the amount elsewhere. If the obligation to transfer is frustrated by local legislation or governmental action of the country where the account is kept, the remaining implied obligation to pay at the branch or office where the account is kept cannot be substituted automatically by an unconditional obligation of the principal to pay elsewhere by resorting to section 226 of the Contract Act. Section 226 permits enforcement of contracts as they stand and not their substitution by fresh contracts with different terms. Moreover, our Contract Act has no extra-territorial operation. The rule of Private International Law on the subject is thus stated in Dicey's Conflict of Laws (7th edition, page 875): "Rule 171.- The rights and liabilities of the principal as regards third parties are, in general, governed by the proper law of the contract concluded between the agent and the third party". It may be possible to infer an implied contract in cases such as the one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t amount to collusion of the principal in any action of the branch at Rangoon. Issue No. 4 raises the question of the liability of either or both of the parties to the alleged collusive payment to Ram Samujh Singh. It has to be borne in mind that the Rangoon branch had not refused to pay the liquidator. Even before the liquidator made any demand for the transmission of the amount to India, the Rangoon branch seems to have taken steps on behalf of the liquidator and applied to the Burmese Exchange Control authorities for transmission of the amount to India. A copy of the Exchange Control Manual issued by the Rangoon Gazette shows that there were Foreign Exchange Regulation Rules. Rule 9 reads as follows : "No person shall remit any money to any place outside the Union of Burma except under a permit or the approved application granted in his own name by the Controller". After the Controller had rejected whatever application was made by the Rangoon branch of opposite party No. 1, the liquidator himself made no demand upon the Burma branch to transmit the amount to India. No doubt, if he had made that demand, the Rangoon branch would have pleaded inability to send the amount to Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourts in this country could proceed in personam. Ram Samujh Singh, opposite party No. 2, who died in the course of the proceedings, did not even come forward to deny the claim of the liquidator. Under all the facts and circumstances stated above, it is clear to me that the opposite party No. 1 was not liable, but Ram Samujh Singh, opposite party No. 2, was accountable to the liquidator for the amounts realized by Ram Samujh Singh in Rangoon on behalf of the company. The fifth issue raises the question of limitation against the opposite parties. As I have held that there is no liability of opposite party No. 1, on the facts and circumstances found above, to pay the amount realized by Ram Samujh Singh and that the liability, if any, was transferred to the People's Bank No. 7 of Rangoon, which was only enforceable in Rangoon, the question of limitation for any action against opposite party No. 1 does not arise in this case. So far as Ram Samujh Singh is concerned, it is not necessary to determine here whether any claim against his heirs would be barred by time if a suit was filed against them. It is enough to point out that, so far as proceedings under section 543(1) of the Companies ..... X X X X Extracts X X X X X X X X Extracts X X X X
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