9911796707
TMI Blog1982 (7) TMI 266X X X X Extracts X X X X X X X X Extracts X X X X ..... a currency issuing Bank and discharged the functions of a Government Treasury. It issued Portuguese currency notes in Goa, and in its banking capacity it received deposits and granted loans. On December 20, 1961 the territories of Goa, Daman and Diu were liberated from Portuguese rule and integrated with India. On the eve of the transfer of power the Banco Nacional Ultramarino closed its Branches at Goa and removed a substantial portion of the valuable assets held there to its Head office at Lisbon and to other places overseas. To provide for the administration of the liberated territories the President of India promulgated the Goa, Daman and Diu (Administration) ordinance, 1962, which on March 27, 1962 was replaced by Goa, Daman and Diu (Administration) Act, 1962 enacted by Parliament. By virtue of sub-s. (1) of s. 5 of the Act all laws in force immediately before the appointed day (December 20, 1961) in Goa, Daman and Diu were to continue to be in force therein until amended or repealed by a competent legislature or other competent authority. The clo sure of the Branches of the Banco Nacional Ultramarino at Goa gave rise to considerable confusion. It was necessa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guaranteed by the managing partner and his wife. The limit was raised subsequently, and the excess was also guaranteed by a promissory note with its maturity date in blank and signed by the defendants. The plaintiff stated that the loan account showed a debit balance of Escudos 428.612$37, equivalent to ₹ 71,435.40, in favour of the Panjim branch of the Banco Nacional Ultramarino, the account being closed on December 20, 1961 and the balance thereof becoming payable. It was stated further that the promissory notes were not in the possession of the plaintiff and could be presumed to have been removed to Portugal. The plaintiff prayed for a joint and several decree against the defendants for ₹ 71,435.40 with accrued interest, Penal interest, commission, fine and court expenses. The suit was resisted by the defendants, principally on the ground that the Banco Nacional Ultramarino was a public limited company with its head office at Lisbon, that the Branch at Panjim did not possess a separate juridical personality from the Company and could not be said to possess assets or liabilities of its own, that transactions by the Panjim Branch were made under the direct supe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arino, that the rights and obligations of the Branches referred to in the Regulation must be understood to mean the rights acquired and the obligations undertaken by the Banco Nacional Ultramarino through those Branches and therefore the Custodian was entitled to maintain the suits and sue for the realisation of debts arising out of transactions entered into through those Branches. The Additional Judicial Commissioner also held that as the execution of the negotiable instruments had been admitted in the written statements and it was commonly agreed that they were not within the reach of the Custodian, having been removed by the officers of the Banco Nacional Ultramarino to Lisbon or elsewhere on December 20, 1961, there was nothing to preclude the Custodian claiming relief without producing those negotiable instruments. He also repelled the contention that the bills of exchange and the promissory notes could on endorsement by the Banco Nacional Ultramarino in favour of others result in the defendants having to make payment a second time. He recorded an oral undertaking furnished by the Custodian that in the event of a decree in such suits the Custodian would render compensation to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue in law. Another reason why the suits cannot be decreed, says Shri Nariman, is because the promissory notes have not been produced. There has been considerable dispute on the point whether the transactions were entered into by the Branches of the Banco Nacional Ultramarino or could be attributed to the Head office at Lisbon. It seems to us clear from the material on the record that the appellants entered into the loan agreements with the Banco Nacional Ultramarino, and the Head office of the Bank at Lisbon authorised the relevant Branch at Goa to give effect to the agreement. The evidence is clear that the agreements were signed on behalf of the bank by the Manager of the relevant branch and the loan accounts were opened by the branches in their books, that payments were made by the Branches to the appellants, that deposits by way of repayment were made by the appellants in these accounts maintained by the Branches, and the appellants pledged or hypothecated their goods in favour of the branches; in short while the Head office authorised the Branch to execute the agreements the transactions were regarded for all purposes as transactions pertaining to the respective Branches ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as at its branch office, but the reason was that the action is then, not on the debt, but on the breach of the contract to pay at the place specified in the agreement , and reference was made to Warrington, L.J. at page 116 and Atkin, L.J. at page 121 of New York Life Insurance Co. v. Public Trustee.([1924] 2 Ch. 101.) That is the position in regard to banking law and practice, and it is apparently in that light that the Regulation has been framed. The Regulation was intended to achieve what emergency legislation was designed to secure in a somewhat different context by somewhat comparable methods. In England, during the First World War the Trading with the Enemy Amendment Act, 1916 provided for the winding up of the business carried on in England by companies incorporated in Germany. That Act was considered by the court In re W. Hagelberg Aktien-Gesellschaft([1916] Chancery Division 503.) and it was observed that although the branches and agency of a business could not be regarded as distinct from the principal business of. the owner, nonetheless, if a statute was enacted to create that effect, effect had to be given to the statute for the purposes incorporated the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess remained throughout those of the Branch, and this is fully affirmed by the existence and operation of the loan accounts in the books of the Branch, by the pledge or hypothecation of goods in almost all cases in favour of the Branch and by the overall nature and character of the transaction as an ordinary banking transaction falling within the normal business of a Branch. It will be noticed that s. S of the Regulation expressly speaks of properties and assets, all rights, powers, claims, demands, interests, authorities and privileges and all obligations and liabilities of the Branches and of all contracts, deeds, bonds, agreements... to which the Branches are a party or which are in their favour. It proceeds clearly on the basis that the Branches must be regarded as entering into and carrying out transactions identifiable as theirs. These are transactions distinct from those exclusively carried on by the Head office of the Banco Nacional Ultramarino, with which transactions in their essence the Branches had nothing to do. It will also be noticed that by sub-s. (2) of s. 7 the Regulation envisages financial transactions between the Branches and the Head office. The entir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter construction. We are of opinion that the transactions under consideration in these appeals fall within the scope of the Regulation and the Custodian is fully entitled to sue for the recovery of the debts covered by the loan agreements. The contention of the appellants to the contrary is rejected. We now turn to the remaining points raised in these appeals. It has been urged that the statutes cannot be decreed because the Promissory Notes and the Bills of Exchange have not been produced by the Custodian before the trial court. Now, it is not disputed that the documents have been removed from Goa to Portugal or to other places overseas and are no longer in the possession of the Branches. The debts were sought to be proved on the basis of the accounts maintained in the books of account of the relevant Branches. This was permissible by virtue of sub-s. (1) of 8. 8 of the Regulation which provides:- 8. (1) If for the prosecution of any suit, appeal or other legal proceeding by the Custodian in any court it is necessary to produce any document or other particulars and the said document or particulars are proved to the satisfaction of the Court to have been rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht was left in anyone else; The debts were regarded as properties and assets of the Branches, and all rights in respect of them stood transferred to and vested in the Custodian by virtue of sub-s. (I) of s. 5. Having regard to the provisions of the Regulation and the object with which it was enacted it is not possible to conceive that it would be open to the Head office of the Banco Nacional Ultramarino to sue the debtors for recovery of those debts. Shri Nariman contends that an express provision was necessary in the Regulation to effect a complete discharge of the debtors from further liability as was the case in s. 11 (2) of the Pakistan Ordinance considered in The Delhi Cloth and General Mills Co. Ltd. v. Harnam Singh and others.([1955] 2 S.C.R. 402, 425.) We think it is not necessary that there should be such a specific provision. rt is sufficient if the same conclusion can be drawn from a proper construction of the general provisions of the Regulation and the object with which it has been enacted. We may point out that although reference was made by this Court in The Delhi Cloth and General Mills Co. Ltd. v. Harnam Singh and others (supra) to s. 11 (2) of the Pakistan Or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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