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TMI Blog1959 (11) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... ne of the Managing Directors, gave evidence on behalf of the plaintiff bank. The defendant himself was the only witness who gave evidence on his own behalf. The defendant's evidence was not accepted by the learned trial Judge. 4. The learned Counsel on behalf of the appellant has submitted before us that be does not challenge the finding of facts by the learned Judge and he has not contended that the defendant's evidence should have been accepted or that the plaintiff's evi dence should be rejected. This fact must be recorded. 5. The only argument advanced on behalf of the appellant is a point of limitation. The appellant contends that the claim of the plaintiff bank is barred by limitation, It also contends that Article 85 of the Limitation Act wnich was used in this case to save limitation does not apply to the kind of account that the defendant had with the plaintiff-bank. In other words, the submission is that the account was not a mutual, open and current account. The point requires careful examination. 6. The basis of this argument is that a bank which has gone into liquidation at the time of the institution of the proceedings cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion appears to support this proposition that liquidation would come within the meaning of the word otherwise used in tbat dictum. It is plain that when a bank is ordered to be wound up or liquidated the account is not open for further transaction by the depositor. He can neither deposit nor withdraw from that account. It is true tbat if the account is an overdraft account he can pay the money to the liquidator to clear his debt but that does not make the account open. The word open in Article 85 of the Limitation Act in the context of Mutual and 'current' must mean that it is open to both arid not to one. It must be open to both the depositor as well as the bank as an account which can be operated and not merely open for special purpose of the bank to debit interest only or the depositor to pay his debt. The legal effect of liquidation must mean that openness, mutuality and currency of the account are all disrupted. 10. But this view does not help the appellant in this case. Article 85 of the Limitation Act speaks of a suit for the balance due on mutual, open and current account. It does not say that the account must remain mutual, open and current at the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank and a Customer and the Bank goes into liquidation, the liquidator succeeds to the rights of the Bank on the mutual, open and current account. No doubt liquidation closes the mutual open and current account, but the cause of action does not change thereby. It is only the administration which changes and the liquidator's right as legal successor to the Bank to sue as such account remains. To hold otherwise will be disastrous for Banks in liquidation. 12. The real point therefore in this case is to find out whether the account on which the liquidator has brought this suit was, when alive, a mutual, open and current account. The learned Counsel for the appellant has contended on this point that the account in this case should not be treated as mutual, open and current account even when the bank wag alive. His submission on this point is two-fold. In the first place, the argument is that except the solitary credit entry of cash deposit on 9-1-1946. there has been no other credit at all and. therefore, this, does not satisfy the requirement of the word mutual and reference has been made to the case of Hajee Syed Mahomed v. Mt. Ashrafoonnissa, ILR 5 Cal 759. His second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account in which the defendant was the creditor of the bank and then the overdraft account where plaintiff bank was the creditor of the defendant. The account, therefore, in my view, answers the essential tests or a mutual, open and current account, with independent obligations. In R.N. Kapur v. Travanoore National and Quilon Bank Ltd. ILR (1946) Mad 325 : (AIR 1945 Mad 467) the Court of Appeal of the Madras High Court comes to the same conclusion that Article 85 of the Limitation Act governs a suit for the recovery of the balance due on a current account maintained by a customer at a bank, which account is sometimes in credit and sometimes in debit with facility to the customer to overdraw, as in the present appeal. 16. The last submission on the point of limitation on behalf of the appellant is that Section 45F of the Banking Companies Act does not apply to this account at all. The basis of this argument is fundamental. It is contended that this bank was, wound up in 1948 before the Banking Companies Act, 1949 came into operation. It is therefore, argued that the Banking Companies Act, 1949 and its provisions and subsequent amendments do not have any retrospective effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a Banking Company should not be limited only to such Banking Companies which were working when Banking Companies Act came into operation and which went into liquidation thereafter. To exclude Banking Companies liquidated prior to the operation of the Banking Companies Act but whose liquidation continued after the Banking Companies Act, from the operation of Section 45F would create a class of Banking Companies with different periods of limitation for which I find no rational justification. Nor do I find any reason for making such a discrimination between Banking Companies prior and subsequent to the Banking Companies Act for the purpose of limitation. 20. Many decisions have been given in this Court and elsewhere which however tacitly proceeded on the view I have just expressed although it must be said that none expressly or directly decided the point. An example of that can be found in the case the Pioneer Co. Ltd. v. Bamandeb Banerjee, 54 Cal WN 710. It may also be noticed here that certain sections of the Banking Companies Act have been held to be retrospective while others are held not to be so'. Reference may be made to the decision of Bachawat. J. in Suburban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute cannot control clear and unambiguous language of a section. See Mt. Savitri Devi v. Dwarka Prasad and Maxwell's Interpretation of Statutes 9th Edn. p. 54 citing In re Carlton (1945) Ch. 372 and Toronto Corporation v. Toronto Railway. (1907) AC 315 at p. 324. In the last case Lord Collins in 1907 AC at p. 324 observed a heading is to be regarded as giving the key to the interpretation of the clauses ranged under it unless the wording is inconsistent with such interpretation. 23. But the most persuasive argument advanced by Mr. Sen on behalf of the appellant on this branch of case is based on the subsequent amendment of Section 45F which is replaced by the present Section 45O of the Banking Companies Amendment Act 1953. By Sub-section (3) of Section 45O it is now provided : The provisions of this section, in so far as it relates to Banking Companies being wound up, shall also apply to a Banking Company in respect of which a petition for the winding up has been presented before the commencement of the Banking Companies Amendment Act, 1953. 24. On the basis of this express language. Mr. Sen advances his third line of argument that previous to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same rules as in bankruptcy in paying debts shall apply where in winding up of any company the assets prove insufficient, held that this law did not make Section 10retrospective. But Jessel M.R. based his view on the 'ground that the alteration in that case was not merely procedural but in the substantive law in bankruptcy to prove for a debt. See Jessel M.R. at p. 50 of that Report. Here limitation for a suit unless the Statute otherwise provides, must be determined by the law of limitation prevailing at the time when the suit is instituted and that question should not be confused with the larger controversial problem of how far substantial legal rights and procedural rights in apending proceeding can be affected by Statute. The decision in Surendra Nath v. Mohini Mohan, while discussing Section 45F was more concerned with execution of a decree and its revival read with Section 151 Civil Procedure Code and does not decide the point before us in this appeal. 26. The view that I am taking appears to be in consonance with the decision of the Division Bench in Sree Bank Ltd. v. P. C. Mukherjee, 55 Cal WN 400 where the Appeal Court lays down the principle that limitation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -1946, 19-3-1946 and 16-4-1946 the defendant withdrew further sums of ₹ 3,000/-, ₹ 2,200/- and ₹ 800/- respectively by virtue of the overdraft arrangement. There were no other withdrawal or deposit by the appellant after the last mentioned date but interest accruing was calculated and added! in the account from time to time up to 29-6-1946. On 10-5-1948 a petition for winding up of the respondent bank was presented before this court and on 3-8-1948 an order was made for winding up of the bank. On 19-6-1950 the official liquidator instituted proceedings for recovery of ₹ 15,477/10/- being the principal and interest due in respect of the said account. The plaintiff bank's case as pleaded was that the said account was at all material times a mutual, Open and current account and so the claim of the bank was not barred by limitation. S.R. Das Gupta J., before whom the case came up for trial passed a decree in favour of the plaintiff bank for ₹ 20,925/ 13/8 pies with interest and costs. The defendant has appealed against this decree. 33. The first contention raised on behalf of the appellant in support of the plea of limitation, is that the acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e account. If the bank allows the customer to overdraw the account and he does so, he becomes a debtor to the bank and the bank in its turn is entitled to demand repayment of the overdraft without closing the account. Where the balance is a shitting one, the bank is under an obligation to the customer when the account is in credit and must meet his demand for payment; likewise when the account is overdrawn the customer is under an obligation to the bank and in law is bound to comply with the bank's demand for payment, when made. It seems to us that in these circumstances the account can only be regarded as a mutual account fulfilling the test laid down in 6 Mad H.C.R. 142. 35. In this Madras case the observations made to the contrary by Pontifex, J. in ILR 5 Cal 759 were dissented from. In a case of this court reported in 91 Cal LJ 16 Chakravartti C. J. referred to most of the relevant cases on the point, and approved of the principles laid down in the Madras cases to which I have made reference. 36. In the present case, from 9-1-1946 to 19-2-1946 the defendant appellant was a creditor of the plaintiff bank and since that date the bank became a creditor. So t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount so long as it is not closed by settlement or otherwise. Unless the parties evince an intention expressly or by their acts and conduct to close the account, the account retains its character of an open and current account. As pointed cut by Ghose, J. in the case of An account is open when the balance is nut struck or though struck is not accepted or acknowledged to be correct by the parties concerned. In the case of 91 Cal LJ 16 at p. 50 Chakravartti C. J. observed that An open account is one which has not been closed whether by settlement or otherwise and which is open for further transactions, In the present case there is no suggestion that the account kept between the parties had been adjusted or stated at any time or that the parties intended to close this account, or they expressed their intention not to do further transactions. 38. Although the withdrawals made by the defendant had exceeded the agreed limit on 19-3-1946 it was quite open to the defendant to make deposits in the account at any time thereafter and thud reduce the amount of the overdraft below the agreed limit and thereafter make fresh withdrawals until the winding up order. It is true that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attracted to the facts of this case the claim is barred because three years from the close of the year 1946 expired on 31-12-.1949 and as the suit was not filed by the Liquidator till 19-6-1950, and as the winding up order was made on 3-8-1948 the liquidator cannot take advantage of Section 45F of the Banking Companies Act which was introduced for the first time in the Statute Book by the Banking Companies Amendment Ordinance (XXIII of 1949) on 10th or 19th September 1949 as the amendment cannot be given a retrospective operation. In my opinion this contention is also without substance. The provisions of Section 45F came up for consideration before S.N. Banerji, J. in the case of 54 Cal WN 710. In this case Banerji, J. pointed out that the material words of the section the period of one year immediately preceding the date of the order for the winding up of the banking company shall be excluded indicate that the intention of the framers of the section was that during this period of one year which the learned Judge calls the 'Liquidator's year the running of limitation would remain suspended. It is further pointed out by the learned Judge that the proper construction of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There is a detailed discussion of this section in the unrcported decision of a Division Bench of this court in Appeal No. 119 of 1954, Suburban Bank Ltd. v. Nistaran Chakravarti where the question of retrospective operation of the section has been dealt with by Das Gupta, C. J. and myself. 46. Reliance was also placed on an unreported decision of this court in the case of In re, Sree Bank Ltd., Matter No. 280 of 1957 D/- 25-2-1958 (Cal) where it was held by me that Section 45G of the Ranking Companies Act is not retrospective in operation, in the sense, that it did not apply to a case where a winding up order was made before the coming info force of this section. But as the language, character and purpose of Section 45G is different, this decision is of no assistance to the appellant. The learned counsel for the appellant also cited in support of his argument the case of (1875) 1 Ch D 48 to which I made reference in my judgment dated 2.5-2-1958 in the Sree Bank case, Matter No. 280 of 1957, D/- 25-2-1958 (Cat), Section 10 of the Judicature Act 1875 which was cons- but trued in that case is materially different in its nature and object from the section which is the subject- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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