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1967 Supreme(Cal) 99
HIGH COURT OF CALCUTTA
Ray
MAJOR GENERAL MAHABIR SHUM SHER JUNG BAHADUR RANA - Appellant
Versus
LLOYDS BANK LTD. - Respondent
Suit 2830 Of 1956
Decided On : MAY 29, 1967
A.K.Basu, B.DAS, SANKAR GHOSH
The vesting of undertaking under Section 16 of the Air Corporations Act, 1953 includes all assets and liabilities mentioned in Section 17 of the said Act with the result that the liability of Himalayan Aviation Ltd. in respect of the sum mentioned in the plaint vested in Indian Airlines Corporation.
Headnote:
AIR CORPORATIONS ACT - VESTING OF UNDERTAKINGS - LIABILITY - FURNISHING OF PARTICULARS - DISCHARGE OF SURETY - CONSTITUTIONALITY - DECLARATORY SUIT - MAINTAINABILITY.
Fact of the Case:
The plaintiff, a director of Himalayan Aviation Ltd., guaranteed the due repayment by the said Company of its dues under the overdraft account with the defendant bank. The Central Government, by a notification, appointed 1st August, 1953 as the appointed date under the Air Corporations Act, 1953. Under the Act, the undertakings of existing air companies including that of Himalayan Aviation Ltd. vested in Indian Airlines Corporation. The plaintiff alleged that the defendant bank wrongfully debited the plaintiff's current account for the sum of Rs. 1,86,491-3-0 for the purported discharge or satisfaction of the liabilities of the said company under the said overdraft account.
Finding of the Court:
The court held that the liability of the company for the sum of Rs. 1,86,491-3-0 vested in the defendant Indian Airlines Corporation and ceased to be enforceable against the Himalayan Aviation Ltd. or the plaintiff as surety or guarantor. The court further held that the defendant bank was not entitled to debit the Cash Margin Account of the plaintiff with the sum mentioned in the plaint.
Issues: 1. Whether the entire undertaking of Himalayan Aviation Ltd. vested on the appointed date, namely, 1st August, 1953 under the provisions of Section 16 of the Air Corporations Act, 1953? 2. Whether the liability of Himalayan Aviation Ltd. in respect of the sum mentioned in the plaint vested in Indian Airlines Corporation? 3. Whether the furnishing of particulars of liabilities and obligations as contemplated in Sections 17 and 22 of the Air Corporations Act affects liabilities of third parties? 4. Whether particulars were furnished by Lloyds Bank Ltd.? 5. Whether under the provisions of section 17 of the Act the plaintiff's guarantee stood discharged? 6. Whether under the provisions of Section 17 the agreement was enforceable only against the Indian Airlines Corporation and not against the plaintiff? 7. Whether the suit was maintainable in the form in which it was instituted?
Ratio Decidendi: 1. The court held that the vesting of undertaking under Section 16 of the Air Corporations Act, 1953 includes all assets and liabilities mentioned in Section 17 of the said Act with the result that the liability of Himalayan Aviation Ltd. in respect of the sum mentioned in the plaint vested in Indian Airlines Corporation. 2. The court held that the furnishing of particulars of liabilities and obligations as contemplated in Sections 17 and 22 of the Air Corporations Act does not affect liabilities of third parties. 3. The court held that particulars were not furnished by Lloyds Bank Ltd. within the statutory period and there was no extension of time. 4. The court held that under the provisions of section 17 (3) of the Air Corporations Act, the contract of surety or guarantee is discharged. 5. The court held that the agreement of guarantee was enforceable only against the Indian Airlines Corporation and not against the plaintiff. 6. The court held that the suit was not maintainable in the form in which it was instituted.
Final Decision: The suit was dismissed with costs.
( 1 ) THE plaintiff instituted this suit against the defendants Lloyds Bank and Indian Airlines Corporation for a declaration that the defendant Lloyds Bank Ltd. has wrongfully debited the plaintiff's current account mentioned in the plaint with the sum of Rs. 1,86,491-3-0, for further declaration that the said sum of Rs. 1,86,491-3-0 is duo and owing by the defendant Lloyds Bunk Ltd. to the plaintiff on the said account and injunction ordering the defendant Lloyds Bank Ltd. to credit the said account of the plaintiff with the said sum of Rs. 1,86,491-3-0 and if necessary a decree for the said sum of Rs. 1,86,491-3-0 with in-terest as against the defendant Lloyds Bank Ltd. , or in the alternative, decree for Rs. 1,86,491-3-0 against the second defendant Indian Airlines Corporation.
( 2 ) THE suit was instituted on 19th November, 1956.
( 3 ) THE plaintiff's case in short is that the plaintiff had a current cash credit account with the defendant Lloyds Bank Ltd. The plaintiff was a director of a company called Himalayan Aviation Ltd. The said company had an overdraft account with the defendant Lloyds Bank Ltd. The plaintiff guaranteed the due repayment by the said Company of its dues under the overdraft account. The Central Government by a notification appointed I August, 1953 as the appointed date under the Air Corporations Act, 1953. Under the Act the undertakings of existing air companies including that of Himalayan Aviation Ltd. vested in Indian Airlines Corporation.
( 4 ) ON or about 31st July, 1953 a sum of about Rs. 1, 86, 491-3-0 was due and owing by Himalayan Aviation Ltd. to the defendant Loyds Bank Ltd. The Himalayan Aviation Ltd. supplied to Indian Airlines Corporation particulars of book debts and investments belonging to and all liabilities and obligations of the company including the liability of Rs. 1, 86, 491-3-0 immediately before the said appointed date in terms of Section 22 of the said Act of 1953. The plaintiff further alleges that the second defendant accepted the particulars and acted thereon.
( 5 ) THE further case of the plaintiff Is that by virtue of the provisions of the said Act and in particular by reason of provisions of Section 17 thereof as from the appointed date the liability of the said company for the sum of Rs. 1,86,491-3-0 vested in the defendant Indian Airlines Corporation and ceased to be enforceable against the Himalayan Aviation Ltd. or the plaintiff as surety or guarantor. The plaintiff it is alleged stood discharged from all obligations of surety or guarantor in the said overdraft account.
( 6 ) ON or about 31st October, 1953 the defendant Lloyds Bank Ltd. wrongfully purported to debit the current account of the plaintiff for the sum of Rs. 1,86,491-3-0 for the purported discharge or satisfaction of the liabilities of the said company under the said overdraft account. The debit is alleged to be wrongful and unauthorised and not binding on the plaintiff. The defendant bank is denying that the current account of the plaintiff has been wrongfully debited or that there is due and owing from the defendant bank the said sum.
( 7 ) THE further case of the plaintiff is that in the event of it being held that the action of the defendant bank in debiting the plaintiff's account was authorized, the plaintiff will in the alternative state that the second defendant was and is bound by law to pay Rs. 1,86,491-3-0 as the balance of the overdraft account of the company Himalayan Aviation Ltd. to the defendant Lloyds Bank Ltd. and that the plaintiff being interested in the payment of the said sum paid it and that as such the plaintiff is entitled to be re-imbursed by the second defendant to the extent of Rs. 1,86,491-3-0.
( 8 ) WRITTEN Statements were filed by both the defendants.
( 9 ) COUNSEL for the plaintiff at the trial stated that the plaintiff did not wish to proceed against the second defendant and as such the suit against the second defendant was dismissed.
( 10 ) THE suit wa
