Forum of consideration of enforceability of agreement to amend composition scheme.

Sir Lionel Leach.-The suit out of which this appeal arises was tried in the Court of the Subordinate Judge of Dhanbad. The real question for decision is whether that Court had jurisdiction to grant the relief sought or whether it was a matter which could only be dealt with by the Calcutta High Court in its insolvency jurisdiction. The answer requires the consideration of a scheme of composition,, a deed of transfer executed in connection therewith, and proceedings in insolvency extending over a period of more than 20 years.

The appellant is a limited liability company which is now in liquidation. Its business was banking and it will be convenient to refer to it hereinafter as “the bank.” In 1909 the bank advanced large sums of money to a partnership of five persons trading under the style of M.L.Laik and Bannerjee. The loans were made against hundis, which were secured by mortgages of immoveable property. Default was made in the repayment of the loans and the bank was compelled to bring mortgage suits. Three suits were filed and a final mortgage decree was obtained in each of them. On the 15th June, 1911, by an order of the Calcutta High Court three of the partners were adjudicated insolvents under the provisions of the Presidency Towns Insolvency Act, 1909, and on the 14th July, 1911, an order of adjudication was made by the same Court against the other two partners. In the month of May, 1913, the insolvents made proposals for a composition jn settlement of their debts. On the 4th June, 1913, the Official Assignee submitted the proposals to a meeting of the creditors. With certain amendments the proposals were approved by the majority in number and exceeding three-fourths in value of the creditors. By this time the amount due to the bank was Rs. 3,25,558-12-1.

On the 15th September, 1913, the Calcutta High Court in its insolvency jurisdiction approved the scheme.

Some of the unsecured creditors who were relations of the insolvents abandoned their claims to rank for payment out of the insolvents’ estate. The scheme ol composition provided for payment in full to the secured creditors and of eight annas in the rupee, in two instalments of four annas, to the unsecured creditors who had not abandoned their claims.

The carrying out of the scheme was guaranteed by certain persons, who were to transfer to the Official Assignee their shares in royalties which had accrued or thereafter should accrue due in respect of specified coal mines. Special provisions were made in clause XII of the Scheme for the payment of the debt due to the bank. Clause XII reads as follows:

"XII. The Benares Bank, Ltd., are agreeable to accept payment of their secured debts as follows:

(1) Ram Ranjan Roy and Ashutosh Roy will transfer their respective half-shares in the Benahir, Bhalgora and Khas Theria properties and the income and profits thereof to the Official Assignee. Out of such income the Official Assignee will pay to the Benares Bank, Ltd., the sum of Rs. 5,000 per annum towards satisfaction of this debt, should such income not suffice to pay Rs. 5,000 then Babu Kali Dass Laik will make up the deficiency.

(2) The debts due to the insolvents so far as the same shall be realized by the Official Assignee as also the sale proceeds of Simapur and Benedih properties (which are to be sold by the Official Assignee) will also be paid to the Benares Bank, Ltd., towards satisfaction of their mortgages.

(3) If the payment made to the Benares Bank, Ltd., under clauses 1 and 2 of this paragraph do not cover the interest at 6 per cent, per annum, then the amount of the deficiency will be made good as to one half thereof by Nirmal Shib Bannerjee and as to the other half by Gopes Chandra Adhicary and Nil Ratan Adhicary.

(4) So long as the payments mentioned in clauses 1, 2 and 3 are regularly made the Benares Bank will accept interest at 6 per cent, per annum and will not enforce their mortgage liability.

(5) Upon satisfaction of Mrs. Barnard and Womesh Chunder Banner