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PUNJAB & HARYANA HIGH COURT
Tek Chand, J.
A.C.Goel
Versus
First National Bank Ltd., Delhi
Liquidation MISCELLANEOUS Application No. 15 of 1958,
Decided On : APRIL 8, 1960
DISPLACED PERSONS (DEBTS ADJUSTMENT) ACT, 1951 - SECTION 19(2), 20 - COMPANY WINDING UP - CONVERSION OF PARTLY PAID-UP SHARES INTO FULLY PAID-UP SHARES - APPLICABILITY OF SECTION 20 - INTERPRETATION OF "BEING WOUND UP" - DISTINCTION FROM "DEEMED TO COMMENCE" IN COMPANIES ACT, 1956, SECTION 441 - MAINTAINABILITY OF PETITION - RELIEF GRANTED.
Fact of the Case:
The petitioner, a displaced person from West Punjab, held 280 partly paid-up shares in the respondent bank, which was being wound up. He applied to the bank under Section 19(2) of the Displaced Persons (Debts Adjustment) Act, 1951, for conversion of his shares into 210 fully paid-up shares. The bank refused, contending that the petition was not maintainable as the winding-up petition had been presented before the petitioner's application.
Finding of the Court:
The court held that the petition was within time and maintainable. It interpreted the phrase "being wound up" in Section 20 of the Displaced Persons (Debts Adjustment) Act, 1951, as referring to the process of winding up after the passing of a winding-up order, and not to the date of presentation of the winding-up petition. It distinguished this from the "deemed to commence" provision in Section 441 of the Companies Act, 1956, which was a statutory fiction. The court found that the two provisions operated in distinct and separate ambits.
Issues: 1. Whether the petition was within time? 2. Whether the petition was maintainable? 3. Whether the petitioner was entitled to get his shares converted as prayed? 4. Whether the bank could make a valid call?
Ratio Decidendi: The court held that the provisions of Section 20 of the Displaced Persons (Debts Adjustment) Act, 1951, were intended to provide relief to displaced persons in respect of shares held by them in companies or co-operative societies that were being wound up. The phrase "being wound up" referred to the process of winding up after the passing of a winding-up order, and not to the date of presentation of the winding-up petition. This was in contrast to the "deemed to commence" provision in Section 441 of the Companies Act, 1956, which was a statutory fiction. The court found that the two provisions operated in distinct and separate ambits.
Final Decision: The court allowed the petition and directed the bank to convert the petitioner's 280 partly paid-up shares into 210 fully paid-up shares.
1. This is an application made by Shri A. C. Goel under S. 19(2)of the Displaced Persons (Debts Adjustment) Act (Act No. LXX of 1951) for converting his 280 shares, on which 75 per cent had been paid up, into 210 fully paid up shares on the ground that the petitioner is a displaced person from West Punjab. The respondent is a banking Company which had its registered office at Lahore which, as a result of the creation of two Dominions, was shifted at first to Ambala and later on to Ludhiana in East Punjab. On 6th of February, 1957 the petitioner serviced a registered notice on the Managing Director of the respondent-Bank requesting that his 280 shares, on which 75 per cent had been paid, may be reduced and converted into 210 fully paid-up shares as he was a displaced person from Lahore. Exhibit P.W. 1/2 is the acknowledgment receipt of the notice. This case, which was filed before the Tribunal at Delhi, has been transferred to this Court by virtue of S. 45B of the Banking Companies Act (Act No. X of 1949).
2. An application had been made for the winding up of the Bank by North India Radhaswami Educational Society on 10th of March, 1955. While the petition for the winding up of the Bank was pending, the Reserve Bank of India, had also applied for its winding up and the Bank was ordered to be wound up on 17th of May, 1957 at the instance of the Reserve Bank. The petition presented by the Society on 10th of March, 1955 was also allowed and order for the winding up was passed on 30th of August, 1957. The contention raised by the petitioner was traversed by the Bank and the pleadings between the parties gave rise to the following issues:
1. Whether the petition is within time?
2. Whether the petition is maintainable?
3. Whether the petitioner is entitled to get his shares converted as prayed?
4. Whether the bank could make a valid call?
3. On the first issue reference may be made to the provisions of S. 19(6) of the Displaced Persons (Debts Adjustment) Act. It provides:
"19 (6) The provisions of this section shall have effect for a period of ten years from the 15th day of August, 1947, and thereafter shall cease to have effect except as respects things done or omitted to be done."
In this case an application to the Company had been made under S. 19(2) by the petitioner on 6th of February, 1957, and that being so the benefit of the provisions of S. 19 are available to the petitioner. I have also expressed this view in the case of Bhai Mohan Singh V/s. Hind Iran Bank Ltd., 1958-28 Com Case 393: (AIR 1959 Punj 225). The first issue, therefore must be decided in the petitioners favour.
4. The second and the third issues overlap each other and may be disposed of together. According to the contentions of the Bank a petition under S. 19 is not competent as the winding up petition was presented on 10th of March, 1955, long before the date of petitioners application to the Bank under S. 19(2). Mr. Krishan Lal Kapur, learned counsel for the Bank, has drawn my attention to the provisions of S. 441 of the Companies Act, 1956 , and has argued that the winding up of a Company by the Court is to be "deemed to commence at the time of the presentation of the petition for the winding up." His contention is that when construing the provisions of S. 20 of the Displaced Persons (Debts Adjustment) Act, the language of S. 441 of the Companies Act had to be borne in mind. According to him the words occurring in S. 20 "Where a Company * * * * * is being wound up" should be read to indicate the period beginning with the date of the presentation of the winding up petition. He has not drawn my attention to any authority in support of his contention. There is a clear distinction between the language employed in Section 20 by the Legislature and it materially differs from the words in Section 441 of the Companies Act. Apart from S. 441, winding up is a process which begins after the Court passes an order for winding up. Till such order is passed, there c
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