Supreme Court of India
BANK OF TRAVANCOREversusGOODLAND PLANTATIONS (P) LTD. N OVEMBE~ 7, 1979
- Citation
- 1979 INSC 231
- Decided
- 7 November 1979
- Disposal
- Appeal(s) allowed
- Bench
- N L UNTWALIA
Holding
The order issued under section 45(10) of the Banking Regulation Act was within the statutory power conferred on the Central Government and is constitutionally valid.
Summary
Goodland Plantations Ltd. subscribed to a monthly chitty run by Orient Bank and paid four instalments, winning the prize. Before the prize could be paid, the Central Government imposed a moratorium on Orient Bank under the Banking Regulation Act, 1949, causing the chitty to be deemed terminated under the Travancore Chitties Act. The Government later approved the amalgamation of Orient Bank with State Bank of Travancore and, under section 45(10) of the Banking Act, issued an order to treat the suspension period as a mere suspension, thereby allowing the chitty to continue as if it had never terminated. Goodland sued for a refund of its instalments; the trial court dismissed the suit, holding the order was within the scope of section 45(10). The Kerala High Court reversed, saying the order exceeded that power. The Supreme Court held that the order was indeed within the scope of section 45(10), that the provision did not suffer from excessive delegation, and that the scheme’s special provision for chitties indicated an intention to continue them. Consequently, the appeal was allowed, the impugned judgment set aside, and the suit dismissed.
Issues considered
- The validity of the order issued under section 45(10) of the Banking Regulation Act, 1949.
- Whether section 45(10) of the Banking Regulation Act suffers from excessive delegation of legislative power.
- Whether the order is consistent with the scheme of amalgamation of Orient Bank with State Bank of Travancore.
- Whether the chitty could be continued despite its termination under the Travancore Chitties Act.
Legislation cited
- Banking Regulation Act, 1949s. 45(10), s. 45(2)
- Constitution of Indias. Article 245
- Travancore Chitties Act, 1120s. 38, s. 39, s. 41
Subjects
Banking lawAmalgamationChittyMoratoriumDelegation of legislative powerConstitutional validitySection 45(10)Travancore Chitties Act
Judgment
1157
STATE BANK OF TRAVANCORE A
v.
GOODLAND PLANTATIONS (P) LTD.
Novembe~ 7, 1979
. [N. L. UNTWALIA, P. N. SHINGHAL AND A. D. KOSHAL, JJ.J B
Banking Regulation Act, 1949 Sectio11 45(10)-Scope of.
The respondent Company, a subscriber, bed to pay money in monthly
instalments to a Chitty run by the Orient Bank. The last instalment was paid
on December 10, 1960. The respondent was the successful bidder. The prize
amount was to be paid to the respondent on January 10, 1961. But before C
that date the Central Government imposed a Moratorium, originally for the
period ending with the March 18, 1961 which later on was e>tended upto
June 16, 1961 on the Orient Bank with the result that the Orient lla11k had
to suspend all its business activity. This resulted in the conduct of the Chitty
being discontinued, so that the Chitty stood terminated and the Orient Bank
in its capacity as the Foreman of the Chitty incurred the obligation to pay
back all the contributions made by non-prized subscribers. D
The Central Government sanctioned a scheme under the Banking Regula·
tion Act for the amalgamation of the Orient Bank with the appellant (Travan-
.core Bank). Realising that the Travancore Bank would not be able to conti-
nue the Chitties for which the Orient Bank had acted as Forentan because
those Chitties had terminated owing to the failure of the Orient Bank to
continue to conduct them by reason of the Moratorium, the Central Govern- E
ment passed an order on December 4, 1961 under section 45(10) of the Bank-
ing Act. This order was further amended substituting the words "the 31st
March 1962" for the words "31st December 1961", the effect of which was
to obliterate the termination of the Chitties as resulting from the suspension
thereof by reason of the moratorium during the period from December 18,
1960 to 31st March, 1962, and to enable the appellant-Bank to continue those
Chitties as if there had been no suspension at any point of time, so that they F
could be continued as if the relevant provisions of the Chitties Act o.nd the
relevant variolas had throughout been complied with.
The respondent filed a suit claiming refund of the four instalments paid
by it along with interest. There was no reference to the impugned order
presumably because the respondent had no knowledge thereof. The snit was
resisted on the strength of the impugned order dated 15-1-1962, but the vires G
-0f that order was challenged by the respondent and it was urged. that the
impugned order did not fall within the ambit of sub-section (I 0) of section
45 of the Banking Act and that in any case that sub-section itself was consti-
tutionally invalid. The suit was transferred by the High Court t•J its own
file, from the Court of Muusif as the constitutional validity of section 45(10)
of the Banking Act was questioned. The suit was dismissed.
H
The respondent instituted an appeal which was accepted by the Division
Bench. Disagreeing with the trial judge as to the object of the i;cheme of
1158 SUPREME COURT REPORTS [1980] 1 S.C.lt.
A amalgamation the Division Bench held that sub-section ( 10) did not suffer
from excessive delegation of legislative power.
lt was urged on behalf of the respondent in this Court that one of tho-
objects of the scheme was to continue the Chittics to a successful conclusion
as held by the trial Judge and that the finding tu the contrary recorded in the
impugned judgment was erroneous.
B Allowing the appea1,
HELD : The pervasive provisions embraced in the Jater part of paragraph
2 of the scheme embraced within their ambit a complete transfer of all rights.
and liabilities, of whatsoever nature, of the Orient Bank to the appeliant-Bank
and no special provision wes therefore needed to be included in the scheme
in regard to Chitties, if they were not to be continued to a successful conclu-
c sion. As it is, the portion of paragraph 2 provides for Chitties on a special
footing which could not have been the case if the right and liabilities of the
Orient Bank in regard to Chitties were sought tD be transferred to the appellant
Bank on the basis of the termination of the Chitties which had already become
operative because of the lvforatorium and as a consequence of suspension of the-
Chitty business by the Orient Bank. Nor was it necessary to provide in clause
(I) of paragraph 2 of the scheme that "the transferee Bank shall become the
D foreman .... and shall continue to exercise all powers and to do all such acts
and things as would have been exercised or done by the transferor Bank .... ,.
if the Chitties were to be dealt with as having come to termination. The
special provision for the Chitty busin<s.. cannot be regarded as redundant and
it was obviously made with a purpose -which, in the circumstances of the case,
could be nothing more or less than to provide for the CGD.tinuation of th~
Chitties in supersession of their termination. No other reasonable explanation
E of that special provision appears possible. And if that be so, the entire reason·
ing adopted in the judgment of the Division Bench for arriving at the conclu·
sion that the impugned order was beyond the scope of sub-section ( 10) of
section 45 of the Banking Act would become unacceptable; for, in that case~
the difficulty which the impugned order sought to overcome would become
very real so that the Central Government would be fully competent under the
provisions of that sub-section to pass an order removing that difficulty and the
F order actually passed could not be considered to be inconsistent with the
provisions of the scheme to any extent or . in any manner. The impugned
order therefore did not fall outside the scope of the power conferred on the
Central Government under sub-section (10) of section 45 of the Banking
Act. [1168 E-H, 1169 A-CJ
C!vIL APPELLATE JURISDICTION: Civil Appear No. 2531 Of 1969.
G
From the Judgment and Order dated 20-1-1 %9 of the Kerala High
Court in A.S. No. 39 /65.
P. Govindan Nair and K. 1. John for the Appellant.
M. R. K. Pillai for the Respondent.
If The Judgment of the Coun was delivered by
KosHAL, J.-For a proper appreciation of the dispute giving rise-
to this appeal by Special Leave against the judgment dated 20th of
STATE BANK V. GOODLAND PLANTATIONS (Koslwl, J.) 1159
January, 1969, of a Division Bench of the High Court of Kerala, a A
reference to various provisions of the Travancore Chitties Act (herein-
after called the 'Chitties Act') being Act XXVI of 1120 (which year
corresponds to years 1944 and 1945 of the Christian era) is necessary.
Clause (2) of section 3 of the Chitties Act defines a 'chitty' thus :
"A 'chitty' means a transaction by which one or more per- B
sons hereinafter called the foreman or foremen enter into an
· agreement with a number of persons, that every one of the
contracting parties' shall subscribe a certain amount of money
or quantity of grain by periodical instalments for a certain
definite period and that each in his turn, as determined by lot
or by auction or in such other manner as may be provided for c
in the variola, shall be entitled to the prize amount."
"Chitty amount" is defined in clause (3) of section 3 to mean the sum
total of the contributions payable by all the subscribers for any instate
ment without any deduction for discount. In clause ( 4) the term 'dis-
count' is stated to mean the amount of money or quantity of grain which D
a prize winner has, under the terms of the variola, to forego for payment
of veethapalisa, foreman's commission or other expenses. A 'foreman'
as per clause ( 6) is the person who, under the variola, is responsible
for the conduct of the chitty. 'Variola' is defined in cjause (14) to be
a document containing the articles of agreement between the foreman
and the subscribers in relation to the chitty while, under clause (15) E
'veethapalisa' is the share of a subscriber in the discount available under
the variola for rateable distribution among the subscribers at each instal-
ment of the chitty. 'Prize amount' says clause (9), means the chitty
amount reduced by the discount.
'>ection 9 enumerates 13 particulars which a variola must contain F
and they are : 1
(I) the full name and residence of every subscriber;
(2) the number of tickets or the fraction thereof held by each
subscriber; ·
(3) the number of instalments and the amount payable for each G
ticket at every instalment;
( 4) the date on which the chitty is to begin and the elate on
which it is to terminate·,
( 5) the mode of ascertaining the prize winner at the successive
instalments;
H
(6) the amount of discount which a prize winner at any instal-
ment has to forego;
1160 SUPREME COURT REPORTS [1980] I S.C.R.
A (7) the mode and proportion in which the discount is distribut-
able by way of veethapalisa, foreman's comn1ission and
other allowance, if any;
(8) the time and place at which the chitty is to be conducted;
(
(9) the instalment at which the foreman is to get the prize;
B
(10) the approved banks in which chitty moneys shall be invested
by the foreman under the provisions of the Act;
(11) the consequence which a non-prized or prized subscriber,
or the foreman, will be liable to in case of any ,foJation
c of the variola;
(12) the nature and particulars of the security offered by the
foreman under section 17; and
(13) any other particulars that may from time to time be pres-
cribed by the Government.
D
Section 14 deals with the time and place where the drawing of prizes
in a chilly shall be conducted. Section 17 to 24 relate to the rights
and liabilities of a foreman while the next three sections following pro-
vide for non-prized subscribers. Sections 29 to 32 embrace provisions
regarding prized subscribers. Sections 38, 39 and 41 relate to tem1ina-
E
tion of chitties and may be reproduced here with advantage :
"3 8. (1) When a foreman dies or becomes of unsound
mind his legal representative or his guardian as the case may
be, shall; in the absence of any provision in the variola to the
contrary, take the place of the foreman and have the right to
r continue the chitty or to make suitable arrangements for the
further conduct of the chitty.
(2) When a foreman is adjudicated an insolvent under the
law relating to insolvent debtors for the time being in force or
G withdraws from the chitty under section 24 or fails to con-
duct the chitty at any instalment or any other date before the
next succeeding instalment as may have been agreed upon by
a special resolution in that behalf, any one or more of the non-
prized subscribers authorized by a special resolution may, in
the absence of any provision in the variolas for the future con-
B duct of the chitty, take the place of the foreman and have the
right to continue the chitty or to make suitable arrangements
for the further conduct of the chilly."
STATE BANK v. GOODLAND PLANTATIONS (Koshal, J.) 1161
"39. A chitty shall be deemed to have terminated only- A
'( 1) When the period fixed in the variola or the period
as altered by a subsequent special resolution for the duration
•• of the chitty has expired, or
(2) when the legal representative of a deceased foreman
B
or the guardian of a foreman of unsound mind or the ~ubs
criber or subscribers selected therefor fail to conduct the chitty
or make suitable arrangements for the further conduct of the
chitty as provided for in section 38;
Provided however that if there are more foremen than one
and one or more snch foremen are living and are not disquali- c
fied to act under section 38, the chitty shall not be deemed to
have terminated under this clause if there is provision in the
variola enabling the remaining foreman or foremen to conduct
the chitty or if the non-prized subscribers agree by a special
resolution to the conduct of the chitty by the remaining fore-
D
man or foremen."
"41. Except in the case of clause (1) of section 39, every
non-prized subscriber shall, unless otherwise provided for in
the variola and subject to the provisions of section 27, be
entitled to get back his contributions at the tennination of the
chitty without any deduction for veethapalisa, if any, received E
by him."
2. The facts are undisputed and may be briefly stated. The plain-
tiff, viz., the Goodland Plantations (P) Ltd., (hereinafter referred to as
the 'Company') became a subscriber to a monthly chitty run by the
Kottayam Orient Bank Limited ('the Orient Bank' for short) as foreman. F
The Company was to pay, like al! other subscribers, a sum of
Rs. 20,000/- in 50 monthly instalments of Rs. 400/- each. The conduct
of the chitty was governed by variola exhibit P-1, apart from the various
provisions of the Chitties Act. The chitty started on the 10th of Septem-
•ber, 1960, when the Company paid the first instalment due from it.
G
Three other instalments were paid by the Company on 10-10-1960,
10-11-1960 and 10-12-1960 to the foreman. On the date last men-
·tioned, an auction was held for the prize amonnt for which the Company
was declared to be the successful bidder, it having elected to accept
·a sum of Rs. 11,075/- in Ueu of the full amount of Rs. 20,000/-. The
prize amount was to be paid to the Company a month later, i.e., on the H
10th of January. 1961, (when the fifth instalment was to be~omo pay-
:able) subject to the Company furnishing security for the continued
1162 SUPREME COURT REPORTS [1980] 1 S.C.R.
A performance of its part of the variola in future. However, before that
stage was reached, th~ Central Government, on the 17th of December,
'1960, imposed a moratorinm on the Orient Bank under section 45 (2)
of the Banking Regulation Ac( 1949, (hereinafter referred to as 'the
Banking Act') with the consequence that the Orient Bank had to
suspend all business/activity. The moratorium was enforced origi-
a nally for the period ending with the 18th of March, 1961, which was
later on extended upto the 16th of June, 1961, (exhibits D-1, D-2
and DA). The suspension of business resulted in the conduct of
the chitty being discontinued so that under sub-section (2) of section
39 of the Chitties Act read with section 41 thereof as also clause (14)
of the variola, the chitty stood terminated and the Orient Bank in its
e capacity as the foreman of the chitty incurred the obligation to pay
back all the contributions made by non-prized subscribers.
On the 16th of May, 1961, the Central Government sanctioned
under sub-section (7) of section 45 of the Banking Act a Scheme
D prepared by the Reserve Bank of India under sub-sections ( 4) to ( 6)
of that section for the amalgamation of the Orient Bank with the·
State Bank of Travancore (hereinafter called the 'Travancore Bank').
The Scheme provided inter alia that all the assets and liabilities of the
Orient Bank'. would stand transferred to the Travancore Bank with
effect from the 17th of June, 1961. In relation to chitties the Scheme
I laid down:
"If the transferor bank was acting immediately before
the prescribed date as a foreman in respect of any kuri or
chitty as defined in the Travancore Chitties Act (XXVI of
1120) or the Cochin Kuries Regulation (VII of 1107) the '
F rights, duties and obligations in relation to the kuri or chitty
shall be regulated in accordance with the following provi-
sions, namely,
( i) the transferee bank shall become the foreman of the
kuri or chitty and shalJ continue to exercise all powers and
to do all such acts and things as would have been exercised
G or done by the transferor bank, in so far as they are not
in consistent with this scheme;
(ii) the funds, if any, of the kuri or chitty Jent to or
deposited with the transferor bank, or otherwise due from
that bank to the kuri or chitty shall be transferred to the·
H transferee bank, and the liabilities corresponding to such
funds shall also be payable by the transferee bank in accor-
dance with the other provisions of this scheme;
STATE BANK v. GOODLAND PLANTATIONS (Koshal, !.) 1163
(iii) if on the prescribed date the transferor bank in its
capacity as the foreman of any kuri or chitty has deposited
any security for the due performance of its duties and obli-
gations in relation to the said kuri or chitty, the said security
shall continue to be available for the purposes for which it
was intended, but shall if and to the extent that it is subse-
quently released be transferred to and vest in the transferee
bank provided that the said security or as the case may be,
the surplus, if any, after providing for the discharge of the
duties or obligations in respect of the kuri or chitty shall be
valued and utilised for the purposes of this scheme."'
Later on it was realised that the Travancore Bank would not be
c
able to continue the chitties for which the Orient Bank had acted as
foreman earlier because those chitties had terminated owing to the
failure of the Orient Bank to continue to conduct them by reason of
the moratorium and in order to cross this hurdle the Central Govern-
ment passed another order dated the 4th of December, 1961, which was
described as the Kottayam Orient-Bank Limited (Amlllgamation with
the State Bank of Travancore) (Removal of Difficulties) Order, 1961.
That order (hereinafter called the 'impugned order') was passed
. under sub-section (10) of section 45 of the Banking Act and its
relevant portion is extracted below:
E
"2. Notwithstanding anything contained in the Travan-
core Chitties Act or the Cochin Kuries Regulation, the sus-
pension of any kuri or chitty for the period from the 18th
December, 1960, to the 31st December, 1961, or for any
part of that period and any consequent prolongation of the
kuri or chitty shall have effect as though the articles in the F
variola ( s) were altered or added to for that purpose by
special resolution(s) of the subscribers of the kuri or
chitty and as though the relevant provisions, if any, of the
Travancore Chitties Act or the Cochin Kuries Regulation
were complied with, and notwithstanding anything contained
in the Travancore Chitties Act or the Cochin Kuries Regu- G
lation, the failure of the foreman to conduct the kuri or
chitt~ during the said period shall not be deemed lo have
termmated the kuri or chitty."
"3 .. Notwithstanding anything contained in the variola ( s)
the penod fixed for the duration of the kuri or chitty shall B
be . deemed to have been extended by the period referred
to m 2 above."
1164 SUPREME COURT REPORTS [1980] 1 S.C.R.
A "4. Notwithstanding anything contained in the Travan-
core Chitties Act or the Cochin Kuries Regulation, the State
Bank shall continue the kuri or chitty as if the provisions, if
any of the said Act or the said Regulation relating to con-
tinuance of the kuri or chitty have been complied with."
B "5. All the words and expressions used herein but not-
defined shall have the meanings respectively assigned to
them in the Travancore Chitties Act, or as the case may be,
the Cochin Kuries Regulation."
By another order dated the 15th of January, 1962, (exhibit P-4)
the impugned order was amended so that the words "the 31st March,
c 1962" were substituted for the words "31st of December, 1961"
occurring in paragraph 2 thereof.
The effect of the impugned order as amended by order exhibit
P-4 was to obliterate the termination of the chitties as resulting from
the suspension thereof by reason of the moratorium during the penod
D from the 18th of December, 1960, to the 31st of March, 1962, and
to enable the Travancore Bank to continue those cbitties as if there
bad been no suspension thereof at any point of time so that they could
be continued as if the relevant provisions of the Cbitties Act and the
relevant variolas bad throughout been complied with.
3. The iitigation started with a suit instituted by the Company on
the 6th of Dece.mber, 196 J, claiming refund of the four instalments
paid by it along with interest. No reference was made in the plaint
to the impugned order presumably because the Company had no y
knowledge of the existence thereof as it bad been passed only a couple
of days before the suit was filed. The claim of the Company was
F based on the averment that the Orient Bank bad failed to conduct
the cbitty to which the Company bad subscribed, that the chitty bad
come to a termination by reason of the default made by the Orient
Bank, that the Orient Bank bad in consequence become liable for
payment back to the CQlllpany of the instabnents deposited by it and
that the Travancore Bank (the sole defendant) had inherited the
G
liability of the Orient Bank.
The suit was resisted on the strength of the impugned order (as
amended by order exhibit P-4) but the vires of that order were chal-
lenged by the Company on whose behalf it was urged that the im-
pugned order did not fall within the ambit of sub-section (10) of
e section 45 of the Banking Act and that in any case that sub-section
itself was constitutionally invalid inasmuch as its enactment amounted
to an abdication of the legislative power which, under Article 245 of
STATE BANK v. GOODLAND PLANTATIONS (Koshal, J.) 1165
the Constitution of India, vested in Parliament and in Parliament alone. A
4. The snit was originally filed in the Court of the Munsif at
Kottayam but was transferred by the High Court to its own file in
1963 because the constitutional validity of sub-section (10) of section
45 of the Banking Act was questioned.
5. The suit was dismissed by Raman Nayar, J., who held that the
impugned order fell squarely within the scope of sub-section ( 10) of
section 45 of the Banking Act, which sub-section also did not suffer,
according to the learned judge, from the infirmity of ex.cessive delega-
tion. Sub-section ( 10) states:
"If any difficulty arises in giving effect t0 tl1e provisions
c
of the scheme, the Central Government may by order do
anything not inconsistent with such provisions which appears
to it necessary or expedient for the purpose of removing the
difficulty."
Raman Nayar, J., noted that the three requirements of the sub-
section were:
"(!) that a difficulty should arise in giving effect to the
provisions of the scheme;
(2) that the order to be made must be such as appears E
to the Central Government to be necessary or expedient for
the purpose of removing the difficulty; and
(3) that the order must not be inconsistent with any of
the provisions of the scheme";
F
and found that all three of them were amply satisfied in the present
case. In his view the object ot the Scheme promulgated by the
Central Government on the 16th of May, 1961, under sub-section
(7) of section 35 of the Banking Act was that the Travancore B"nk
should take over the business of the chitties earlier run bv the Orient
Bank and conduct the same to a "successful conclusion".. However, G
that object, according to the learned Judge, could not be achieverl a·
the Scheme did not provide for an obliteration of the termination of
the said chitties which had already taken place under sub-section (2)
o[ section 38 of the Chitties Act read with sub-section (2) of section
39 thereof and the provisions contained in the variolas. The learned
Judge was clearly of the opinion therefore that a difficulty had arisen H
le giving effect to the provisiJn< of the Scheme which was sought to
be remedied by the impt''"1ed order. The argument that the Scheme
1166 SUPREME COURT REPORTS [1980] J S.C.R.
A did not envisage the continuation of the chillies by the Travancore
Bank, tha~ all that the Scheme provided for was that the rights and
obligations of the Orient Bank in relation to the chitties stood trans-
ferred to the Travancore Bank and that in consequence, the latter J.
became liable for 'the return of the amounts deposited by the sub- I
scribers with the Orient Bank, was turned down by the learned Judge
B with the following observations:
•
"It is no use saying that the defendant Bank could have
had no difficulty in accepting that the chitty had terminated •
and paying off the unprized subscribers. For, that would
not be to work the scheme which clearly contemplates that
c the defendant bank should run the chitties to a successful
conclusion. The difficulty that stood in the way of this
being done was certainly a difficulty in giving effect to the
provisions of the Scheme".
For repelling the cohtention put forward on behalf of the Com-
·D pany about the constitutional invalidity of sub-section (10) of s~tion
45 of the Banking Act, the learned Judge relied on In re Art. 143
Constitution of India, etc.(') and Ra;1111rain Singh v. Chairman, P. A.
Committee(').
6. Against the dismissal of its suit, the Company instituted the
appeal which was accepted by the Division Bench through the judg-
·ment challenged before us. Isaac, J., speaking for himself and
Pillru, J., disagreed with the learned trial Judge as to the object of the
Scheme of amalgamation and observed that in so far as the chitties
y
were concerned, there was nothing in the Scheme to show that such
object was to run them to a successful conclusion. He was further
of the opinion that there was no difficulty at all in the way of the
Scheme, as originally promulgated, being .given effect to. In this
connection he remarked :
"There is no difficulty in paying the amount. The diffi-
G
culty is only for not paying it; and what was achieved by
exhibits P-3 and P-4 was the creation of that difficulty. What
exhibit P-3 provides is that the period during which the
cbitty was not conducted would be treated as a period of
suspension of the chitty by a special resolution of the subscri-
I
bers. The result of that provision was that the right of the
pl:tlntiff to get from the defendant the amount subscribed to
the chitty was taken away and substituted with a liability to
'" (I) A. I. R. 1951 S. C. 332.
(2) A. I. R. 1954 S.C. 569.
STATE BANK V, GOODLAND PLANTATIONS (Kasha!, J.) 1167
draw the prize amount on furnishing security for payment of A
future instalments. This is a provision which is clearly incon-
., sistent with the provisions of the Scheme. Exhibits P'-3 and
P-4 are, therefore in my view beyond the scope of the
power conferred on the Central Government under sub-sec-
.. tion (10) of section 45 of the Banking Companies Act."
B
In regard to the question of constitutional validity of sub-section
~ (10), however, the Division Bench concurred with the learned trial
Judge and held that sub-section (10) did not suffer from excessive
delegation of legislative power.
Allowing the appeal, the Division Bench decreed th.e suit with C
costs of the proceedings in both the courts.
7. The question of the constitutional validity of sub-section (10)
'v · of section 45 of the Banking Act has not been raised before us and
all that we have to determine therefore is whether the impugned order
falls within or outside the scope of that sub-section. D
8. Shri Govindan. Nair, learned counsel for the Company, has
vehemently contended that one of the objects of the Scheme was to
continue the chitties (which had earlier been conducted by the Orient
Bank but had come to a termination by reason of the moratorium) to
a "successful conclusion" as held by the learned trial Judge and that E
the finding to the contrary recorded in the impugned judgment is
erroneous and after hearing him and learned counsel for the Travan-
" core Bank at length we have no hesitation in agreeing with Shri Nair's
contention. It is to be noted that the prorvision regarding chitties
appears in the latter part of paragraph 2 of the Scheme, the earlier
part of which may be quoted here with advantage: F
"(2) As from the date which the Central Government
may specify for this purpose under sub-section (7) of sec-
tion 45 of the said Act (hereinafter referred to as the pres-
cribed date) all rights, powers, claims, demands, interests
authorities, privileges, benefits, assets and properties of the G
transferor bank, movable and immovable, including premi-
ses subject to all incidents of tenure and to the rents and
other sums of money and covenants reserved by or
contained in the leases or agreements under which they
are held, all office furniture, loose equipment, plant appa-
ratus and appliances, books, papers, stocks of stationery, H
other stocks and stores, all investmerit in stocks shares and
securities all bills receivable in hand and iii transit, all cash
1168 SUPREME COURT REPORTS [1980] 1 S.C.R.
in hand and on current or deposit account (including money
at call or short notice) with banks, bullion, all books debts,
mortgage debts and other debts with the benefit of the
securities, or any guarantee therefor, all other, if any, pro-
perty rights and assets of every description including all
rights of action and benefit of all guarantees in connection
B with the business of the transferor bank shall, subject to the
• other provisions of this Scheme, stand transferred to, and be-
come the properties and assets of, the transferee bank; and as
from the prescribed date all the liabilities, duties and obli-
gations of the transferor bank shall be and shall become
the liabilities, duties and obligations of the transferee bank
c to the extent and in the manner provided hereinafter.
Without prejudice to the generality of the foregoing provi-
sions all contracts, deeds, bonds, agreements, power of attor-
ney, grants of legal representation and other instruments of
whatever nature subsisting or having effect immediately
D before the prescribed date shall be effective to the extent
and in the manner hereinafter provided against' or in favour
of the transferee bank and may be acted upon as if instead
of the transferor bank the transferee. bank had been a party
thereto or as if they had been issued in favour of the trans-
feree bank."
These pervasive proV1s1ons embraced within their ambit a com-
plete transfer of all rights and liabilities of whatever nature, of the
Orient Bank to the Travancore Bank and no specfol provision was
therefore needed to be included in the Scheme in regard to chitties if
they were not to be continued to a "successful conclusion". As it is,
F
the portion of paragraph 2 extracted by us earlier did provide for
chitties on a special footing which could not have been the case if tbe
rights and liabilities of the Orient Bank in regard to chitties were
sought to be transferred to the Travancore Bank on the basis of the
termination of the chitties which had already become operative
G because of the moratorium and as a consequence of suspension of
the chitty business by the Orient Bank. Nor was it necessary to t
provide in clause (1) occurring in paragraph 2 of the Scheme that
"the transferee bank shall become the foreman ...... and shall con-
tinue to exercise all powers and to do all such acts and things as
would have been exercise or done by the transferor bank. . " if
H the chitties were to be dealt with as having come to a termination. The
special provision for the chitty business in the Scheme cannot be
regarded as redundant and it was obviously made with a purpose
STATE BANK V. GOODLAND PLANTATION~ (Kos/wl, /.) 1169
which, in the circumstances of the case, could be nothing more or A
less than to provide for the continuation of the chillies in superses;ion
of their lcrminalioc. No other reasonable explanation of that special
provision a ppcurs to us possible. Ami if that be, so, the entire reason-
ing adopted in the impugned judgment for arriving at the conclusion
that the impugned order was beyond the scope of sub-section (10)
of section 45 of the Banking Act would become unacceptable; for, in B
.. tliat case, the diftlculty which the impugned order sought to overcome
would become very real so that the Central Government would be .
fully competent under the provisions of that sub-section to pass an
order removing that difficulty and lhe order actually passed could not
be considered to be inconsistent with the provisions of the Scheme to
any extent or in any manner. c
9. In the result we hold that the impugned order did not fall
outside the scope of the power conferred oil. the Central Gover11111em
under sub-section (10) of section 45 of the Banking Act and reverse
the finding to the contrary recorded in the impugned judgment.
Allowing the appeal, therefore, we set aside the impugned judgment D
and dismiss tqe suit but, in the circumstances of the case, leave the
parties to bear their own costs throughout.
N.K.A. Appeal allowed.
20-743 SCl/79
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