P L D 1969 Dacca 375 (PLP)

(2) The winding up of a company under the Companies Act, 1948, is governed entirely by English law." He has relied on the comment based on English cases that: "It is now established that the Companies Acts do not except when express provision is made to the contrary affect assets which a company may possess which are situated outside the United Kingdom, and that in particular assets situated outside the United Kingdom do not fall under the control of the liquidator by virtue of a winding‑up order." He also relied on the case of In re: Noakhali Union Bank Ltd. (2 D L R 181), which, however, was a case under section 153 of the Companies Act. I will come up to this case later and show that it is contrary to the contention of Mr. Paul. Mr. Paul has also relied on the case of New Zealand Loan and Mercantile Agency Company, Limited v. Christian Morrison (1898 A C 349) where it was held that the Joint Companies Arrangement Act, 1870 did not apply to the Colonies. Accordingly a scheme of arrangement thereunder sanctioned by an English Court is qua the Colonies a proceeding in a foreign Court, and cannot be pleaded by the Company in a Victorian Court as a defence to an action by a non‑assenting Victorian creditor for the full amount of her claim. Mr. Paul wanted to rely on these cases in support of his contention and argued that the Official Liquidator could not proceed with the debt in the foreign country. Mr. Paul also relied on the case of Sheikh Amin‑Uddin v. Lahore Electric Supply Company Ltd. (P L D 1951 Lah. 293), in support of his proposition that the Company was a foreign Company. So far as the definition of section 2‑A of the Companies Act and the Registration under section 270 of the Act are concerned I can at once say that the obvious fallacy in Mr. Paul's argument is that he has omitted to consider the fact that this was a Banking Company and its Branches in Pakistan had been wound up in Pakistan by an order under the Banking Control Act, 1948. The Banking Company has been defined in that Act. (The Banking Control Act, 1948) as follows: "(a) `Banking Company' means a banking company as defined in section 277‑F of the Indian Companies Act, VII of 1913, and includes the Imperial Bank of India and any body of persons incorporated by or under any law in force in any place outside the Provinces and carrying on the business of a banking company in any Province or any Acceding State." In the same Act `secured loan or advance' has been defined as follows: "(f) `secured loan or advance' means a loan or advance made on the security of assets the market value of which is not at any time less than the amount of such loan or advance." The rules requiring the maintenance of liquid assets and the definition of assets in the Province as given in section 9 of said Act, (that is the Banking Control Act, 1948) leaves it to the State Bank full authority to define what would be the assets of a Company in the Provinces. The State Bank has been appointed the Official Liquidator in this case and the State Bank has claimed this tea estate as an asset of this company. Without however, relying on the above interpretation altogether I would like to give an analysis of the situation and examine Mr. Paul's contention on the background of such analysis. It appears from the application under subsection (3) of section 15 of the Banking Companies Control Act of 1948 for winding up of the Company preferred by the State Bank that the Bank immediately before the establishment of the Dominion of Pakistan was a Scheduled Bank and carried on its business from its Registered Office at Calcutta and it had 56 branches situated throughout India out of which eight branches were situated in the territories now forming the territories of East Pakistan, namely, Dacca, Chittagong, Mymensingh, Narayanganj, Khulna, Barisal, Faridpur and Brahmanbaria and four branches were situated in the territories now forming the terr:4ories of West Pakistan, viz. Karachi, Lahore, Quetta and Peshawar. Immedi ately after the establishment of the Dominion of Pakistan the said bank closed six of its branches in Pakistan and thereafter on the 1st July 1948, informed the petitioner that the said Bank was doing banking business only from two branches in Pakistan, viz. Dacca and Chittagong, and that their principal place of business in Pakistan was at Dacca. The branches at Mymensingh, Narayanganj and Khulna were closed in February 1948, and amalgamated with the Dacca branch. That thereafter on or about the 28th January 1950, the said bank also closed its branches at Dacca and amalgamated the same with its Chittagong branch, which was from that time its only branch in Pakistan. Although the Bank was functioning normally in Bharat, on or about 24th February 1950, the Bank wrongfully and illegally and without any moratorium order from any competent Court in Pakistan suspended payments from its branch at Chittagong and also stopped submitting the returns required to be submitted under the provisions of the Banking Companies Control Act, 1948. Therefore it appears that on the eve of Partition, the Bank had 44 branches in India with its Head Office at Calcutta and 12 branches in Pakistan. But from the definition of a Banking Company given in the Banking Control Act which I have quoted above the Branches in Pakistan consisted of a Banking Company. It was, therefore, not a foreign company in the sense that Mr., Paul wants to establish. Node of the orders under the Indian Independence Act exactly covers the situation. In the case In re: Noakkali Union Bank Ltd. which overruled the judgment of Ormond, J. Shahabuddin, J. held that the High Court at Dacca had jurisdiction under section 153 in respect of the petitioner‑Company though the Registered Office of the Petitioner‑Company was at Calcutta, a foreign country and the learned Judge further held that the exercise of this jurisdiction was not dependent on any orders passed by the High Court of Calcutta although those orders should in finally disposing of the matter be considered on the principle of co‑operation based on essential principles of justice and equity. To my mind it appears that every branch in Pakistan was entitled to share in the assets of the Company on the eve of the Partition, and the shares should be considered on the principle of co‑operation based on essential principle of justice and equity as observed by Shahabuddin, J. I therefore, do not accept the argument of Mr. Paul that the debt was an asset which was exclusively realisable in Calcutta. It was an asset of each and every branch of the Bank so entitled. The respondent Mrs. Pushpa Rani Chowdhury has annexed as Annexure B', a copy of the plaint filed (in the Calcutta High Court) by the Bank which is also now in liquidation in Calcutta. The claim is for realisation of the identical debt, the ; principal sum being stated as Rs. 2,00,000 but the interest was calculated on the date of filing of the plaint to Rs. 1,45,794‑22 paisa. The material fact is that the plaint excluded the Pallathal Tea Estate. Paragraph 4 of the said plaint (Annexure `B') reads as follows: "

4. On and from August 15, 1947 the said Pallathal Tea Estate mentioned in Paragraph I above and described in the Second Schedule under Lot I of the said Memorandum of Deposit of title deeds formed part of Pakistan." In the prayer portion, the plaintiff claimed a declaration of title of the plaintiff as mortgagee in respect of Aylabari Tea Estate only. The debt was created on mortgage of the two Tea Estates‑one has now fallen in India and the other is in Pakistan. The area given by the Official Liquidator is that Pallathal Tea Estate contains 12 hundred acres of land while Aylabari Tea Estate and Latu Pahar Tea Estate contain only 960 acres including some zamindary, cultivated and forest lands 560 acres. Value of the Tea Estate land being more, therefore, it appears that the property in Pakistan would be of at least the same value as the property in India. Therefore, in my opinion, the Liquidator is entitled to follow 50% of the original debt. Mr. Paul has then argued that the mortgagee cannot follow only a part of the mortgaged property. Section 67, subsection (d) of the T. P. Act reads as follows: "Nothing in this section shall be deemed‑ . . . . . (d) to authorise a person interested in part only of the mortgage money to institute a suit relating only to corres ponding part of the mortgaged property, unless the mortgagees have, with the consent of the mortgagor, served their interests under the mortgage." Here the terms of section 67 (d) are not applicable. By partition by the then Paramount power the country has been divided into two parts. The mortgaged property has fallen into two parts. The mortgagee bank has also been divided into two parts. Therefore, in these circumstances, the question of consent of the mortgagor does not arise. Besides it is the admitted case that the original mortgagors who had joint interest in the property themselves sold their 16 annas interest in the property now in Pakistan to the respondent Mrs. Pushpa Rani Chowdhury. In such circumstances the rule of indivisibility of mortgage is not available. The Legislature by enacting the rule quoted had intended to protect the mortgagee from being harassed by multiplicity of suits but that question will not arise here. As stated above the suit for realisation of the debt filed in Calcutta has excluded this property and the Official Liquidator here also claims to follow only this property for realisation of his claim. Mr. Paul has then argued that the Official Liquidator cannot demand any payment unless he is in a position to give back the title deeds as it was a mortgage by deposit of title deeds. So far as the respondent Pushpa Rani is concerned, there is no question of her getting back her title deeds as she is a purchaser who had purchased this property with the full knowledge that the said property was mortgaged as evidenced by her kabala filed by the Official Liquidator on 6‑8‑

65. The original title so far as this property is concerned has merged in the present kabala, which she has obtained. Besides mere inability to give back the title deeds will not take away the right of for a closure. Can it be said that the mortgagee in a mortgage created by deposit of title deeds loses his right of foreclosure if by a vis‑major or accident the title deeds are lost? Moreover in this case the question does not arise as the mortgage was by a mortgaged deed as will appear later. The last question that remains whether there was any valid mortgage by deposit of title‑deeds. It appears that the Memoran dum of the deposit of title deeds contain details regarding the terms of the loan and is an extensive document giving all details. It was argued by Mr. Paul that this was not a valid mortgage as the document was not a proper memorandum of deposit of title deeds but in fact is the mortgage itself in which the deposit of title deeds was mentioned. I have gone through the copy of the document filed by the Official Liquidator and judged by the terms of the document, the contention of Mr. Paul cannot be brushed aside. But the fact remains that although the mortgage was created by deposit of title deed, and that fact is acknow ledged in the Memorandum itself the most crucial factor is that the Memorandum was in fact registered and fully stamped as required by law. Thus I find that this contention of Mr. Paul also fails. In these circumstances I order that the list of debtors be settled to the effect that the respondents Mrs. Pushpa Rani Chowdhury is indebted to the Bank for the principal amount of Rs. 1,00,000 together with interest thereupon at 6% up to the statutory limit as stipulated in the mortgage document. Let the requisite certificate be issued. Costs of and incidental to this application will come out of the assets of the Company. A. E./S. A. H. Order accordingly.