Case: State Bank of Travancore Vs. Goodland Plantations Private Limited

to get from the defendant the amount subscribed to the chitty was taken away and substituted with a liability to draw the prize amount on furnishing security for payment of future installments. This is a provision which is clearly inconsistent 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-section (10) of section 45 of the Banking Companies Act." 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 the suit with costs of the proceedings in both the courts. 7. The question o f the constitutional validity of sub-section (10) 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. 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 the finding to the contrary recorded in the impugned judgment is erroneous and after hearing him and learned counsel for the Travancore Bank at length we have no hesitation in agreeing with Shri Nairs contention. It is to be noted that the provision regarding chitties appears in the latter part of paragraph 2 of the Scheme, the earlier part of which may be quoted here with advantage: "(2) As from the d ate which the Central Government may specify for this purpose under sub-section (7) of section 45 of the said Act (hereinafter referred to as the prescribed date) all rights, powers, claims, demands, interests authorities, privileges, benefits, assets and properties of the transferor bank, movable and immovable, including premises 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 apparatus and appliances, books, papers, stocks of stationery, other stocks and stores, all investment in stocks shares and securities all bills receivable in hand and in transit, all cash 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 therefore, all other, if any, property rights and assets of every description including all rights of action and benefit of all guarantees in connection with the business of the transferor bank shall, subject to the other provisions of this Scheme, stand transferred to, and become the properties and assets of, the transferee bank; and as from the prescribed date all the liabilities, duties and obligations of the transferor bank shall be and shall become the liabilities, duties and obligations of the transferee bank to the extent and in the manner provided hereinafter.Without prejudice to the generality of the foregoing provisions all contracts, deeds, bonds, agreements, power of attorney, grants of legal representation and other instruments of whatever nature subsisting or having effect immediately 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 transferee bank." These pervasive provisions embraced within their ambit a complete transfer of all rights and liabilities of whatever nature, of the Orient Bank to the Travancore Bank and no special 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, 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 the 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 h ad already become operative because of the moratorium and as a consequence of suspension of the chitty business by the Orient Bank. Nor was it necessary to provide in clause (1) occurring in paragraph 2 of the Scheme that "the transferee bank shall become the foreman.. and shall continue to exercise all powers and to do all such acts and things as would have been exercise or done by the transferor bank.." if 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 which, in the circumstances of the case, could be nothing more or less than to provide for the continuation of the chitties in supersession of their termination. No other reasonable explanation of that special provision appears to us possible. And if that be so, the entire reasoning 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 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 order actually passed could not be considered to be inconsistent with the provisions of the Scheme to any extent or in any manner.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]These pervasive provisions embraced within their ambit a complete transfer of all rights and liabilities of whatever nature, of the Orient Bank to the Travancore Bank and no special 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, 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 the 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 h ad already become operative because of the moratorium and as a consequence of suspension of the chitty business by the Orient Bank. Nor was it necessary to provide in clause (1) occurring in paragraph 2 of the Scheme that "the transferee bank shall become the foreman.. and shall continue to exercise all powers and to do all such acts and things as would have been exercise or done by the transferor bank.." if 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 which, in the circumstances of the case, could be nothing more or less than to provide for the continuation of the chitties in supersession of their termination. No other reasonable explanation of that special provision appears to us possible. And if that be so, the entire reasoning adopted in the impugned judgment for arriving at the conclusion that the impugned order was beyond the scope ofn (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 thatn to pass an order removing that difficulty and the order actually passed could not be considered to be inconsistent with the provisions of the Scheme to any extent or in any manner.