Case: 73Jyoti Bhushan Gupta Vs. The Banaras Bank Ltd

1. The Banaras Bank Ltd. -a public limited company having its registered office at Banaras (hereinafter referred to as the Bank) was ordered on March 1, 1940 to be compulsorily wound up by the High Court of judicature at Allahabad, and the Official Liquidator was appointed to conduct the proceedings in winding up. On September 12, 1942 an order was made by the High Court under S. 187 of the Indian Companies Act, 1913 (Act VII of 1913) for payment of unpaid calls and the appellants Jyoti Bhushan Gupta and Gokul Chand, whose names had been placed on the list of contributories, were directed to pay with interest Rs. 95,178-5-9 to the Official Liquidator of the Bank. This order was, by virtue of S. 199 of the Act, enforceable in the same manner in which the decree of the High Court made in any suit pending therein may be enforced. On September 12, 1946 the order was transferred to the District Judge, Allahabad for execution. On September 23, 1946 the Official Liquidator applied to the District Court, Allahabad for execution of the order dated September 12, 1942, and prayed that certain amounts due to the appellants be attached in satisfaction of the claim. The execution proceedings were transferred by the District Judge to the Civil Judge, Allahabad. The appellants contended inter alia that as the application for execution was not preferred within 3 years of the order for payment as prescribed by Art. 182 of the First Schedule of the Limitation Act it was barred by the law of limitation. The Official Liquidator contended that the application was governed by Art. 183 of the Act and that, in any event, certain part payments having been made towards the claim by the appellants, the period of limitation was extended thereby. At the hearing, the alternative plea of part payment was abandoned by the Official Liquidator.2. The Civil Judge held that the application for execution was barred by limitation as it was not preferred within 3 years from the order of the High Court. In appeal to the High Court of Allahabad, the order passed by the Civil Judge was reversed and the proceedings were remitted to the Civil Judge with a direction to restore the execution application to its original number and to proceed with it according to law. Against that order with certificate of fitness granted by the High Court under Art. 133 of the Constitution, this appeal is preferred.

Court's reasoning:
We have not thought it necessary, having regard to the importance of the question raised by the appellants and the fact that this Court may in a proper case regularise the proceeding in this Court by granting special leave, even if certificate under Art. 133 of the Constitution could not be issued by the High Court, to hear the parties on the question as to the maintainability of the appeal on the certificate and have heard the appeal on the merits.4. We are of the view that the appeal must fail on theis true that when the Letters Patent were issued the High Court had no jurisdiction under a law relating to companies of the nature exercised by the High Court, the character whereof falls to be determined in this appeal. But by Cl. 16 of the Charter Act and Cl. 35 of the Letters Patent of the Allahabad High Court jurisdiction which was not initially conferred upon the High Court could be conferred by legislation within the competence of the Governor-General in Council and the Governor in Council. By the Companies Act of 1913, the High Court was invested with jurisdiction to order payment of the amounts due by debtors of companies ordered to be wound up.This jurisdiction may be invoked as of right against all persons whose names are placed on the list of contributories. The jurisdiction is ordinary: it does not depend on any extraordinary action on the part of the High Court. The jurisdiction is also original in character because the petition for exercise of the jurisdiction is entertainable by the High Court as a court of first instance and not in exercise of its appellate jurisdiction. Again by S. 187 no special jurisdiction is conferred. The High Court adjudicates upon the liability of the debtor to pay debts due by him to the Company : the jurisdiction is therefore civil. Normally, a creditor has to file a suit to enforce liability for payment of a debt due to him from his debtor, The Legislature has by S. 187 of the Companies Act empowered the High Court in a summary proceeding to determine the liability and to pass an order for payment, but on that account the real character of the jurisdiction exercised by the High Court is not altered. Nor is there any substance in the contention that the authority to order payment of a debt under S. 187 is merely a power of the High Court and not its jurisdiction. By S. 3 read with S. 187 of the Companies Act the High Court has jurisdiction to direct payment of the amount due by a contributory: and an order passed for payment manifestly is an order passed in exercise of the jurisdiction vested in the High Court by S. 3 read with S. 187 of the Companiesunder Cl. 18 of the Letters Patent a Judge or Judges of the High Court are to sit as a Court for relief of insolvent debtors and powers and authorities with respect to original and appellate jurisdiction are to be determined by reference to the law relating to insolvent debtors. The jurisdiction to deal with the claims of companies ordered to be wound up is conferred by the Indian Companies Act and to that extent the Letters Patent are modified. There is, however, no difference in the character of the original civil jurisdiction which is conferred upon the High Court by Letters Patent and the jurisdiction conferred by special Acts. When in exercise of its authority conferred by a special statute the High Court in an application presented to it as a court of first instance declares liability to pay a debt, the jurisdiction exercised is original and civil and if the exercise of that jurisdiction does not depend upon any preliminary step invoking exercise of discretion of the High Court, the jurisdiction isan application for enforcement of that liability Art. 183 of the Limitation Act was held applicable.