Banking company powers over pledged shares prevail over Companies Act transfer restriction; complaint and proceedings were quashed.

Section 108B of the Companies Act, 1956 was held to govern transfers by a body corporate and not by a banking company, which is treated as a distinct category. A bank's sale of pledged shares was treated as an exercise of its powers under the Banking Regulation Act, 1949, so section 108B did not apply to that transfer. The Court further held that, even if section 108B were otherwise relevant, the Banking Regulation Act would prevail where the two enactments are inconsistent. The private complaint therefore disclosed no offence and the criminal proceedings were liable to be quashed as an abuse of process.

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Issues: Whether the private complaint alleging contravention of the Companies Act was maintainable and whether the proceedings deserved to be quashed in view of the Banking Regulation Act and the scope of section 108B of the Companies Act, 1956.

Analysis: Section 108B of the Companies Act, 1956 was held to regulate transfers by a "body corporate" and not by a "banking company", the two being distinct categories under the Act. The sale of pledged shares by the bank was treated as an act within the banking company's powers under section 6(1)(f), (g) and (n) of the Banking Regulation Act, 1949. On that basis, section 108B was held inapplicable to the bank's transfer of pledged shares. The Court further held that, even if section 108B were otherwise attracted, the Banking Regulation Act would prevail because the Companies Act applies to banking companies only so far as its provisions are not inconsistent with the Banking Regulation Act. The complaint was therefore found to disclose no offence and to be an abuse of process.

Conclusion: The private complaint was not maintainable and the criminal proceedings were liable to be quashed.

Ratio Decidendi: Where the statutory power of a banking company to realise pledged security is inconsistent with the restriction on transfer of shares imposed on a "body corporate" under section 108B of the Companies Act, 1956, the banking company is not bound by that restriction and no criminal liability arises on such transfer.

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