1959 (11) TMI 71 - HC - Companies Law

Court rules in favor of liquidator in account dispute, dismissing appeal and awarding costs.

Kalipada Banerjee Versus Sree Bank Ltd. (In Liquidation)

The court concluded that the account in question was a mutual, open, and current account, allowing the liquidator to pursue legal action. The claim was ... - Issues Involved:1. Whether the account in question was a mutual, open, and current account.2. Whether the plaintiff's claim is barred by limitation.3. Applicability of Section 45F of the Banking Companies Act to the case.Detailed Analysis:1. Mutual, Open, and Current Account:The appellant contended that the account was not mutual, open, and current, as there were no reciprocal obligations and the account became one-sided after the overdraft. The court, however, determined that the account was mutual, open, and current. The key test is whether each party can claim against the other, creating independent obligations. The account began as a current deposit account, later becoming an overdraft account, thus meeting the criteria for mutuality. The court cited the case of Hirada Basappa v. Gadigi Muddappa and a Madras High Court decision, emphasizing that the account remains mutual, open, and current as long as it is not closed by settlement or otherwise.2. Limitation:The appellant argued that the claim was barred by limitation, asserting that Article 85 of the Limitation Act did not apply because the account was not mutual, open, and current at the time of the suit. The court rejected this argument, stating that Article 85 applies as long as the account was mutual, open, and current when it was active. The court referred to the Bombay High Court decision in Karsondas v. Surajbhan, which held that the nature of the cause of action must be determined at the date of the suit. However, the court distinguished this case, noting that liquidation does not change the cause of action but merely the administration of the account. The court also referred to the Division Bench decision in Gonesh Lal v. Sheo Golam Singh, supporting the applicability of Article 85 even if the account ceased to be mutual, open, and current before the suit.3. Applicability of Section 45F:The appellant argued that Section 45F of the Banking Companies Act did not apply because the bank was wound up before the Act came into force. The court held that Section 45F applies to all banking companies in liquidation, regardless of whether the liquidation order was made before or after the Act. The court emphasized that the language of Section 45F does not restrict its application to banks liquidated after the Act. The court also noted that excluding banks liquidated before the Act would create unjustified discrimination. The court referred to several cases, including the Pioneer Co. Ltd. v. Bamandeb Banerjee and Suburban Bank Ltd. v. Nistaran Chakrabarti, supporting the retrospective application of Section 45F.Conclusion:The court concluded that the account was a mutual, open, and current account, and the liquidator succeeded to the bank's rights to sue on such an account. The suit was filed within the limitation period, considering Section 45F of the Banking Companies Act. The appeal was dismissed with costs, and the liquidator was allowed to retain the costs out of the assets.