Automatic transfer of pending proceedings in bank winding up to the High Court under the Banking Companies Act

Sections 45A and 45B of the Banking Companies Act, 1949 confer exclusive jurisdiction on the High Court having territorial control over the bank's registered office to decide claims and questions of law or fact arising in winding up. Section 11 further provides that pending proceedings arising out of or in the course of such winding up stand transferred to that Court automatically, as if the Act had applied when the proceeding began. A partition proceeding continued after a winding-up order was treated as a proceeding in the course of winding up because the liquidator became a necessary party and leave was required for continuation. The subordinate court therefore lacked jurisdiction to proceed.

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Issues: Whether the pending partition proceeding, after the bank was ordered to be wound up and a liquidator appointed, stood automatically transferred to the High Court under the Banking Companies Act, 1949.

Analysis: Sections 45A and 45B of the Banking Companies Act, 1949 confer exclusive jurisdiction on the High Court exercising jurisdiction where the registered office of the banking company is situate, and empower that Court to decide all claims and all questions of law or fact arising in the course of winding up. Section 11 of the same Act provides that any pending proceeding arising out of or in the course of such winding up shall stand transferred to the Court having jurisdiction under the Act as if it had been in force when the proceeding commenced. The proceeding was held to be at least one arising in the course of winding up, because after the winding-up order the liquidator became a necessary party and leave under Section 171 of the Indian Companies Act, 1913 was required for its continuation. The transfer was held to be automatic and not dependent on any further order.

Conclusion: The proceeding stood transferred to the High Court, and the subordinate court had no jurisdiction to continue with it.

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