Scheme of arrangement is distinct from winding up; High Court may still supervise and apply banking debt-settlement machinery where statute permits.

A sanctioned scheme of arrangement under the Companies Act, 1956 is legally distinct from winding up or liquidation, so it does not, by itself, convert a banking company's reorganisation into a liquidation process. The High Court may nevertheless exercise supervisory powers under sections 391 and 392 over such a scheme and, where the statutory framework permits, apply the machinery for settling the list of debtors under the banking law. Section 45D applies to winding up, but section 45M was identified as enabling its use in appropriate cases for a banking company working under a sanctioned arrangement. The jurisdictional objection was rejected.

---

---

Issues: Whether the High Court had jurisdiction to entertain the bank's petition for settlement of the list of debtors while the bank was functioning under a sanctioned scheme of arrangement, and whether such a scheme could be treated as winding up or liquidation for the purpose of applying the relevant provisions.

Analysis: Section 45D of the Banking Companies Act, 1949 applies where a banking company is being wound up, but the scheme in question was one of arrangement under the Companies Act, 1956. The statutory scheme distinguishes between winding up and a compromise or arrangement: the provisions dealing with arrangements are placed in the part of the Companies Act concerned with management and administration, while winding up is dealt with separately. The earlier special power under section 45K had been embodied in section 392 of the Companies Act, 1956, and the omission of section 45K did not show that the underlying power had disappeared. Section 45M was a special provision enabling the High Court, in appropriate cases, to apply the machinery of section 45D to a banking company working under a sanctioned arrangement, but that did not make a scheme of arrangement an alternative mode of liquidation. The Court also noted the supporting powers under sections 37 and 38 of the Banking Companies Act, 1949 and held that the authorities relied upon for treating a scheme as an alternative mode of liquidation did not govern the present statutory setting.

Conclusion: The High Court had jurisdiction to entertain the petition and to proceed under sections 391 and 392 of the Companies Act, 1956 read with the relevant provisions of the Banking Companies Act, 1949. The jurisdictional objection was rejected.

Ratio Decidendi: A sanctioned scheme of arrangement under the Companies Act, 1956 is distinct from winding up, and the High Court may exercise its supervisory powers over such a scheme without treating it as liquidation; the machinery for settling debtors under the banking law can be invoked only within the statutory framework that permits its application.

---