AGENCIA COMMERCIAL INTERNATIONAL LTD. & OTHERS versus CUSTODIAN OF THE BRANCHES OF BANCO NACIONAL ULTRAMARINO

Citation: [1983] 1 S.C.R. 16 · Decided: 30-07-1982 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Dismissed

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Judgment (excerpt)

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. AGENCIA COMMERCIAL INTERNATIONAL 
LTD. & OTHERS 
v. 
CUSTODIAN OF THE BRANCHES OF BANCO 
NACIONAL ULTRAMARINO 
July 3~, 1982 
(R.S. PATHAK, 0. CHINNAPPA REDDY, AND 
BAHARUL ISLAM, iJ.) 
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Banking law and practice-Uberation of Goa and other areas from Portu-
guese rule and Integration with 1nd1a-Head Office of the bank removed all docu-
ments 10· Lisbon on tM eve of liberation-President promulgattd regu/at/0111 
constituting an independent bank-Custodian empowered to realise all debts-Agree-
ments entered into and loans granted by head of/i!!t in Lisbon-Custodian-I/ could, 
recover debt&-Pos~tion in banking law and practice discussed-Promissory notes 
and bl/ls of uchange If 114Cl8sary to be produced at the lime of r1covery of 
t/#bts. 
Tho Banco Nacional Ultramarino (B.N.U.) with its head office at Lisbon 
in Portu8al carried on banking . business in Goa, Daman and Diu. On the eve· 
of the liberation of these territories from Portuguese ruJC and their integration 
with India the B.N.U. removed a substan~ial portion of valuable assets held there 
to its head office at Lisbon. 
To relieve the distress caused to the people by reason of the closure of the 
B.N.U. the President promulgated regulations by which the branches at these 
places were. intCgrated into a fully constituted bank independent of the B.N.U. 
and a Custodian was appointed to take charge of the bank. The Custodian was 
empowered to realise all debts due to the branches including any debts from the 
head office of the B.N.U. 
The Custodian filed a suit against the appellants stating that the loan 
accounts of the appellants ... showed a debit balance in favour of the branch. It 
was also stated that the promissory notes were not in bis possession but that 
they could be presumed to have been removed to Portugal. While suits similar 
il,1 nature filed in some courts had been dismissed, suits filed in other courts were 
decreed against the original debtor as well as the guarantor and surety. 
The Additional Judicial Commissioner on appeal decreed the suits against 
1ho appellants and $ranted the reliefs claimed by the Cu$todian, holdins that the 
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AGENCJA COMMERCIAL V. BRANC!lES OF BANCO 
17 
Custodian was entitled to maintaio the suits· and sue for the realisation of debtS 
arising out of the transactions entered into through the branches. He further held 
that the execution of the negotiable instruments having been admitted in the 
written stateriient and these documents having been removed by the B.N.U. to 
Lisbon there was nothing to preclude thC CustOdian from claiming relief without 
producing th«:JSC negotiable instruments. 
In appeal to this Court, it was contended on behalf of the appellants that 
Since the Joans had been granted by the head office of the B.N .U. and not its 
branches·, the Custodiari was not entitled to sue for recovery of Joans granted by 
the head office. 
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Dismissing the appeals. 
HELD : ,. The transactions under consideration feJI within the scope 
of the regulations and the Custodian was fully entitled to sue for the rcc~vcry 
of the debts covered by the loan agreements. [28 CJ 
It is settled law.that a Dody ,corporate and its branches are not distinct 
and'separate entities from each other, that the branches constitute mere compo· 
nents through which the corporate entity expresses , itself an"d that all transactions 
entered into ostensibly with the -bfanches are in legal reality transactions with the' 
corporate body and that it is with the corPorate body _that a person must deal 
directJy. 
In the case of a bank which operates through its branches, however, 
the branches are regarded for many purposes as separate and distinct entities 
from the head office and from each other. If the bank wrongly refuses to pay 
when a demand is made at the proper place and time, then it can be sued at·its' 
head office as well as at its branch office the reason being that the action is then 
not on the debt, but on the breach of the \contract to pay at the place specified' in 
the agreement. The regulations had been made apparentIY in the light of this 
· hanking law and practice. [24 B-C; 25 BJ 
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The Delhi Cloth and General Mliis Co. 
[1955] 2 SCR 402 at 422, referred to: 
Ltd. v. Harnam Singh an/ o'rhers, 
I 
The regulations were intended to achieve what emergency legislation 
was designed to secure. Jn all such emergency Jaws there is a departure from 
the general rule that t

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