BANK OF TRAVANCORE versus GOODLAND PLANTATIONS (P) LTD. N OVEMBE~ 7, 1979

Citation: [1980] 1 S.C.R. 1157 · Decided: 07-11-1979 · Supreme Court of India · Bench: N.L. UNTWALIA · Disposal: Appeal(s) allowed

Judgment (excerpt)

.. 
1157 
STATE BANK OF TRAVANCORE 
v. 
GOODLAND PLANTATIONS (P) LTD. 
N ovembe~ 7, 1979 
[N. L. UNTWALIA, P. N. SHINGHAL AND A. D. KOSHAL, JJ.J 
Banking Regulation Act, 1949 Sectio11 45(10)-Scope of. 
The respondent Company, a subscriber, bed to pay money 
in 
monthly 
instalments to a Chitty run by the Orient Bank. The last instalment was paid 
on December 10, 1960. The respondent was the successful bidder. 
The prize 
A 
B 
amount was to be paid to the respondent on January 10, 1961. But before 
C 
that date the Central Government imposed a Moratorium, originally for the 
period ending with the March 18, 1961 which later on was e>tended upto 
June 16, 1961 on the Orient Bank with the result that the Orient lla11k had 
to suspend all its business activity. This resulted in the conduct of the Chitty 
being discontinued, so that the Chitty stood terminated and the Orient Bank 
in its capacity as the Foreman of the Chitty incurred the obligation to pay 
back all the contributions made by non-prized subscribers. 
D 
The Central Government sanctioned a scheme under the Banking Regula· 
tion Act for the amalgamation of the Orient Bank with the appellant (Travan-
.core Bank). Realising that the Travancore Bank would not be able to conti-
nue the Chitties for which the Orient Bank had acted as Forentan because 
those Chitties had terminated owing to the failure of the Orient Bank to 
continue to conduct them by reason of the Moratorium, the Central Govern-
E 
ment passed an order on December 4, 1961 under section 45(10) of the Bank-
ing Act. This order was further amended substituting the words "the 31st 
March 1962" for the words "31st December 1961", the effect of which was 
to obliterate the termination of the Chitties as resulting from the suspension 
thereof by reason of the moratorium during the period from December 18, 
1960 to 31st March, 1962, and to enable the appellant-Bank to continue those 
Chitties as if there had been no suspension at any point of time, so that they 
F 
could be continued as if the relevant provisions of the Chitties Act o.nd the 
relevant variolas had throughout been complied with. 
The respondent filed a suit claiming refund of the four instalments paid 
by it along with interest. 
There was no reference to the impugned order 
presumably because the respondent had no knowledge thereof. The snit was 
resisted on the strength of the impugned order dated 15-1-1962, but the vires 
G 
-0f that order was challenged by the respondent and it was urged. that the 
impugned order did not fall within the ambit of sub-section (I 0) of section 
45 of the Banking Act and that in any case that sub-section itself was consti-
tutionally invalid. The suit was transferred by the High Court t•J its own 
file, from the Court of Muusif as the constitutional validity of section 45(10) 
of the Banking Act was questioned. 
The suit was dismissed. 
The respondent instituted an appeal which was accepted by the Division 
Bench. Disagreeing with the trial judge as to the object of the i;cheme of 
H 
1158 
SUPREME COURT REPORTS 
[1980] 1 S.C.lt. 
A 
amalgamation the Division Bench held that sub-section ( 10) did not suffer 
from excessive delegation of legislative power. 
B 
c 
D 
E 
F 
G 
lt was urged on behalf of the respondent in this Court that one of tho-
objects of the scheme was to continue the Chittics to a successful conclusion 
as held by the trial Judge and that the finding tu the contrary recorded in the 
impugned judgment was erroneous. 
Allowing the appea1, 
HELD : The pervasive provisions embraced in the Jater part of paragraph 
2 of the scheme embraced within their ambit a complete transfer of all rights. 
and liabilities, of whatsoever nature, of the Orient Bank to the appeliant-Bank 
and no special provision wes therefore needed to be included in the scheme 
in regard to Chitties, if they were not to be continued to a successful conclu-
sion. As it is, the portion of paragraph 2 provides for Chitties on a special 
footing which could not have been the case if the right and liabilities of the 
Orient Bank in regard to Chitties were sought tD be transferred to the appellant 
Bank on the basis of the termination of the Chitties which had already become 
operative because of the lvforatorium and as a consequence of suspension of the-
Chitty business by the Orient Bank. Nor was it necessary to provide in clause 
(I) of paragraph 2 of the scheme that "the transferee Bank shall become the 
foreman .... and sh

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