LexORIENTAL BANK OF COMMERCE LTD. versus SHRI HARCHARAN DAS LOOMBA
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2 S.C.R.
SUPREME GOUR T REPORTS 231
'
ORIENTAL BANK OF COMMERCE LTD.
v.
SHRI HARCHARAN DAS LOOMBA
(P. B. GAJENDRAGADKAR, M. HIDAYATULLAH
and J. C. SHAH JJ.)
Displaced person-Shares in bank-Statutory right given
by Act to get partly paid up shares converted into fully paid-up
shares-Order of Company Judge allowing reduction of capital of
bank-Whether doctrine of Res judicata 'applicable-" No cause
for sueh refusal", Meaning of-Displaoed
Persons
(Debt8
Adjustment) Act, 1951 (LXX of 1951), ss. 3, 19 (2), (4), (5).
The appellant bank ~uffered losses due to the partition of
India. Its scheme for reduction of capital was approved of by the
Company Judge subject to the condition that the Bank should
accept without any pay1nent surrender of ordinary shares on
which part payment was made from any displaced person
entitled to relief under s. 19 of the Displaced Persons (Debts
Adjustn1ent) Art, so as to relieve such person from liability to
pay the calls made and to be made. A period of two weeks
was given to displaced person!! to exercise the option.
•The respondent was a share-holder of the appellant but he
did not avail himself of the option given by the Company
Judge. Later on, he asked the appellant bank under s. 19 (2)
of the Displaced Persons (Debts Adjustment) Act to convert
his 500 ordinMy shares into 250 fully paid-up shares.
On the
bank refusing to comply with the requisition, the respondent
filed a petition under s. 19(4) of the Act for an order dire:ting
the bank to convert his 500 partly paid-up shares into 250
fully paid-up shares. The Tribunal granted the relief prayed
for to the respondent, It also held that losses suffered by the
bank and doubtful debts had been accumulating for a long
time and the bank resorted to the scheme of capital reduction
only after the passing of the Act of 1951 with a view to deprive
the displaced share-holders of the benefit under the provisions
of s. 19 of the Act. This view of the Tribunal was affirmed
by a single judge and a Division Bench of the Punjab High
Court. The bank appealed to this Court with special leave.
Held, that the order directing the bank to convert the
shares of the respondent into fully paid-up shares must be
coi;firmed. No goo<! cause had been shown by the bank for
1963
March 5
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232
SUPREME COURT REPORTS [1964] VOL.
declining to convert th~ partly paid-up shares into fully paid·
up shares.
The expression "no cause for such
r~~f11sal" \Vithin
the mca_ning of cl. ( 4) must mean "no good rause for ref usaI. ".
He/4, also that the order of the companyJudg-c sanction·
ing reduction of capital was not con('lu"Sive and hin<ling and
could not deprive a displaced person of the right i;ranted by
Act.
The order of the Company )u•1ge sanctioning reduction
of capital was subject lo the pr.wision of s. 19 of the Act.
A displaced person was not obliged to avail himself of the
option.
A displaced person not desiring to avail hi1nself of
the option given under the order of the Company Judge could
apply under s. 19 (4).
The order of the Company Judge was
valid and binding subject to any order which the Tribunal
might make in respect of any individual share-holder who
applied under s. 19 (1).
CIVIL APPELLATE JuRTSDICTION : Civil Appeal
No. 300of1961.
Appeal by special leave from the judgment
and order dated :"lovember 13, 1957, of the Punjab
High Court at Chandigarh, in
Letters
Patent
Appeal No. 19-D of 1955.
K. L. Gosain, 0. P. Jfrilhotra and 8. X. Anand,
for the appellant.
·
Bnkshi jfehtab Singh Smvhney, ll. K. /,. Sab-
lu1rwa.l and I. S. Sawhney, for the respondent.
1963.
l\.farch 5.
The Judgment of the Court
was delivered by
SRAll J.-Thc Oriental Bank of Commerce
Ltd. was
incorporated in February 1943 under the
Indian Companies Act,
I!Jl 3.
The Bank had its
registered office at Delhi and it opened branches in
Lahore and in other towns which arc now in
Pakistan. The capital of the Bank was divided into
5,97,584 ordinary shares of Rs. 10/- each, and 24,200
B class ordinary shares of Re. 1/-
each. The paid-
up
capital
of the
Bank as on December
31,
HJ(6 was
approximately
Rs.
23
lakhs:
/
-
2 S.C.R.
SUPREME COURT REPORTS
233
On account
of
disturbances
which
follow-
ed in the wake of the setting up of the Domi-
nions of India and Pakistan, the Bank
lost
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