judgement:
Appeal No. 105 of 1966.
Appeal from the judgment and order dated February 3, 1961 of the Calcutta High Court in Civil Revision No. 2755 of 1957.
D. Narsaraju, R. M. Mehta and section P. Nayar, for the appellant.
Ganpat Rai, for respondent No. 1.
The Judgment of the Court was delivered by SHAH, J.
G. W. Browne was an employee of the East India Railway and was a subscriber to the State Railway Provident Fund.
He elected to be governed by the Provident Fund Sterling Accounts Rules, whereunder payment of the provident fund credited in his account in rupees was on retirement to be made in sterling.
On August 26, 1947, Browne addressed a letter to the Financial Adviser and Chief Accounts Officer, East India Railway, requesting that the provident fund payable to him on retirement may be remitted to him by Bank Draft on the District Bank, Water Street, Liverpool.
After Browne retired from service, the Deputy General Manager, Eastern Railway, wrote a letter on July 27, 1955, to the Chief Accounts Officer, communicating the sanction of the General Manager for payment of the special contribution to provident fund to Browne in sterling in terms of r. 1410(1) of the Railway Establishment Code.
Another communication was received from Browne (who had apparently by then migrated to the United Kingdom) on February 22, 1956, by which he requested that the amount standing to his credit in the Provident Fund Account be remitted to the Westminster Bank, Birmingham.
The Railway Administration then drew two cheques one for Rs. 14,428 8 9 and another for Rs. 23,018 11 10 in favour of the Reserve Bank of India with instructions to the Reserve Bank to convert amounts covered by the cheques into sterling and to transmit the fund in sterling to the bankers of Browne in England.
The respondent Radha Kissen Agarwalla had obtained a money decree against Browne and he applied to the 3rd Court of the Subordinate Judge at Alipore for execution of that decree, and obtained an order for attachment of the cheques lying with the Reserve Bank.
The cheques were attached and under orders of the executing court the cheques were encashed and the amount realized was deposited in the executing court.
30 The Union of India claimed immunity from attachment of the cheques on the ground that they represented provident fund money which by section 3 of the , was immune from attachment.
The execution application filed by Radha Kissen Agarwalla was struck off on December 7, 1956.
On the next day Radha Kissen Agarwalla started another execution application and applied for and obtained an order for attachment of the money lying in the executing court in the execution case which had been struck off.
The Union of India again applied for removal of attachment on the ground that the money represented provident fund money and was immune from attachment under the law and that the attachment was "illegal and without jurisdiction".
The executing court overruled the objection observing "that the attachment issued by the Court on December 8, 1956, was perfectly in order. the moneys attached by the Court lost their character as Provident Fund moneys long before they were attached and hence they were not immune from attachment, as claimed by the objector".
The Union of India then applied to the High Court of Calcutta in revision.
The High Court confirmed.
the order passed by the executing court.
Rule 1413 of the Provident Fund Sterling Accounts Rules, insofar as it is relevant, provides : "(1) Where under these Rules any payment is to be made to the subscriber in sterling (a) the subscriber, prior to the date on which payment is to be made, shall send written instructions to the Accounts Officer intimating the place at which payment is to be made, such place being in a country where the rupee is not legal tender; (b) the Accounts Officer, on receipt of the, written instructions referred to in the preceding clause shall remit the amount through a bank for payment at the place at which payment is required." Accounts Officer for payment of the amount standing to his credit in a Provident Fund Account in sterling if the country in which it is to be paid, the rupee is not legal tender.
Browne had given intimation before he retired of his intention to receive the provident fund amount due to him at the foot of the Provident Fund Account in sterling in the United Kingdom.
After retirement of Browne, in order to carry out that obligation, the Accounts Officer of the Railway made out two cheques in the name of Browne and sent them to the Reserve Bank for conversion of the amount in sterling.
The Reserve Bank was the only authority which could permit such conversion in view of the 31 currency restrictions imposed by the Government of India.
For purpose of conversion and transmission of the amount to Browne, the Reserve Bank of India was the agent of the Railway Administration.
Until the money was converted into sterling and was transmitted by the Reserve Bank to Browne, the money remained at the disposal of the Railway Administration.
The Railway Administration was in respect of the provident fund money in the position of a trustee for Browne and it had undertaken to discharge its obligation by arranging to have the amount converted into sterling and to remit it to Browne.
Under section 60 (1) (k) of the Code of Civil Procedure, 1908, read with section 3 of the , the compulsory deposit in any recognised Provident Fund Account is exempt from attachment in execution of a decree of a civil court.
Section 3 ( 1 ) of the , provides : "A compulsory deposit in any Government or Railway Provident Fund shall not in any way be capable of being assigned or charged and shall not be liable to attachment under any decree or order of any Civil, Revenue or Criminal Court in respect of any debt or liability incurred by the subscriber or depositor, and neither the Official Assignee nor any receiver appointed under the Provincial insolvency Act, 1920, shall be entitled to, or have any claim on, any such compulsory deposit.
" The Reserve Bank was, as already stated, the agent of the Railway Administration for conversion of the amount into sterling and was not the agent of Browne to receive the amount on his behalf.
So long as the money remained under the control of the Railway Administration as provident fund money, it was exempt from attachment.
Clause (b) of r. 1413 (1), which we have already noted, imposed upon the Accounts Officer an obligation to send the amount through a bank for payment at the place at which Payment was required, and the payment was required either under the first intimation at Liverpool by bank draft or under the later intimation by payment to the bankers of 'Browne at Birmingham.
The High Court relied upon illustration (d) to section 50 of the Indian Contract Act in support of the view that by sending the two cheques to the Reserve Bank of India in performance of the manner of Payment prescribed by Browne, the debt was discharged, and the money must be deemed to have been paid out to the subscriber Browne.
Section 50 of the Contract Act provides "The performance of any promise may be made in any manner, or at any time which the promise prescribes or sanction 32 It enacts the elementary rule relating to the performance of a promise under a contract : performance has to be in the manner and at the time which the promisee prescribes or sanctions.
Browne had not authorised the Reserve Bank to receive payment of the money on his behalf, nor had he sanctioned payment to the Reserve Bank in discharge of the liability of the 'Railway Administration.
Illustration (d) to section 50 of the Contract Act on which reliance was placed by the High Court reads : A, desire B., who owes him Rs.100, to send him a note for Rs. 100 by post.
The debt is discharged as soon as B, puts into the post a letter containing the note duly addressed to A." The illustration only covers cases in which a creditor has directed the debtor to send him the amount owed by the, debtor in a certain manner.
Browne asked the Railway Administration by the first intimation to send the amount by bank draft and later to the Westminster Bank, Birmingham.
Only after the direction of Browne regarding transmission of the fund was complied with, the obligation of the Railway Administration could be discharged and not till then.
In our view, the High Court was in error in holding that the money in the hands of the Reserve Bank of India had ceased to be provident fund money and was liable to be attached.
It was somewhat faintly suggested that the Union of India had no interest in maintaining an application for removal of attachment.
But the Union of India was a trustee for the subscriber of the money.
When the amount lying with the Reserve Bank as the agent of the Railway Administration was attached the Union had clearly an interest to maintain the application for removal of attachment.
The order of attachment of the amount into which the two cheques drawn by the Railway Administration were converted on encashment was contrary to the terms of section 3 of the .
The appeal is therefore allowed and the order passed by the High Court is set aside.
There will be no order as to costs.
R.K.P.S. Appeal allowed.

summary:
B was an employee of the East India Railway and a subscriber to the State Railway Provident Fund.
He elected to be governed by the Provident Fund Sterling Account Rules, according to which payment of his provident fund on retirement was to be made in sterling.
B 'addressed letters to the Railway Accounts Officer in August 1947 and again after his retirement in February 1956 requesting that the amounts standing to his credit in the provident fund account be remitted to his bank in the United Kingdom.
The Railway administration drew cheques in respect of B 's provident fund in favour of the Reserve Bank of India and instructed that bank to convert the amount into sterling and to transmit it to B 's Bank in the United Kingdom.
The respondent had obtained a money decree against B and upon applying for execution of that decree obtained an order for attachment of the cheques lying with the Reserve Bank.
The cheques were encashed and the amount realised was deposited in the executing court.
The appellant claimed immunity from attachment of the cheques under section 3 of the and the respondent 's execution application was thereupon struck off.
On filing a second execution application, the respondent obtained an order for attachment of the money lying in the executing court.
A further application by the applicant claiming immunity from attachment was rejected by the executing court on the ground that the monies attached by the court lost their character as Provident fund monies long before they were attached and were not therefore immune from attachment.
The High Court in revision confirmed the order of the executing court.
On appeal to this Court, HELD : Allowing the appeal The order of attachment passed by the executing court was contrary to section 3 of the .
The Railway administration was in respect of the provident fund money in the position of a trustee for B and it had undertaken to discharge its obligation by arranging to have the amount converted into sterling and to remit it to B. The Reserve Bank was the agent of the Railway administration for converting and remitting the amount on its behalf.
Until the money was converted and transmitted by the Reserve Bank to B, it remained at the disposal of the Railway administration.
So long as the money remained under the control of the Railway administration as provident fund money, it was exempt from attachment under section 60(1)(k) (PC read with section 3 of the Provident Funds Act, 1925.[131 B F] 29 The High Court was in error in relying on illustration (d) of section 50 of the Contract Act.
B had not authorised the Reserve Bank to receive payment of the money on his behalf, nor had he sanctioned payment to the Reserve Bank in discharge of the liability of the Railway Administration.
[32 A B]


judgement:
minal Appeal No. 51 of 1967.
Appeal by special leave from the judgment and order dated October 3, 1966 of the Bombay High Court, Nagpur Bench in Criminal Revision Application No. 168 of 1966.
R. K. Garg, section C. Agarwala, G. V. Kalikar, section K. Dhingra and M. section Gupta, for the appellants.
W. section Barlingay and A. G. Ratnaparkhi, for respondent No. 1.
H. R. Khanna and section P. Nayar, for respondent No. 2.
The Judgment of the Court was delivered by Shah, J.
The Nagpur District Land Development Bank Ltd. is registered as a society under the Maharashtra Co oPerative Societies Act, 1960. 'One Narayan Tanbaji Murkute applied for membership of the Bank as a "non borrowing member".
At a meeting of the Bank held on June 30, 1964, the application of Murkute and of 94 others were granted and they were enrolled as members.
But in the list of members entitled to take part in the General Meeting dated June 30, 1964 the names of Murkute and others were not included.
Murkute and others then applied to the Registrar Co operative Societies for an order declaring that they were entitled to participate in the election of office bearers and for an injunction restraining the President and the Secretary from holding the 187 annual General Meeting.
The Registrar referred the dispute for adjudication under section 93 of the Maharashtra Co operative Societies Act, 1960, to H. V. Kulkarni, his nominee.
The nominee decided the dispute on May 7, 1965 and held that Murkute and other applicants were members of the Bank.
In the proceeding before the nominee certain documents including the minutes book of the Bank were produced.
It is claimed by Murkute that those 'books were fabricated by the President and the Secretary with a view to make it appear that Murkute and other persons were never elected members of the Bank.
On August 7, 1965, Murkute filed a complaint in the Court of the Judicial Magistrate, First Class, Nagpur, charging the President and Secretary of the Bank with committing offences under sections 465 and 471 I.P. Code.
It was alleged in the complaint that the two accused had dishonestly and fraudulently introduced a clause in Resolution No. 3 appearing in the minutes book with the intention of causing it to be believed that the clause was part of the original.
Resolution passed by the Board of Directors in the meeting held on June 30, 1964, whereas it was known to them that at that meeting no such clause was passed.
The two accused raised an objection that the Magistrate had no jurisdiction to take cognizance of the complaint without the previous sanction of the Registrar of Co operative Societies under section 148(3) of the Maharashtra Co operative Societies Act, 1960.
The Trial Magistrate rejected the contention.
The order was confirmed by the Court of Session and the High Court of Bombay.
In this Court counsel for the accused raised two contentions that (1) that, the nominee of the Registrar appointed under section 95 of the Maharashtra Co operative Societies Act, 1960, was a "court" within the meaning of section 195 Code of Criminal Procedure, and a complaint for offences under sections 465 and 471 I.P. Code alleged to have been committed by a party to any proceeding in respect of a document produced or given in evidence in such proceeding, cannot be entertained except on a complaint in writing of such court, or of a court to which it is subordinate; and (2) that offences charged in the complaint fell within the description of the offence under section 146(p) of the Maharashtra Co operative Societies Act, 1960, and without the sanction of the Registrar the complaint was not maintainable.
Section 195 Code of Criminal Procedure insofar as it is relevant provides : "(1) No Court shall take cognizance(a) (a) (b) 188 (c) of any offence described in section 463 or punishable under section 471 .
when such offence is alleged to have been committed by a party to any proceeding in any Court in respect of a document produced or given in evidence in such proceeding, except on the complaint in writing of such court, or of some other Court to which such Court is subordinate.
(2) In clauses (b) and (c) of sub section '(1), the term "Court" includes a Civil, Revenue or Criminal Court, but does not include a Registrar or Sub Registrar under the Indian Registration Act, 1877." Murkute complained that the President and the Secretary of the Bank who were parties to the proceeding before the nominee of the Registrar had committed offences under sections 465 & 471 I.P. Code in respect of documents produced or given in evidence at the trial.
If the Registrar 's nominee is a Court within the meaning of section 195 Code of Criminal Procedure the Magistrate could not take cognizance except on the complaint in writing by the Registrar 's nominee or of some court to which he was subordinate.
To determine whether the Registrar 's nominee is a court, it is necessary to refer to the relevant provisions of the Maharashtra Co operative Societies Act, 1960, relating to the functions of the nominee and the powers with which he is invested, counsel for the appellants urges that by the Maharashtra Co operative Societies Act the power of the Civil Court to entertain disputes with regard to certain matters concerning cooperative societies is expressly excluded from the jurisdiction of the Civil Court, and the Registrar or his nominee is alone competent to determine those questions; thereby the Registrar and his nominee are invested with the judicial power of the State and they are on that account "courts" within the meaning of section 195 of the Code of Criminal Procedure.
Section 2(2) of the Maharashtra Co operative Societies Act, 1960, defines "arbitrator" as meaning "a person appointed under this Act to decide disputes referred to him by the Registrar and includes the Registrar 's nominee or board of nominees.
" Section 91 and the following sections which occur in Ch.
IX relate to disputes and arbitration.
By section 91, insofar as it is material, it is provided : "(1) Notwithstanding anything contained in any other law for the time being in force, any dispute touching the constitution, election of the office bearers, conduct of general meetings, management or business of a society shall be referred by any of the parties to the dispute. . . to the Registrar, if both the parties hereto are one or other of the following 189 (a) (b) a member, past member or a person claiming through a member, past member or a deceased member of a society, or a society which is a member of the society.
(c) (d) (e) (2) When any question arises whether for the purpose of the foregoing subsections matter referred to, for decision is a dispute or not, the question shall be considered by the Registrar, whose decision shall be final.
(3) Save as otherwise provided under sub section (3) of section 93 no Court shall have jurisdiction to entertain any suit or other proceedings in respect of any dispute referred to in sub section (1).
" Section 93 provides : "(1) If the Registrar is satisfied that any matter referred to him or brought to his notice is a dispute within the meaning of section 91, the Registrar shall, subject to the rules, decide the dispute himself, or refer it for disposal to a nominee, or a board of nominees, appointed by the Registrar.
(2) Where any dispute is referred under the foregoing sub section, for decision to the Registrar 's nominee or board of nominees, the Registrar may at any time, for reasons to be recorded in writing withdraw such dispute from his nominee or board of nominees, and may decide the dispute himself, or refer it again for decision to any other nominee, or board of nominees, appointed by him.
(3) Notwithstanding anything contained in section 91 the Registrar may, if he thinks fit, suspend proceedings in regard to any dispute, if the question at issue between a society and a claimant or between different claimants, is one involving complicated questions of law and fact, until the question has been tried by a regular suit instituted by one of the parties or by the society.
If any such suit is not instituted within two months from the Registrar 's order suspending proceedings, the Registrar shall take action as is provided in subsection 190 Section 94 provides for the procedure of settlement of disputes and power of the Registrar, his nominee or the board of nominees.
It provides, insofar as it is material : "(1) The Registrar, or his nominee or board of nominees, hearing a dispute under the last preceding section shall hear the dispute in the manner prescribed, and shall have power to summon and enforce attendance of witnesses including the parties interested or any of them and to compel them to give evidence on oath, affirmation or affidavit and to compel the production of documents by the same means and as far as possible in the same manner, as is provided in the case of a Civil Court by the Code of Civil Procedure, 1908.
(2) Except with the permission of the Registrar or his nominee or board of nominees, as the case may be, no party shall be represented at the hearing of a dispute by a legal practitioner.
" Sub section (3) of section 94 authorises the Registrar, his nominee or the board of nominees to join or substitute new parties.
Section 95 authorises the Registrar or his nominee or board of nominees to pass an order of attachment and other interlocutory orders.
Section 96 provides "When a dispute is referred to arbitration the Registrar or his nominee or board of nominees may, after giving a reasonable opportunity to the parties to the dispute to be heard, make an award on the dispute, on the expenses incurred by the parties to the dispute in connection with the proceedings, and fees and expenses payable to the Registrar or his nominee or, as the case may be, board of nominees.
Such an award shall not be invalid merely on the ground that it was made after the expiry of the period fixed for deciding the dispute by the Registrar and shall, subject to appeal or review of revision, be binding on the parties to the dispute.
" Section 97 provides "Any party aggrieved by any decision of the Registrar or his nominee or board of nominees under the last preceding section, or an order passed under section 95 may,. . . appeal to the Tribunal.
Section 98 provides that every order passed by the Registrar or his nominee or board of nominees or in appeal therefrom shall, it not carried out, on a certificate signed by the Registrar, be deemed to be a decree of a civil court, and shall be executed in 191 the same manner as a decree of such court or be executed according to the law and under the rules for the time being in force for the recovery of arrears of land revenue.
By section 99 a private transfer or delivery of, or encumbrance or charge on, property made or created after the issue of the certificate of the Registrar under section 98 shall be null and void as against the society on whose application the certificate was issued.
Jurisdiction of the Civil Court by section 91(3) to entertain a suit in respect of any dispute referred to in sub section
(1) of section 91 is expressly excluded and the dispute is required by law to be referred to the Registrar or his nominee.
Against the decision of the Registrar 's nominee an appeal lies under section 97 and the order made for payment of money is enforceable as a decree of the Civil Court.
The Registrar or his nominee called upon to decide the dispute are bound to hear it in the manner prescribed and they have power to summon and enforce attendance of witnesses and to compel them to give evidence on oath, affirmation or affidavit and to compel production of documents.
The effect of these provisions, according to counsel for the Appellants, is that the judicial power of the State to deal with and dispose of disputes of a civil nature which fall within the description of section 91(1) is vested in the Registrar 's nominee and he is on that account made a "court" within the normal connotation of the term.
Section 195(2) of the Code of Criminal Procedure enacts that the term "court" includes a Civil, Revenue or Criminal Court, but does not include a Registrar or Sub Registrar under the Indian Registration Act, 1877.
The expression "court" is not restricted to courts, Civil, Revenue or Criminal; it includes other tribunals.
The expression "court" is not defined in the Code of Criminal Procedure.
Under section 3 of the Indian Evidence Act "Court" is defined as including "all Judges and Magistrates, and all persons, except arbitrators, legally authorised to take evidence".
But this definition is devised for the purpose of the Evidence Act and will riot necessarily apply to the Code of Criminal Procedure.
The expression "Court of Justice" is defined in the Indian Penal Code by section 20 as denoting "a Judge who is empowered by law to act judicially as a body, when such Judge or body of Judges is acting judicially".
That again is not a definition of the expression "Court" as used in the Code of Criminal Procedure.
The expression "Court" in ordinary parlance is a generic expression and in the context in which it occurs may mean a "body or organization" invested with power, authority or dignity.
In Halsbury 's Laws of England, 3rd Edn., Vol. 9, article 809 at p. 342 it is stated : "Originally the term "court" meant, among other meanings, the Sovereign 's place; it has acquired the 192 meaning of the place where justice is administered and, further, has come to mean the persons who exercise judicial functions under authority derived ' either immediately or mediately from the Sovereign.
All tribunals, however, are not courts, in the sense in which the term is here employed, namely, to denote such tribunals, as exercise jurisdiction over persons by reasons of the sanction of the law, and not merely by reason of voluntary submission to their jurisdiction, Thus, arbitrators, committees of clubs, and the like, although they may be tribunals exercising judicial functions, are not "Courts" in this sense of that term.
On the other hand, a tribunal may be a court "in the strict sense of the term although the chief part of its duties is not judicial.
Parliament is a court.
Its duties are mainly deliberative and legislative : the judicial duties are only part of its functions.
" In article 810 it is stated "In determining whether a tribunal is a judicial body the facts that it has been appointed by a nonjudicial authority, that it has no power to administer an oath, that the chairman has a casting vote, and that third parties have power to intervene are immaterial, especially if the statute setting it up prescribes a penalty for making false statements ; elements to be considered are (1) the requirement for a public hearing, subject to a power to exclude the public in a proper case, and (2) a provision that a member of the tribunal shall not take part in any decision in which he is personally interested, or unless he has been present throughout the proceedings.
A tribunal is not necessarily a court in the strict sense of exercising judicial power because (1) it gives a final decision; (2) hears witnesses on oath; (3) two or more contending parties appear before it between whom it has to decide; (4) it gives decisions which effect the rights of subjects; (5) there is an appeal to a court; and (6) it is a body to which a matter is referred by another body.
Many bodies are not courts, although they have to decide questions, and in so doing have to act judicially, in the sense that the proceedings must be conducted with fairness and impartiality, such as the former assessment committees, the former court of referees which was constituted under the Unemployment Insurance Acts, the blenchers of the Inns of Court when considering the conduct of one of their members, the 193 Disciplinary Committee of the General Medical.
Council when considering questions affecting the conduct of a medical man, a trade union when exercising disciplinary jurisdiction over its members, or the chief officer of a force exercising discipline over members of the force.
" A body required to act judicially in the sense that its proceedings must be conducted with fairness and impartiality may not therefore necessarily be regarded as a court.
Counsel for the appellants however invited our attention to a number of decisions in support of his contention that wherever there is a dispute which is required to be resolved by a body invested with power by statute and the body has to act judicially it must be regarded as a court within the meaning of section 195 of the Code of Criminal Procedure.
Counsel asserted that every quasi judicial authority is a court within the meaning of section 195 (2) of the Code of Criminal Procedure.
The contention is inconsistent with a large body of authority of this Court to which we will presently refer.
By section 195 of the Code of Criminal Procedure, it is enacted that certain offences amounting to contempt of lawful authority of public servants i.e. offences falling under sections 172 to 188 I.P; Code, offences against public justice under sections 193, 194, 195, 196, 199, 200, 205, 206, 207, 208, 209, 210, 211 and 228, when such offences are alleged to have been committed in or in relation to, any proceeding in any Court, and offences described in section 463 or punishable under sections 471, 475 or 476, when such offences are alleged to have been committed by a party to any proceeding in any Court in respect of a document produced or given in evidence in such proceeding, cannot be taken cognizance of by any court, except in the first class of cases on a complaint in writing of the public servant concerned, and in the second and third class of cases on the complaint in writing of such Court or some other Court to which it is subordinate.
An offence ordinarily signifies a public wrong : it is an act or omission which is a crime against society : it may therefore be brought to the notice of the Court by any person, even if he is not personally aggrieved by the act or omission.
To that rule there are certain exceptions which are specified in sections 195, 196, 197, 198, 198A of the Code of Criminal Procedure and other special statutes.
Authority of courts to entertain complaints in respect of the offences so specified is barred in view of the special nature of the offence which vitally affect individuals only or public bodies and in the larger interest of society it is deemed expedient to exempt them from the general rule.
194 The nominee of the Registrar acting under section 96 performs the functions substantially of an arbitrator to whom a dispute is ,referred for adjudication.
The Registrar may appoint a single nominee or a board of nominees and may at any time, for reasons to be recorded in writing, withdraw such dispute from the nominee or 'board of nominees, and may decide the dispute himself, or refer it again for decision to another nominee, or board of nominees, appointed by him.
Under sub section
(3) of section 93 it is open to the Registrar to suspend proceedings in regard to any dispute, if the question at issue between a society and a claimant or between different claimants, is one involving complicated questions of law or fact.
The jurisdiction of the nominee or board of nominees arises by reason not of investment by statute, but by appointment made by the Registrar who exercises control over the proceeding.
The nominee therefore derives his authority from his appointment by the Registrar : the Registrar is entitled to withdraw his authority; and the Registrar may fix the time within which a dispute shall be disposed of : his adjudication is again called an award.
The nominee is even entitled to make a provision for the 'expenses payable to the Registrar or to himself.
It is true that the procedure of the nominee is assimilated to the procedure followed in the trial of a Civil proceeding.
The nominee has the power to summon witnesses, to compel them to produce documents and he is required to hear the dispute in the manner prescribed by the Code of Civil Procedure.
Thereby he is required to act judicially i.e. fairly and impartially : but the obligation to act judicially will not necessarily make him a court within the meaning of section 195 of the Code.
The position of a nominee of the Registrar is analogous to that of an arbitrator designated under a statutory arbitration to which the provisions of section 47 of the , apply.
The authorities to which our attention was invited by counsel for the appellants may now be considered.
It may be sufficient here to observe that the tests laid down by this Court in certain cases to be presently noticed make many of the cases relied upon of doubtful authority.
In Thadi Subbi Reddi vs Emperor(1) it was held by a single Judge of the Madras High Court that the Registrar before whom a Co operative Society files its suit, or its claim for enforcing a bond, is a "Court" within the meaning of section 195 of the Code of Criminal Procedure, for the Registrar to whom a dispute touching a debt due to a society by a member is referred has power to administer oaths, to require the attendance of all parties concerned and of witnesses, and to require the production of all books and documents relating to the matter in dispute, and the Registrar is required to give a decision in writing, and when it is given the decision may be enforced on application to the Civil Court having jurisdiction as if it were a decree of the Court.
2 00 deface, or secrete or attempts to secrete any document which is or purports to be a will, or an authority to adopt a son, or any valuable security, or mischief in respect of such document.
section 477A penalises falsification of accounts by a clerk, officer or servant or by a person employed in the capacity of a clerk, officer or servant.
The offence of forgery and its allied offences may be committed if a false document is made with intent to cause damage or injury to public or any person, or to support any claim or title, or to cause any person to part with property, or to enter into any express or implied contract, or with intent to commit fraud or that fraud may be committed, (section 463).
In order to attract section 463 I.P. Code there must therefore, be making of a false document with the intention mentioned in that section.
By 464 it is provided : "A person is said to make a false document First.
Who dishonestly or fraudulently makes, signs, seals or executes a document or part of a document, or ,,makes any mark denoting the execution of a document, with the intention of causing it to be believed that such document or part of a document was made, signed, sealed or executed by or by the authority of a person by whom or by whose authority he knows that it was not made, signed, sealed or executed, or at a time at which he knows that it was not made, signed, sealed or ,executed; or Secondly Who, without lawful authority, dishonestly or fraudulently, by cancellation or otherwise, alters a, document in any material part thereof, after it has been made or executed either by himself or by any other person, whether such person be living or dead at the time of such alteration; or Thirdly Who dishonestly or fraudulently causes any person to sign, seal, execute or alter a document, knowing that such person by reason of unsoundness of mind or intoxication cannot, or that by reason of deception practised upon him, he does not know the contents of the document or the nature of the alteration." Making of a false document by a person in all the three clauses must be done dishonestly or fraudulently and with the necessary intention or knowledge contemplated by the three clauses.
Section 146 of the Maharashtra Co operative Societies Act, 1960, does not make any such intention as is referred to in sections 463 and 464 I.P. Code an ingredient of the offence: it also renders a person who is merely privy to the destruction, mutilation, alteration, falsification or secreting or to the making of any false or 201 fraudulent entry in any register, book of account or document belonging to the society liable to be punished.
under section 146 (p) The offence may be committed under section 146 only by an officer or member past or present of the society.
Even destruction or secreting of a document or security is penalised under section 146 of the Act.
We are unable to accept the contention that these two sections section 146(p) of the Maharashtra Co operative Societies Act and section 465 P. Code, are intended to deal with the same offence.
It is true that certain acts may fall within both the sections.
For instance, tampering with or altering or falsifying any, register, book of account or security, or making any false or fraudulent, entry in the register, book of account or document belonging to the society, may when done with the requisite intention mention ed in section 464 read with section 463 I.P. Code be also an offence under section 146(p) of the Maharashtra Co operative Societies Act.
But that, in our judgment, is not a ground for holding 'that section 465 I.P. Code and the related offences were intended to be pro tanto repealed by the enactment of section 146(p) of the Maharashtra Cooperative Societies Act.
When the Indian Penal Code seeks to impose in respect of offences under As, 477 imprisonment which may extend to imprisonment for life, or with imprisonment upto a period of seven years for an offence under section 477A it would be difficult to hold that when committed by an officer or a member of a society the maximum punishment which can be imposed by virtue of section 146(p) would be three years rigorous imprisonment only.
This Court in Om Prakash Gupta vs State of Uttar Pradesh(1) held that the offences under section 409 I.P. Code and section 5(1)(c) of the Prevention of Corruption Act, are distinct and separate offences and section 409 I.P. Code is not repealed by section 5(1) (c) of the Prevention of Corruption Act.
In a recent judgment of this Court in T. section Balliah vs T. section Rengachari(2) we had occasion to consider whether section 177 I.P. Code was repealed by section 52 of the Indian Income tax Act.
It was pointed out that in considering the problem the Court must consider the true meaning and effect, of the two Acts, and unless there is repugnancy or inconsistency between the two enactments or that the two enactments cannot stand together they must be treated as cumulative.
It is clear from a perusal of section 146 (p) of the Maharashtra Co operative Societies Act, 1960, and sections 463 and 464 I.P. Code.
that they are two distinct offences which are capable of being (1) [1957] S.C.R.423.
7 Sup C 1/69 14 (2) ; 202 Committed with different intentions by different sets of persons and it, could not be contemplated that the Legislature of the State of Maharashtra intended to repeal pro tanto the provisions of section 465 I.P. Code by enactment of section 146 of the Maharashtra Co operative Societies Act.
It is unnecesary in the circumstances to consider the question whether the Maharashtra State Legislature was competent to repeal the provisions of section 465 I.P. Code.
The law relating to Co operative Societies may be enacted in exercise of the power under List II Entry 32 of the Seventh Schedule to the Constitution, but if section 146 is directly intended to trench upon a provision ,of the Indian Penal Code falling within List 11 Entry 1, sanction of the President under article 254(2) would apparently be necessary.
Both the contentions raised by counsel for the appellants fail.
The appeal is dismissed.
G.C. Appeal dismissed.

dataset_name: IN-Abs

summary:
The Nagpur District Land Development Bank Ltd. was registered as a society under the Maharashtra Cooperative Societies Act, 1960.
There was dispute as to whether one 'M ' had been elected as a member of the Bank at a meeting of the Board of Directors.
The Registrar of Cooperative Societies referred the dispute to a nominee.
Certain documents including the minutes book of the Bank were produced before the nominee. 'M ' filed a complaint against the President and Secretary of the Bank charging them with offences under sections 465 and 471 I.P.C. for having forged the minute book and producing it before the nominee.
The two accused raised an objection that the magistrate had no jurisdiction to take cognizance of the complaint without the previous sanction of the Registrar of Cooperative Societies under section 148(3) of the Maharashtra Cooperative Bank Act, 1960.
The trial magistrate rejected the contention.
The order was confirmed by the Court of Session and the High Court Of Bombay.
In appeal before this Court the following contentions were urged on behalf of the accused appellants : (i) That the nominee of the Registrar appointed under section 95 of the Maharashtra Cooperative Societies Act, 1960, was a 'court ' within the meaning of section 195 of the Code of Criminal Procedure and a complaint for offences under sections 465 and 471 Indian Penal Code alleged to have be en committed by a party to any proceeding in respect of the document produced or given in evidence in such proceeding, cannot be entertained except on a complaint in writing of such court, or of a court to which it is subordinate, (ii) That the ingredients of the offence of forgery punishable under section 465 I.P. Code 'and of the offence under section 146(p) of the Maharashtra Cooperative Societies Act are the same, and the general provision is on that account pro tanto repealed, and in any event in view of section 148(3) of the Maharashtra Act no prosecution could be initiated in respect of the offences charged otherwise than with the sanction of the Registrar.
HELD : (i) The nominee exercising power to make an award under section 96 of the Maharashtra Cooperative Societies Act, 1960, derives his authority not from the statute but from investment by the Registrar in his individual discretion.
The power invested is liable to be suspended and may be withdrawn.
He is not entrusted the judicial power of the State : he is merely an arbitrator authorised within the limits of the power conferred to 'adjudicate upon the dispute referred to him.
He is not a court within the meaning of section 195 of the Code of Criminal Pro 'Sup.
CI/69 13 18 6 Thadi Subbi Reddi vs Emperor, , Velayuda Mudali & Anr.
vs Co operative Rural Credit Society & Ors., , Y, Mahabaleswarappa vs M. Gopalaswami Mudaliar, A.I.R. 1935 Mad. 673, Nand Lal Ganguli vs Khetra Mohan Ghose, I.L.R. , Jagannath Prasad vs State of Uttar Pradesh, ; , Lalji Haridas vs State of Maharashtra & Anr., ; , Shri Virindar Kumar Satyawadi vs State of Punjab, [1955] 2 S.C.R. 1013, Brajnandan Sinha vs Jyoti Narain, ; , Hari Pandurang & Anr.
vs Secretary of State for India in Council I.L.R. , Thakur Jugal Kishore Sinha vs Sitamarhi Central Co operative Bank Ltd. ; and Malabar Hill Co operative Housing Society Ltd. Bombay vs K. L. Gauba & Ors.
A.I.R. 1964 Bom.
147, considered.
(ii) Section 146(p) of the Maharashtra Cooperative Societies Act, 1960 and sections 463 and 464 I.P.C. are two distinct offences which are capable of being committed with different intentions by different sets of persons and it could not be contemplated that the Legislature of the State of Maharashtra intended to repeal pro tanto the provisions of section 465 I.P.C. by enactment of section 146 of the Maharashtra Cooperative Societies Act.
The prosecution in the present case not being under the Maharashtra Act sanction of the Registrar under section 148 thereof was not necessary.
[201 H 202 A] Om Prakash Gupta vs State of Uttar Pradesh, [1957] S.C.R. 423 and T. section Balliah vs T. section Rengachari, ; , applied.


judgement:
l Appeals Nos. 1174 of 1965 and 1935 of 1966.
Appeals from the judgment and decree dated October .14, 1959 of the Madras High Court in Appeal No. 471 of 1955.
H. R. Gokhale, P. section Padmanaban and D. N. Gupta, for the appellant (in C.A. No. 1174 of 1965) and respondent No. 1 (in C.A. No. 1935 of 1966).
V. P. Raman, Shyamala Pappu, Vineet Kumar, P.S. khera and R. Nagaratnam, for the appellants (in C.A. No.1935 of 1966) and respondents Nos.
1 to 4 (in C.A. No. 1174of 1965).
C.B. Agarwala and R. Gopalakrishnan, for respondent No. 12 (in C.A. No. 1935 of 1966).
206 The Judgment of the Court was delivered by Bachawat, J.
One James Henry Wapshare owned several estates including Naduvattam in the Nilgiris known as the Ouchterlony Valley Estates, having tea, coffee, cardamom and cinchona plantations.
He lived in Naduvattam and Ootacamund with his wife Nellie, daughters Violet and Dorothy and sons James and Edward.
In 1927 he formed a limited company known as the Ouchterlony Valley Estates limited,having a share capital of Rs. 15 lakhs and conveyed the estates to the company.
All the shares of this company, sometimes referred to as the "old company" were held by him and the members of his family.
The company borrowed Rs. 10 1/2 lakhs from the Imperial Bank of India against the issue of debentures.
The loan was secured by a mortgage of the estates under a debenture trust deed dated May 13, 1927 and was repayable on May 15, 1937.
In default of payment within November 15, 1937 the trustee under the debenture trust deed was authorised to enter into possession of the estates and sell them.
By an agreement dated August 16, 1936 Peirce Leslie & Co. Ltd., referred to as the appellant company, was appointed as the secretary of the old company.
On April 15, 1937 the old company was served with a notice.
that in default of payment of the loan within November 15, 1937 the trustee for the debenture holders would take possession of the estates and sell them.
On May 18, 1937 James Henry Wapshare died leaving behind him his widow and his sons and daughters.
In November 1937 after prolonged negotiations between the Wapshares and the appellant company it was settled that the company would purchase all the estates except Naduvattam for Rs. 10 lakhs.
On December 29, 1937 formal agreements were executed providing that the old company would convey to the appellant company all the estates except Naduvattam for Rs. 10 1/2 lakhs and the appellant company would convey Naduvattam to Mrs. Nellie Wapshare for Rs. 50,000 and would at the same time advance Rs. 50,000 on the hypothecation of Naduvattam crops.
By January 10, 1938 the appellant company paid the entire purchase price and took possession of the estates and the entire dues of the Imperial Bank of India were liquidated.
On March 30, 1938 the old company passed a special resolution for its voluntary winding up and appointed Capt.
F. Murcutt as its liquidator.
The appellant company promoted a new company known as Ouchterlony Valley Estates Ltd., for the purpose of acquiring the ' estates.
The new company was incorporated on September 5, 1938.
Fifty per cent of its shares were held, by the appellant company.
Formal conveyances of the Naduvattam estate in favour of Mrs. Nellie Wapshare and of the other estates in favour of the new company were executed by the old company between January and May 1939.
On the execution of the con 207 veyances the new company entered into possession of the estates conveyed to them.
, As soon as the affairs of the old company were wound.
up the liquidator made ,up the final accounts of tile winding up and called the final meetings of the company and its creditors.
On or about November 29, 1939 a copy 'of the final accounts and the return of the holding of the meetings were filed with the registrar of joint stock companies and were registered under 'section 209H of the Indian Companies Act, 1913.
In view of section 209H(4), the old company stood dissolved with effect from March 1, 1940.
On December 21, 1950 Mrs. Nellie, Violet, Dorothy, James and Edward Wapshares instituted the present suit against the appellant company, impleading the appellant company as defendant No. 1, 12 persons said to be its directors and officials as defendants 2 to 13, Capt.
F.A. Murcutt as defendant No. 14, the new company as defendant No. 15 and the old company as defendant No. 16.
The plaintiffs prayed for a decree declaring that the old company had not been wound up in accordance with law and was still in existence as a corporate personality, a declaration that the old company was the real owner of the aforesaid properties and the new company held them in trust for the old company, a decree vesting or re transferring the properties to the old company and alternatively to the plaintiffs and accounts.
The plaintiffs alleged that the appellant company as the secretary and manager of the old company was bound in a fiduciary character to protect its interest and by availing itself of this character gained pecuniary advantage by purchase of the properties from the old company in 1939, that the agreement for sale and conveyances in respect thereof were induced by fraud, fraudulent concealment, misrepresentation, undue influence an improper means, that the new company was controlled by the appellants that all the defendants were privy to the fraud, that the winding up of the old company was procured by the defendants fraudulently,, that the plaintiffs discovered the fraud in September 1949, and the plaintiffs were the only shareholders of the old company and as such were entitled to maintain the suit.
Defendants 4, 11 and 14 died during the pendency of the suit.
The defunct old company impleaded as defendant No. 16 did not appear but the other defendants contested the suit.
The Subordinate Judge, the Nilgiris, Ootacamund, dismissed the suit.
, He held that (1) there was no fiduciary relationship between the appellant and the old company; (2) the impugned agreements and conveyances were not induced by fraud, fraudulent concealment, undue influence or improper means and were valid and binding on the old company and the plaintiffs; (3) the suit was barred by limitation; (4) the old company was dissolved in ,accordance with law and was not in existence and (5) the plaintiffs had no locus standi to maintain the suit .
The plaintiffs filed an appeal from the decree.
The Madras High Court allowed 208 the appeal in part and passed a decree asking the appellant to pay to the plaintiffs Rs 1,50,000.
The High Court held that (1) there was a fiduciary relationship between the appellant and the old company, (2) the appellant by availing itself of its fiduciary character gained a pecuniary advantage of Rs. 1,50,000 and to the extent of this unjust 'enrichment was bound to reimburse the plaintiffs; (3) the suit was not barred by limitation and (4).
in spite of the dissolution of the old company the plaintiffs were entitled to maintain the suit.
Aggrieved by this decree the appellant company filed C.A. No. 1174 of 1965 and the Wap shares have filed the cross appeal C.A. No. 1935 of 1966 on the strength of certificates granted by the High Court under Act.
133(1)(c) of the Constitution.
The following three questions arise in these appeals (1) was there a fiduciary relationship between the appellant and the old company and if so, did the appellant company by availing themselves of this fiduciary character gain a pecuniary advantage of Rs. 1,50,000.
(2) is the suit barred by limitation; and (3) are the plaintiffs as shareholders of the old company entitled to maintain the suit.
It is a settled rule of equity that any person bound in a fiduciary character to protect the interests of another person should not put himself in a position where his interest and duty conflict.
If by availing himself of his fiduciary character or by entering into any dealings under circumstances in which his interests are ,or may be adverse to those of such other person he gains for himself a pecuniary advantage, he must hold for the benefit of such other person the advantage so gained, see Trusts Act,s.88.
But there is no rule which incapacitates a trustee from dealing with a cestui que trust.
In Coles vs Trecothick(1) Lord Eldon said : "a trustee may buy from the cestui que trust, provided 'there is 'a distinct and clear contract, ascertained to be such after a jealous and scrupulous examination of all the circumstances, proving, that the cestui que trust intended, the trustee should buy; and there is no fraud, no concealment, no advantage taken, by 'the trustee of information acquired by him in the character of 'trustee.
I admit, it is a difficult case to make out, wherever it is contended that the exception prevails.
" As stated in Kerr on ,Fraud and Mistake, 6th Ed. page 192 "Thus a trustee for sale may purchase the trust estate, if the cestui que trust fully and clearly understands with whom he is dealing and makes no objection to the transaction, and the trustee fairly and honestly (1) 9 Ves.
June.234,247;32E.R.592,597. 209 discloses all that he knows respecting the property and gives a just and fair price, and does not seek to secure surreptitiously any advantage for himself.
The onus however, rests upon the trustee, and he is bound to produce clear affirmative proof that the parties were at arms ' length, that the cestui que trust had the fullest information upon all material facts, and that having this information he agreed to and adopted what was done.
" The appellant company was the secretary of the old company, was in charge of its correspondence and accounts and was actively engaged in assisting it and its shareholders in selling the estates.
In course of its employment the appellant acquired intimate knowledge of the income, prospects and the market value of the properties.
We agree with the High Court that the appellant stood in a fiduciary relationship towards the old company and was bound to protect its interests.
The appellant entered into an agreement with the old company for the purchase of the properties.
It promoted the new company to which the properties were subsequently conveyed.
Fifty per cent of the shares of the new company were held by the appellant company and the new company was managed and controlled by it.
The onus is upon the appellant company to establish affirmatively that the transaction was righteous and that it did not gain any pecuniary advantage by availing itself of its fiduciary character.
We are inclined to think that the appellant company has discharged this difficult burden of proof.
Since 1931 the Wapshares were keen on selling the estates.
From time to time there were offers from intending buyers but none of them materialized.
In 1936 there was a 'slump in tea and coffee prices.
There was a possibility that the tea restriction scheme would be abolished and there would be a further slump in tea prices.
The old company was indebted to the Imperial Bank of India for Rs. 10 1/2 lakhs against the issue of debentures secured by an English mortgage over all the estates.
The Bank was pressing for the payment of its dues.
There was every likelihood that in default of payment by November 15, 1937 the trustee for the debenture holders would enter into possession of the estates and sell hem without intervention of court.
The old company was not in a position to liquidate the debt without selling the estates, In April 1937 M/s. Kuruvilla Bros. agreed to purchase the properties.
On May 18, 1937 James Henry Wapshare died.
In July 1937 the deal with Kuruvilla Bros. fell through.
The Wapshares and the old company tried their best to raise loans and for that purpose issued advertisements and contacted several banks and insurance companies but they were unable to raise any loan.
In the beginning of November 1937, 210 the Wapshares had before I them a firm offer from Arbuthnot Lathem & Co. for purchase of the estates for Rs. 14 lakhs.
But the Wapshares were not willing to sell Naduvattam.
The bungalow at Naduvattam was the home of the Wapshare family.
Naduvattam was the highest altitudinal estate, grew the best tea in the area and had a very good name in the London tea market.
The appellant had previously offered to buy all the estates, for Rs. 111/2 lakhs only.
The Wapshares wanted the appellant to make an offer which would enable them to retain Naduvattam and at the same time to liquidate the Bank 's dues.
At the insistence of the Wapshares interviews were arranged at Calicut on November 4, and November 6, 1937 between Dorothy and Robert representing the Wapshares and Mr. Thorne representing the appellant.
Mr. Thome could not offer more than Rs. 10 lakhs for all the estates excluding Naduvattam.
He told the Wapshares that they should accept the, offer of Arbuthnot Lathem & Co. as they would get Rs. 14 lakhs by selling all the estates.
The Wapshares were anxious to retain Naduvattam and were inclined to accept the appellant 's offer.
They took some time for consideration and at the same time asked the Arbuthnots for time till, November 10, for consideration of their offer.
On November 10, Dorothy sent a telegram to the appellant company informing them that the family was agreeable to their new proposal.
The draft agreement was sent by the appellant on November II.
In the beginning of November Mrs. Wapshare was ill and was in a hospital in Bangalore.
But on November 10, she was well enough to discuss the appellant 's proposal.
On November 12, she came to Ootacamund and on November 13 she went to her lawyer Gonsalves, discussed the matter, with him and gave her consent.
Gonsalves was approached to put the bargain in a legal form.
He took exception to the draft agreement, but found the formal agreements to be free from blemish.
At a meeting held on November 18, 1937 the shareholders of the company unanimously accepted the proposal.
Mrs. Wapshare, Dorothy, Robert and Edward were present at the meeting.
The meeting was also attended by E.W. Simcock, chairman of the company, H. M. Small, the director, nominated by the Imperial Bank of India and C. K. Pittock.
All the Wapshare 's were sui juris ' Dorothy was a shrewd young lady and the best business brain in the family.
The Wapshares knew the value of the properties intimately.
They knew that Naduvattam if sold separately would not fetch more than Rs. 2 lakhs.
Yet they chose to retain Naduvattam and sell their estates for Rs. 10 lakhs instead of selling all the estates for Rs. 14 lakhs.
The reason was that there was no other, buyer willing to pay more than Rs. 10 lakhs for the other estates.
They had decided not to sell Naduvattam and they were satisfied that ft. 10 lakhs was a just and fair price for the other estates sold separately from Naduvattam.
The appellant 's offer enabled them 211 to keep Naduvattam and at the same time to liquidate the Bank 's dues.
The deal was satisfactory to them in every way.
They obtained all necessary legal advice.
The documents were in proper legal form.
There was no fraud, no concealment and no undue influence.
No advantage was taken by the_ appellant of any information acquired by them in their character as secretary.
The Wapshares clearly understood that they were, dealing with the appellant company, had the fullest information about all material, facts and that having this information they agreed to sell.
They made no complaint about it for 12 years.
Their long acquiescence 'in the sale is evidence that the transaction was fair in all respects, see Parks vs White(1).
On the whole and especially having regard to the long acquiescence we hold that the transaction was just and fair and that the appellant did not gain any pecuniary advantage by availing themselves of their fiduciary character or under 'circumstances in which their interests were in conflict with those of the old company.
In saying so we must not be understood to say that we encourage transactions of this type.
Having regard to their fiduciary character the appellant company might well have avoided entering into the transaction.
The next question is with regard to limitation.
The convey ances in favour of the new company were executed on January 14, 1939 and May 15, 1939.
Simultaneously with the execution of the conveyances the new company entered into possession of the properties.
Even before that date by January 10, 1938 the appellant company had taken possession of the properties.
The suit was filed on December 21, 1950 when the Indian Limitation Act, 1908 was in force.
The plaintiffs cannot claim relief on the ground of fraud and consequently article 95, has no application.
Section 10 does not apply as the properties are not vested in the new company for the specific purpose of making them over to the old company or to the plaintiffs.
Article 144 does not apply for several reasons.
In the plaint there is no prayer for recovery of possession.
The plaintiffs claim declaratory reliefs, a decree vesting or re transferring the properties to the old company or to the plaintiffs and accounts.
Such a suit is governed by article 120.
The High Court passed a decree for money and not for recovery of immovable properties.
A suit for such a relief would be governed by article 1 20.
Even if the suit is treated as one for recovery of possession of the properties it would be governed by article 120 and not by article 144.
The old company could not ask for recovery of the properties until they obtained a reconveyance from the new company '.
The cause of action for this relief arose in 1939 when the properties were 11 Ves.
June. 209,226; ,1074.
212 conveyed to the new company.
A suit for this relief was barred under article 120 on the expiry of six years.
After the expiry this period the old company could not file a suit for recovery of possession.
In Rani Chhatra Kumari Devi V. Prince Mohan Bikram Shah(1) the Privy Council held that in a case where the property was not held by the trustee for the specific purpose of making it over to the beneficiary 'and the trust did not fall within section 10, a suit by the beneficiary claiming recovery of possesSion from the trustee was governed by Art 120.
Sir George Lowndes said. "The trustee is, in their Lordships ' opinion, the owner of the trust property, the right of the beneficiary being in a proper case to call upon the trustee to convey to him.
The enforcement of this right would, their Lordships think, be barred after six years under article 120 of.
the Limitation Act, and if the beneficiary has allowed this period to expire without suing, he cannot afterwards file a possessory suit, as until conveyance he is not the owner.
" It follows that the suit is barred by limitation.
The third question relates to the maintainability of the suit.
The plaintiffs sued to recover properties belonging to the old company.
The company went into voluntary liquidation and was wound up.
As already stated the company stood dissolved on March 1, 1940 under section 209H of the Indian Companies Act, 1913.
No application was made within 2 years to declare the dissolution to be void under section 243.
Apart from s.243 the dissolution might possibly be set aside in a suit on the ground of fraud, but the plaintiffs failed to establish any fraud affecting the dissolution.
The dissolution has put an end to the existence of the company.
In these circumstances, the appellant contends that all the properties and the rights of the old company.
if any, have vested in the Government by escheat or as bona vacantia and the plaintiffs cannot sue for the recovery of its properties.
The plaintiffs dispute the right of the Government to take the properties by escheat or as bona vacantia, and they contend that on the dissolution of the old company, its assets have now vested in its shareholders.
The common law of England recognises the right of the Crown to take property by escheat or as bona vacantia.
Escheat proper was the lord 's right of re entry on real property held by a tenant dying intestate without lawful heirs.
It was an incident ,of feudal tenure and was based on the want of a tenant to perform the feudal services, see Halsbury 's Laws of England, vol.
16, (1) L.R. 58 I.A. 279.
213 art 830 On the tenant dying intestate without leaving any lawfull heirs his estate came to an end and the lord was in by his own right and not by way of succession or inheritance from the tenant, see: Attorney General of Ontario vs Andrew F. Mercer(1).
In most cases, the land escheated to the Crown as the lord paramount, in view of the gradual elimination of intermediate or mesne lords since 1290 The Crown takes as bona vacantia goods in which no one else can claim a property.
In Dyke vs Walford(2 ) it was said that "it is the right of the Crown to bona vacantia, to property which has no other owner.
" The right of the Crown to take as bona vacantia extends to personal property of every kind, see: In re.
Wells, Swinburne Hanham vs Howard(3).
Escheat of real property of an intestate dying without heirs was abolished in 1925 and the Crown now takes all his properties as ,bona vacantia.
On the dissolution of a company the Crown took its real property by escheat and its personal property as bona) vacantia.
Technical escheat of the property of a dissolved company was abolished in 1929 and now under section 354 of the English Companies Act, 1948 all the property and rights of a dissolved company is deemed to be bona vacantia and accordingly belongs to the Crown.
The right of the Government to take by escheat ' for want of an heir or successor or as bona vacantia for want of a rightful owner has been recognised in our country for a long time.
Statute 16 & 17 Victoriae, C. 95, section 27, an Act to provide for the government of India asserted that "all real and personal estate within the said territories escheating or lapsing for want of an heir or successor, and all property within the said territories devolving as bona vacantia for want of a rightful owner, shall (as part of the revenues of India) belong to the East India Company in trust for Her Majesty for the service of the government of India." By section 54 of the Government of India Act, 1858 the existing provision was continued in force and was construed as referring to the Secretary of State in Council in place of the company.
Section 20(3) (iii) of the Government of India Act, 1915 provided that the revenues of India received for His Majesty would include "all movable or immovable property in British India escheating or lapsing for want of an heir or successor, and all property in British India devolving as ' bona vacantia for want of a rightful owner.
" Section 174 of the Government of India Act, 1935 provided : "Subject as hereinafter provided, any property 'in India accruing to His Majesty by escheat or lapse or as bona vacantia for want of a rightful owner, shall, if it is (1) 8 A.C. 767, 772.(2) ; ,496;13E.R.557,580.
(3) [1933] 1 Ch.29,49.
214 property situate in a Province, vest in His Majesty for the purposes of the government of that Province, and shall in any other case vest in His Majesty for the purpose of the, government of the Federation.
" Article 296 of the Constitution now provides "Subject as hereinafter provided, any property in the territory of India which, if this Constitution had not come into operation,, would have accrued to His Majesty or, as the case may be, to the Ruler of an Indian State by escheat or lapse, or as bona vacantia for want of a rightful owner, shall if it is property situate in a State, vest in such State, and shall, in any other case, vest in the Union.
" These enactments show that in this country the Government takes by escheat immovable as well as movable property for want of an heir or successor.
In this country escheat is not based on artificial rules of common law and is not an incident of feudal tenure.
It is an incident of sovereignty and rests on the principle ,,of ultimate ownership by the State of all property within its jurisdiction.
"Private ownership not existing, the State must be owner as ultimate lord", see: Collector of Masulipatam vs C. Vencata Narainapah(1).
The rules of English feudal law relating to mesne lords are not applicable, and consequently the zamindar could not take by escheat the land of a tenant dying without heirs.
The right of escheat belongs to the Government only, see Ranee Sonet Kowar vs Mirza Himmut Bahadoor(2).
The Government has the right to take all property within its jurisdiction by escheat for want of an heir or successor and as bona vacantia for want a a rightful owner, see : Bombay Dyeing & Manufacturing Co. V. State of Bombay("), Legal Remembrancer vs
Corporation of Calcutta (4),.
Consequently the property of an intestate dying without leaving lawful heirs, and the property of a dissolved corporation passes to the Government by escheat or as bona vacantia.
The property taken by escheat or as bona vacantia belongs to the Government, subject to trusts and charges, if any, previously affecting it.
As already stated, technical escheat of the real property of a dissolved company was abolished in England in 1929 and section 354 of the Companies Act 1948 now provides that all property and rights of a dissolved company shall be deemed to be bona vacantia and shall accordingly belong to the Crown.
There was no statutory provision like section 354 before 1929.
In the absence of such a provision, the Crown took the real property of a company dissolved before 1929 by escheat 'and its personal property (1) 8 M. I. A. 500, 525.
(3) ; ,1146.
(2) L.R. 3 I.A. 92, 101.
(4) 215 as bona vacantia, except in so far as its right, was cut down by statute, see : In re.
Wells(1).
Likewise in this country, the Government, took by escheat or as bona vacantia all the properties of a company dissolved under the Indian Companies Act, 1913 except in so far as its right was cut down by that Act.
P. B. Mukherjee, J. expressed a similar opinion In re U.N. Mandal 's Estate (2).
Accordingly the shareholders or creditors of the dissolved company cannot maintain any action for recovery of its assets.
No effective relief can be given in such action, as the company is ' not a party and the assets cannot be restored to its coffers.
On this ground in Coxon vs Gorst(3) an action by creditors for recovery of moneys due to the dissolved company was dismissed, and in.
In re.
Lewis & Smart Ltd. (4) it was held that a pending misfeasance summons abated on the dissolution of the company.
The plaintiffs ' contention that the properties of a dissolved company passed to its shareholders is based upon American law, which is stated in American Jurisprudence, 2d, Corporations, aft.
1659 thus : "Apart from statutory provisions which frequently embody the following rule also, the general equitable rule now followed in this country is that upon the dissolution of a corporation, the property and assets of the corporation constitute a trust fund 'for the benefit of its creditors and stockholders.
This rule necessarily displaces and makes obsolete the early common law rules as to the reverter If real estate and the escheat of the personal estate of corporation in such a case, and practically makes obsolete the doctrine as to the extinguishment of the debts owing by and to the corporation in such cases.
Stated in another way, the rule is that after the dissolution of a corporation, its property passes to its stockholders subject to the payment of the corporate debts.
The inherent jurisdiction of equity over trusts embraces the power to administer the assets of a dissolved coloration.
" The subject of dissolution of corporations is discussed in articles 1628 to 1696 of the book.
The corporation is dissolved by a judgment of court (article 1645).
For the purpose of complete winding up of its affairs, statutes provide that even after dissolution the corporation shall continue to exist and may sue or be sued for a limited period, see articles 1662, 1668, 1669, 1671, 1673, Statutes also provide for appointment of a trustee for the dissolved corporation and their effect is to convert its properties into 'a trust fund and to abrogate the common law rule of escheat, articles 1676, 1677.
The stockholders of the dissolved corporation can accordingly maintain an action against the trustee for distribution (1) ,49.(3) (2) A.T.R. , 498.(4) 216 of the surplus assets after payment of the debts.
of the corporation, see Bacon vs Robertson (1).
The law in our country is very different.
Here the winding up precedes the dissolution.
There 'is no statutory provision vesting the properties of a dissolved company in a trustee or having the effect of abrogating; the law of escheat.
The shareholders or creditors of a dissolved company cannot be regarded as its heirs and successors.
On dissolution of a company, its properties, if any, vest in the government.
In Coxon vs Gorst(2) page 78 Chitty, J. summarily rejected the contention that a chose in action vested in a company passed on the dissolution to its creditors.
He said : "This supposed vesting in the creditors of the company 's closes in action is a mere fiction with nothing in the statute to support it, and is in the teeth of the provisions of the statute.
follows that the plaintiffs are not entitled to maintain this suit.
A question may arise whether the Government takes the pro perty of a dissolved insolvent company subject to a trust for payment of its debts, see in this connection, In the matter of Chandbali S.S. Co.,(3) and In Re Wells(4 ) at pages 38 and 50.
But that question does not arise in the present case and we express no opinion on it.
In the result, C.A. No. 1174 of 1965 is allowed, the decree passed by the High Court is set aside and the decree passed by the Trial Court is restored.
C.A. No. 1935 of 1966 is dismissed.
There will be no order as to costs in this Court and in the High Court.
C.A. No. 1174/65 allowed.
v.p.s.
C.A. No. 1935/66 dismissed.
(1) 15 Law ed.
(2) (3) , 284 286.

summary:
One W owned several tea, coffee and other.
plantations.
In 1927, he formed a limited company and conveyed his estates to the company.
All the shares of the company were held by him and the members of his family.
The company borrowed Rs. 10 1/2 lakhs from the Imperial Bank of India 'against the issue of debentures secured by an English mortgage.
The loan was repayable on March 15, 1937.
In default of payment within November 15, 1937 the trustee under the debenture trust deed was authorised to enter into possession of the estates and sell them.
The appellant company was appointed as the secretary of the company.
Since 1931, the family was keen on selling the estates, but none of the offers materialised.
In 1936, there was a slump in tea and coffee prices and there was a possibility of a further slump.
The Bank was pressing for the payment of its dues and the company was not in a position to liquidate the debt without selling the estates.
The family 'tried unsuccessfully to raise loans.
In the beginning of November 1937, the family had a firm offer from A.L. & Co. for the purchase of all the estates for Rs. 14 lakhs, but the family wag anxious to retain one of them.
The appellant company offered Rs. 10 lakhs for all the estates excluding the estate which the family wanted to retain.
The family knew that this estate, if sold separately, would not fetch more, than Rs. 2 lakhs and yet they chose to retain it and to accept the appellant 's offer.
At a meeting all the shareholders (members of the family) unanimously accepted the, proposal.
There all sui juris and had business acumen.
They knew the value of he properties and accepted Rs. 10 lakhs as a just and fair price.
The offer enabled them to retain the estate which they wanted to retain and at the same time enabled them to liquidate the Bank 's dues.
They had legal advice and the documents were in proper legal form.
The meeting was also attended by the chairman of the company and the director nominated by the Imperial Bank.
After the transfer, the company went into voluntary liquidation and it stood dissolved on March 1, 1940, under section 209 H of the Companies Act, 1913.
The appellant took possession of the properties on January 10, 1938 and promoted a new company to which the properties were transferred by conveyances dated January 14, 1939 and May 15, 1939 50 % of the shares of the new company were held by the appellant company which managed and controlled the new company.
The members of the family made no complaint about 'the transaction for 12 years, but, on December 21, 1950, they instituted a suit against the appellant and others alleging that the old company had not been wound up in accordance with law and was still in existence, that the old company was the real owner of the properties and the new company held them in trust for the old 204 company, that the appellant took advantage of its fiduciary capacity and gained pecuniary advantage and that the various sales and conveyances were vitiated by fraud, and prayed for 'a decree vesting or retransferring the properties to the old company or the family.
The trial court dismissed the suit, but the appeal to the High Court was allowed in part.
In appeal to this Court, on the, questions : (1) (a) Whether there was a fiduciary relationship between the appellant and the old company, and (b) Whether the appellant gained a pecuniary advantage by availing itself of the fiduciary character; (2) Whether the suit was barred by limitation; and (3) Whether the members of the family as shareholders of the old company were entitled to maintain the suit, HELD : (1) (a) The appellant company was the secretary of the old company, was in charge of its correspondence and accounts and was actively engaged in assisting it and its share holders in selling the estates.
In the course of such employment it acquired intimate knowledge of the income, prospects and market value of the properties.
Therefore, the appellant stood in a fiduciary relationship towards the old company and was bound to protect its interests.
Having regard to its fiduciary character, the appellant should have avoided entering into the transaction.
[209 B D; 211 D] (b) But, there is no rule, which incapacitates a trustee from dealing with a cestui que trust, provided there was no fraud and no advantage was taken by the trustee of any information acquired by him in the character of a trustee.
The onus, however, is upon the trustee to establish affirmatively that the transaction was righteous and that he did not gain any pecuniary advantage by availing himself of his fiduciary character.
in the present case, the appellant had discharged this difficult onus.
The transaction was just and fair and the appellant did not gain any pecuniary advan tage by availing itself of its fiduciary character, nor was there any conflict between its own interests and those of the old company.
, No advantage was taken by the appellant of any information acquired by it in its character as secretary and, the circumstances ,how that there was no fraud, no concealment and no undue influence.
The long acquiescence of the members of the family in the sale is also evidence that the transaction was fair in all respects.
E; 211 E D] Coles vs Trecothick, ; , 247; ; , 597 and Parks vs White, , 226; , 1074, applied (2) The suit was barred by limitation.
[212 D] A suit by a beneficiary, claiming recovery of possession from the trustee is governed by article 120 of the Limitation Act, 1908.
The plaintiffs had not established fraud and consequently article 95 of the Limitation Act has no application.
Section 10 of the Act also does not apply, because, the properties were not vested in the new company for the specific purpose of making them over to the old company or to the plaintiffs.
In the plaint there was no prayer for recovery of possession.
The old company could not ask for recovery of the properties until they obtained a reconveyance from the new company.
The suit is not there fore governed by article 144 of the Limitation Act and since the ' period under article 120 is 6 years from the date of cause of action and the cause of action in the present case arose in 1939 when the conveyances were executed, the suit was barred.
[211 F H] 205 Rani Chhatra Kumari Devi vs Prince Mohan Bikram Shah, L.R. 58 I.A. 279, applied.
(3) The plaintiffs were not entitled to maintain the suit.
[216 C] As the plaintiffs failed to establish any fraud affecting the dissolution of the company, the dissolution has put an, end to its existence.
On the dissolution of the company, its properties, if any, Vested in the Government The right of the Government to take by escheat for want of an heir or successor or as bona vacantia for want of a rightful owner has been recognised in our country.
The various Government of India Acts and the Constitution show that the Government takes by escheat immovable as well as movable property for want of an heir or successor.
It is an incident of sovereignty and rests on the principle of ultimate ownership by the State of all property within its jurisdiction.
Unlike the law in the United States, winding up 'under the Indian Law precedes dissolution and there is no statutory provision vesting the properties of a dissolved company in a trustee or having the effect of abrogating the law of escheat.
The shareholders or creditors of a dissolved company cannot be regarded as its heirs or successors.
Therefore, the Government took by escheat or as bona vacantia all properties of a company dissolved under the, Indian Companies Act,. 1913, except in so far as its right was cut down by that Act.
Accordingly, the shareholders or creditors of the dissolved company cannot maintain arty action for recovery of its assets As the company was not a party and the assets could not be restored to its coffers, no effective relief could be given in such an action.
D E; 214 C D, F; 215 B C; 216 A B] Collector of Masulipatam vs C. Vencata Narainapah, 8 M.I.A. 500, 525, in re.
Wells , 49, Coxon vs
Gorst, and In re.
Lewis and Smart Ltd. , applied.
Bombay Deying and Manufacturing Co. vs State of Bombay, ; , 1146 and Legal Remembrancer vs Corporation of Calcutta; , , 204, followed.
In re.
U. N. Mandal 's Estate, A.I.R. 1959 Cal.
493, 498, approved.