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Petitioner: KHONDKER FAIZUR RAHMAN VS Respondent: OFFICIAL LIQUIDATOR, SOUTHERN BANK LTD. (IN LIQUIDATION) AND OTHERS
P L D 1970 Dacca 211
P L D 1970 Dacca 211
Before Abu Md. Abdulla, J
KHONDKER FAIZUR RAHMAN‑Petitioner
Versus
OFFICIAL LIQUIDATOR, SOUTHERN BANK LTD. (IN LIQUIDATION) AND OTHERS‑Respondents
Matter No. 12 of 1964, decided on 29th May 1968.
Companies Act (VII of 1913), S. 235 read with Banking Companies Ordinance (LVII of 1962), Ss. 61 & 67‑Respondent purchasing fixed deposit receipt with disputed money of petitioner deposited in Bank after getting it transferred to his account ---Application of Petitioner, under S. 235, held, maintainable against bank as well as respondent‑Section 67, Banking Companies Ordinance, 1962 empowers High Court to follow property whether it stands in name of promoters, directors, liquidator or any officer of company or of any other person as ostensible owner.
Section 235, Companies Act, 1913 is applicable to any person who has taken part in the formation or promotion of the company, or any past and present Directors, Manager or liquidator or any officer of the company. After examining into the conduct of the promoter, Director and Manager, liquidator or officer the Court can compel him to restore the money or property or any part thereof.
Section 67, Banking Companies Ordinance, 1962 also shows that the application must be directed against any promoter, director, manager, liquidator or officer of a Banking Company. But sub section (2) shows that where any application has been made under section 235 of the Companies Act, 1913 the High Court has power to follow the property whether it stands in the name of the above mentioned persons or of any other person as the ostensible owner.
Badrul Haider Chowdhury with A. R. Yousuf for Petitioner.
Ruhul Islam for Respondent No. 1.
Kazi Abdul Wahab for Respondent No. 3.
Dates of hearing: 23rd June; 20th July; 3rd and 10th August; 10th, 16th, 17th, 21st, 23rd, 24th November 1967 and 10th January 1968.
JUDGMENT
This is an application under section 235 of the Companies Act read with section 67 of the Banking Companies Ordinance, 1962.
The petitioner Khondker Faizur Rahman had a current Deposit Account No. 1539 in the Southern Bank Ltd. till it suspended its business by the order of this Court dated 28‑4‑64. Later on the State Bank of Pakistan was appointed as the Official Liquidator by this Court by its order dated 10th November 1964. It is alleged by the petitioner that he deposited one cheque for a sum of Rs. 41,400.00 on 20‑4‑64 and another cheque for a sum of Rs. 29,280.00 on 21‑4‑64. The petitioner alleges that he enquired about the fate of these two cheques from the then Manager of Southern Bank Ltd. during the period of suspension of business of the Bank. He was told by the said Manager that the cheques had not yet been cleared by the State Bank of Pakistan. The petitioner further alleges that he had deposited several cash warrants with the Executive Engineer which cash warrants had been obtained by him from the Bank. In 1966 he received 50 % of the amount of the cash warrants which were released by the Executive Engineer except one cash warrant for a sum of Rs. 11,400 which was Cash Warrant No. 127 and was issued by the Bank on 17‑4‑1964. With regard to this cash warrant he was told that he could not be given credit for the sum and it could not be entertained by the Official Liquidator on the ground that the said cash warrant was not mentioned in the books of accounts of the Bank in Liquidation. During this period the petitioner made enquiries regarding the fate of his two aforesaid cheques totalling Rs. 70,680 but was told again and again that since a winding up proceeding had commenced the matter was under investigation by the Official Liquidator. It is alleged in para. 8 of the petition that on 12th December 1964, he received information from the Official Liquidator to the effect that the balance in the current Deposit Account No. 1539 shows an amount of Rs. 101.50 paisa only as on 28th April 1964. It is alleged that he took up the matter immediately with the Southern Bank Limited and was told by the then Manager of the Southern Bank Limited that the figure Rs. 101.50 paisa only shows the balance on 28th April 1964, but as the two cheques have been forwarded to the State Bank for clearance the amount covered by the said cheques namely Rs. 70,680 will not be shown in the balance‑sheet. A copy of the said letter is enclosed with the petition as Annexure B but it has got no reference to the two cheques. It is the case of the petitioner that he has never issued any advice to the Southern Bank to transfer the amount of the two cheques, nor did he issue any instruction to pay the amount to any other person. The petitioner further stated that he had further come to learn from the Official Liquidator that his name has not been included as one of the creditors in respect of the aforesaid sum of Rs. 82,080 being the amount covered by the two cheques and the cash warrant. On further enquiry the petitioner came to learn that the Southern Bank Ltd. in collusion with one Rabindranath Ghose (respondent No. 3) transferred Rs. 70,680.00 being the total amount of the aforesaid two cheques to the account of the said Rabindranath Ghose. It is alleged that the petitioner was not informed by the Southern Bank about the transfer and the petitioner had come to learn from an ex employee of the Southern Bank Ltd. but who was also functioning for and on behalf of the Official Liquidator that the money had been transferred from the petitioner's account to the account of the said Rabindranath Ghose. The petitioner claims that such transfer if true was illegal and unauthorised as there has been no transfer‑advice by the petitioner. The Official Liquidator also did not inform the petitioner about the fate of those two cheques.
It is alleged that on further query by the petitioner the Official Liquidator pleaded complete ignorance about those cheques. The petitioner then is alleged to have filed affidavit in proof of his claim against Southern Bank Ltd. to the officer‑in‑charge who, however, without recording any reason verbally informed the petitioner that the petitioner may seek redress of his grievance by way of an appropriate proceedings in the Court of law. On these facts petitioner alleges that the officers of the Southern Bank Ltd. had been guilty of breach of trust had misapplied the afore said amounts of Rs. 82,080 by retaining the said amount by committing fraud and as such had become liable and accountable for the aforesaid amount. Hence the present application was filed by the petitioner. The petitioner prays for issuing the following directions
(i) that the Southern Bank Limited (in Liquidation) owes to the petitioner the sum of Rs. 82,080.00 only on account of
Rs. (a) Cheque No. 212997 ... 41,400 (b) Cheque No. 213608 ... 29,280 (c) Cash Warrant No. 4127 ... 11,400 ... 82,080
(ii) That the Official Liquidator be directed to include the petitioner as creditor of the Southern Bank Limited (in liquida tion) for the aforesaid amount in addition to his other claim.
In a supplementary affidavit the petitioner has given the name of the informant in paragraph 11 of his petition as one Amol Kumar Bhadra of Haji Mohsin Road, P. S. Kotwali, Khulna and the name of respondent No. 2 Dhirajlal Chatterjee who was the Manager of Southern Bank Ltd. at the relevant time.
The Official Liquidator entered appearance and filed a counter affidavit on 18th of April 1967. The counter affidavit has been sworn to by one Mr. Rab who claims to be Banking Officer of the State Bank of Pakistan and was an officer‑in‑charge of the Banking Company. It is stated by the Official Liquidator that the amount of the two cheques were credited to the petitioner's current account No. 1539 on 21‑4‑64. The entry for Rs. 41,400 bears a remark "By Clearing", and the entry for Rs. 29,280 bears a remark "By Transfer". The relative credit vouchers dated 21‑4‑1964 indicate that Rs. 41,400 representing the proceeds of cheque No. 217997 dated 20‑4‑64 after collection to clear it and the other sum of Rs. 29,280 represented the proceeds of the other cheque No. 2103607 dated 21‑4‑64 credited by debit to "Bill Discount Account" pending collection. A report from the repre sentative of the Official Liquidator at Khulna reveals that the cheque was also collected on 23‑4‑1964 and the proceeds thereof were adjusted against the aforesaid "Bill Discount Account". Thus the proceeds of both the cheques were credited to the petitioner's current Account. It is further stated by the Official Liquidator that the books of account and other papers, however, showed that on the same date a total sum of Rs. 70,680 was transferred to Current Account No. 1333 of R. N. Ghosh by debit to the petitioner's Account No. 1539 through Debit and Credit Vouchers passed under the signature of the then Manager of the Banking Company, Mr. D. L. Chatterjee. The official liquidator goes on to state that from the relevant vouchers it appears that the debit and credit entries were passed at the instance of said R. N. Ghosh who purports to have signed his name on the reverse of the two vouchers. There is no other record available with the Banking Company in this behalf. Thus it is claimed by the Official Liquidator that when the State Bank of Pakistan took over the affairs of the Banking Company on 28‑4‑64 as Special Officer, the said Current Account No. 1539 of the petitioner, Khandaker Faizur Rahman had a credit balance of Rs. 101.50 paisas. The amount being less than Rs. 250 it was paid to the creditor by a cheque dated 6‑1‑65 and the account was closed. The payment was made in accordance with the direction of the High Court dated 19‑12‑64 in terms of which 100 % payment was to be made to the creditors of the Banking Company whose account had credit balance up to Rs. 250. The Official Liquidator, therefore, claimed that it was not liable for the proceeds of the two cheques in question. Certified copies of the ledger entries in respect of Current Account Nos. 1539 and 1333 referred to above were annexed as Annexures "A" and ` B" to the counter affidavit.
With regard to the cash warrant for the amount of Rs. 11,400 it is stated that from the records it appears that a Cash Warrant No. 4127 dated 17‑4‑64 for the sum of Rs. 11,400 was purchased by the petitioner in favour of the Executive Engineer (C & B) Resource Division 11, Khulna but the money was not booked through the books of accounts of the Banking Company. The counterfoil of the cash warrant bears a remark of the then Manager to this effect : "Entry not passed to day". It is claimed that the cash warrant in question was not found outstanding in the books of the Banking Company when the State Bank of Pakistan took over its affairs as Special Officer appointed by this High Court and subsequently as Official Liquidator with effect from 10‑11‑64. It is stated in the counter‑affidavit that how the money was utilised or accounted for by the said Manager D. L. Chatterjee is not available on the records of the Banking Company. In the circumstances the Official Liquidator states that it is not liable for the amount of Rs. 11,400. The Official Liquidator further states that the petitioner Khondakar Faizur Rahman received the cheque of Rs. 101.50 paisa on 27‑2‑65. With regard to the affidavit of claim by the petitioner, the official liquidator states that on receiving the affidavit on 15‑3‑67 this deponent referred the matter to the representative of the Official Liquidator who was working as the Incharge of the Banking Company at Khulna for report and while the claims of the petitioner were being examined by this official liquidator the petitioner served a copy of this petition and summons on 12‑4‑67.
The respondent No. 3 Rabindra Nath Ghose entered appear ance on 9‑6‑67 and filed a counter‑affidavit. The case of this respondent is that on 17‑4‑64 this respondent No. 3 and the petitioner instructed the Manager Southern Bank Limited, Khulna to prepare a cash warrant for Rs. 11,400 only, and accordingly the cash warrant No. 4127 was prepared but the same was not delivered as no payment could be made for want of fund. Thereafter the respondent No. 3 and the petitioner approached the said Manager on 19‑5‑64 and made him understand that in the absence of the said cash warrant formal tender for carriage of cement and M. S. rod from Resource Godown, Daulatpur to C & B building Division, Rajshahi could not be submitted as a result of which no payment would be received by them before the Eid and their position would be precarious before their labourers. The respondent No. 3 and the petitioner also assured the Manager that the payment would be made by 30‑4‑64. Accordingly the Manager delivered the said cash warrant for Rs. 11,400 to the petitioner, who submitted the said cash warrant to the office of the Executive Engineer, Building Resources Division along with the formal tender the said formal tender was passed by the Executive Engineer on 20‑4‑64 and on the same date the first running bill was passed and cheque No. 212987 for Rs. 41,400 only was issued on 21‑4‑6 t, the second running bill was passed for the said job and cheque No. 213607 for Rs. 29,280 was issued. On 21‑4‑64 both the respondent No. 3 and the petitioner went to the said Southern Bank Limited for making payment of the said sum of Rs. 11,400 and learnt that the business of the Bank was suspended under order of the High Court and Manager of the said Bank was also found absent ; hence payment could not be made. It is claimed by the respondent No. 3 that all other cash warrants were purchased by him in the name of the petitioner by debiting money from Current Account No 1333. With regard to the two cheques the case of respondent No. 3 is that the respon dent No. 3 and the petitioner had a partnership business and for the convenience of works the alleged two cheques were transferred to the account of the respondent No. 3 under instruc tion from the petitioner and out of the said amount two fixed deposit receipts of Rs. 20,000 each were purchased in the name of Mr. Keya Rani Ghosh wife of the respondent No. 3 from the same Southern Bank Limited on the same date i.e. 21‑4‑64 within the knowledge of the petitioner and the rest was withdrawn on different dates for making payment at the work site as well as to pay the petitioner to meet his Eid expenses. It is further stated by respondent No. 3 that the petitioner had been enlisted as a first class Contractor under C & B Building Directorate but he had no money to secure and execute work and the petitioner had approached the respondent No. 3 and requested him to invest his money in contract business. Accordingly an oral partnership was formed between the petitioner and respondent No. 3 on 1‑12‑63 for securing and executing works under C & B Building and Resources Divisions, Khulna. It was agreed upon between the petitioner and respondent No. 3 that the business would be run in the name of the petitioner and the entire capital would be provided by respondent No. 3. Accordingly respondent No. 3 started advancing money and as per previous agreement the payments were received from the Government in the name of the petitioner and the profit was divided between the petitioner and the respondent No. 3 in equal shares after paying back the money advanced by respondent No. 3. It is further stated that the cheques were received from the C & B Office by the petitioner and sometimes the respondent No. 3 used to receive cheques from the C & B Office. For the convenience of the execution of works sometimes the petitioner transferred money from the account of respondent No. 3 to his account and sometimes the respondent No. 3 also transferred money from the account of the petitioner to his account. The case of respondent No. 3 further is that after the closing of the Southern Bank Limited the petitioner opened an account with the United Bank Limited, Khulna. Some cheques were encashed with the said Bank the major portion of which were transferred either by bearer cheque or by Account payee cheques to the account of respondent No. 3. On 2nd June 1964, another account was opened by the petitioner with the Commerce Bank Limited, Khulna being Account No. R‑17 and on the same date the petitioner applied for an overdraft of Rs. 13,000 against the two fixed deposit receipts of Rs. 20,000 each of Mrs. Keya Rani Ghosh wife of respondent No. 3 made in the Southern Bank Limited, Khulna on 21‑4‑64 and the said overdraft was granted to the petitioner and he drew the money. Thereafter on 4‑7‑64 the petitioner drew two cheques for Rs. 45,000 each one in favour of the petitioner and the other in favour of the respondent No. 3 and each of them purchased a fixed deposit of Rs. 45,000 from the Commerce Bank Limited. On 21‑7‑64 the petitioner and the respondent No. 3 required a sum of Rs. 1,10,00) for executing works and the sum was secured by overdraft against which the said two fixed deposits of Rs. 45,C03 each was kept in security. The profit of this transac tion was also shared by the respondent No. 3 and the petitioner. There were other transactions jointly carried out by the partners till 10‑3‑65 when the partnership was dissolved by a deed of agreement dated 10‑3‑65 by both the petitioner and respondent No. 3 in which they clearly admitted that they had already received money of their respective shares and it was also admitted that out of Rs. 55,000 on account of pending bills the respondent No. 3 will get Rs. 15,000 only but the said amount had not yet been paid by the petitioner. The respondent No. 3 alleges that pursuant to a demand by respondent No. 3 for the said sum of Rs. 15,000 the petitioner has made this fictitious claim involving the respondent No. 3.
An attempt was made to secure the presence of Dhirajlal Chaterjee, the ex‑Manager, Southern Bank Limited but it trans pires from the Peon's report that the said Dhirajlal Chaterjee had left for Hindustan two to four months before the date on which the summons were sought to be served on him.
The petitioner has examined himself only in support of his case. The Official Liquidator has examined one Mr. M. 1. Siddiky who took charge of the Bank at Khulna on, 24‑6‑64 as D. W. 1. He has also examined Md. Idris an officer f the State Bank of Pakistan who was incharge of Southern Bank Ltd. The cashier of the Southern Bank Ltd. Amal Kumar Bhadra has also been examined as D. W. 3. The respondent No. 3 Rabindranath Ghose has given evidence as D. W. 4.
The petitioner has reiterated the statement that he has made in the petition. He has proved Exh. 1 and the letter which he received in December 1964, and his case is that on receipt of the letter he asked the Officer‑in‑charge of the Bank why his balance was shown as only Rs. 101.50 paisa and he was told by the Officer‑in‑charge that as the State Bank had suspended the opera tion of the Bank so his cheques were not cleared and he would be informed later on. He further stated that on receipt of the cheque for Rs. 101.50 paisa he was told that the sum represented the balance due to him as on 28‑4‑64 and that his name would be entered in the creditors' list when the said two cheques were cashed. He has produced the said cheque for the sum of Rs. 101.50 paisas which has been marked as Exh. 2. He produced two cash warrants Exh. 3 dated 8‑2‑64 and Exh. 4 dated 17‑2‑64. Exh. 3 is for a sum of Rs. 2,200 only for which the Bank paid 50 % on 20‑2‑67, and the payment against Exh. 4 which is for a sum of Rs. 11,400 was refused. He states that he got Exh. 4 on 17‑4‑64 and he paid for it. He states that Amal Bhadra D. W. 3 told him that the money of the two cheques were transferred in the name of R. N. Ghose. After learning this he saw the liquidation officer at Dacca and also at Khulna. He alleges that this person told him that there was no final list prepared when it would be done he would be informed. He has stated that he did not authorise Southern Bank nor R. N. Ghose regarding the transfer of the amount of the two cheques. He admits that he transferred to R. N. Ghose's account by 2 or 3 letters to the Managers Southern Bank for the purpose. He further states that after writing a letter of authority to the Bank he went to the Bank within 15 to 20 days and the Manager told him on one occasion it was a heavy amount so he has signed the transfer voucher. He admits that he transferred a sum of Rs. 45,000 on 12‑2‑64 to R. N. Ghose by a cheque. He further admits that on 9‑3‑64 he transferred a sum of Rs. 45,541 to R. N. Ghose by a letter of authority and that he subsequently signed the voucher also. On 2‑4‑64 he admits that he bad transferred an amount of Rs. 6,000 to R. N. Ghose by a letter of authority. For the first time in Court he admits that he took R. N. Ghose as his partner. He said that they both carried out the work and they used to invest money and work together. On 10‑3‑65 he admits that the partnership was resolved. This dissolution is admitted by him to have been made by a deed of dissolution. He admits that there were other transactions with R. N. Ghose through the Commerce Bank and states that every transfer made by him was by means of cheque in the Commerce Bank.
In cross‑examination by Mr. Islam for the Official Liquidator the witness states that the joint work was in the name of the witness but Mr. Ghose and he worked jointly in different places. He admits that he purchased some cash warrants from Southern Bank Ltd. and states that he paid every time except on one occasion, which was done by Mr. R. N. Ghose. When confronted with the question that the Bank record shows that all the cash warrants that were purchased in his name were purchased from his account by debiting from his account, he states that instruction might have been there.
When further questioned that excepting the said sum of Rs. 11,400 all other cash warrants had been purchased by debiting from his accounts he answers that he does not remember exactly. So far as the tender of this cash warrants for Rs. 11,400 his case is that he submitted the same along with the cash warrants for Rs. 2,200 and the Bank Officers paid 50 % of the cash warrant for Rs. 2,200 but did not accept the cash warrant for Rs. 11,400 and returned the same to him. The Official Liquidator then suggested that he did not tender the cash warrant for Rs. 11,400 on the same date as that for Rs. 2,200. He denied the suggestion. So far as the two cheques were concerned he admitted that these cheques were issued by the Executive Engineer in connection with the partnership business but were in his name. He said that he came to learn for the first time from Amal Bhadra at the end of the year, 1966 when he went to enquire about the cash warrant of its. 11,400 that the amount of these cheques had been transferred to the account of Mr. R. N. Ghose. He reiterated that whenever transfers were made from his account all were made against letters and instructions. On one occasion he admitted that an amount was transferred by letter of authority and when he went to the Bank after 15 or 20 days the Bank authorities took another signature on the transfer voucher as it was a heavy amount. Various transfer vouchers were produced by the official Liquidator and put to the witness and he admitted these transfer vouchers. The Official Liquidator finally suggested that this was a false claim based on the fact that the transfer vouchers did not contain his signature. On cross‑examination by Mr. K. M. Sobhan for respondent No. 3 the witness reiterated that all transfers were made by letter of instructions and admits that he has not got a copy of any of these written instructions. He admits that for purchasing a cash warrant one has to fill up the forms but does not remember whether he applied for the cash warrant of Rs. 2,200 dated 8‑2‑64. He admits Exh. G a document by which the partnership was dissolved but only says that the date 1‑12‑63 as referred to in paragraph 1 was not mentioned in his copy and that it was a later insertion. He says that the signature in Exh. 1 is definitely his signature and admits the signature of Rabin Ghosh and of the others and states that all the signatures were known to him and all the signatures wer,2 given in his presence. He admits that excepting the date 1‑12‑63 occurring in paragraph 1 of Exh. G he did not dispute the contents of the deed, He admits that an account was opened iii Commerce Bank Limited on 2‑4‑64 and he took overdrafts of Rs. 1,10,000 by letter dated 21‑7‑54. As security for the said overdraft he admits that he deposited two fixed deposit certificates of Rs. 45,000 each. One in his own name and the other in the name of Rabin Ghosh. He also admitted that against another overdraft of Rs. 13,000 he had placed a fixed deposit certificate of Mrs. Keya Rani Ghosh for Rs. 20,000. Mrs. Keya Rani Ghosh is the wife of Mr. R. N. Ghosh. He admits that along with other…
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