1. These are two execution applications for the execution of the decrees passed in two separate suits.
2. Two suits for the recovery of the amount of Rs. 25,1)00 and 20,000 respectively were filed on 24th August 1968, against the National Commercial Bank Ltd. In the Court of 7th Civil Judge Ist Class, Karachi. Subsequently an objection was taken that the bank had been ordered to be liquidated.
3. Consequentry the suits were withdrawn under Order VII, rule 10 and, therefore, the plaints were returned and subsequently presented in the High Court. Ex parte decrees were passed in both the suits. So the present execution applications had been filed.
4. These execution applications have been resisted on the ground that in view of the liquidation proceedings neither decree Iii those suits could be passed nor the present execution applications are maintainable.
5. Before proceeding to consider the merits of controversy it is necessary to point out certain facts.
6. The .National Commercial Bank was ordered by the High Court on 30th May 1968, to wind up In J.M.35/68 on the application of the State Bank under section 49 of the Banking Companies Ordinance, 1962. An official liquidator was appointed. The suits in the Court of the Civil Judge, Karachi filed from 31st July 1968, buut on the objection having been raised were withdrawn and fresh suits in the High Court were filed on 21st February 1969. Simultaneously, an application under section 171 of the Companies Act VII of 1913 was made and it was granted without notice on 31-3-69.
7. The decrees in those suits were passed on 5th March 1970. The present execution applications were made on 24th April 1971.
8. It has been urged by the learned counsel for the official liquidator that the Companies Act No. VII of 1913 was not applicable in the present case in view of the promulgation of the Banking Companies Ordinance, 1962, and, therefore neither any permission could be sought under section 171 of the Companies Act nor the suits were maintainable. But under the Ordinance an application had to be made under section 61 of the Ordinance to the High Court in the liquidation proceed--ings.
9. Looking into the provisions of the Ordinance although under section 2 of the Ordinance the application of the provisions of the Companies Act have not been barred but it is subject to any express provision made to the contrary in the Ordinance. Under section 49 of the Ordinance the High Court has been invested with the power to wind up the banking company. Section 61 of the Ordinance has given powers to the High Court to decide the claims in respect of Banking Companies. Section 62 makes provision for the transfer of the pending proceedings in the various Courts to the High Court. Section 63 relates to the Settlement of the list of debtors. Section 6,5 lays down that the documents of the banking Company to be treated as evidence. Section 72 provides right to appeal against an order or decision of the High Court, when the amount or value of the subject-matter of the claim exceeds Rs. 5,000. Section 73 provides special power of limitation for the filing of suit or application by a banking company which is being wound up. Section 78 relates to the enforcement of the order rind decision of the High Court. Section 79 empowers the High Court to frame rules but no such rules have yet been framed, I n respect of the present case section 61 is important and reads as under "Power of High Court to decide all claims in respect of banking companies.-The High Court shall, save as otherwise expressly provided in section 62, have exclusive jurisdiction to entertain and decide any claim made by or against a i,anking company wbicb is being wound up (including claim$ Ay or against any of its branches fn Pakistan) or any applica--- tion made under section 153 of the Companies Act, 1913 (VII of 1913), by or fn respect of a banking company or any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or raise in the course of the winding up of a banking company, whether such claim or question has arisen or arises or such applica-1 tion has been made or is made before or after the date of the order for the winding up of the banking company or before or after the commencement of this Ordinance"
10. It is clear from this section that the power to entertain and settle the claim, may be by or against a banking Company which is being wound up, has been exclusively conferred upon the High Court acting under the Ordinance and, therefore, not suit is maintainable. It is also clear from these provisions that) the application of the provisions of the Companies Act, 1913 ls'A also barred, and, therefore, the grant of permission under section 171 of the Companies Act could not improve the situation. Thus the suits which had been filed were not maintain--able and no decree could be passed in those suits. It, therefore, follows that the decrees are without jurisdiction and should be ignored. In this connection I may refer to the case of In re t Companies Act and Noakhall Union Bank Ltd. (In Liquidation) (1). In that case a suit was decreed by the Court of a subordinate Judge but in appeal the High Court set aside the decree and dismissed the suit with costs. An execution application was made by the Official Liquidator in the Liquidation proceedings for staying the execution of the decree on the basis of the provisions of section 61 of the Banking Companies Ordinance. It was held that the proceedings In the execution case were without jurisdiction. The relevant observation reads as under t "Such a proceeding is clearly barred by section 61 of the Ordinance which confers exclusive jurisdiction on the High Court to entertain a claim against a Banking Company which is pending proceedings as visualised in section 62 of the Ordinance which have however no application to this case. Therefore, I -have no hesitation to hold that the proceeding in the said '.:'money execution case is without jurisdiction and has no ellect "- _ whatsoever and is not binding on the Official Liquidator. `' It, is. However, open to this Court to make an order in respect '4~7 of costs clearly awarded against him by the High Court."
11. Of course in the above case the final order which was passed 'allowed the costs to be paid out of the assets of the company but It may be noted that in that case the application was made in the liquidation proceedings and, therefore, the High Court passed the order under the Banking Companies Ordinance. It may be said that the present proceeding be dealt with on the liquidation side but even that is not possible as I have held that the suits were not maintainable and the decrees which were passed were without jurisdiction.
12. Consequently the situation is quite different and the present execution application are not maintainable.
(I) PLD 1964 Dacca 742 In the alternative it was argued by the learned counsel for the official liquidator that even if it was presumed that the Companies Act was applicable yet section 171 of the Act required permission not only for the filing of the suit but other legal proceedings as well and the execution application being a legal proceeding a fresh sanction was to be obtained. Section 171 of th(z Companies Act reads as under i "When a winding-up order has been made (or a provisional liquidator has been appointed) no suit or other legal proceed. Ings shall be proceeded with or commenced against the company except by leave of the Court, and subject to such terms as the Court may impose."
13. This section clearly supports the contention raised by the learned counsel. In this connection reference may also be made to section 232 of the Act which lays down that where any company is being wound up by or subject to the supervision of the Court, any attachment, distress or execution put in force without leave of the Court against the estate or effects of the company after the commencement of the winding up shall be void. Consequently no step can be taken for the recovery of the amount without prior permission by the Court and no such permission has been sought in the present case. The underlying principle is that the property remains vested in the company but the liquidator is only trustee for the benefit of all the creditors and, therefore, one creditor cannot be placed at an advantageous position and permitted to derive the benefit to the exclusion of other creditors. So when the permission is required the Court considers the claims of all the creditors an orders the distribution of the assets of the company as may be deemed fit and possible. No creditor can be permitted to have priority over the other. In this I am fortified by the case of Oriental Inland Steam Company ex parte Scinde Railway Company (1). In that case although one creditor had been able to obtain possession of part of the assets of the company in an execution proceeding held abroad but this was not permitted and it was held that the assets must be distributed in England upon the footing of equality. In this connection it was further observed that no doubt winding differs from bankruptcy in this respect that in bankruptcy the whole estate, both legal and beneficial is taken out of the bankrupt, and is vested in his trustees or assignees, whereas in a winding-up the legal estate still remains in the company ; whereas the beneficial interest is taken out of the company. So that does in strictness constitute a trust for the benefit of all the creditors and no creditor can be allowed to have a larger share of the assets than any other creditor.
14. In the result, I dismiss the execution applications with no I order as to costs.
(1) 9 Ch. A 557