BANK OF INDIA v. VIJAY TRANSPORT & Ors.

Setting aside the Judgment and decrees of the Subordinate Judge, the High Court, in appeal, decreed the suit instituted by the appellant, but held that the Bank was entitled to recover the amount claimed by it, only after scaling down the debt in accordance with the provisions of the Andhra Pradesh (Andhra Area) Agriculturists Relief Act IV of 1938. In the appeal by special leave, it was submitted on behalf of the appellant-Bank that in view ofs. 4(e) of the Act, the provisions of the Act were not 11pplicable to the appellant-Bank and as such, it was entitled to recover the entire amount without the same being scaled down as pro vided in s. 13 of the Act, and that the words "special Indian Law" in s. 4{e) referred to and related to law made by an Indian Legislature. On behalf of the respondents, it was contended that the words "special Indian law" meant a special Indian Law enacted by the Parlia ment of the United Kingdom, that even assuming that the expression "special Indian law" meant a law enacted by the Indian Legislature and that the Banking Act was such a law, still the provision of s. 4{e) of the Act did not apply inasmuch as the appellant-Bank was not formed in pursuance· of "special Indian law", but by or under "special Indian law", that is, the Banking Companies Act, and as such, it was not a Corporation within the meaning of s. 4(e) of the Act, that as the appellant-Bank was nationalised and/or created under Ordinance VUI of 1969 promulgated on July 19, 1969 and the Banking Companies Act only ratified the already created bank under the said Ordinance, it was not formed or created under any 'special Indian Law' and that since a · major part of the loan was contracted before the nationalisation of the appellant Bank, the provision of s. 4(e) was not applicable, Allowing the appeal, A B c 0 IE F HELD: 1. The provisions of the Act are not applicable, to the appellant Bank, and there is no question of scaling down the debt due to the Bank by the respondents. [972E] G H In the instant case, the amounts of loan were advanced by the Bank to the firm under the cash-credit account opened in favour of the firm. Normally, the advances that are made from the cash-credit account are repaid and thereafter fresh advances are made. It is not known what was the actual balance on the date the Bank was nationali sed, and whether the first two amounts were repaid by the firm and, thereafter fresh advances were taken on the cash credit account. 1971B·D l BANK OF INDIA v. VUAY TRANSPORT 963

2.1 The Banking Companies Act is a special Indian law and the A provision of s. 4(e) Andhra Pradesh (Andhra Area) Act IV of 1938 is applicable to the appellant Bank. [969G I

2.2 In interpreting the words of the provision of a statute, while it may sometimes be necessary to take Into consideration the setting in which such words are placed, that is not the only and the surest method B of interpretation, and when such words convey a clear meaning, a different interpretation or meaning need not be given to them because of the setting. [9680] R.L. Arora v. State of Uttar Pradesh, [1964] 6 SCR 784, referred to. In the instant case the expression 'special Indian law' has a clear and unambiguous meaning. There is no reasonable justification to think that the expression must be an enactment of the. British Parliament since there were in existence Indian Legislatures, including a Legisla- ture at the Centre. [968E] Section 3(27)(a) of the General Clauses Act, as it stood on the day the Act was passed, defines 'Indian Law' as meaning any Indian law enacted by the Indian Legislature. The expression 'special Indian law' therefore, means a special Indian law enacted by the Indian Legis- lature. [968F-G] c D E Indian Bank, Alamuru v. Krishna Murthy, AIR 1983 Andhra Pradesh 347, over-ruled.

2.3 Inasmuch as the words 'any special Indian law' in s. 4(e) of the Act refer and relate to a law made by the Indian Legislature and not F by the British Parliament, the Banking Companies Act is quite legal and valid. [972C-D]

2.4 Theoretically, there may be a distinction between the words 'in pursuance of' and the words 'by or under' but by using the expres sion 'in pursuance of' iu s. 4(e), the Legislature has not meant that the G corporation, in question, should be formed by a third party in pur suance of the law and not by the law itself in order to come within the purview of s. 4(e) of the Act. The intention of the Legislature is very clear in that the provision of s. 4(e) would apply to a corporation which is the creature of a special Indian law, whether it is created in pur suance of or by or under the special Indian law. There is no difference H 964 SUPREME COURT REPORTS [ 1988) 1 S.C.R. A or distinction whatsoever between the corporation formed in pursuance of, and a corporation by or under a special Indian law. [969E·FI

2.5 An Ordinance is as much a law as an enactment of Parliament or Legislature. Therefore, it must be held that the bank was created under a special Indian law even assuming that the bank was created B under the Ordinance VIII of 1969 and not under the Banking Companies Act. It is also manifestly clear from sub-section (1) of section 3 of the Banking Companies Act which provides that on the commencement of the Banking Companies Act there shall be constituted such correspond· ing new Banks as are specified in the first Schedule, that the appellant· Bank, which is mentioned in the first Schedule, has been created under the provisions of the Banking Companies Act with effect from July 19, 1969. [970C, E-F] C