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PETITIONER: BANK OF INDIA

       Vs.

RESPONDENT: VIJAY TRANSPORT AND OTHERS

DATE OF JUDGMENT11/11/1987

BENCH: DUTT, M.M. (J) BENCH: DUTT, M.M. (J) KANIA, M.H.

CITATION:  1988 AIR  151            1988 SCR  (1) 961  1988 SCC  Supl.   47     JT 1987 (4)   389  1987 SCALE  (2)1028  CITATOR INFO :  F          1989 SC2105  (3,4)

ACT:      Andhra Pradesh (Andhra Area) Agriculturists Relief Act, 1938: Sec.  4(e)-‘Debt’-Due to  Bank-Scaling down  of  debt- Whether permissible.      Banking  Companies   Act:  Validity  of-Act  whether  a special Indian law.      Statutory Interpretation:  Duty of court-To look at the setting in  which words  are used and circumstances in which the law came to be passed.

HEADNOTE: %      The appellant-Bank  filed a  suit  against  respondents including  respondent   firm  and  its  partners,  who  were agriculturists, for  recovery of  a sum  of  Rs.18,14,817.91 being balance  of three principal amounts severally advanced by the  Bank to  the firm under cash-credit account on three different dates.  The last  loan was  advanced by  the  Bank after its  nationalisation on July 7, 1969. The Bank alleged that, to  secure repayment  of the aforesaid amount of loan, in addition  to hypothecation  made in  its  favour  of  the properties in  ‘A’ and‘B’Schedules  of the plaint, equitable mortgage of properties in Schedule ‘C’, ‘D’ and ‘E’ was also created in  its favour by respondent No. 2, respondent No. 3 and his  deceased father.  The appellant-Bank prayed for the sale of  the said properties for the recovery of the amounts claimed by it.      The respondents,  including the  firm, and  Respondents No.4 to  12, who  were  alienees,  denied  creation  of  any equitable mortgage  in favour  of  the  appellant-Bank.  The respondent firm and its partners, namely, third respondent’s deceased father and the second respondent also filed counter claim against the appellant-Bank.      Dismissing the  suit against  respondent Nos. 4-12, the Subordinate  Judge  held  that  no  equitable  mortgage  was created in  favour of  the appellant-Bank and that the claim of   the   appellant-Bank,   except   to   the   extent   of Rs.1,00,418.55, was  barred by limitation. The counter claim against the Bank was decreed.

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962      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 of s. 4(e) of the Act, the  provisions of  the Act  were not applicable to the appellant-Bank and  as such,  it was entitled to recover the entire amount without the same being scaled down as provided 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 Parliament  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 VIII  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, ^      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]      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 nationalised, and whether the  first   two  amounts  were  repaid  by  the  firm  and, thereafter fresh  advances were  taken on  the  cash  credit account. [971B-D] 963      2.4 The  Banking Companies  Act is a special Indian law and the  provision of  s. 4(e)  Andhra Pradesh (Andhra Area) Act IV of 1938 is applicable to the appellant Bank.[969G]      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   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. [968D]      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

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existence Indian  Legislatures, including  a Legislatures 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 Legislature. [968F- G]      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  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 expression  ‘in pursuance  of’ in s. 4(e), the Legislature has not meant that the corporation, in question, should be  formed by  a third  party in pursuance 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 pursuance of or by or under the special Indian law. There is no difference 964      Or  distinction   whatsoever  between  the  corporation formed in  pursuance of,and  a corporation  by  or  under  a special Indian law. [969E-F]      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 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 corresponding new Banks as are specified in the  first   Schedule,  that  the  appellantBank,  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]      R.C. Cooper v. Union of India, AIR 1970 SC 564 and Life Insurance Corporation of India v. Kota Ramabrahmam, AIR 1977 SC 1704, referred to.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeal No. 465 of 1985.      From the  Judgment and  Order dated  20.9.1983  of  the Andhra Pradesh High Court in Appeal No. 858 of 1976.      G.  Ramaswamy,   Additional  Solicitor-General  and  P. H.Parekh for the Appellant.      T.V.S.N. Chari,  Ms. Vrinda  Grover,  Charanjeet,  V.D. Miracee and B.P. Maheshwari for the Respondents.      The Judgment of the Court was delivered by      DUTT, J.  This  appeal  by  special  leave  is  at  the instance of the appellant, the Bank of India, a nationalised Bank, and is directed against the judgment and decree of the Andhra Pradesh  High Court in so far as they direct that the appellant is  entitled to  recover the amounts claimed by it against the  respondent firm  only after the scaling down of the debt  in accordance  with the  provisions of  the Madras

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Agriculturists Relief  Act  IV  of  1938  which,  after  the creation of the State of Andhra Pradesh, was made applicable to  that   State  as   the  Andhra   Pradesh  (Andhra  Area) Agriculturists Relief  Act IV  of 1938, hereinafter referred to as ‘the Act’. 965      The appellant  Bank filed  a suit  being O.S. No. 12 of 1979 in  the Sub-Court,  Eluru, on February 10, 1975 against the  respondents  including  the  respondent  firm  and  its partners to  recover a  sum  of  Rs.18,14,817.91  being  the balance (inclusive  of interest)  of three principal amounts of Rs.3.00,000, Rs.7,00,000 and Rs.80,000 severally advanced by the  Bank to the firm under cash credit account on 28-11- 1967, 3-4-1968 and 17-2-1972 respectively. It may be noticed here that  the Bank  was nationalised  on July 7, 1969 under the  Banking   Companies  (Acquisition   and   Transfer   of Undertakings) Act V of 1970, hereinafter referred to as ‘the Banking Companies  Act’. The sum of Rs.80,000 was admittedly advanced  by   way  of   loan  by   the   Bank   after   its nationalisation.      The respondent  firm owns  certain motor vehicles which are mentioned  in A  and Schedules to the plaint of the said suit. The  firm was  carrying on  its business  at Madras as fleet owners  and gasolene  carriers. It  had two  partners, namely, one S. Doranna Choudhury, since deceased, the father of the  respondent No. 3 and the respondent No. 2, Sunkavali Rajlaxmi. The  case of  the Bank was that in addition to the hypothecation of  the A  and Schedule properties made in its favour to  secure the  repayment of the aforesaid amounts of loan, the  other partner,  the respondent  No. 2, created an equitable mortgage  in favour  of the  Bank on  December 22, 1969 in  respect of  C-Schedule properties of the plaint. S. Doranna Choudhury, since deceased, also created an equitable mortgage in  favour of  the Bank  on February  28,  1970  in respect  of   D-Schedule  properties   of  the  plaint.  The respondent No.3  also created  another equitable mortgage on September 6, 1974 in respect of E-Schedule properties of the plaint. The  respondents No.  4 to  12 are  alienees of  the mortgaged properties.  In the  suit the  Bank prayed for the sale of  the said properties for the recovery of the amounts claimed by  it on account of the loan together with interest due thereon.      The respondents  including the  firm contested the suit by  filing  written  statements,  inter  alia,  denying  the creation of  any equitable  mortgage by the deceased partner and the  respondents Nos.  2 &  3 in favour of the Bank. The respondents Nos.  4 to  12, the  alienees, while denying the creation of the mortgages contended that they were bona fide purchasers for valuable consideration and the Bank was bound by the alienations and transfers made in their favour of the properties alleged  to be  under mortgage.  The firm and its partners, namely, the said S. Doranna and the respondent No. 2 also  filed a  counter-claim against the Bank for a sum of Rs.34,48,799. It is not necessary for us to 966 state  in  details  the  respective  cases  of  the  parties including the  case of  the firm  and its partners in making the counter claim against the Bank, inasmuch as the scope of this appeal  is limited to the consideration of the question as to  whether the High Court was justified in decreeing the Bank’s claim  only after  the scaling  down of  the debt  in accordance with the provisions of the Act.      Be that  as it  may, the learned Subordinate Judge held that no equitable mortgage was created in favour of the Bank and, accordingly, dismissed the suit against the respondents

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Nos. 4  to 12  and refused  to direct sale of the properties alleged to  have been  mortgaged to  the Bank.  The  learned Subordinate Judge  also found  that the  claim of  the Bank, except to  the  extent  of  Rs.1,00,418.55,  was  barred  by limitation. The  counter-claim of  the firm and its partners for the  sum of  Rs.34,48,799 was  decreed and  the Bank was directed to pay the same to the firm and its partners.      Being dissatisfied  with the judgment and decree of the learned Subordinate  Judge, the  Bank preferred an appeal to the  High   Court.  The   High  Court,   after   elaborately considering the  facts and circumstances of the case and the evidence adduced  by the parties, set aside the judgment and decree of the learned Subordinate Judge including the decree allowing the  counter-claim of the firm and its partners and decreed the  suit instituted  by the  Bank. In decreeing the suit, the  High Court  held that  the Bank  was entitled  to recover the amount claimed by it only after the scaling down of the  debt in  accordance with  the provisions of the Act. Hence this appeal.      The  Act   contains  provisions   granting  reliefs  to indebted agriculturists.  One of  such reliefs  is  that  as contained in section 13 of the Act providing for the scaling down of  the debt  of an  agriculturist. It  is not disputed that the partners of the respondent firm are agriculturists.      Mr. G.  Ramaswamy, learned Additional Solicitor General appearing on  behalf of  the appellant Bank, submits that in view of  section 4(e)  of the Act, the provisions of the Act were not  applicable to  the Bank and, as such, the Bank was entitled to recover the entire amount without the same being scaled down as provided in section 13 of the Act. Before the High Court also the Bank placed reliance on the provision of section 4(e)  of the  Act, but  the High Court negatived the contention relying  upon a Division Bench decision in Indian Bank, Alamuru  v. Krishna  Murthy, AIR  1983 Andhra  Pradesh 347. We  shall presently  refer to that decision, but before we do that it is necessary to 967 refer to  the provision of section 4(e) of the Act, which is extracted below:-           "S.4. Nothing  in this  Act shall affect debts and           liabilities of  an agriculturist falling under the           following heads:-                ............................................                ............................................                ............................................                (e)  any liability  in respect of any sum due                     to any  cooperative society, including a                     land mortgage bank, registered or deemed                     to  be   registered  under   the  Andhra                     Pradesh   (Andhra   Area)   Co-operative                     Societies Act,  1932, or any debt due to                     any corporation  formed in  pursuance of                     an  Act  of  Parliament  of  the  United                     Kingdom or  of any special Indian law or                     Royal Charter or Letters Patent."      In view of section 4(e), the provisions of the Act will be inapplicable to any debt due to any corporation formed in pursuance of  an Act  of Parliament of the United Kingdom or any  special   Indian  law   or  Royal  Charter  or  Letters Patent.The question  is whether the Banking Companies Act by or under  which the  appellant Bank  was constituted,  is  a ‘special Indian  law’ or  not. It  is submitted on behalf of the Bank that the words ‘special Indian law’ in section 4(e) of the  Act refers  and relates  to law  made by  an  Indian Legislature. It  is not  disputed that the Banking Companies

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Act is a special law enacted by the Indian Parliament.      It has,  however, been  urged by  Mr. Mirasee,  learned Counsel appearing  on behalf  of the  respondents, that  the said  words  mean  a  special  Indian  law  enacted  by  the Parliament  of   the  United  Kingdom.  Indeed,  in  Krishna Murthy’s case  (supra), it  has  been  held  by  the  Andhra Pradesh High  Court that  section 4(e) while speaking of any special Indian  law, is  only speaking of special Indian law made by  the British  Parliament as  different from  any Act enacted  by   the  British   Parliament  that   might   have application to  India also  in common  with the  rest of the British colonies.  The learned Counsel, while placing strong reliance upon  the said interpretation of the words ‘special Indian law’  as made  in Krishna Murthy’s case (supra), also submits that  the expression  should be  interpreted in  the light of  the setting  of the  same  in  the  words  of  the provision of section 4(e). In support of the contention, the learned Counsel has drawn our attention to an obser- 968 vation made  by this  Court in  R.L. Arora v. State of Uttar Pradesh, [1964]  6 SCR  784 that a literal interpretation is not always  the only  interpretation of  a  provision  in  a statute and  the court  has to  look at the setting in which the words  are used  and the  circumstances in which the law came to  be passed  to decide  whether  there  is  something implicit behind  the words actually used which would control the literal  meaning of  the words  used. Accordingly, it is submitted by  the learned Counsel that as the words ‘special Indian law’ are placed after the words ‘an Act of Parliament of the  United Kingdom’  and before the words ‘Royal Charter or Letters  Patent’, it  must be held in view of the setting that the expression‘special Indian law’ refers or relates to a special  law enacted  by an  Act of British Parliament for India.      We are  unable to accept the contention. It may be that interpreting the  words of  the provision  of a statute, the setting in  which such  words are  placed may  be taken into consideration, but  that does  not mean that even though the words which  are to  be interpreted  convey a clear meaning, still a  different interpretation or meaning should be given to them  because of  the setting.  In other words, while the setting of  the words  may sometimes  be necessary  for  the interpretation of the words of the statute, but that has not been ruled  by this  Court to  be the  only and  the  surest method  of   interpretation.  In   the  instant   case,  the expression ‘special  Indian law’ has a clear and unambiguous meaning and  there is  no need for its interpretation. There is no  reasonable justification to think that the expression ‘special Indian  law’ must  be an  enactment of  the British Parliament. If, on the date the Act was passed, there was no Indian  Legislature,   such  an   interpretation  might   be justified,  but   when  there   were  existence   of  Indian Legislatures including a Legislature at the Centre, it would be quite  unreasonable to  think that  ‘special Indian  Law’ must be  a law  enacted by  the British  Parliament. In this connection, we  may refer to section 3(27)(a) of the General Clauses Act, 1897, which defined ‘Indian law’ as meaning any Indian law enacted by the Indian Legislature. In view of the said definition, the expression ‘special Indian law’ means a special Indian law enacted by the Indian Legislature. In the face of  the provision  of section  3(27)(a) of  the General Clauses Act,  as it  stood on the day the Act was passed, we do not think that there is any justification for laying down that the  expression ‘special Indian law’ in section 4(e) of the Act  means a  law  enacted  by  the  British  Parliament

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specially for India. We are, therefore, unable to accept the view of  the Andhra  Pradesh High  Court in Krishna Murthy’s case (supra) and also the contention of the respondents made in that regard, which is rejected. 969      The next  contention made  on behalf of the respondents is that  even assuming  that the  expression ‘special Indian law’ means  a law enacted by the Indian Legislature and that the Banking Companies Act is such a law, still the provision of section  4(e) of  the Act  will not apply inasmuch as the appellant Bank  was not  formed in pursuance of any ‘special Indian law’,  but by  or under  a ‘special Indian law’, that is, the Banking Companies Act. It is submitted that there is a good  deal of  distinction  between  the  formation  of  a corporation ‘in  pursuance of’  and ‘by or under’, a special Indian law.  It is  urged as  the appellant  Bank  has  been formed by  or under  and not  in pursuance  of  the  Banking companies Act. it is not a corporation within the meaning of section 4(e)  of the Act. In support of this contention, the respondents  have   placed  reliance   on  Krishna  Murthy’s decision where  it has  been observed  that  the  words  ‘in pursuance of’  refer to  the action  taken under the law and not by  the law  itself, and  that  the  phrase  ‘formed  in pursuance  of’  in  section  4(e)  signifies  a  process  of formation of  a corporation under the law and not by the law itself. Further,  it has  been observed  that the  words ‘in pursuance of’ can be said to have been used appropriately by the Legislature only to signify the activity or formation of a corporation  carried on  by an  intermediary  third  party acting  under  a  law  as  different  from  an  activity  of formation carried on by that law itself. We are afraid, such a narrow  and technical  interpretation  of  the  words  ‘in pursuance  of’   is  contrary   to  the   intention  of  the Legislature.  Although,   theoretically,  there   may  be  a distinction between  the words  ‘in pursuance  of’  and  the words ‘by  or  under’,  but  by  using  the  expression  ‘in pursuance of’  in  section  4(e)  the  Legislature,  in  our opinion, has  not meant  that the  corporation  in  question should be  formed by  a third  party in pursuance of the law and not  by the  law itself  in order  to  come  within  the purview of  section 4(e)  of the  Act. The  intention of the Legislature is  very clear  in that the provision of section 4(e) would apply to a corporation which is the creature of a special Indian law, whether it is created in pursuance of or by or  under the  special Indian law. There is no difference or distinction  whatsoever between the corporation formed in pursuance of  a special  Indian law and a corporation formed by or  under  a  special  Indian  law.  It  will  be  highly unreasonable and  illogical to  think that  as a corporation has been  formed by or under a special Indian law and not in pursuance of such a law, it will not come within the purview of section  4(e) of  the Act.  Accordingly, we hold that the Banking Companies  Act is  a  special  Indian  law  and  the provision of  section 4(e)  is applicable  to the  appellant Bank.      The learned  Counsel for  the respondents has drawn our atten- 970 tion to  the fact  that the  Banking Companies Act was first formed or  created by the Ordinance VIII of 1969 promulgated on July  19, 1969.  The Ordinance  was replaced by an Act of Parliament   being   Act   XXII   of   1969   with   certain modifications. This  Court, however  in R.C. Cooper v. Union of India,  AIR 1970  SC 564 struck down the Act XXII of 1969 as unconstitutional.  Thereafter, a  fresh  Ordinance  being

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Ordinance No.  III of  1970 was  promulgated on February 14, 1970 with  certain further  modifications  and,  thereafter, replaced  by  the  present  Banking  Companies  Act.  It  is submitted that as the appellant Bank was nationalised and/or created under the Ordinance VIII of 1969 promulgated on July 19, 1969 and the present Banking Companies Act only ratifies the already  created Bank  under  the  said  Ordinance,  the appellant Bank  was not,  therefore, formed or created under any special  Indian law.  This contention  is devoid  of any merit and  fit to  be rejected  on  the  face  of  it.  Even assuming that  the Bank was created under the Ordinance VIII of 1969  and not  under the  Banking Companies Act, still it must be held that it was created under a special Indian law, for an  ordinance is  as much  a  law  as  an  enactment  of Parliament or  Legislature. In  this connection, it may also be pointed  out that  under sub-section  (2) of section 1 of the Banking  Companies Act,  the provisions  of the  Banking Companies Act (except section 21 which shall come into force on the  appointed day)  shall be  deemed to  have come  into force on  July 19, 1969. Sub-section (1) of section 3 of the Banking Companies  Act provides  that on the commencement of the Banking  Companies Act,  there shall be constituted such corresponding new  Banks  as  are  specified  in  the  First Schedule.  Therefore,   it  is  manifestly  clear  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. The contention of the  respondents that  the Bank  has been nationalised or formed under  the Ordinance  VIII of  1969  is  without  any substance whatsoever and is rejected.      We may  refer to  a decision  of  this  Court  in  Life Insurance Corporation of India v. Kota Ramabrahmam, AIR 1977 SC 1704.  Gupta J.  while delivering  the  judgment  of  the Court,  observes   that  there   is  no   dispute  that  the corporation established under the Life Insurance Corporation Act, 1956  is a  corporation as contemplated by section 4(e) of the  Act. This  decision has been strongly relied upon by the respondents  in support  of their contention that as the major part  of the  loan, that  is to  say,  a  sum  of  Rs. 10,00,000, was  contracted before the nationalisation of the appellant  Bank,  the  provision  of  section  4(e)  is  not applicable. In  Life Insurance  Corporation’s case the loans were 971 advanced by  the Andhra  Insurance Company  of Masulipatanam and by  Nagpur Pioneer  Insurance Company  Limited,  Bombay, admittedly, before the creation of the Corporation under the Life Insurance Corporation Act, 1956 and it was held by this Court that  the debts due to the insurers in these two cases were liable  to  be  scaled  down  in  accordance  with  the provisions of the Act.      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 nationalised. It is true that in  the judgment  of the  High Court it has been stated that the  principal amounts  of Rs.3,00,000, Rs.7,00,000 and Rs.80,000 were  severally advanced  by the  Bank to the firm under the  cash credit  account on  28-11-1967, 3-4-1968 and 17-2-1972 respectively.  But, there  is no further statement whether the  first two  amounts were repaid by the firm and, thereafter, fresh advances were taken out of the cash credit account. The respondents did not advance any such contention

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either in  their written  statements  or  in  the  arguments before the  Trial Court  and the  High Court.  It is for the first time  before this  Court that such a plea is raised in the argument of the learned Counsel for the respondents. The contention involves  a question  of fact  which  has  to  be pleaded and  proved. In the absence of any such pleading, we are  unable  to  allow  the  respondents  to  raise  such  a contention for the first time in argument before this Court.      At this  stage,  it  may  be  stated  that  in  Krishna Murthy’s case (supra) it has been held by the Division Bench that the  latter part  of section 4(e) of the Act containing the words  ‘any  debt  due  to  any  Corporation  formed  in pursuance of  an Act  of Parliament of the United Kingdom or any special  Indian law  or Royal Charter or Letters Patent’ is  offensive   to  Article  14  of  the  Constitution  and, accordingly, void.  The learned  Counsel for the respondents submits that  in view  of the  decision in  Krishna Murthy’s case, this  Court should  declare the latter part of section 4(e) of  the Act  to be  void as offending Article 14 of the Constitution, although  no such point has ever been taken by the respondents  up to  this Court. On the other hand, it is submitted by  the learned  Additional Solicitor General that the said  finding of  the Division Bench in Krishna Murthy’s case to  the effect  that the latter part of section 4(e) of the Act is void, is erroneous.      The reasons  given by  the Division Bench of the Andhra Pradesh 972 High Court  in Krishna  Murthy’s case for holding the latter part of  section 4(e)  of the  Act as void, are that section 4(e) of  the Act was enacted to protect the British economic interests and  although such  a  law  could  permissibly  be enacted  under   the  Constitutional   Scheme  of  the  1953 Government of  India Act, that law after the inauguration of our Sovereign Democratic Republic cannot but be held to have become void  as making invidious discrimination in favour of the  British  Corporation  offending  against  the  equality clause  under   Article  14   of  the  Constitution.  Before declaring the same as void, the Division Bench took the view that the  words ‘any special Indian law’ could not have been intended to  refer to any law made by any Legislature of our country,  but   to  a  law  made  by  the  British  Imperial Parliament as  a piece  of special legislation applicable to India. It  has already  been discussed  by us that the words ‘any special Indian law’ refers and relates to a law made by the Indian Legislature and not by the British Parliament. In that view  of the  matter, the reasons given by the Division Bench for holding the latter part of section 4(e) to be void as making a discrimination in favour of corporations created by British Parliament, will not apply to corporations formed or created  by any  special Indian law which, in the instant case,  is   the  Banking  Companies  Act.  In  our  opinion, therefore, the  Banking Companies  Act is  quite  legal  and valid. No other point has been urged by either party in this appeal.      In view  of the discussion made above, we hold that the provisions of  the Act  are not  applicable to the appellant Bank and,  therefore, there  is no  question of scaling down the debt due to the Bank by the respondents.      For the  reasons aforesaid,  the judgment and decree of the High Court in so far as the same direct the scaling down of the  debts due  to the  Bank by  the respondents, are set aside. The  Bank will  be entitled  to  realise  the  amount decreed in  its favour by the High Court without any scaling down of the same under the provisions of the Act.

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    The appeal is allowed. There will, however, be no order as to costs in this Court. N.P.V.                                       Appeal allowed. 973