HARNAM SINGH GANDHIOK v. MANAK SINGH — 1965 DIGILAW 33 (DEL)

S. K. Kapur ( 1 ) HARNAM Singh Gandhiok, defendant No. 1, borrowed Rs. 20, 000. 00 from the Rawalpindi Branch of the Traders Bank Ltd. , defendant No. 2, and executed a demand promissory note for the said amount. Defendant No. 1 also agreed to pay interest on the amount at the rate of 7 per cent per annum with half-yearly rests. The liability was acknowledged by Harnam Singh on 12th of July 1948 by his letters Exhibits P. 3 and P. 4. After adjustment of Rs. 690. 00 credited by the Traders Bank Ltd. , Defendant No. 2 to the account of Harnam Singh, Defendant No. 1 and of Rs. 10/6/6 debited to him on account of Bank charges a sum of Rs 19, 320/6/6 was due by the defendant No. 1 to the Bank. The plaintiff alleged that on the 5th of July 1952 the Traders Bank Ltd. transferred the aforesaid note to the plaintiff at Delhi for consideration. He claimed to be a holder in due course of the said promissory note. In these circumstances the plaintiff filed a suit for recovery of Rs. 24, 265/10/4 together with future interest at the rate of 4 per cent per annum till realisation. The trial Court by judgment dated 18th March 1955 granted the plaintiff a decree for Rs. 20,079/2/4. ( 2 ) THE only ground that has been urged before us on behalf of the appellant is that the suit was barred by time. It is common ground between the parties that the suit would be within time only if Traders Bank Ltd. defendant No. 2 is shown to be a displaced person. That h stated to be so because the plaintiff is an assignee from defendant No. 2 and the benefit of section 36 of the Displaced Persons (Debts Adjustment) Act, 1951, would be available only if the assignor was a displaced person. The plaintiff claimed that the suit was within time because of section 36 of the Displaced Persons (Debts Adjustment) Act, 1951. The plaintiff claimed that the suit was within time because of section 36 of the Displaced Persons (Debts Adjustment) Act, 1951. Section 36 inter alia provides that, notwithstanding anything contained in the Indian Limitation Act, 1908 or in any special or local law or in any agreement, any suit or other legal proceeding in respect whereof the period of limitation was extended by section 8 of the Displaced Persons (Institution of Suits) Act, 1948 (Act XLVII of 1948) may be instituted at any time within one year from the commencement of the Act. The suit was admittedly brought within one year of the commencement of the said Act. The only question, therefore, to be considered is whether the suit is one in respect whereof the period of limitation was extended by section 8 of Act 47 of 1948. As we have said earlier it is not disputed that in case the Traders Bank Ltd. , defendant No. 2 is held to be a displaced person, the suit would be within time. ( 3 ) WE, therefore, proceed to consider whether the Traders Bank Ltd. , defendant No. 2 has baen rightly held to be a displaced person by the trial Court. Mr. G. S. Vohra learned counsel for the appellant submits that a Bank cannot be held to be a displaced person within the meaning of the Displaced Persons (Debts Adjustment) Act, 1951, because displaced Bank is separately defined by sub-section (7) of section 2 and is treated as a separate category from a displaced person as defined in sub-section (10) of section. 2 of the said Act. In our opinion this question does not arise at all in this case. All that we have to decide is whether the suit is one in respect whereof the period of limitation was extended by section 8 of the Displaced persons (Institution of Suits) Act 1948. The answer to the question will, therefore, depend on whether or not the Traders Bank Ltd. is held to be a displaced person within the meaning of Act 47 of 1948. The answer to the question will, therefore, depend on whether or not the Traders Bank Ltd. is held to be a displaced person within the meaning of Act 47 of 1948. Section 8 of Act 47 of 1948, as amended by the Displaced Persons (Institution of Suits and legal Proceedings) Amendment Act, 1950, is in the following terms- "notwithstanding anything contained in section 3 of the Indian Limitation Act, 1908 (IX of 1908), or in any special or local law, any suit or other legal proceeding by a displaced person- (a) Where such suit or other legal proceeding instituted is in pursuance of section 4 and the pericd of limitation expires or has expired on or after the 14th day of August, 1947; or (b) where such suit or other legal proceeding is instituted otherwise than in pursuance of section 4 in respect of a cause of action which arises or has arisen in a place now situate within the territories of Pakistan and the period of limitation expires after the commencement of the Displaced Persons (Institution of Suits and Legal Proceedings) Amendment Act, 1950; May beinstituted at anytime before the date of expiry of this Act. "since defendant No. 1 is admittedly a displaced person the present suit cannot be said to have been instituted in pursuance of section 4 of Act 47 of 1948. It would, however, be admittedly covered by section 8 (b) if Traders Bank Ltd. defendant No. 2, is held to be a displaced person as defined by displaced Persons (Institution af Suits) Act, 1948. ( 4 ) MR. Vohra then contends that Traders Bank Ltd. defandant No 2 cannot claim to be a displaced person even within the meaning of Act 47 of 1948. He submits that the resolution for shifting of the registered office was passed by the Traders Bank in May 1947 but till June 3, 1947, there was no certainty about the partition of the country into the two Dominions. According to the learned counsel, the case set up by the plaintiff was that the Traders Bank Ltd. hid shifted on account of setting up of the Dominion of India and Pakistan, but that could not have been possible in May 1947 at all. We do not agree. According to the learned counsel, the case set up by the plaintiff was that the Traders Bank Ltd. hid shifted on account of setting up of the Dominion of India and Pakistan, but that could not have been possible in May 1947 at all. We do not agree. The very definition of a displaced person recognises the shifiting after 1st of March 1947 on account of setting up of the Dominions of India and Pakistan. The law makers must have been conscious of the fact that in March 1947 people started visualising the partition of the countary and shifting to places which were expected to fall on this side of the border. We are unable to agree with the learned counsel for the appellant that the words "after the first day of March 1947" in section 3 of Act 47 of 1948 can not be read with " on account of setting up of the Dominions of India and Pakistan " and must be confined to the words " on accouat of civil disturbances or fear of such disturbances. " That would be rewriting the section which is not the function of the Court. Moreover history shows that in May 1947 the partition of the country was almost a certainty. We have then to consider whether. or not the plaintiff has succeeded in establishing the status of defendant No. 2 as displaced person. What is it that determines the residence of a company ? Those controlling the management of the company are treated as company s " brains" and where ever the brain functions, there resides the company. The Courts look behind the facade of the company and its place of incorporation to deteramine its residence. The location of registered office is not conclusive, but is only one of the factors to be taken into consideration. For determining the residence of a company, the test laid down has long been the place of its " central management and control. " It has not been disputed that the central management and control was in Lahore till May 1947. The evidence of Lachhmi Narain P. W. 1. and Shiv Raj P. W. 3. shows that after May 1947 the place of its central management and control is shifted to Delhi on account of partition. " It has not been disputed that the central management and control was in Lahore till May 1947. The evidence of Lachhmi Narain P. W. 1. and Shiv Raj P. W. 3. shows that after May 1947 the place of its central management and control is shifted to Delhi on account of partition. It has thus been established that defendant No. 2 has been displaced from or has left its place of residence in Lahore, after 1st March 1947, on account of setting up of the Dominions of India and Pakistan and has subsequently been residing in India. The Traders Bank Ltd. , defendant No. 2, must, therefore, be held to be a displaced person. ( 5 ) MR. Vohra then submits that the reasons given in the resolution of the general meeting passed on the 17th of May 1947 and in the application made to the High Court for transfer of registered office from Lahore to Delhi were different and the transfer was not sought on. th" ground that the change was necessitated on account of the partition of the country. He further submits that that resolution and copy of the application having been kept back, a presumption should be drawn against the respondent. According to Mr. Vohra the reasons for transfer of registered office having been recorded in writing in the said resolution and the petition made to the High Court, no oral evidence could, in view of section 92 of the Indian Eviedence Act, be led to show that the real reason for the transfer of registered office was different. We need not go into this question for the simple reason that we have to decide about the location, not of the registred office, but of the residence of the company. The evidence on the record show that the residence of the company was shifted from Lahore to Delhi after 1st of March 1947. Th3 fact that the registered office was also transferred lends further support to the arguments of the respondent that after the transfer of the registered office the management and control was also located in India. ( 6 ) IN the result the suit cannot be held barred by time. No other point having been pressed the appeal must fail and is dismissed, but there will be no order as to costs. Grover J.- I agree.