Section 42 of the Banking Regulation Act, 1949: Power to dispense with meetings of creditors

Section 42 forms part of Part III of the Banking Regulation Act, 1949, which deals with suspension of business and winding up of banking companies. It gives the High Court a limited procedural power to dispense with meetings of creditors or contributories where holding such meetings would cause delay and expense without securing a sufficient useful purpose.

Updated: 13 September 2026

Text of Section 42

42. Power to dispense with meetings of creditors, etc. - Notwithstanding anything to the contrary contained in section 460 of the Companies Act, 1956 (1 of 1956), the High Court may, in the proceedings for winding up a banking company, dispense with any meetings of creditors or contributories if it considers that no object will be secured thereby sufficient to justify the delay and expense.

Current-law note: The official India Code text of Section 42 continues to contain the historical reference to section 460 of the Companies Act, 1956. The Companies Act, 1956 has since been repealed by section 465 of the Companies Act, 2013, subject to statutory savings. The wording above follows the current official text of the Banking Regulation Act rather than substituting a different provision.

Meaning and scope of Section 42

The expression "notwithstanding anything to the contrary" is a non-obstante clause. Within the field covered by Section 42, it gives the special banking winding-up provision overriding effect over the contrary requirement referred to in the section.

The power is discretionary. The High Court may dispense with a meeting only when, in the circumstances of the winding-up proceedings, it considers that holding the meeting would not achieve an object important enough to justify the resulting delay and expense.

Who is the "High Court" for this Part?

Section 36B of the Banking Regulation Act defines the High Court, for Part III and Part IIIA, by reference to the place where the banking company's registered office is situated. For a banking company incorporated outside India, the relevant place is where its principal place of business in India is situated.

What are creditors and contributories?

A creditor is a person or entity to whom the banking company owes a legally enforceable debt or claim. A contributory, in company winding-up law, broadly refers to a person liable to contribute to the assets of the company in the event of winding up, subject to the applicable company-law framework.

Key points under Section 42

The provision applies in proceedings for winding up a banking company.
The power is vested in the High Court identified under Section 36B.
The Court may dispense with meetings of creditors, contributories, or both.
The statutory test focuses on whether a useful object would be achieved sufficient to justify delay and expense.
The provision is intended to avoid unnecessary procedural steps in bank winding-up proceedings while leaving the decision to judicial discretion.

Legislative history noted in the Act

Act 95 of 1956 substituted the earlier reference to sections 178A and 183 of the Indian Companies Act, 1913, with effect from 14 January 1957.
Act 1 of 1984 substituted the reference so that the provision referred to section 460 of the Companies Act, 1956, with effect from 15 February 1984.
Act 52 of 1953 substituted the expression "High Court" for "Court", with effect from 30 December 1953.
Act 1 of 1984 omitted the words relating to appointment of a committee of inspection, with effect from 15 February 1984.

Related provisions

Section 42 should be read in the context of the surrounding winding-up provisions, including Section 41 - preliminary report by official liquidator, Section 41A - notice to preferential claimants and secured and unsecured creditors, and Section 43 - booked depositors' credits to be deemed proved.