Banking Regulation Act, 1949  >  Section 45M

Section 45M of the Banking Regulation Act, 1949: Banking Companies Working Under Schemes of Arrangement

Section 45M forms part of the special provisions in the Banking Regulation Act, 1949 dealing with banking companies under arrangements that were already being worked when the Banking Companies (Amendment) Act, 1953 came into force. It gives the High Court limited powers, on an application by the banking company, to excuse delay in carrying out an existing compromise or arrangement or to permit settlement of the list of debtors under Section 45D.

In brief: Section 45M is a transitional and special provision. It applies to a banking company whose compromise or arrangement, sanctioned under the statutory provision referred to in Section 45M, was already being worked at the commencement of the Banking Companies (Amendment) Act, 1953.

Statutory Text of Section 45M

45M. Special provisions for banking companies working under schemes of arrangement at the commencement of the Amendment Act. Where any compromise or arrangement sanctioned in respect of a banking company under section 391 of the Companies Act, 1956 (1 of 1956), is being worked at the commencement of the Banking Companies (Amendment) Act, 1953 (52 of 1953), the High Court may, if it so thinks fit on the application of such banking company,-

(a) excuse any delay in carrying out any of the provisions of the compromise or arrangement; or

(b) allow the banking company to settle the list of its debtors in accordance with the provisions of Section 45D and in such a case, the provisions of the said section shall, as far as may be, apply to the banking company as they apply to a banking company which is being wound up as if the order sanctioning the compromise or arrangement were an order for the winding up of the banking company.

Current legal context: The text of Section 45M continues to contain its historical reference to Section 391 of the Companies Act, 1956. The Companies Act, 2013 now contains the general framework for compromises, arrangements and amalgamations in Sections 230 to 232. The wording of Section 45M should therefore be read as the statutory historical provision that it is; the current company-law framework should be consulted separately where a present-day arrangement is involved.

What Section 45M Means

The provision is not a general power for every banking-company restructuring. Its language is tied to schemes of compromise or arrangement that were already being worked when the 1953 Amendment Act commenced. In that narrow setting, the High Court may grant procedural relief to facilitate implementation of the existing arrangement.

1. Power to excuse delay

Clause (a) allows the High Court to excuse delay in carrying out a provision of the compromise or arrangement. The power is discretionary: the section uses the expression "may, if it so thinks fit".

2. Settlement of the list of debtors

Clause (b) permits the High Court to allow the banking company to settle its list of debtors in accordance with Section 45D of the Banking Regulation Act, 1949. When this course is allowed, Section 45D applies, so far as possible, as though the banking company were being wound up and the order sanctioning the compromise or arrangement were a winding-up order.

Essential Elements of Section 45M

Relationship With Other Provisions

Section 45M should be read with the surrounding provisions of Part IIIA of the Banking Regulation Act, particularly Section 45D, which deals with settlement of the list of debtors. The preceding Section 45L concerns public examination in relation to certain banking-company schemes, while Section 45N deals with appeals from specified High Court orders or decisions under the Act.

Legislative Note

The reference to Section 391 of the Companies Act, 1956 was substituted for the earlier reference to Section 153 of the Indian Companies Act, 1913 by Act 95 of 1956, with effect from 14 January 1957. This historical amendment explains why Section 45M refers to the 1956 Act even though the provision itself originated in the setting of the 1953 amendment to banking law.

Official References

For authoritative and current statutory material, consult the official India Code text of the Banking Regulation Act, 1949 and the Ministry of Corporate Affairs text of the Companies Act, 2013. This page is intended as an explanatory legal-information article and should be read with the official legislation.

India Code - Banking Regulation Act, 1949
Ministry of Corporate Affairs - Companies Act, 2013