TRAVANCORE BANK LTD Vs. ABRAHAM

JUDGEMENT

(1.) The company which was known by the name of the Travancore Trade Agencies Ltd., had its place of business in Trivandrum. On the application of one of the creditors that company was ordered to be wound up. Then three creditors filed C.M.Ps. 6057 dated 18.12.1950, 6151 dated 21.12.1950 and 856 dated 20.2.1951 for treating them as preferential creditors. One branch of business conducted by the Trade Agencies Ltd., related to the supply of Hudson Cars. These cars were being directly imported by the Rayala Corporation, and the Trade Agencies were canvassing orders for those cars as the agents of Rayala Corporation. It was stated by the three petitioners that they had entrusted the Travancore Agencies Ltd., with the necessary amount for the purchase of Hudson Cars, that the Trade Agencies did not send the money to the Rayala Corporation, that neither the Corporation nor the company supplied cars to these petitioners, that the company therefore committed breach of trust in respect of these amounts, that subsequently small portions of those were returned, that in this affair the Trade Agencies Ltd., were only trustees for the three petitioners and that therefore the amount due to them should be paid out of the assets of the Trade Agencies Ltd., hereafter described as the company. Two other creditors of the company were the Travancore Bank Ltd., and the Indian Bank Ltd. These two banks had already instituted suits against the company for the amounts due to them. They opposed the preferential claim put forward by the three petitioners.

(2.) The court below held that the three petitioners were entitled to get preferential payment of the debts due to them from the company. Against this order the Travancore Bank Ltd. has filed appeal; suit Nos. 627 to 629 of 1951 and the Indian Bank Ltd. has filed A.S. 722 of 1951. The respondents in A.S. 627, 628 and 629 are respectively the petitioners in C.M.P. Nos. 6151, 856 and 6067 of 1951. The Indian Bank Ltd. has filed a consolidated appeal A.S. 722 of 1951 and the three petitioners mentioned above are the respondents in that case. These four cases were heard together as the question raised in all the appeals was the same.

(3.) Before considering the legal relationship between the company and the three petitioners, it would be proper to mention the circumstances under which they advanced the amounts. These three petitioners stand on the same footing. The letters which passed between the company and the petitioner in C.M.P. 6151 had been exhibited in the case as Exts. A to C. It was stated that similar letters had also passed between the company and the other two petitioners. Ext. A is the earliest of these letters. It is dated 2nd January 1948. It is from the company to the petitioner in C.M.P. 6151. It was mentioned there that the companys principals Messrs. Rayala Corporation, Madras had informed them that regular consignment of Hudson Cars could be expected from the beginning of February 1948, that the said corporation had booked orders for 15 cars to be delivered by about April of that year, that the full payment for each car along with the name of the party was to be sent to the companys principals who would advise each party when the car was ready for delivery, that the petitioner was therefore to send in the further sum of Rs. 9,000 so that the total advance would be Rs. 12,000/- that the petitioners number in their register would be 12, that five cars had already been supplied to the customers and that the amount should be sent before the 10th of that month. This letter would clearly indicate that the company was acting on behalf of foreign principals and those principals were the Rayala Corporation, Madras. In Ext. B letter of 29th April 1948, the company informed the petitioner that the companys principals had informed them that they expected to give them Hudson 1948 Model Cars by the first week of April 1948, that the cars would be received in Madras before the 20th of April 1948 and that the company should be informed whether the petitioner wanted to take delivery of the car at Madras or at Kottayam. Ext. C dated 20th May 1948 is another letter to the petitioner from the company intimating that delivery of 1948 Model Cars was expected by the middle of June 1948, that the petitioners brother had requested the Managing Director to give a definite date regarding either delivery of the car or the refund of the money (advance) viz. Rs. 12,000, that in case the car could not be delivered by the 20th of June 1948, arrangements would be made for the immediate return of the money, that the company was sorry for the inconvenience that had been caused owing to unavoidable circumstances and financial difficulties and that arrangements were being made for the delivery of the car within the period mentioned.