JESSA RAM FATEH CHAND Vs. OFFICIAL LIQUIDATORS

JUDGEMENT

(1.) This special appeal is directed against an order passed by Mootham, J., (as he then was) in exercise of company jurisdiction on the 2nd of January J.951. The facts involved in this case are very short. The appellants Messrs. R.B. Seth Jessa Ram Fateh Chand (hereinafter called the appellants) were appointed by an agreement dated the 18th of December, 1948, made between them and the respondent No. 2 the Vijay Lakshmi Sugar Mills Limited (hereinafter referred to as the mills), the sole selling agents of the Mills for one year upon the terms and subject to the conditions therein set out. In accordance with the terms of the agreement the appellants deposited with the Mills a sum of Rs. 50,000/- as security for the due performance of their obligation under that agreement. In 1949 the Mills went into voluntary liquidation and by an Order of this Court dated 8th November, 1949, the liquidation was directed to continue under the supervision of the Court. The appellants claimed the sum of Rs. 50,000/- deposited by them along with the stipulated interest at 6 per cent per annum from the liquid ators as also a sum of Rs. 24,500/- on account of commission on the sale of sugar, claiming priority over other creditors in respect of these two sums. Later on, however, the claim with respect io the sum of Rs. 24,500/- was abandoned by the appellants and the liquidators were concerned onty with the amount of Rs. 50,000/- along with the interest mentioned above. The controversy between the parties was in respect of the essential quality of the deposit of Rs, 50,000/-. It was contended on behalf of the appellants that it was in the nature of a trust whereas the position taken by the liquidators was that it was nothing more than, a debt and consequently there could be no question of any priority between the debtors inter se. The liquidators not having agreed to give priority to this amount, the matter was taken before the learned Company Jugde who on 2nd January, 1951, passed an order by which he held that this sum could not be treated to be anything other than a debt and consequently no question of priority arose. Dissatisfied with that order the appellants have filed the present appeal.

(2.) The only question involved in this special appeal is with regard to the essential nature of the deposit. Learned counsel have not addressed us on any other question, and in our judgment no other question arises. A large number of authorities have been brought to our notice by learned counsel for the parties in respect of their rival contentions. Before we advert to those authorities we think it proper to first deal with the question on first principles. The relevant paragraphs in the agreement are paragraphs 8 and 9 which read as follows :

(3.) Mr. Jagdish Swarup who has appeared for the appellants has strenuously contended that the mere payment of interest cannot be a conclusive consideration. We may straightway say that in all human transactions normally there rarely is a conclusive consideration but there are paramount considerations and it cannot be denied that the payment of interest, considering human nature and normal course of business, is a paramount consideration for determining whether or not a particular advance is a debt or a trust.