FIRST NATIONAL BANK LTD. Vs. PIONEER COMMERCIAL BANK

JUDGEMENT

(1.) THIS is a suit for a declaration that the defendant bank, which is now in liquidation, holds a sum of Rs. 27,875/ - being the amount collected by it on 3 bills of that value as agent or trustee for the plaintiff, for a decree for Rs. 27,875/ - for injunction and for other ancillary reliefs.

(2.) ON November 6, 1946, the plaintiff sent, by a letter of that date, a bill for Rs. 10,225/ - to the Champadanga branch of the defendant bank for collection and for sending the proceeds by a 'Lahore Draft'. On November 12, 1946, and November 13, 1946, the plaintiff similarly sent two bills for Rs. 8825/ - and Rs. 8825/ - respectively with similar instructions to the said branch of the defendant bank. On November 19, 1946, the Manager of the plaintiff bank asking for information as to what has happened to the bills, the said branch of the, defendant bank sent three drafts to the plaintiff drawn on November 26, 1946 on its head office in Calcutta for Rs. 10,225/ -, Rs. 8,825/ - and Rs. 8,825/ - respectively. It is not disputed that the said branch of the defendant bank realised the proceeds of the 3 bills from the drawees. The said drafts were sent by the plaintiff to the Central Bank of India for realisation. They were presented for payment to the head office of the defendant bank but were not paid. On November 26, 1946, the head office of the defendant bank wrote to the plaintiff that they had received payment from their said branch office but they were unable to pay, as payments have boon suspended by the High Court. The Central Bank returned the drafts to the plaintiff whereupon it wrote to the defendant asking for reasons for nonpayment. The defendant bank replied that its business has been suspended by the High Court Under Section 153 of the Indian Companies Act. 2. It appears that on November 25, 1946, an application was presented to this Court by the defendant bank for a scheme of arrangement Under Section 153 of the Indian Companies Act. On that date, on the undertaking of the directors not to withdraw any money they had in the bank and not to transfer their shares in the bank, directions were given for convening meetings of the shareholders and of the creditors and until the final determination of the application or until further orders of the Court, the commencement and/or continuation of all suits and proceedings both civil and criminal against the defendant bank were stayed. In spite of the said order, the drafts were drawn on the next day, that is, November 26, 1947.

(3.) ON March 12, 1947, this suit was filed. On behalf of the Official Liquidator a written statement has been filed, disputing that the defendant company held the proceeds of the said 3 bills as trustee or agent.