IN RE: TRAVANCORE NATIONAL AND QUILON BANK LTD (IN LIQUIDATION); MODERN AUTOMOBILES BY PROPRIETOR R G PATEL Vs. TRAVANCORE NATIONAL AND QUILON BANK LTD(IN LIQUIDATION) BY OFFICIAL LIQIDATORS

JUDGEMENT

(1.) This is an application by one Mr. Patel the proprietor of Modern Automobiles carrying on business at Bombay for payment of two sums, Rs. 1500 and Rs. 433- 2-0. The case for the applicant is that he was a customer of the Bombay branch of the Travancore National and Quilon Bank Ltd. and had a current account with them, that he delivered on 16 June 1938 a cheque bearing the said date for Rs. 1500, drawn in his favour on the Anderson branch of the bank at Madras and another cheque for a sum of Rs. 433-2-0 drawn in his favour on the same branch for realisation and credit in his current account, that according to the course of dealings he had with the bank he could draw on the said bank only after the said amounts were realised and intimation thereof had been given to him, that before he received any such intimation the bank suspended payment and therefore the said moneys realised by the bank must be held to be moneys held in trust for him and he is therefore entitled to rank as a preferential creditor in respect thereof. The receipt of the cheques by the Bombay branch of the bank and the realisation of the said cheques by the Anderson branch of the bank are admitted by the Officials Liquidators. The sum of Rs. 1500 in respect of the cheque dated 16th June 1938 was realised by the Anderson branch on 18 June 1938 and the sum of Rs. 438-2-0 in respect of the second cheque was realised on 20 June 1938 before the bank suspended payment. There are two paying in slips Exs A and A-1 evidencing the payment of cheques to the Bombay branch of the bank. They indicate that the said cheques were paid in to the credit of the Modern Automobiles in current account. There are certain rules framed by the bank in regard to the current account and two rules appear to be relevant in regard to the cheques in question. Rule 10 runs thus: Cheques, drafts, etc., (either local or mofussil) on other banks received after 1 P.M. (on Saturdays 11-30 A.M.) will not be sent for collection until the following business day and should accordingly be drawn against only after they are realised.

(2.) Rule 12 says: It must be distinctly understood that though entries may have been made to the credit of an account and initialled for in the pass-book, should such credits be made up of cheques which have to ho collected, they are not available for drawing against until it has been ascertained that the proceeds have been realised by the bank.

(3.) Mr. Gopalaratnam appearing for the applicant examined Mr. Patel. He deposed that he was receiving advice notes in regard to the amounts realised in respect of cheques delivered to the bank from time to time. He also filed his pass-book which contains the rules on which the relationship between him and bank in regard to these cheques was regulated. The question that arises is whether in respect of moneys realised by the Anderson branch in respect of these cheques the relationship of debtor and creditor was established between the bank and the applicant. From the paying in slips it is clear thut the moneys were intended to be credited into the current account and therefore, the relationship intended to be established between the applicant and the bank was that of a debtor and creditor. On the date on which the applicant paid the cheques into the bank it cannot be said that such a relationship arose because he was not allowed to draw on those cheques except according to the provisions contained in Rr: 10 and 12. It does not appear from the evidence when the cheques were delivered at the Bombay branch, that is, whether it was after 1 P.M. or before that hour. But it appears that those cheques were despatched on the very day to the Anderson brunch at Madras and realised by them immediately in the ordinary course of business. Under Section 12 those cheques were not available for drawing until it was ascertained that the proceeds had been realised by the bank. The question is, can it be said that it has been ascertained that the proceeds have been realised by tho bank? The receipt by the Anderson branch at Madras of these sums on the respective dates must be held to be receipts by the bank and the proceeds must be said to have been realized by the Bombay branch of the bank on the respective dates. In Mackersy V/s. Ramsays 57 R.R. 183 one Maekersy had an account with the firm of Ram says. He delivered a draft dated 10 February 1832 drawn in his favour on a firm in Calcutta requesting the firm of Ramsays to realize the proceeds of the cheque and place them to his credit. Ramsays delivered this bill to Coutts & Co. requesting them to forward it to their agents at Calcutta for realisation. Coutts & Co. sent that bill to their correspondents Alexander & Co. at Calcutta who realized the proceeds of the bill but failed to remit the amount to Coutts & Co. and subsequently became bankrupt. The question that arose in that case was whether Maekersy was entitled to have credit for the amount realized by Alexander & Co. in spite of their bankruptcy and when it could be said that the proceeds should be deemed to have been realized to the credit of Maekersy.