K N RAMAKRISHNA AIYAR Vs. OFFICIAL LIQUIDATOR

JUDGEMENT

(1.) The applicant is a creditor of the company which is being wound up. The Official Liquidator refused to place him in the list of preferential creditors and the object of this application is to obtain an order that he should be treated as such preferential creditor.

(2.) The ground upon which preference is claimed is that a sum of Rs. 140 was paid by the applicant to the company in circumstances which created a trust, the company being the trustee and the applicant the cestui que trust.

(3.) The applicant was the assignee of a policy of insurance issued by the company in respect of which about two years premia were in arrears and the policy had lapsed. After correspondence passing between the applicant and the company, Exs. P. 1 to P. 5, in which the company stated that upon payment of the amount of the premia in arrear amounting to Rs. 140 and a medical certificate being supplied in respect of the person insured by the policy, this would be revived. On the 20 June, 1940, the applicant sent a cheque for Rs. 140 to the company to meet the amount of the premia unpaid. The company acknowledged payment on the 16 July, 1940, stating that the medical certificate had not been forthcoming, but upon its receipt, it would consider revival of the policy and meanwhile, the sum of Rs. 140 was placed in the suspense account involving no risk to the company. In fact, the company did not place it in any account named "suspense", but in an account called "advance premium receipt account". Within a few days of payment, the liquidation of the company commenced and no further step was taken in regard to the policy or its revival.