KUSH DAN KHAN KABULI Vs. OFFICIAL ASSIGNEE

JUDGEMENT

(1.) This is an appeal from an order passed by the Official Assignee. The official Assignee ruled that a sum of Rs. 900, admittedly the appellant's money, which at the date of the insolvency was in the hands of the insolvent, could be regarded as an unsecured claim only. The appellant's case is that this money was the subject of a trust and under Section 52, Presidency Towns Insolvency Act, was not divisible among the creditors. Several authorities have been cited before me. These naturally have been of assistance, but in this case there is not in my view any question of principle involved which has not been clearly dealt with by this High Court and the Privy Council. All I have to do is to ascertain the facts and to apply to them the principle of law applicable. In this case it is most important to consider what exactly happened in the proceedings previous to this appeal. The Official Assignee was appointed interim receiver on 8 January 1934 and the insolvent firm were adjudicated on 13 March. The money involved, namely Rs. 900, was entrusted to the insolvent in currency notes on 22 November, 1933 and it should be noted that this was the only transaction (I use that word for lack of a better) which the appellant had with the insolvent. The order of the Official Assignee in this case is dated 9 February 1935 and no evidence was called on either Bide. I am quite satisfied why that was so. It was because before the Official Assignee there was no contest with regard to the facts and this case was adjudicated by the Official Assignee on the basis that the facts so far, as they appear from the documents, were true. Before me, & clerk of the Official Assignee was called to explain the books of the insolvent. On 26 January the appellant put in his claim and the endorsement on the back of it is as follows: Letter dated 22 November, 1933 showing that the insolvent company have received Rs. 900 in Anamath. The letter will be produced at the time when the Official Assignee admits the claim of the claimant.

(2.) The appellant understands only Hindustani and not Tamil or English. The letter mentioned above is Ex. A. It is a receipt given by the insolvent to the appellant and it recites "the amount received from self in cash with instructions to keep in suspense (anamath)- Rs. 900." It is written in Tamil. On 6 February 1935 Mr. S. Ramachandran, the appellant's advocate, wrote a letter to the Official Assignee setting out the facts on which he relied. I would set out the letter in full: My client Kushdan Khan Kabuli, No. 50 Abdul Hafiz Sahib Street, Choolai, Madras, is a petty hawker having no definite place of residence at Madras. As he used to be in the Masjid near the business premises of the above insolvent and being afraid of the chance of losing the collections he made, he entrusted a sum of Rs. 900, with the insolvent firm on 22 November, 1933 for safe custody. My client had confidence in the honesty of the insolvent's firm, and the said amount of Rs. 900 was entrusted to him on trust and for safe custody. As evidencing the receipt of the sum of Rs. 900 from my client the insolvent firm gave him a letter stating that the amount of Rs. 900 paid by my client is held in suspense. My client states that there was no relation of creditor and debtor between my client and the insolvent firm at any time, and there was no prior or subsequent dealings between my client and the firm either in selling and purchasing goods or in lending and borrowing moneys, so as to raise any presumption of relationship of debtor and creditor between my client and the insolvent firm. The entries in the insolvents accounts- ledger No. 26, p. 53, fully support the claim of my client, Srimukha Karthiga 7 : (Received Rs. 900 to be kept in suspense). In the daybook of the firm the entry is to the same effect. The insolvent seems to have mixed up the trust money along with his own money and my client is entitled to follow it and claim the full amount. In re Hallett's case (1880) 13 Ch D 696. The amount was given by my client to the firm in a fiduciary capacity and there was no stipulation for payment of interest on the amount. Under the law the person whose money is held in suspense is entitled to withdraw it at any moment he likes, and the firm is a trustee for the claim amount in respect of Rs. 900 entrusted to them for safe custody. It is therefore necessary that you will pay Rs. 900 in full to my client out of the estate of Cawder Hussain Sahib & Co.

(3.) It will be seen that the appellant is a kabuli petty hawker without any residence in Madras and as he used to sleep in a mosque, he feared he might; lose his collections, that is, the sum of Rs. 900, and so entrusted them with the insolvent firm for safe custody because he said he had confidence in the insolvent firm. The amount was entrusted to them for safe custody and evidencing the receipt, the insolvent gave him a letter stating that the amount is held in suspense. There was no question of interest being paid and there was no question of any dealings. The Official Assignee by his Advocate, Mr. K.S. Rajagopala Iyengar, at first argued that the result was the insolvent was entitled to use that money in his own business and the argument proceeded on that basis. I took the view and still take the view that this money was handed over for safe custody and that the insolvent firm were in a fiduciary capacity to the appellant; and Mr. Rajagopala Iyengar stated as follows: I admit that if A leaves money with B on terms that B is to keep the money apart for A, then it would be in a fiduciary capacity.