ALLAHABAD UNION BANK LTD Vs. JAGESHWAR PRASAD SHUKUL

JUDGEMENT

(1.) Mr. Jageshar Prasad Shukul states that the nature of the transaction between him and the bank was like this: Jageshar Prasad having some money to spare for investing in loans he handed over the money to the Union Bank and received a note-book in which it was stated that the money was for safe custody. As a matter of agreement and practice, however, Mr. Jageshar Prasad used to secure borrowers who would agree to pledge ornaments by way of security. The borrower was taken by Jageshar Prasad to the manager of the bank or he would go to the manager of the bank with a note from Mr. Jageshar Prasad. The ornament was kept by the bank by way of security and money was advanced on an interest of 12% per annum. Out of this interest Jageshar Prasad used to get 9% and the bank 3%. No money of Jageshar Prasad used to be lent out by the bank without any security of ornaments. Similarly when a man came to redeem his ornaments he would either take Jageshar Prasad to the bank or take a note of his to the manager of the bank and on payment the ornament would be released.

(2.) Mr. Harendra Krishna <JGN>Mukerji</JGN> , Official Liquidator states that this is a correct representation of the transaction. Mr. Jageshar Prasad and Mr. <JGN>Mukerji</JGN> are also agreed that in the pass book given to Mr. Shukul the book numbers of transactions by which money was lent on security of ornaments used to be noted and afterwards a slip of paper used to be given to Mr. Jageshar Prasad on which Were entered the particulars of the transactions of the loans entered into on his behalf by the bank.

(3.) The question under the circumstances is whether Mr. Shukul is to be treated as a secured creditor or whether he should rank as an ordinary creditor of the bank.