IN RE: TRAVANCORE NATIONAL AND QUILON BANK LTD (IN LIQUIDATION); NAYAR MODERN BANK LTD Vs. JAMES VOCE PIRRIE, CYRIL GILL AND JOHN STANLEY GOODWIN(OFFICIAL LIQUIDATORS)

JUDGEMENT

(1.) This is an application by the Nayar Modern Bank for payment of a sum of Rs. 6500 standing to its credit in the Travancore National and Quilon Bank under three fixed deposits for Rs. 1000, Rs. 5000 and Rs. 500 respectively in preference to the ordinary creditors of the Bank. The basis of the claim is thus put in para. 2 of the affidavit of the Managing Director: Under the mandatory provisions of Section 282-B, Companies Act, the Nayar Modern Bank Ltd. has deposited with the Travancore National and Quilon Bank Ltd. a total amount of Rs. 6500 under three deposits (R. No. 96, dated 30 July 1937 for Rs. 1000, R. No. 6 of 1938 for Rs. 5000, date 15 January 1938 and R. No. 24-38 for Rs. 500, dated 21 February 1938) and in a separate account earmarked as Employees Cash Security. The Travancore National and Quilon Bank Ltd. has-accepted the deposit as the Nayar Modern Bank Ltd., Employee's Gash Security Deposit and such, acceptance is evidenced by the endorsements on the receipts themselves in red ink and the correspondence in relation to the transactions.

(2.) One of the Official Liquidators of the Travancore Bank in his counter-affidavit stated that the said amount of Rs. 6500 was deposited with the Bank for the purpose of earning interest thereon and that the Bank was requested to earmark the-said deposit as Employees Cash Security "which clearly meant (and could only mean) that the deposit receipts, were to be headed "Employees Cash Security" to distinguish them from the other several deposits or loans made by the same Bank against which the depositor arranged to obtain overdrafts." In para. 3 of his affidavit he further submitted as follows: The depositee Bank appears to have accepted all the said deposits as loans merely as banker for its customer in the ordinary course of its banking. business and issued the usual and ordinary customer's deposit receipts showing the sums therein acknowledged were debts due and payable to its customer twelve months after the respective dates-of deposit, carrying ordinary deposit interest at the rate of 4 per cent, per annum in the meanwhile. It does not appear that the depositee Bank, was asked to accept and it does not appear to have accepted the said sums or any of them as a trustee and none, of the three transactions are impressed with any trust.

(3.) The letters written by the Nayar Modern Bank at the time of the several deposits merely indicate that it was sending the moneys for a deposit and that they should be earmarked as Employees Cash Security. It is enough if I refer only to one such letter. On 30 July 1937 the Nayar Modern Bank sent a sum of Rs. 1000 for being placed as a fixed deposit and the letter which accompanied it ran thus: We are sending herewith the sum of Rs. 1000 which is to be placed as a fixed deposit for one year in our name and we request you to kindly grant us your usual receipt. The deposit is to be treated as one earmarked as our Employees Gash Security Deposit as per Section 282-B, Companies Act.