IN RE: TRAVANCORE NATIONAL AND QUILON BANK LTD (IN LIQUIDATION); SIR T DESIKACHARI, TRUSTEES, EAST TANJORE ELECTRIC SUPPLY CORPORATION LTD EMPLOYEES PROVIDENT FUND INSTITUTION Vs. JAMES VOCE PIRRIE AND CYRILGILL

JUDGEMENT

(1.) This is an application on behalf of East Tanjore Electric Supply Corporation Ltd., Employees Provident Fund Institution, Trichinopoly, hereinafter called the Corporation, for the payment of a sum of Rs. 500 in preference to the ordinary creditors of the Travancore National and Quilon Bank, hereinafter called the Bank. The ground on which the application is made is that the said amount is the provident fund moneys of the employees of the Corporation standing to the credit of the Savings Bank Account No. 489-8 in the Trichinopoly branch of the Bank and therefore trust money and that the Bank was aware of this fact. The contention is thus put in para. 5 of the affidavit in support of the application: I am also advised that under Section 282-B(2), Companies Act, 1913, all moneys contributed to the Provident Fund shall be invested only in securities mentioned in Clause (a) to (e) of Section 20, Trusts Act, 1882. I say therefore that this amount of Rs. 500 is trust property which has come into the hands of the Travancore National and Quilon Bank Ltd., with notice of the trust and inconsistently with the trust. I say therefore that the bank having received the money wrongfully and in breach of trust is itself a trustee for the amount and the amount still continues to be trust money in its hands.

(2.) The Official Liquidator of the Bank in his reply states that the Bank did not receive the sum of Rs. 500 wrongfully of knowingly in breach of any trust. He further submits as follows in para. 4 of his affidavit: In any event, a reference to the said Section 282-B(2) will show that the trustees were entitled to deposit the said funds in Bank to accumulate the same for the purpose of investing such accumulations annually in the securities referred to in Section 20, Trusts Act, 1882.

(3.) The rules in regard to the investment of Provident Fund moneys which the Bank may be said to be aware of in so far as they are material to this application are Rules 10 and 11, which run thus: 10. All moneys paid to the trustees or otherwise coming into their hands in connexion with the Fund shall be forthwith paid into an account or accounts to be opened in the names of the Trustees with a Bank or Banks approved by the committee. 11. All moneys of the Fund not immediately required for the purpose thereof shall be invested in the name of the trustees in such securities as are specified in Section 282-B, Indian Companies Act, 1913, as determined by the Committee from time to time.