TMI Blog1963 (7) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... ixed deposit receipt, stamped, signed and discharged on the back of exhibit P-11, and a delivery letter and an instruction letter similar to exhibits P-9 and P-10 respectively. The material words of exhibits P-9 and P-10, marked by way of illustration, read as follows: Exhibit P-9: " Please take delivery of your.... Branch Fixed Deposit Receipt No.... dated....for Rs.....favouring....which has been duly discharged by me/us and hold it as security for an advance of Rs...... which I/We request you to grant to me/us. On maturity the proceeds of the above Fixed Deposit Receipt should be credited to my/our Loan account with you." Exhibit P-10: "With reference to your Fixed Deposit Receipt No......dated..... for Rs. . . . which I have discharged and delivered to you to be held as security for Demand Loan No. . . . . granted to me by you on . . . . kindly credit all interest on the above deposit receipt as and when it accrues to my Demand Loan Account No. . . . . This letter cancels any previous instructions I may have given regarding disposal of interest earned on my above Fixed Deposit Receipt." The sole question for determination in the appeal is whether the appellant is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... insisted that Barnett Company should pay the debt of 88 before the goods were delivered up to them, and that they should prove for the whole sum of 3,010 against the bankrupt's estate. The court held that Barnett Company were entitled to have the sum of 88 set off against their claim, so as to free the goods from the lien, and to prove for the balance against the bankrupt's estate. Lord Selborne L.C. referred to section 39 of the Bankruptcy Act, 1869: "39. Where there have been mutual credits, mutual debts, or other mutual dealings between-the bankrupt and any other person proving or claiming to prove a debt under his bankruptcy, an account shall be taken of what is due from the one party to the other in respect of such mutual dealings, and the sum due from the one party shall be set off against any sum due from the other party, and the balance of such account, and no more, shall be claimed or paid on either side respectively ; but a person shall not be entitled under this section to claim the benefit of any set-off against the property of a bankrupt in any case where he had at the time of giving credit to the bankrupt notice of an act of bankruptcy committed by such ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the customer enter into an agreement (evidenced by the handing over of the fixed deposit receipt duly discharged and the delivery letter and instruction letter in the case of loans against fixed deposits, and by the lien letter in the case of loans against savings bank deposits) by which nothing is due or payable to the customer in respect of the deposit until he has repaid the loan. On the failure of the customer to repay the loan within the time stipulated, the bank is to repay itself from out of the proceeds of the deposit when the deposit becomes repayable. That time had not expired in the present cases when the winding up commenced, and, the loan remaining unpaid at the commencement, there was nothing due to the customer on the deposit to be set off against his loan. The bank is no doubt bound to adjust the proceeds of the deposit against the loan, but the proceeds are now only the dividends paid in the winding up and not the amount of the deposit itself." (Paragraph 22). It is not clear why the learned judge says: " on failure of the customer to repay the loan within the time stipulated." The loan to the appellant was not for any specific term and no time was fixed for its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eiver appointed in respect of the deposit, by way of security for the loan, holding the deposit in that capacity until the loan is repaid and bound to apply the proceeds of the deposit in discharge of the loan in case the loan is not repaid in time. The result is the same. The loan remaining unpaid at the commencement of the winding up, nothing is due upon the deposit to the customer and there is nothing to be set off against the loan taken by him." Analogies like this are based on approximations and afford no assistance in any process of analysis; and as pointed out by the learned judge himself "it is really not necessary to find a name for the position occupied by the bank in relation to the deposits." It will be clear from the extracts given above that the real foundation for denying the set-off claimed by the appellant is the judge's conclusion that nothing was due to the appellant in respect of his deposit at the commencement of the winding up. This is a conclusion to which we cannot subscribe. We find it equally impossible to endorse the alternative approach made in paragraph 27 of the order under appeal. The material portion of that paragraph reads as follows : "Even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d business no action could be taken. The question for decision was whether the plaintiff's debt had come to an end and he was a creditor to the extent of Rs. 2,000. Shadi Lal and Le Rossignol JJ. said : "The plaintiff's case is that on the 10th October, 1914, when the deposit of Rs. 4,000 fell due, his liability on the pronote came to end, and that he became a creditor to the extent of the balance. In answer to this case it is contended on behalf of the bank that the plaintiff is a creditor in respect of the entire amount of Rs. 4,000, that the loan taken by him on the pronote has not been discharged, and that he is liable to pay the same with interest at the stipulated rate. To obtain an adjudication upon the rights inter se of the parties the plaintiff brought the present action for a declaration that his liability on the pronote had come to an end " and: "There can be no manner of doubt that on the 10th October, 1914, when the deposit matured, the defendant bank was not entitled to call upon the plaintiff to pay the debt due on the pronote, considering that it had already in its possession Rs. 4,000 belonging to the plaintiff and payable to him at once. As observed already t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
