Tax Management India. Com
                        Law and Practice: A Digital eBook ...

Category of Documents

Latest Case Laws

TMI - Tax Management India. Com
Case Laws Acts Notifications Circulars Classification Forms Manuals SMS News Articles
Highlights
D. Forum
What's New

Share:      

        Home        
 

TMI Blog

Home List
← Previous Next →

1952 (3) TMI 46

filed by the Official Liquidator of the Puri Bank for recovery ,of an amount of ₹ 7988-5-0 from the defendant alleged to have been, due in respect of the current, mutual and open account No. 202 of the defendant in the Balasore Branch of the Puri Bank. The defendant was admittedly a person having a current account with the said branch of the Puri Bank. In addition to having a current account, he made certain fixed deposit's and was allowed overdraft facilities for double the amount thereof, on the security of the said deposits. The two fixed deposits are evidenced by Exts. B and B-1 and are for ₹ 2000/- each. Ext. B is dated 17-10-1944, and Ext. B-l is dated 21-9-45. That they were pledged as security for the overdraft account is evidenced by Ext. C dated 23-10-45. These facts are not disputed. The amount now sued for is what is due in respect of the said overdraft account with interest without any adjustment of the fixed deposit's. The defendant does not dispute the correctness of the principal amount shown in the account as having been advanced to him, nor does he dispute that the claim is in time. His defence is twofold: (1) That the interest should have been .....

X X X X X X X

Full Text of the Document

X X X X X X X

endant's evidence is to the following effect. The two fixed deposits evidenced by Exts B and B-1 covering ₹ 4,000/- and another fixed deposit of ₹ 1000/-which he had with the Bank of Calcutta, were all given as security for the overdraft account. in the Puri Bank which the defendant required for his business. He stopped his business in the year 1947. He received the demand Ext. K and wrote a letter to the Secretary of the Bank,, Ext. D dated 24-7-47 informing him that he cannot any longer run his business and requesting him to adjust his fixed deposits-against the overdraft accounts and to let him know what further money remained to be paid by him. To this he received a reply from the Secretary, Ext. D-1 of the same date, informing him that he was busy at the moment and would send him a reply in a few days. He therefore went in person to the Bank on 25-7-47. The Secretary attended to him and made the necessary adjustments between the overdraft account and the fixed deposits. The Secretary noted all the adjustments in the pass-book of the defendant relating to his overdraft account. The defendant also says (in cross-examination) that to the best of his recollection, .....

X X X X X X X

Full Text of the Document

X X X X X X X

endant and the fact that his case as to the retention of that pass-book by the bank has not been made out, and also in view of the fact that the fixed deposit receipts, Exts. B and B-1 do not bear any endorsements of discharge and the defendant has not made out his plea that Exts. B and B-1 are not the original receipts, I have come to the definite conclusion that the plea of adjustment as a fact raised by the defendant cannot be accepted as true. 12. The next question that arises is whether even if the adjustment pleaded is true, it is valid and binding. The two fixed deposits which were for three years each, matured admittedly on 7-8-1947, and 21-9-1948. The alleged date of adjustment is 25-7-47, i.e., clearly before the dates of maturity. It is the case of the plaintiff that the amounts payable under the fixed deposits were not available to be paid or adjusted before the maturity, except on the specific sanction of the Managing Director. He says so in his chief-examination. Though there has been some kind of cross-examination, on the point, it has not been specifically and clinchingly directed towards it. Neither side has called for or produced the rules of the Bank to show whet .....

X X X X X X X

Full Text of the Document

X X X X X X X

ollusive attempt to defeat the general body of creditors by a fraudulent preference. 14. I am therefore definitely of the opinion that the adjustment pleaded was not true as a fact and that even, if true, it is unauthorised and cannot be sanctioned by the Court. 15. The next question however remains as to whether or not in spite of the absence of any adjustment, the defendant is entitled to a set-off against his dues, for the amount due to him under the fixed deposit receipts, Exts. B and B-1. The defendant's advocate relies on Section 229, Companies Act read with Section 46, Provincial Insolvency Act. Section 229, Companies Act is as follows: "In the winding up of an insolvent company, the same rules shall prevail and be observed with regard to the respective rights of Secured and unsecured creditors and to debts provable and to the valuation of annuities and future and contingent liabilities as are in force for the time being under the law of insolvency with respect to the estates of persons adjudged insolvent; and all persons, who in any such case would be entitled to prove for and receive dividends out of the assets of the company may come in under the winding up, and .....

X X X X X X X

Full Text of the Document

X X X X X X X

between the plaintiff and the defendant in this case fall within the category of the phrase "mutual dealings" under Section 46, Provincial Insolvency Act. The leading case on the subject is - 'Rose v. Hart', (1813) 129 ER 477 (A) to be found also in the II Volume of Smith's Leading Cases, p. 271, 12th Edition. It would appear from a consideration of that case and the cases following the same, for instance 'Naoroji v. Chartered Bank of India', (1868) 3 C.P. 444 (B) and - 'Palmer v. Day', (1895) 2 QB 618 (C), that mutual credit or mutual dealings simply mean reciprocal demands which must be naturally terminated in a debt. There can be no doubt that with reference to I that test the present case must be taken to be one of mutual dealings between the parties, since there are reciprocal demands, which must I in the normal course terminate in a debt owing by one party to the other. The present is a Simple case which is not in any way complicated by considerations whether the debt on one side is an individual debt and on the other side either a joint debt or a debt in the representative capacity or of some other different character. See for instance, .....

X X X X X X X

Full Text of the Document

X X X X X X X

1818) 129 ER 477 (A)' requires is that there must be credits on each side, which must in their nature terminate in debts. On this principle, a delivery of properly with directions to turn it into money has been considered as a credit available for set off though in fact the property had not been so converted by the date of the bankruptcy. See - '(1895) 2 QB 618 (C). A future but ascertained debt cannot stand on a worse footing-. I can see therefore no reason for depriving the defendant of the equitable relief by way of set off in respect of the fixed deposits though in fact, the deposits had not matured. Indeed, it appears to me that the case in - 'Baker v. Lloyd's Bank Ltd.', (1920) 2 KB 322 (J) is a case where a set-off was allowed in respect of a debt which may be called a future debt by the relevant date. Similarly the case in -'Gibson v. Bell', (1835) 131 ER 1303 (K) and also the case in - 'Alsager v. Currie', (1843) 152 ER 1402 (L) would also on facts appear to be cases where the set-off was allowed in respect of debts which by the date of the bankruptcy must be considered to be future debts. I am therefore of the opinion that in the presen .....

X X X X X X X

Full Text of the Document

X X X X X X X

 

 

← Previous Next →

 

 

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || Database || Members || Refer Us ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.
|| Blog || Site Map - Recent || Site Map ||