1960 (2) TMI 33 - HC - Companies Law

Summary

Issues Involved:
1. Set-off claimed by the defendant.
2. Validity of the assignment of the fixed deposit.
3. Effect of the court's moratorium order and scheme on the defendant's right to set-off.
4. Payment and credit of cheques to the defendant's overdraft account.

Issue-wise Detailed Analysis:

1. Set-off claimed by the defendant:
The defendant claimed a set-off for various amounts, including a fixed deposit of Rs. 12,000 assigned by Sri Gadadhar Thakuria and several cheques sent to the plaintiff bank. The trial court allowed set-off for Rs. 3,746-3-9 and Rs. 920-7-3 but refused the other amounts. The court below held that the defendant could only get credit for amounts due until June 23, 1950, due to a scheme sanctioned by the High Court, which would prevent preferential payment to some creditors over others.

2. Validity of the assignment of the fixed deposit:
The defendant argued that the assignment of the fixed deposit of Rs. 12,000 by Sri Gadadhar Thakuria was valid and should be credited to his overdraft account. The bank contended that the assignment was invalid due to a moratorium order under section 37 of the Indian Banking Companies Act, which prohibited payments to creditors. The court found that the letters sent by Thakuria constituted a valid assignment under section 130 of the Transfer of Property Act, making the defendant a creditor of the bank for Rs. 12,000 from August 12, 1950.

3. Effect of the court's moratorium order and scheme on the defendant's right to set-off:
The court examined the moratorium order dated June 26, 1950, which stayed actions against the bank but did not prohibit book adjustments or payments up to 25% of the debt. The order was rescinded on August 31, 1950, and a scheme under section 153 of the Indian Companies Act was sanctioned on April 19, 1951. The court held that the defendant's right to claim a set-off was not affected by the scheme as the assignment was valid and the defendant became a creditor before the scheme's sanction.

4. Payment and credit of cheques to the defendant's overdraft account:
The defendant sent several cheques to the bank on August 12, 1950, requesting credit to his overdraft account. The bank returned these cheques on September 21, 1954, without crediting the amounts. The court found that the cheques, drawn by other customers of the bank, had sufficient funds and should have been credited to the defendant's account. The court held that the cheques amounted to payment by the defendant and the bank's refusal to credit these amounts was unjustified.

Conclusion:
The appeal was allowed, and the defendant was entitled to a set-off for the fixed deposit of Rs. 12,000 and the amounts of the cheques. The plaintiff's suit was dismissed, and the parties were ordered to bear their own costs throughout.