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TMI Blog1937 (8) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by him. The position taken up on behalf of these creditors and urged before me arises from the following circumstances. All of them were employees of the bank. As a condition for obtaining employment, either the employees themselves or some person on their behalf paid to the bank a sum of money by way of what was called security deposit in respect of the employment of the employees. That was a sum which was paid to the bank, as a gesture of honesty and by way of security for their faithful and honest service whilst in the employment of the bank. There can be no doubt that the moneys paid by or on behalf of these employee creditors were paid for the purpose and under the circumstances I have mentioned. When the bank advertised for employ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehaviour, recourse being had only by the bank when they were justified in looking to the employee to recoup themselves in respect of losses sustained by reason of some default or act by the employee. Interest was payable upon these moneys and in one case at least was paid. It is contended on behalf of the Official Liquidator that since there was an agreement by which interest was payable, the moneys paid as security deposit cannot be the subject of a trust and reliance was placed to support that proposition upon the decision in Arbuthnot Co. v. Sabapathy Mudaliar [1912, 23 M.L.J. 221] the head note of which is as follows: " ..the amount paid in by the employee of the insolvent company and held in fixed deposit by the latter in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement to pay interest is concerned, in In re Fazalbhai Mills Ltd. [38 Bom. L. R. 542] Kania, J., at page 552 says : "It was next pointed out on behalf of the liquidator that the payment of interest and the fact that in the interval the fund was intended to be used by the company indicate that there was no fiduciary relationship but that the company stood in the position of a debtor only. In support of that contention reliance was placed on the decision in In Re Maneckji Petit Manufacturing Company [1932] 34 Bom. L.R. 728. The question in that case was about the deposit made by the selling agents of a mill as security for the due discharge of the terms of the agency agreement. The company bound itself to pay interest on the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ency Towns Insolvency Act shall apply to companies' winding up. Section 52(1) of the Presidency Towns Insolvency Act provides that the property of the insolvent divisible amongst his creditors shall not comprise "(2) property held by the insolvent on trust for any other person". That means property at the date, so far as the company is concerned, of its winding up held by the company on trust. It does not mean that moneys which have been entirely dissipated are to be deemed to be held on trust, but if the assets of the company can be traced showing the existence of trust property, then the creditors are entitled to rely upon the provisions of Section 52 ( i )( a ) of the Presidency Towns Insolvency Act. The question of tracing trust monies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he payments made by the depositors in respect of the employees' employment to the bank were trust moneys and that trust money can be followed so as to reach assets of the bank from whatever source they might come being clearly laid down, the tracing of assets in that way is the proper principle of law to apply in regard in these matters. The result is that the claims made by the creditors I have enumerated will be allowed. There is one other point with which I desire to deal. It is this. Two of the creditors No. 7 arid 35 having deposited moneys with the bank by way of fixed deposit, a few days later wrote letters to the bank purporting to grant to the bank a lien on the amount of deposit in respect of the employment of employees. Althoug ..... X X X X Extracts X X X X X X X X Extracts X X X X
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