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TMI Blog1952 (3) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 calculated at 71/2 per cent and not at 9 per cent as has been claimed in the plaint: (2) That the moneys due to him under the fixed deposit receipts, Exts. B and B-1 have in fact been adjusted as against his overdraft account and that he is liable to pay only the balance. (3) That even if the adjustment is found not to be a fact or not to be valid and binding on the liquidator, he is entitled as a matter of law to a set-off in respect of the amounts payable to him under the said fixed deposit receipt's. 2. So far as the dispute regarding interest is concerned, the defendant relied upon a letter Ext. A dated 18-9-45 written by the Secretary of the Bank to the defendant which shows that in respect of the fixed deposit amount, the defendant will get 7 per cent and that in respect of his over-draft account, he will pay 71/2 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, endorsements were also made on the back of the fixed deposit receipts showing the adjustment. The Secretary who has been examined as P.W. 1 while accepting that the letter Ext. D dated 24-7-47 was received by him and that he sent his reply, Ext. D-1, of the same date, denies that the defendant came to him on the 25th or that he made any adjustments of the fixed deposits, as against the over-draft account, on the 25th or on any other date. The best evidence of this adjustment would naturally have been (1) the pass-book of the defendant for the defendant's over-draft account in which according to him all the adjustment entries have been made and also (2) the original fixed deposit receipts which according to him would contain endorsements of discharge presumably signed by him. It must be noted at this stage that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ixed 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 whether or not the Secretary had independent authority in this behalf. But Ext. A. the letter filed on behalf of the defendant and relied upon by him as regards the variation of the interest indicates that even for that variation, the Managing Director's sanction was required. I am, therefore., prepared to accept the evidence of P.W. 1 that the fixed deposits could not be adjusted before the maturity without the specific sanction of the Managing Director. Indeed, this may also be taken to have been realised by the defendant, because he has given evidence that when he met the Managing Director on one occasion at Balasore, he had a talk with him in the presence of the Secretary which resulted in the letter, Ext. A granting reduction of interest on the overdraft account. According to him, it was on that very occ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reditors 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 make such claims against the company as they respectively are entitled to by virtue of this section. Section 46, Provincial Insolvency Act is as follows: Where there have been mutual dealings between an insolvent and a creditor proving or claiming to prove a debt under this Act, 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 other party and the balance of the account, and no more, shall be claimed or paid on either side respectively. The argument on behalf of the defendant is that the debt due by the defendant to the Bank and the amount due by the Bank to the defendant in respect of the fixed deposits are mutual dealings between the insolvent Bank and the defendant in his capacity as debtor as well as cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eciprocal 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, -- 'Nur Husan v. Mt. Ghulam Zobra', AIR 1922 Lah 222 (D); -- 'Alliance Bank of Simla v. Mohan Lal, AIR 1927 Lah 228 (E); -- 'Verappa Chettiar v. J. V. Pirrie', AIR 1940 Mad 436 (F) and --'Travancore N. Q. Bank Ltd. v. Cyril Gill and John Stanley Goodwin', AIR 1941 Mad 622 (G). In fact, the above cases themselves clearly show that in a case where there are reciprocal demands available by one party against the other in the same capacity, it is a clear case of mutual dealings in which a Set-off is a matter of course. The case in -- 'Sundara-varadan v. R. Narasimha Chari', AIR 1940 Mad 266 (H) is also a clear authority in favour of this position. 16. The only point about which I have had some doubt on this portion of the case is whether the fact that at the date when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bt 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 present case, the defendant would be entitled to a set-off in respect of the fixed deposit amounts under Exts. B and B-1, though they had not matured by the date of the application for winding up and though the factum of adjustment pleaded by him is found not to have been proved. 17. Having regard to the letter, Ext. A dated 18-9-1945, interest payable on the fixed deposit amounts would be 7 per cent, as from the date of that letter, but no interest will run from the date of the application for winding up. 18. In the result, therefore, the plaintiff will have a decree for an amount to be recalculated on the basis of my findings above as regards the right to a set-off and the interest payable on the overdraft account and on the fixed deposit amounts with reference to Ext. A dated 18-9-1945. Since the def ..... X X X X Extracts X X X X X X X X Extracts X X X X
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