Trust money: employee security deposits retain trust character and may be traced into bank assets to support claimant charges.

Security deposits paid by or for employees for faithful service were treated as trust property despite fixed deposit receipts and payable interest; legal principles permit characterising funds as held on trust where paid for a specified trust purpose, excluding such property from the divisible estate on insolvency. Trust funds invested in the bank's business may be traced into business assets, giving beneficiaries a charge or preferential claim. Consequently, depositors' claims are allowable and assets in the liquidator's hands must be earmarked to satisfy those claims, with pro rata distribution if insufficient.

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Issues: Whether moneys paid to the bank as security deposits by employees (or on their behalf) constitute trust moneys and whether such trust moneys can be traced into the bank's assets so as to give the depositors a charge or preferential claim on the assets in the winding up.

Analysis: The payments were made as security for faithful service in the course of employment and were acknowledged by the bank by fixed deposit receipts. Although interest was payable on some deposits, prior decisions and authority permit trust characterization even where interest is agreed, provided the deposits were paid and held for the specified trust purpose. Applicable insolvency provisions make property held on trust excluded from divisible estate. Authorities establish that trust money invested in a trustee's business may be traced to the business assets and that beneficiaries retain a charge upon such assets. Applying these principles, the deposits here remained trust moneys in the hands of the bank and could be traced into the bank's assets, entitling the depositors to claim against those assets in the winding up.

Conclusion: The deposits paid by or on behalf of the employees are trust moneys and can be traced into the bank's assets; the claims of the specified creditors are allowed and the assets in the hands of the Official Liquidator shall be earmarked to discharge those claims (with pro rata division if assets are insufficient).

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