Creation of trust over deposited funds requires clear intention; absent this, deposits are ordinary debts not preferential claims.

The text explains that creation of a trust over deposited movable property requires intention to create a trust, an identifiable purpose, beneficiary and trust property, and where needed transfer to the trustee; letters and account conditions purporting to secure company liabilities and to assign deposits for the company's benefit were held to lack the requisite manifestation of intention by subscribers, so the bank did not hold the funds as trustee and the company liquidator cannot claim preferential payment-the amounts must be proved as ordinary debts in the bank's liquidation.

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Issues: Whether moneys standing to the credit of chit-related savings accounts held by the bank were held by the bank on trust for the company, thereby entitling the company's liquidator to preferential payment in the bank's liquidation.

Analysis: The Court examined the requirements for creation of a trust of movable property under Section 6 of the Indian Trusts Act, 1882 - namely intention to create a trust, the purpose, the beneficiary and the trust property, and (where applicable) transfer of the trust property to the trustee. The Court found that subscribers opened savings accounts subject to conditions to secure their liabilities to the company and signed letters which operated as assignments of the deposited amounts for the company's benefit. The arrangement was effected by the bank (which controlled the company) for its own protection. On this basis the Court concluded that there was no manifestation of an intention by the subscribers to create a trust in favour of the company and that the bank did not hold the funds as trustee.

Conclusion: In favour of Respondent. The company's liquidator is not entitled to preferential payment; the amounts must be proved as ordinary debts in the bank's liquidation.

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