Set-off by assignee and cheque tender can survive a moratorium where the debt and credit relationship remain legally effective.

A valid assignment of a matured fixed deposit transfers the creditor's rights to the assignee on execution, and notice to the debtor is sufficient to recognise that substitution. A moratorium order restraining actions against a bank does not, by itself, extinguish the underlying debt or defeat a lawful assignment, and a later scheme of arrangement binds only the creditors within its relevant class. Cheques tendered for credit to an overdraft account may also operate as payment or credit for set-off purposes where the negotiable instrument has the legal effect of discharging the drawer's liability. The combined set-off exhausted the bank's claim.

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Issues: (i) whether the defendant, as assignee of a matured fixed deposit, could claim set-off notwithstanding the moratorium order and the subsequent scheme of arrangement; and (ii) whether the cheques sent by the defendant to the bank on 12 August 1950 constituted payments or credits giving rise to set-off against the bank's claim.

Issue (i): whether the defendant, as assignee of a matured fixed deposit, could claim set-off notwithstanding the moratorium order and the subsequent scheme of arrangement

Analysis: A written assignment of an actionable claim under the Transfer of Property Act became effective on execution, and notice to the debtor was sufficient to substitute the assignee in place of the assignor. The moratorium order restrained actions and proceedings against the bank and limited payments to depositors, but did not prohibit recognition of a valid assignment or destroy the underlying debt. After the moratorium ceased, the defendant stood in the shoes of the original depositor and became a creditor of the bank. The later scheme of arrangement bound only those who were creditors within the relevant class at the material time, and it did not revive a debt already discharged by assignment or extinguish the assignee's right of set-off.

Conclusion: The defendant was entitled to claim set-off in respect of the assigned fixed deposit, and the moratorium and scheme did not defeat that right.

Issue (ii): whether the cheques sent by the defendant to the bank on 12 August 1950 constituted payments or credits giving rise to set-off against the bank's claim

Analysis: The cheques were negotiable instruments presented by the defendant for credit to his overdraft account. On presentation beyond a reasonable time, the drawers' liability stood discharged to the extent contemplated by section 84 of the Negotiable Instruments Act, and the defendant became a creditor in place of the drawers. The bank's retention of the cheques without crediting the defendant's account or debiting the drawers' accounts did not alter the legal effect of the tender. On the facts, the transaction amounted to payment to the bank for the purpose of reducing the defendant's indebtedness, and the defendant acquired a corresponding right of set-off.

Conclusion: The defendant was entitled to set-off in respect of the cheques as well.

Final Conclusion: The defendant's set-off exhausted the plaintiff's claim, so the plaintiff was not entitled to a decree and the appeal succeeded.

Ratio Decidendi: A valid assignment of a debt and a negotiable instrument tendered for credit can create a creditor-debtor relationship supporting set-off, and a moratorium or scheme of arrangement does not displace that right unless it expressly does so.

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