https://www.taxtmi.com/caselaws?id=98527 Company funds held by directors were treated as trust money for the company's purposes, and knowing participation in their dishonest use to finance a share purchase created constructive trusteeship for the directors and third parties involved. The paying bank that honoured unusual cheques without inquiry was liable in negligence and in equity, because the circumstances would have alerted a reasonable banker; another bank was not liable on the facts proved. A later novation and circular cheque arrangement did not extinguish the prior equitable claims or amount to true satisfaction. The second transaction did not generate a recoverable loss. Illegality under the Companies Act did not bar the successful trust-based claims, and relief for the directors was refused. en-us Thu, 30 May 1968 00:00:00 +0530 Fri, 20 Jan 2012 18:44:57 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=98527 Company funds held by directors were treated as trust money for the company's purposes, and knowing participation in their dishonest use to finance a share purchase created constructive trusteeship for the directors and third parties involved. The paying bank that honoured unusual cheques without inquiry was liable in negligence and in equity, because the circumstances would have alerted a reasonable banker; another bank was not liable on the facts proved. A later novation and circular cheque arrangement did not extinguish the prior equitable claims or amount to true satisfaction. The second transaction did not generate a recoverable loss. Illegality under the Companies Act did not bar the successful trust-based claims, and relief for the directors was refused. Case-Laws Companies Law Thu, 30 May 1968 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=98527