1940 (8) TMI 22

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....s "the bank". The company was formed by the bank for the purpose of organising chit funds, which was considered to be a profitable business. The bank held all the shares in the company, except two, and it is common ground that it controlled the company through one of its officers. The chit funds which the company organised were for periods of twenty-five months with four classes of subscribers. The subscriber who was successful at the monthly auction could not withdraw the amount subscribed that month unless he furnished security to the company for its repayment. If he furnished security, of course, he was allowed to withdraw the money and dispose of it as he pleased. If security was not furnished, the company either retained the amount ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....nt as security for the due payment of what the subscriber owed to the company. The company and the bank carried on business in the same premises in Madras and the arrangement was completed by an officer of the bank acting on behalf of the company and the bank. The Court is informed that the bank kept a considerable number of these accounts. The company and the bank having gone into liquidation, the question arose whether the company was entitled to have the amounts standing in these various savings bank accounts treated as moneys over which the liquidator of the company had a preferential claim. In order to have the question settled he took out a summons under Section 183 of the Indian Companies Act. The matter was heard by Venkataramana....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....(unless the trust is declared by will or the author of the trust is himself to be the trustee) transfer the trust property to the trustee. These are the provisions of Section 6 of the Indian Trusts Act, 1882. In this case it is impossible in our opinion to say that there was an intention on the part of the subscriber to create a trust. What the subscriber agreed to do and did was to open a savings bank account with the bank which was to be kept on certain conditions. The payment into the account of the money by the company was a payment in on behalf of the subscriber and the intention was that this money should be used in discharging the subscriber's financial obligations to the company. It is accepted that the letter which the subscribers ....