The short question of law which falls to be decided in the present appeal is whether a dispute raised by the employees of a General Insurance Company against their employer for payment of bonus in any particular year can be referred for adjudication by an Industrial Tribunal under S. 10(1) of the Industrial Disputes Act, 1947 (XIV of 1947). This question arises in this way. The workmen of the Hercules Insurance Co. Ltd. are the appellants and the Insurance Company is the respondent before us. On April 11, 1957, the Central Government referred the appellants claim for bonus for the years 1954 and 1955 for adjudication to the Industrial Tribunal, Dhanbad, constituted under s. 7A of the Industrial Disputes Act, and this reference has been made under S. 10(1)(d) of the Act. Before the Tribunal the respondent urged a preliminary objection against the validity of the reference itself. Its case was that the payment of bonus by an Insurance Company is conditioned entirely by the relevant provisions of the Insurance Act, 1938 (IV of 1938), and that the said provisions did not justify the reference of a dispute in that behalf for adjudication by any Industrial Tribunal. This preliminary objection was based on the provisions of S. 31A(1) and proviso (vii) of the Insurance Act.
 It was also urged by the respondent that having regard to the limitations imposed on the General Insurance Companies by s. 40C of the Insurance Act the claim for bonus made by the appellants, could not be sustained. The Tribunal has upheld the preliminary objection thus raised by the respondent and held that the reference is invalid. Incidentally it has also considered the plea raised under s. 40C and has observed that the said plea is also well founded In the result the Tribunal refused to entertain the reference and dismissed it accordingly. It is against this order of the Tribunal that the appellants have come to this Court by special leave. It is common ground that the respondent has paid the appellants bonus equivalent to two months basic wages for each of the two years 1954 and 1955. The appellants claim two months basic wages as additional bonus for each of the two years under reference. It is their case that if the trading profits made by the respondent are ascertained from the respondents balance sheet and the Full Bench formula is applied, it would appear that the respondent has in its hands a substantial amount of available surplus from which the additional bonus claimed by them can be awarded. Since the reference has been rejected on the preliminary ground the Tribunal has naturally not considered this aspect of the problem. The preliminary objection raised by the respondent is founded on the relevant provisions of s. 31A of the Insurance Act (hereafter called the Act) and so we must now turn to the said provisions. Section 31A(1)(c) of the Act provides, inter alia, that notwithstanding anything to the contrary contained in the Indian Companies Act, 1913, or in the articles of association of the insurer, if a company, or in any contract or agreement, no insurer shall after the expiry of one year from the commencement of the Insurance (Amendment) Act, 1950, be directed or managed by, or employ as manager or officer or in any capacity, any person whose remuneration or any part thereof takes the form of commission or bonus in respect of the general insurance business of the insurer. Thus looking s. at 31A(1)(c) by itself without the proviso the position is absolutely at clear.
 The respondent cannot be directed to employ the appellants in any capacity so as to include in their remuneration a liability to pay bonus in respect of the general insurance business of the respondent. Bonus under the Industrial Disputes Act is not a part of wages, but the right to claim bonus which has been universally recognised by industrial adjudication in cases of employment falling under the said Act has now attained the status of a legal right. Bonus can be claimed as a matter of right provided of course by the application of the Full Bench formula it is shown that for the relevant year the employer has sufficient available surplus in hand. Therefore a claim for bonus made by the appellants in the present proceedings is a claim in respect of the general insurance business of the respondent, and if allowed it would add to the remuneration payable to them. In other words, bonus claimed by the appellants, if awarded, would, for the purpose of s. 31A (1)(c), be a part of their remuneration, and that is precisely what is prohibited by the said provision. There are, however, certain exceptions to this general prohibition, and it is to one of these exceptions that we must now turn. Proviso (vii) to s. 31A (1)(c) lays down that nothing in this subsection shall be deemed to prohibit- the payment of bonus in any year on a uniform basis to all salaried employees or any class of them by way of additional remuneration, such bonus, in the case of any employee, not exceeding in amount the equivalent of his salary for a period which, in the opinion of the Central Government, is reasonable having regard to the circumstances of the case. This provision which constitutes an exception to the rule prescribed by s. 31A(1)(c) allows the payment of bonus to the employees of Insurance Companies subject to the condition specified by it. Bonus intended to be paid to such employees must not exceed in amount the equivalent of their salary for a period which the Central Government regards as reasonable. The result of this provision appears to be that the Central Government has to consider the circumstances of each insurer and then decide whether any bonus should be paid by the insurer to its employees.
 If the financial position of the insurer is sufficiently satisfactory, the Central Government may decide to allow the insurer to pay bonus to its employees, and in that context the Central Government would prescribe the maximum within which the payment should be made. In no case can payment exceed the maximum prescribed by the Central Government, and in all cases the matter has to be considered by the Central Government and no other authority. Having regard to the scheme of the Act which purports to supervise and regulate the working of Insurance Companies the legislature thought that the payment of bonus by the Insurance Companies to their employees should normally be prohibited and its payment should be permitted subject to the over-riding control of the Central Government to prescribe the maximum in that behalf. If the Central Government decides that no bonus should be paid, no bonus can be paid by the insurer. If the Central Government decides that bonus should be paid but not beyond specified limit the insurer cannot exceed that limit. That, in our opinion, is the effect of proviso (vii) to s. 31A(1).
 It is, however, urged that proviso (vii) merely enables the Central Government to prescribe the maximum. It does not take away the Central Governments authority to refer an industrial dispute in respect of bonus for adjudication under s. 10 of the Industrial Disputes Act. In this connection it is urged by Mr. Mazumdar that in some cases the Central Government may take the view that the financial position of the insurer justified the payment of bonus, but the quantum may be better left to the Industrial Tribunal. In such a case the Central Government should have authority to make the reference. Similarly it is urged that the Central Government may decide that within the maximum prescribed by it, bonus should be paid by an insurer, but the insurer 1000 may not comply with the Central Governments decision and in that case the only way to make the Central Governments decision effective is to refer the matter to adjudication and enable the employees to obtain an award which can be executed. That is why the appellants contend that the enabling provision contained in proviso (vii) should not be construed to constitute a bar against the Central Governments power to act under s. 10(1) of the Industrial Disputes Act. We are not impressed by this argument. In our opinion the policy of the relevant clause of the proviso is absolutely clear. Payment of bonus by insurers was intended by the legislature to be conditioned by the provisions contained in the said clause, and we feel no doubt or difficulty in reaching the conclusion that the intervention of the Industrial Tribunals was intended to be excluded and the matter was intended to be kept within the discretion of the Central Government so far as the payment of bonus by the insurers is concerned.
 Then, as to the argument that the Government directive issued under proviso (vii) may not be obeyed by any insurer, we do not think that such an event is likely to happen but theoretically it is conceivable that an insurer may refuse to comply with the decision of the Government. In that case all we can say is that there is a lacuna left and the legislature may consider whether it is necessary to provide adequate remedy for making the Government decision binding and final. Having regard to the unqualified and absolute prohibition contained in s. 31A(1)(c) it seems to us difficult to hold that the payment of bonus to the employees of Insurance Companies is not absolutely conditioned by proviso (vii). In the absence of the said provision no bonus could have been claimed by Insurance employees, and so the effect of the said provision must be to limit the said right to the conditions prescribed by it. That is why we think that the Tribunal was right in coming to the conclusion that the reference made by the Central Government is invalid. The fact that the Central Government took the view that it could make such a reference 1001 is hardly relevant in determining the scope and effect of the relevant provisions of the Act. This question must be considered on what we regard to be the fair construction of the relevant statutory provision, and as we have just indicated the construction of the relevant provision clearly supports the view taken by the Tribunal.
 Incidentally, it may be pointed out that in its award the Tribunal has referred to several other decisions of Industrial Tribunals which have taken the same view though there are one or two decisions which have upheld the validity of the reference without duly considering the effect of s. 31A(1). In this connection we may refer to the decision of this court in The Central Bank of India v. Their Workmen (1), where a similar question has been considered. In that case the Court had to consider the effect of s. 10 of the Banking Companies Act, 1949, prior to its amendment in 1956. The said section, according to that decision, prohibited the grant of industrial bonus to bank employees inasmuch as such bonus is remuneration which takes the form of a share in the profits of a banking company. In dealing with the character of bonus in relation to remuneration specified by s. 10, S.
 Das, J., who spoke for the Court, observed that bonus in the industrial sense as understood in our country does come out of the available surplus gap, wholly or in the actual wage. id it fills the wage and age in that sense, whether it be called contingent or supplementary.
DECISION ??

That is why we think that the Tribunal was right in coming to the conclusion that the reference made by the Central Government is invalid.

This preliminary objection was based on the provisions of S. 31A(1) and proviso (vii) of the Insurance Act.

The appellants claim two months basic wages as additional bonus for each of the two years under reference.

Since the reference has been rejected on the preliminary ground the Tribunal has naturally not considered this aspect of the problem

The preliminary objection raised by the respondent is founded on the relevant provisions of s. 31A of the Insurance Act (hereafter called the Act) and so we must now turn to the said provisions

If the Central Government decides that bonus should be paid but not beyond specified limit the insurer cannot exceed that limit. That, in our opinion, is the effect of proviso (vii) to s. 31A(1).

In other words, bonus claimed by the appellants, if awarded, would, for the purpose of s. 31A (1)(c), be a part of their remuneration, and that is precisely what is prohibited by the said provision.

There are, however, certain exceptions to this general prohibition, and it is to one of these exceptions that we must now turn.

It does not take away the Central Governments authority to refer an industrial dispute in respect of bonus for adjudication under s. 10 of the Industrial Disputes Act.

In the absence of the said provision no bonus could have been claimed by Insurance employees, and so the effect of the said provision must be to limit the said right to the conditions prescribed by it.

That is why we think that the Tribunal was right in coming to the conclusion that the reference made by the Central Government is invalid.

The workmen of the Hercules Insurance Co. Ltd. are the appellants and the Insurance Company is the respondent before us.

The Tribunal has upheld the preliminary objection thus raised by the respondent and held that the reference is invalid.

Thus looking s. at 31A(1)(c) by itself without the proviso the position is absolutely at clear.

Bonus can be claimed as a matter of right provided of course by the application of the Full Bench formula it is shown that for the relevant year the employer has sufficient available surplus in hand.

This provision which constitutes an exception to the rule prescribed by s. 31A(1)(c) allows the payment of bonus to the employees of Insurance Companies subject to the condition specified by it.

In no case can payment exceed the maximum prescribed by the Central Government, and in all cases the matter has to be considered by the Central Government and no other authority.

That, in our opinion, is the effect of proviso (vii) to s. 31A(1).

It is, however, urged that proviso (vii) merely enables the Central Government to prescribe the maximum.

The Central Bank of India v. Their Workmen (1), where a similar question has been considered

Before the Tribunal the respondent urged a preliminary objection against the validity of the reference itself.

It is against this order of the Tribunal that the appellants have come to this Court by special leave.

there is a lacuna left and the legislature may consider whether it is necessary to provide adequate remedy for making the Government decision binding and final.

theoretically it is conceivable that an insurer may refuse to comply with the decision of the Government.

The fact that the Central Government took the view that it could make such a reference 1001 is hardly relevant in determining the scope and effect of the relevant provisions of the Act.

In no case can payment exceed the maximum prescribed by the Central Government, and in all cases the matter has to be considered by the Central Government and no other authority.


The appellant is a Sugar Mill in District Saran in the State of Bihar. One Ramkrishna Prasad was appointed as clerk in this mill in 1933. Gradually, he worked his way up and was drawing Rs. 140 per month in October 1952. The mill created a new post of store in-charge about that time as the work in the Stores Department of the Mill had increased. On October 4, 1952, Babulal Parekh was appointed to this new post on a consolidated salary of Rs. 180 per menses. A letter of appointment was issued to him on that date and he was told that he would be on probation for one year. He was also asked by another letter to take charge immediately. He took charge on October 7, 1952.
 On November 28, 1952, an order was passed by the mill distributing the duties between the various clerks employed in the Stores Department and it was stated therein that all the staff of the Stores Department would work as subordinate to Babulal Parekh. On December 2, 1952, another order was passed by which Ramkrishna Prasad was ordered to hand over the keys of the stores to Babulal Parekh. Thereafter Ramkrishna Prasad made a representation against his being made subordinate to the stores in-charge. This representation was rejected. A dispute was then raised by the union and a reference was made by the Government of Bihar on May 9, 1956, in which the following three matters were referred to the tribunal-
 Whether the status of workman, Sri Ramkrishna Prasad, Store-keeper, and the nature of the job performed by him has been changed to his prejudice with the appointment of a separate store in charge
 Whether in view of the satisfactory performance of duties of store-keeper for the last 20 years by the above- named workman, it was at all necessary to appoint a separate store in-charge over him with higher emoluments and whether Shri Ramkrishna Prasad is entitled to be appointed to the post of store in-charge and
 Whether the claim of the above-named workman for promotion to higher grades has been overlooked by the management, and if so, what relief the workman is entitled to.
 When the matter came up before the tribunal, the main contention on behalf of the mill was that it was exclusively the management function to decide its labour strength, both qualitatively and quantitatively, and that so far as Ramkrishna Prasad was concerned his position had not been prejudicially affected by the creation of the new post of a store in-charge. The workmen on the other hand contended that Babulal Parekh was first appointed as a mere clerk under Ramkrishna Prasad to begin with and it was only on November 28, 1952, that he was promoted over the head of Ramkrishna Prasad as a store in-charge, thus superseding Ramkrishna Prasad. This stand of the workmen was controverted by the mill and its case was that Babulal Parekh was from the very beginning appointed as store in- charge. The tribunal came to the conclusion after a consideration of the evidence produced that Babulal was first appointed as an ordinary clerk in the Stores Department and was subsequently made a store incharge.
 It held that this caused reasonable heart burning to Ramkrishna Prasad. The tribunal was conscious of the principle that promotion to a higher post was the exclusive function of the management and should not ordinarily be interfered with. But in spite of that it was of the view that this was a fit case for interference but on other considerations which were not specified in the order by the tribunal it held that it would not interfere with the arrangement made by the mill it instead granted an increment of Rs. 30 per month from the date of its order to Ramkrishna Prasad to meet the ends of justice. It is this order which is being challenged before us. Two points have been urged before us on behalf of the appellant.
 In the first place it is urged that the reference was incompetent as sugar was a controlled industry and only the Central Government could have made the reference and not the State Government. Secondly, it is urged that the order of the tribunal granting an increment of Rs. 30 per month to Ramkrishna Prasad was patently perverse and that there was no change in the status or emoluments of Ramkrishna Prasad by the creation of the new post and the employment of Babulal Parekh on it. So far as the question of the competence of the reference is concerned, we are of opinion that there is no force in it, A similar question was raised before this Court in The Bijoy Cotton Mills Ltd. v. Their Workmen and Another (1) and it was held there on the language of s. 2(a)(1) of the Industrial Disputes Act, 1947, that before that provision could apply to a controlled industry there must be a notification by the Central Government for the purposes of s. 2(a)(1) of the Industrial Disputes Act. Section 2(a)(1) is in these terms- I Appropriate Government means in relation to any industrial dispute concerning any industry carried on by or under the authority of the Central Government or by a railway company or concerning any such controlled industry as maybe specified in this behalf by the Central Government, or in relation to an industrial dispute concerning a banking or an insurance company, a mine, an oil-field or a, major port, the Central Government.
 The argument is that as sugar is a controlled industry under the Schedule to the Industries (Development and Regulation) Act, No. 65 of 1951, the appropriate (1) 1960 2 S.C.R- 982, Government for the purposes of s. 2(a)(1) with reference to the sugar Industry is the Central Government. Reliance is placed on the words concerning any such controlled industry as may be specified in this behalf by the Central Government appearing in s. 2 (a)(1). It is true that sugar is a controlled industry under the Industries (Development and Regulation) Act, 1951, but that in our opinion does not conclude the matter. In order that the appropriate government under s. 2(a)(1) may be the Central Government for a controlled industry, it is necessary that such controlled industry should be specified by the Central Government for the purposes of s. 2(a)(1). This in our opinion is obvious from the words controlled industry as may be specified in this behalf by the Central Government appearing in s. 2(a)(1).
 It is not enough that an industry should be a controlled industry to attract this provision of s. 2(a)(1) it is further necessary that it should be specified in this behalf, namely for the purposes of s. 2(a)(1), as a controlled industry by the Central Government, before the Central Government can become the appropriate government within the meaning of s. 2(a)(1). We may in this connection refer to Firebricks and Potteries Ltd., etc. v. Firebricks and Potteries Ltd. Workers Union Ltd. (1) where the same view has been taken. We are of opinion that is the correct meaning of these words appearing in s. 2(a)(1), as already held in The Bijoy Cotton Mills Ltd. (2) . The objection that the reference was not competent therefore fails. We next come to the contention raised on behalf of the mill that there was in fact no prejudice whatsoever so far as the status and emoluments of Ramkrishna Prasad were concerned by the creation of the new post and the appointment of Babulal Parekh on it, and that the tribunal was not justified in any case in granting an increment of Rs. 30 per menses to Ramkrishna Prasad. The main consideration which influenced the tribunal in passing the order which it did was that in the view of the tribunal Ramkrishna Prasad was superseded by Babulal Parekh who was first appointed as a clerk under him. This view of I.L.R. 1955 MYS. 546. (2) 1960 2 S.C.R. 982. the tribunal in our opinion is patently erroneous. The appointment order dated October 4, 1952, clearly shows that Babulal Parekh was appointed as store inches from the very beginning at Rs. 180 per month. The tribunal referred to certain entries in the attendance register to hold that Babulal Parekh worked as clerk to begin with.
 It appears from the attendance register for the months of October, November and December that Babulal Parekh was marked present from October 7 to November 9. Thereafter from November 11 to the end of December he signed the attendance register. The statement of Cbaudhari, Labour Welfare Officer of the mill was that the practice in the mill was that officers used to be marked present in the attendance register while clerks used to sign it themselves. The tribunal has concluded from the fact that Babulal. Parekh signed the register in November that he must have been a clerk to begin with. The tribunal, however, completely overlooked that from October 7 to November 9, Babulal Parekh was marked present which would show that he was not a clerk.
 The tribunal also overlooked that even from November 28 to the end of December when Babulal Parekh admittedly was not a clerk but store in- charge he still signed the register, though he should have been marked present. Chaudhari was unable to explain how this happened, but he was hardly the person to explain this. It is, however, clear from this confusion that no importance can be attached to whether Babulal Parekh was marked present in the register or signed it. The real thing which determined the status of Babulal Parekh was the appointment order dated October 4, 1952, which the tribunal has accepted as correct. A question was certainly put to Chaudhari at the end of his cross-examination that he had manufactured the statements put in by him only the night before but he denied it. We cannot accept the suggestion on behalf of the respondents that the appointment order was ante-dated, for no such suggestion was made to Chaudhari and the tribunal itself does not find so. It is clear therefore that the finding of the tribunal that Babulal Parekh was appointed as clerk under Ramkrishna Prasad to begin with is patently perverse and it must be held that Babulal Parekh was from the very beginning working as store in-charge. Now in so far as Ramkrishna Prasad was concerned his work and emoluments remained the same after the appointment of Babulal Parekh. If a higher post was created in the Stores Department because of the increase in work, Ramkrishna Prasad could not claim promotion to it merely because he was working as a store-keeper before.
DECISION ??

The real thing which determined the status of Babulal Parekh was the appointment order dated October 4, 1952, which the tribunal has accepted as correct.

The objection that the reference was not competent therefore fails

Thereafter Ramkrishna Prasad made a representation against his being made subordinate to the stores in-charge. This representation was rejected

The appellant is a Sugar Mill in District Saran in the State of Bihar.

The objection that the reference was not competent therefore fails.

We are of opinion that is the correct meaning of these words appearing in s. 2(a)(1), as already held in The Bijoy Cotton Mills Ltd. (2)

This view of I.L.R. 1955 MYS. 546. (2) 1960 2 S.C.R. 982. the tribunal in our opinion is patently erroneous.

One Ramkrishna Prasad was appointed as clerk in this mill in 1933.

Two points have been urged before us on behalf of the appellant.

Government, before the Central Government can become the appropriate government within the meaning of s. 2(a)(1).

The tribunal has concluded from the fact that Babulal.

Parekh signed the register in November that he must have been a clerk to begin with.

Thereafter Ramkrishna Prasad made a representation against his being made subordinate to the stores in-charge.

The appointment order dated October 4, 1952, clearly shows that Babulal Parekh was appointed as store inches from the very beginning at Rs. 180 per month.

This view of I.L.R. 1955 MYS. 546. (2) 1960 2 S.C.R. 982. the tribunal in our opinion is patently erroneous.

It is, however, clear from this confusion that no importance can be attached to whether Babulal Parekh was marked present in the register or signed it.

So far as the question of the competence of the reference is concerned, we are of opinion that there is no force in it,


Appeal by special leave from the judgment and decree dated June 23, 1959, of the Calcutta High Court in Appeal from Original Decree No. 50 of 1955. Veda Vyasa, S. K. Kapur and B.P. Maheshwari, for the appellant. L. Gosain and K. L. Mehta, for the respondent. 1961. December 20. The Judgment of the Court was delivered by SHAH, J.-Mr. Justice Bachawat of the High Court of Judicature at Calcutta decreed Suit No. 1039 of 1948 filed by one Pearey Lal-hereinafter called the plaintiff-for a decree for Rs. 1,35,000/- with interest against the New Bank of India Ltd.
The appeal of the Bank against the decree was dismissed by a Division Bench of the High Court. With special leave the Bank has appealed to this Court. The Bank had its registered office, originally at Lahore but after the partition of India the office was transferred to Amritsar. The plaintiff who was a resident of Lahore had accounts with several banks including the New Bank of India Ltd. In view of the impending partition, the plaintiff was anxious to transfer his moveable property outside the territory it was apprehended would be included in Pakistan, and he gave instructions for transferring his accounts with the Bank to its other branches in India. He also paid an amount of Rs. 1,25,000/- on July 18, 1947, into the Bank at Lahore with instructions to transmit the same the to Bank branch at Calcutta which it then proposed to open in the near future. An amount of Rs. 10,000/- was also paid into the Bank at Lahore on July 19, 1947, with similar instructions. In respect of these two transactions the Bank executed receipts which are set out below Received the sum of Rs. 1,25,000/- (Rs. One Lac twenty five thousand) only from Mr. Pearey Lal on account of amount to be remitted to Calcutta branch for preparing various F.D. Receipts subject to his instructions on or after the opening date when he would call upon them personally. Lahore for the New Bank of India Ltd. The 18th day of Sd. Illegible July, 1947. Manager. Received the sum of Rs. 10,000/-(Rupees ten thousand) only through Mr. Pearey Lal for transmission to our Calcutta Office for making up various F. D. Receipts at his instance when he calls upon them personally on or after the opening date of the Branch. Lahore for the New Bank of India Ltd. 19-7-47. Sd. Illegible Manager. The two amounts were transmitted by the Bank to Calcutta. A branch of the Bank was opened at Calcutta on September 24, 1947, but within a few days thereafter the Bank ceased making payments. It appears that a moratorium for a limited period was declared under an Ordinance issued by the Governer-General restraining the Bank from making payments to its depositors.
In December, 1947, after the expiry of the period of the moratorium the plaintiff applied to the Banks branch at Calcutta for facility to withdraw the whole amount but the Calcutta Branch raised certain technical objections against such a course. On March 24, 1948 the plaintiff commenced an action against the Bank inter alia for a decree of Rs. 1,35,000/- in the Calcutta High Court on its original side. During the pendency of the suit the High Court of East Punjab sanctioned a scheme for arrangement under ss. 153 and 153A of the Indian Companies Act, 1913, for settlement of the liability of the Bank. By the first clause of the scheme the expression deposit was to include Fixed Deposits, Banks own Cash Certificates, Current Accounts, Deposits at Call, Savings Fund Accounts Amounts lying in Sundries or in any other kind of Credit Accounts, Bank Drafts, Cash Orders, and documents of the like nature and amounts due to Bankers over and above the value of Government Securities lying with them against such depositors. It was directed by the scheme, as it finally emerged, that the depositors were to be paid 701/2 of the deposits held by them and to he allotted shares of the face value of 5 of the deposits. The plaintiff claimed by his suit that he had entrusted to the Bank at its registered office at Lahore Rs. 1,35,000/- on July 18 and 19, 1947, with instructions to transmit the same to the branch of the Bank which it proposed to open at Calcutta and to hold the amount subject to further instructions to be given by him when he would call personally at the branch at Calcutta on or after the opening date, that prior to the opening of the said Calcutta Branch the plaintiff countermanded his instructions on or about September 13, 1947 and demanded at Lahore that it be returned, but the Bank wrongfully claimed to have remitted the two sums to its Calcutta Branch and to have kept the same in a fixed deposit account in the name of the plaintiff, even though the plaintiff, had opened no such account at the Calcutta Branch and had given no instructions to put the same into any account by way of fixed deposit or otherwise. The plaintiff, accordingly, claimed that the Bank was a trustee for transmission of the amount and in the absence of any instructions given by him for opening a fixed deposit account, in respect of the amount transmitted the Bank stood qua the plaintiff in a fiduciary relation and was liable to refund the full amount. In substance, it was claimed by the plaintiff that the amount lying with the Bank at Calcutta was not a deposit within the meaning of the scheme and was not liable to any reduction. The Bank submitted that the amount of Rs. 1,35,000/- was deposited by the plaintiff at its head office at Lahore for the purpose of opening a fixed deposit account in the name of the plaintiff upon the terms that the fixed deposit would carry interest as on the respective dates of the deposits, that it was agreed that the plaintiff would be allowed to take loans upto 90 of the deposit at a rate of interest of half percent above the current fixed deposit rates and that the amount would be transmitted to the Calcutta Branch of the Bank for the purpose of crediting the same to the fixed deposit account of the plaintiff. The Bank denied the alleged instructions in September, 1947, countermanding the original arrangement and contended that the plaintiff was bound by the scheme of arrangement sanctioned by the High Court of East Punjab.
The Bank offered to pay the amount due to the plaintiff under the scheme of arrangement and also to allot shares of the value of 5 in accordance with the scheme. A decree on admission was passed against the Bank for Rs. 81,000/- and the suit was contested by the Bank for the balance of the claim. The trial Court held that even though the plaintiff failed to prove the instructions in the month of September, 1947, set up by him countermanding transmission, it was established on the evidence, that the plaintiff had entrusted to the Bank Rs. 1,35,000/- for transmission and the plaintiff having given no further instructions, the Bank held the amount as trustee for the plaintiff and that the plaintiffs claim was not liable to be reduced under the scheme sanctioned by the High Court of East Punjab. The Court also negatived the plea of the Bank that the amount of Rs. 1,35,000/- was deposited with the Bank at Lahore for opening a fixed deposit account subject to the conditions which the Bank set up. The finding of the trial Court were confirmed, in appeal, by a Division Bench of the High Court at Calcutta. The facts found proved, according to the findings of the trial Court and confirmed by the High Court are therefore that the plaintiff delivered an amount of Rs. 1,25,000/- on July 19, 1947, and Rs. 10,000/- on July 19, 1947, to the Bank at Lahore for transmission to Calcutta, with instructions to await the directions of the plaintiff regarding the opening of accounts for keeping the same in fixed deposit or otherwise in the Calcutta Branch of the Bank, and the plaintiff never gave instructions for opening any account, fixed deposit or otherwise, in regard to the amounts after they reached Calcutta. Delivery of the amount for transmission to the Bank created ex facie a relationship of a fiduciary character. But counsel for the Bank contends that when the amount was handed over at Lahore to the Bank by the plaintiff who was an old constituent of the Bank it must be presumed that a relationship of debtor and creditor arose and by the addition of instructions for transmissions of the amount to another branch the relationship of trustee and cestuique-trust did not arise. He submitted that the contention that the relation between the plaintiff and the Bank was of creditor and debtor was supported by three important circumstances (1) that the Bank agreed to pay interest on the amount delivered by the plaintiff (2) that the Bank charged no commission or remuneration for transmission of the amount and (3) that even on the plaintiffs case the amount was to be utilized for opening fixed deposit accounts at Calcutta. It is true that in the absence of other evidence a person paying money into a Bank, whether he is a constituent of the Bank or not, may be presumed to have paid the money to be held as bankers ordinarily hold the moneys of their constituents. If no specific instructions are given at the time of payment or thereafter, and even if the money is held in a suspense account the bank does not thereby become a trustee for the amount paid. In other words, when a person dealing with a bank delivers money to the Bank an intention to create a relation of creditor and debtor between him and the Bank is presumed, it being the normal course of the business of the Bank to accept deposits from its customers. But this presumption is one of fact arising from the nature of the business carried on by the Bank and is rebutted by proof of special instructions, or circumstances attending the transaction. Where the money is paid to a bank with special instructions to retain the same pending further instructions (The Official Assignee, Madras v. Natesam Pillai (1)) or to pay over the same to another person who has no banking account with the bank and the bank accepts the instructions and holds the money pending instructions from that other person (Arbuthnot Co. v. D. Rajam Ayyar (2)), or where instructions are given by a customer to his banker that a part of the amount lying in his account be forwarded to another bank to meet a bill to become due and payable by him and the amount is sent by the banker as directed (Farley v. Turner (3)), a trust results and the presumption which ordinarily arises by reason of payment of the money to the bank is rebutted. It is not necessary in this appeal to consider whether because of an agreement to pay interest the relationship may be deemed to be of debtor and creditor, because it was held by both the courts below that no such agreement is proved, and according to the settled practice of this court the finding is regarded a binding. The Bank charged no commission or remuneration for transmitting the amount to Calcutta, but that, in our judgment, is a circumstance which permits of no inference against the plaintiff. Undoubtedly, when the amount was delivered to the Bank by the plaintiff it was his intention to open fixed deposit account in Calcutta with the Banks branch but the fixed deposit accounts were to be opened after instructions were received.
The transaction, as evidenced by the two receipts, was primarily one of entrustment of the amount to the Bank for transmission to Calcutta. After the purpose for which the moneys were entrusted was carried out, in the absence of further instructions the defendant did not cease to be a trustee. So long as instructions were not given by the plaintiff for appropriation of the amounts the Bank continued to hold the amounts transmitted for and on behalf of the plaintiff and there is no evidence that the plaintiff gave instructions or acquiesced in the opening of a fixed deposit account after the same reached Calcutta. It is immaterial that the Bank purported to open fixed deposit account in the name of the plaintiff with the amounts received at its head office at Lahore. That course of action was adopted without the consent of the plaintiff and it could not bind the plaintiff. The High Court was, therefore, right in holding that the amount delivered by the plaintiff to the Bank at Lahore remained in trust even after it reached Calcutta, and it was not held by the Bank, in deposit for the plaintiff within the meaning of the scheme sanctioned by the High Court of East Punjab.
DECISION ??

In substance, it was claimed by the plaintiff that the amount lying with the Bank at Calcutta was not a deposit within the meaning of the scheme and was not liable to any reduction.

Appeal by special leave from the judgment and decree dated June 23, 1959, of the Calcutta High Court in Appeal from Original Decree No. 50 of 1955.

the Bank held the amount as trustee for the plaintiff and that the plaintiffs claim was not liable to be reduced under the scheme sanctioned by the High Court of East Punjab.

The finding of the trial Court were confirmed, in appeal, by a Division Bench of the High Court at Calcutta.

Delivery of the amount for transmission to the Bank created ex facie a relationship of a fiduciary character.

Where the money is paid to a bank with special instructions to retain the same pending further instructions

or to pay over the same to another person who has no banking account with the bank and the bank accepts the instructions and holds the money pending instructions from that other person

a trust results and the presumption which ordinarily arises by reason of payment of the money to the bank is rebutted

In substance, it was claimed by the plaintiff that the amount lying with the Bank at Calcutta was not a deposit within the meaning of the scheme and was not liable to any reduction.

Delivery of the amount for transmission to the Bank created ex facie a relationship of a fiduciary character.

After the purpose for which the moneys were entrusted was carried out, in the absence of further instructions the defendant did not cease to be a trustee.

That course of action was adopted without the consent of the plaintiff and it could not bind the plaintiff.

The appeal of the Bank against the decree was dismissed by a Division Bench of the High Court.

With special leave the Bank has appealed to this Court.

A decree on admission was passed against the Bank for Rs. 81,000/- and the suit was contested by the Bank for the balance of the claim.

The finding of the trial Court were confirmed, in appeal, by a Division Bench of the High Court at Calcutta.

Turner (3)), a trust results and the presumption which ordinarily arises by reason of payment of the money to the bank is rebutted.

It is immaterial that the Bank purported to open fixed deposit account in the name of the plaintiff with the amounts received at its head office at Lahore.

The two amounts were transmitted by the Bank to Calcutta.

A branch of the Bank was opened at Calcutta on September 24, 1947, but within a few days thereafter the Bank ceased making payments.

On March 24, 1948 the plaintiff commenced an action against the Bank inter alia for a decree of Rs. 1,35,000/- in the Calcutta High Court on its original side.

even though the plaintiff, had opened no such account at the Calcutta Branch and had given no instructions to put the same into any account by way of fixed deposit or otherwise.

but the fixed deposit accounts were to be opened after instructions were received.

The transaction, as evidenced by the two receipts, was primarily one of entrustment of the amount to the Bank for transmission to Calcutta.

Receipts subject to his instructions on or after the opening date when he would call upon them personally.

Receipts at his instance when he calls upon them personally on or after the opening date of the Branch.

with instructions to transmit the same the to Bank branch at Calcutta which it then proposed to open in the near future.

the plaintiff had entrusted to the Bank Rs. 1,35,000/- for transmission and the plaintiff having given no further instructions, the Bank held the amount as trustee for the plaintiff

in the absence of further instructions the defendant did not cease to be a trustee.

that prior to the opening of the said Calcutta Branch the plaintiff countermanded his instructions on or about September 13, 1947 and demanded at Lahore that it be returned

The finding of the trial Court were confirmed, in appeal, by a Division Bench of the High Court at Calcutta.

on account of amount to be remitted to Calcutta branch for preparing various F.D.

for the purpose of opening a fixed deposit account in the name of the plaintiff

Undoubtedly, when the amount was delivered to the Bank by the plaintiff it was his intention to open fixed deposit account in Calcutta with the Banks branch