1. Syed Zafar Husain made a fixed deposit of Rs. 800 in the Bank of Upper India Limited at Meerut on 1st March 1910. The deposit was for a period of three months only and the stipulated rate of interest was 3 per cent per annum.
2. The fixed deposit receipt which has been exhibited in this case as No. 4 is worded as follows:
Received from Syed Zaffar Hussain village Dholri, District Meerut, the sum of Rs. 800 only as a deposit subject to three months' notice of withdrawal bearing interest at 3 per cent per annum from 24th February 1910 payable on 1st January and 1st July of each year.
3. Syed Zaffar Hussain died on 10th June 1910. He left a widow Mt. Husain Bandi, a daughter Amtul Zainub, aged about 4 years and a son Arif Husain aged about 2 years. These were his heirs under the Mahomedan law and were entitled to the amount of the deposit together with interest.
4. It ought to be noticed that Syed Zaffar Husain died before the fixed deposit had matured for payment.
5. Mt. Husain Bandi the widow had left this country and lived in Iraq from 1913 to 1917. She died in 1917, the exact date of her death cannot be ascertained from the record. Mt. Amtul Zainub died on 14th October 1921.
6. The present suit was commenced by Arif Husain for recovery of the amount of the fixed deposit on 18th March 1926. Plaintiff was a minor at the date of the suit and the suit was instituted by one Syed Mohammad Raza as the next friend of the plaintiff.
7. The plaintiff alleged that at the date of the suit he was the only person who was entitled to the money his mother and his sister having predeceased him.
8. The Bank of Upper India, Limited closed its doors and went into voluntary liquidation on 8th October 1914. A meeting of the creditors was held which drew up a composition scheme This scheme was sanctioned by this Court under Section 153, Companies Act' on 2nd June 1915. In pursuance of this scheme an option was given to the creditors either to accept fully paid up preference shares in the bank or to take debentures of the bank carrying interest at the rate of 41/2 per cent per annum according to the face value of their deposits. The High Court directed that this option was to be exercised on or before 5th January 1917. If the depositors did not exercise the option on or before that date they were to forfeit their rights to preference shares in the bank and were entitled to debentures only.
9. No notice of these proceedings were given to the heirs of Syed Zaffar Husain. But the composition scheme appears to have been sanctioned by this Court in due process of law under Section 153, Companies Act. It was therefore binding upon the heirs of Syed Zaffar Husain. Not having exercised the option to accept preference shares on or before 5th January 1917 they became entitled to hold debentures from the bank carrying interest at the rate of 4i per cent per annum according to the face value of their deposits.
10. The debenture-holders appear to have appointed three trustees to act for and look after their interests. A formal deed of trust was executed on 18th December 1915. The effect of this document was that a floating charge was created in favour of the debenture-holders on all the assets belonging to the Bank of Upper India. We do not know what the powers of the trustees were under this deed of trust.
11. On or about 31st January 1917 a meeting of the debenture-holders wag held and resolutions were passed modifying the terms of the original deed of trust dated 18th December 1915. The Original trust deed was modified by a supplementary trust deed which was executed on 18th June 1917 and which was sanctioned by the High Court. The terms of the supplementary deed were rather drastic. The object was to transfer the liability from the Bank of Upper India Limited to two other bodies, namely, the Trust of India, Limited and the Alliance Bank of Simla, Limited. The supplementary trust deed provided that each debenture holder of Rs. 100 was to get Rs. 40 per cent cumulative preference shares of the Trust of India Limited and Rs. 60 per cent fixed deposit receipt in the Alliance Bank of Simla, Ltd.
12. The heirs of Syed Zaffar Husain do not appear to have been represented at the general meeting in which the terms of the supplementary deed were mooted and ultimately adopted. It does not appear that the trustees of the debenture-holders were within their authority in assenting to a modification of the original deed of trust and to a substitution of the liability of the Bank of Upper India Ltd. by that of the Trust of India Ltd., and the Alliance Bank of Simla, Ltd. No debentures, appear to have been issued to the heirs of Syed Zaffar Husain as ought to have been issued after 5th January 1917. The plaintiff contends that his right against the Bank of Upper India Ltd. remains unaltered by the supplementary trust deed which is not binding upon him.
13. The tactics adopted by the Bank of Upper India Ltd., were dilatory and obstructive. Upon the plaintiff claiming the money, the Bank insisted upon the plaintiff producing a succession certificate. A succession certificate was produced in due course. The Bank then repudiated the plaintiff's claim.
14. Upon the original fixed deposit receipt being produced in support of the plaintiff's claim, the defendant Bank refused to admit its genuineness and put the plaintiff to its proof.
15. A written statement attested by Mr. H. Hunter, liquidator, has been produced in this case which consists of 26 paragraphs. Various pleas were taken in defence but it is necessary to notice only two of the pleas which are material for the purpose of this appeal. The defendant contended that the liability of the Bank having been transferred to the Trust of India Ltd. and the Alliance Bank of Simla Ltd. there was no subsisting cause of action against the defendant. It was also contended that the plaintiff's claim was time barred.
16. These contentions were overruled by the trial Court which substantially decreed the plaintiff's claim. The plaintiff had claimed a sum of Rs. 1,373-11-0. The trial Court decreed the claim for Rs. 1,333-11-0. On appeal by the Bank, the lower appellate Court has affirmed the decision.
17. Holders of fixed deposits who did not surrender their receipts were treated as unconverted depositors.
18. Ten lakhs of rupees were set apart in the Upper India Bank accounts to meet the claims of the unconverted depositors.
19. Syed Zaffar Husain's deposit formed part of this sum of ten lakhs of rupees.
20. Syed Zaffar Husain was not represent-ed at the meeting of the debenture-holders dated 31st January 1917. It does -not appear that the trustees of the debenture-holders had any authority to represent the heirs of Syed Zaffar Husain or to negotiate about their securities with a third party. The assets of the Bank of Upper India do not appear to have been transferred in due course of law to either the Trust of India or the Alliance Bank Ltd. A deed of release bearing an eight annas stamp appears to have been executed with the set design of conveying the assets of the Bank of Upper India to the Trust of India Ltd. This document was unregistered and therefore could not effectively operate to transfer the assets to the Trust of India Ltd. We are clearly of opinion that the plaintiff's cause of action as a holder of debentures in pursuance of the composition scheme sanctioned by the High Court on 2nd June 1915 under Section 153, Companies Act, remains unimpaired. The original rights of the parties under the fixed deposit dated 1st March 1910, became replaced by the rights which came into existence under the aforesaid order of the High Court. The plaintiff and the other coheirs became therefore the debenture-holders of the defendant company. They could not lose those rights except either by a fresh contract between the parties or by operation of law. The plaintiff or his other coheirs did mot surrender their rights to a third party under a fresh contract. Indeed, there was no novation of contract. The original tights as secured by the order of the High Court dated 2nd June 1915 did not cease to exist by operation of law. The so-called deed of release was a mere waste paper. The supplementary deed of trust was clearly in the teeth of Section 212, Companies Act, which provides that:
Any arrangement entered into between a company about to be, or in the course of being wound up voluntarily, and its creditors shall, subject to any right of appeal under this section be binding on the company if sanctioned by an extraordinary resolution and on the creditors, if acceded to by 3/4ths in number and value of the creditors.
21. The resolution mooted in the meeting of the trustees dated 31st January 1917 was not acceded to by 3/4ths in number and value of the creditors. This was therefore not an arrangement which could be binding upon the creditors. It therefore could not take away the right of the plaintiff and his other coheirs, Reliance has been placed upon the doctrine of part performance as an answer to the objection that the directions of the statute as contained in Section 212 have not been complied with. The doctrine of part performance cannot create or annul a title. Where there is a legal defect in an agreement between the parties by reason of its not being registered but the parties have acted on the terms of the agreement and in arrangement of their rights in accordance with the said terms equity steps in. In such cases equity will support a transaction clothed imperfectly in those legal forms to which finality attaches after the bargain has been acted upon: Muhammad Musa v. Aqhore Kumar Gangoli A.I.R. 1914 P.C. 27. Where the statute makes it imperative that certain conditions must be fulfilled, the non-fulfilment of these conditions cannot be supplied by invoking the doctrine of part performance.
22. The assets of the Bank of Upper India Ltd., consisted of moveable and immovable property of the value of more than Rs. 100. There could be no transfer or release in favour of the Trust of India Ltd., or the Alliance Bank of Simla, Ltd, without an instrument in writing duly registered. It has been held by a -Full Bench of this Court in Ram Gopal v. Tulsi Ram : AIR1928All641 ., that the doctrince of part performance cannot override the positive rules of law embodied in the Transfer of Property Act. This principle does not appear to have been kept in view in re Hunter v. Damodar A.I.R. 1924 All. 772. The decision of one of the Judges in that case must be taken to have been overruled by the Full Bench decision in Ram Gopal's case : AIR1928All641 .; and also by a recent pronouncement of the Privy Council in John H. Arseculeratre v. B.M. Perera, A.I.R. 1928 P.C. 273 at p. 275, it has been held by their Lordships of the Judicial Committee that the doctrine of part performance has no application when non-observance of a statutory provision makes the transaction ineffective. We are clearly of opinion that the plaintiff has a subsisting cause of action against the defendant-appellant.
23. Syed Zaffar Husain died before the fixed deposit became mature for payment. Of his heirs only one, namely, Mt. Husain Bandi, the widow, was entitled to recover a share of the deposit because she was a major. She was away from the country when the Bank of Upper India Ltd. went into liquidation and she died in a foreign land. Mt. Amtul Zainub died a minor. Plaintiff was a minor at the death of his father and continued to be a minor at the date of the present suit.
24. The lower appellate Court has relied upon Article 60, Lim. Act; and held that the suit was within limitation as being within three years from the time when the demand was made by the plaintiff for his money. The demand was made in 1925. Article 60, Lim. Act prescribes a period of three years from the date when he demand is made in a suit:
for money deposited under an agreement that it shall be payable on demand, including money of a customer in the hands of his banker so payable.
25. The money payable under the' fixed deposit was not subject to an agreement that it was payable on demand. It was not money of a customer in the hands of the banker ' so payable,' that is payable on demand. On the other hand, it was money payable by the Bank at a specified time, namely, upon the expiry of three months from the date of the deposit. Article 60, Lim. Act, is therefore not applicable to a suit of this description. The plaintiff's claim however is saved from the operation of limitation by a variety of reasons. The cause of action accrued to the plaintiff during his minority and the disability has not ceased. Under the composition scheme sanctioned by the High Court ten years' time was allowed for the debentures to mature for payment. The period of debentures expired on 1st April 1925. The suit was instituted on 18th March 1926. It is clearly within time. This appeal is without force and is dismissed with costs.