Mathurai Sadhu Seva Samajam vs The Official Assignee, representing the Estate of M.K. Balakrishnier and Sons

Rajamannar, C.J.—The Madurai Sadhu Seva Samajam, a society regd. under the Societies Registration Act, XXI (21) of 1860, which is the applt. before us filed an appln. in the insolvency of M. K. Balakrishna Aiyar & Sons claiming a preferential payment of a sum of Rs. 8056-1-0 being the amount due for principal & interest in respect of a sum of Rs. 7000 deposited with the insolvent firm on 29-7-1946. The society was certainly a charitable institution, but the learned Judge held that even assuming that the insolvent firm knew of the objects of the society & that the funds were in the nature of trust funds, that would not be sufficient to create a deposit on trust which will entitle payment in priority over other creditors. He held that there was nothing to show that the insolvent firm received this deposit or held it on trust for the society. He therefore dismissed the appln.

It is not contended that on the facts as placed before him, the Judge erred in dismissing the appln. But an appln. has been made to us to admit certain documents as additional evidence & it is argued that if such evidence is admitted, the society would be entitled to the relief for which they prayed in their appln. The documents are intended to show that the Insolvent firm was a member of the society. The argument is that if the firm was a member of the society, it must be deemed to be in law a trustee in respect of the amounts invested with the firm. Assuming that the insolvent firm was a member of the society, we fail to see how that fact by itself makes the firm a trustee. The society is a corporate body with a separate juristic personality which is distinct & separate from that of its members. The moneys & property belonging to the society are vested either in the trustees, if any, duly appointed under the provisions of the Act, or, in the absence of trustees, in the governing body. It is admitted that the insolvent firm was not a member of the governing body; nor was it one of the trustees under the Act. It cannot therefore be said that the insolvent firm which at best was an ordinary member of the society was by reason of such membership in the position of a trustee in respect of moneys belonging to the society as such. Here was a plain case of an investment of moneys belonging to the society by the society with the insolvent firm which happened to be also a member of the society. In this view, as the applt. is not likely to succeed in establishing his claim, even after admission of the documents sought to be admitted, we think we should not admit them. The appln. (C. M. P. No. 776 of 1951) is therefore dismissed.

The appeal also fails & is dismissed with costs.