JUDGMENT - (1) This is an appeal by way of a Judges Summons taken out by Madhya Pradesh State Co-operative Bank Ltd. (Hereinafter referred to as "the Co-operative Bank") against the Official Liquidator as Liquidator of the Laxmi Bank Ltd. (in Liquidation), praying that the Co-operative Bank be declared as" a preferential creditor with a trust claim of Rs. 11,031.87" against the Laxmi Bank and that the decision of the Official Liquidator disallowing the claim as a trust claim be modified.

(2) The Co-operative Bank had at all material times a Pay Office at Harda and a branch at Betulganj but no office or Branch in Bombay. The Laxmi Bank at all material times had Branches at Yeotmal, Khandwa, Chhindwara and Bombay.

(3) On the 17th May 1960 the Co-operative Banks Pay Office at Harda sent to the Laxmi Banks Branch at Yeotmal a Bill for Rs. 5,000/- for collection at Yeotmal with instructions inter alia, "to remit the proceeds by Demand Draft on Bombay". The Laxmi Banks Yeotmal Branch collected the proceeds and according to the said instructions sent its Demand Draft, dated 24th May 1960, for Rs. 5,001.23 on the Laxmi Banks Bombay Branch to the Co-operative Banks Pay Office at Harda.

(4) On the 21st May 1960 the Co-operative banks Pay Office at Harda sent to the Lax mi Banks Branch at Yeotmal a Bill for Rs. 3,000/- for collection at Yeotmal with instructions to remit the proceeds by a Demand Draft on Bombay. The Laxmi Banks Yeotmal Branch collected the proceeds and according to the said instructions sent its Demand Draft, dated 28th May 1960, for Rs. 2,999.78 on th Laxmi Banks Bombay Branch to the Co-operative Banks Pay Office at Harda.

(5) On the 25th May 1960 the Co-operative Banks Pay Office at harda sent to the Laxmi Banks Branch at Khandwa a Bill for Rs. 3,.000/- for collection at Khandwa with instructions to remit the proceeds by a Demand Draft on Bombay. The Laxmi Banks Khandwa Branch collected the proceeds and according to the said instructions sent its Demand Deaft, dated 26th May 1960, for Rs. 2,998/- on the Laxmi Banks Bombay Branch to the Co-operative Banks Pay Office at Harda.

(6) On the 12th May 1960 the Co-operative baks Branch at Betul Ganj sent to the Laxmi Banks Branch at Chhindwara a Bill for Rs. 279.60 for collection at Chhindwara with instructions to remit the proceeds by a Demand Draft on Betul. The Laxmi Banks Chhindwara Branch collected the proceeds and according to the said instructions sent its Demand Draft, dated 27th May 1960, for Rs. 281.60 on the Laxmi Banks Branch at Betul Ganj.

(7) On 30th May 1960 a petition was filed for an order for winding up theLaxmi Bank and such an order was made on 28th June 1960.

(8) It is the case of the Co-operative Bank, as made out in their affidavits of claim, that all the said four drafts "were returned unhonoured as by that time the Laxmi Bank had stopped all payments and had been placed under liquidation.

(9) In respect of all the said 4 Demand Drafts the Co-operative Bank Lodged a claim for an aggregate sum of Rs. 11,280.56 and claimed further that the Laxmi Bank had been constituted and acted as an Agent of the Co-operative bank and having collected the amounts held them in trust for the special purpose of paying the same to the Co-operative Bank and that, as it was a trust claim, the same should be allowed as a preferential claim. The Official Liquidator investigated the claim. He upheld the Co-operative Banks said claim for Rs. 11,280.56 but further held that the same was liable to a set off for the sum of Rupees 248.69 so that the net claim was reduced to Rupees 11,031.87. Co-operative Bank does not dispute the said set off or the correctness of the said amount of Rs. 11,031.87 arrived at after the set off. The Official Liquidator allowed that claim only as an ordinary claim, but not as a preferential claim. It is to dispute this latter finding that the Co-operative Bank has filed this Appeal by taking out this Judges Summons.

(10) The essential facts relating to all the s

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