The main legal point established in the judgment is the interpretation and application of the provisions of S.45 (7) of the Banking Regulation Act, 1949, and the creation of an equitable assignment by way of security under S.130 and 134 of the Transfer of Property Act, 1882.

1. This appeal is by the defendant in p. S.377 of 1966. The respondent, the State Bank of Travancore is the plaintiff in the suit. The suit was based on Ext. P2 promissory note executed by the appellant in favour of Latin Christian Bank Ltd. which was amalgamated with the State Bank of Travancore, the respondent. The scheme for amalgamation of the Latin Christian Bank Ltd. with the respondent Bank sanctioned under S.45 (7) of the Banking Regulation Act, 1949 came into operation on 17 81964 and it contained a provision for reduction of the 'interest or rights' of the depositors as envisaged by clause (f) of sub-section (5) of S.45 of the Banking Regulation Act, 1949. The reduction was to the extent of 40 percent. The appellant had deposited Rs. 6000/- in the Latin Christian Bank Ltd. and a fixed deposit receipt, Ext. P7 dated 9-6-1961 had been issued to him for the amount. The deposit was due to mature on 26-3-1964. In the meantime, the promissory note, Ext. P2 dated 22-10-1963, was executed by the appellant for Rs, 1890/- in favour of the Latin Christian Bank Ltd. payable on demand with interest. As security for the amount due under Ext. P2 the fixed deposit receipt, Ext. P7, had been duly discharged by the appellant and was handed over to the Bank.

2. On 22-10-1963 the date of the note Ext P2, an agreement was also executed by the appellant (Ext.P3) stating that the fixed deposit receipt Ext. P7 had been offered as security for chitti moneys due from the appellant to the Bank and that after providing Rs. 3900/-for future subscriptions due from the appellant towards the chitti, the balance amount covered by the fixed deposit receipt Ext. P7 be treated as security for the payment of Ext. P2 promissory note amount. We shall extract Ext. P3 which is in Malayalam.

3. As a result of the scheme the Latin Christian Bank Ltd. got amalgamated with the State Bank of Travancore, the respondent-plaintiff. The contention that was raised by the appellant in answer to the suit was that long before the scheme came into operation the fixed deposit receipt Ext. P7 had matured on 26 3 1964 and that after adjusting the amounts due towards future chitti subscriptions therefrom there was enough money left with the Bank to adjust the amount due from the appellant to the Bank under Ext. P2 promissory note and that such adjustments should have been made on the date on which the fixed deposit receipt Ext. P7 matured. If that was done nothing will be found due to the respondent Bank under Ext. P2 note and hence the suit should be dismissed.

4. The learned Munsiff accepted the contention that the amounts due under Ext. P7 to the appellant should be set off as against that due to respondent under Ext. P2 by applying S.47 of the Travancore-Cochin Insolvency Act, 1955 as if there was a question of adjustment in insolvency. In appeal by the respondent before the District Court, the District Court took the view that S.47 of the Travancore-Cochin Insolvency Act, 1955 will have no application in view of the fact that the provisions of S.45 (14) of the Banking Regulation Act 1949 and of any scheme made under it shall have effect "notwithstanding anything to the contrary contained in any other provisions of this Act or in any other law or in any agreement, award or other instrument " In this view the application of S.47 of the Travancore-Cochin Insolvency Act, 1955 was negatived The scheme having come into force on 17 81964 it was held that the amount of the fixed deposit receipt got reduced by 40 percent and the balance was sufficient only to pay off the future subscriptions for the chitti due from the appellant. The claim on the promissory note Ext. P2 was therefore decreed.

5. We do not consider that the framing of a scheme of amalgamation under S.45 and giving a direction under S.45 (5) (f) of the Banking Regulation Act 1949 can be treated as an insolvency to which the provisions of S.47 of the Travancore-Cochin Insolvency Regulation Act 1955 would be