The requirement of a written instrument for the transfer of actionable claims, as per the Transfer of Property Act, 1882, S.130, and the priority for preferential payment in cases of competing claims over a fund.

M.S. Menon, J.

1. The plaintiff in O. S. No. 24 of 1958 of the court of the Additional Subordinate Judge, Trichur, is the appellant before us. The respondent is the Union of India, the 1st defendant in that suit.

2. The suit was for the recovery of an amount of Rs. 10,000/- deposited by one T. P. Francis with the Southern Railway as security for the due performance of an agreement between him and the railway. The deposit was made on 17-5-1951, and Ext. P. 1 of the said date is the receipt issued by the Railway. The appellant derived the right to institute the suit by virtue of a Power of Attorney executed by T. P. Francis, Ext. P. 5 dated 10-7-1953.

3. The main question for consideration is the character of the rights conveyed by Ext. P. 5. According to the Union of India arrears of income tax to the extent of Rs. 30,591-14-0 were due from T. P. Francis at the time of the execution of Ext. P. 5 and the State is entitled to a preferential payment in respect of those arrears. This contention is stated as follows in paragraph 5 of the written statement dated 7-1-1956 :

"The liability of the 2nd defendant (T. P. Francis) for the aforesaid Income Tax arrears appears to have accrued in the year 1124 M. E, long before July 1953 when the power of attorney was given to the plaintiff. The amounts due to the 2nd defendant from the Government, viz., the above said security deposit, is liable to be set off and adjusted towards the amounts due to the Government as above. The Government are also entitled to priority."

4. As pointed out in 1960 KLT 716 the State is entitled to a priority only when the debts due to it and a citizen are of equal degree and that proposition is not in dispute before us. It is also agreed that the State has no charge in respect of arrears of income tax due under the Indian Income Tax Act, 1922. The controversy, as already stated, centres round the rights conferred by Ext. P. 5.

5. According to the appellant that document should be construed either as effecting an immediate transfer to him of all the rights of T. P. Francis over the amount deposited or at least as creating a charge in his favour over that fund. We find it impossible to accept either of these contentions.

6. Ext. P. 5 is styled a Power of Attorney and is drafted like one. The only provisions emphasised before us are the clauses in which T. P. Francis says:

"I also hereby authorise my attorney herewith to appropriate the amounts due from me to my attorney.";

and:

"This Power of Attorney is not revocable by me at any time under any circumstances without the consent of the attorney."

7. As the whole case turns on the construction of the power of Attorney we may with advantage extract the whole of it in this judgment. It says :

"I, T. P. Francis, do hereby constitute and appoint A. C. Chacko (appellant) as my attorney for me in my name and on my behalf to ask or demand for or recover or sue for my civil or other appropriate proceedings all and every sums or sum of money that are or is now due and owing to me or that may fall due to me in respect of bills drawn on the Financial Adviser and Chief Accounts Officer, Southern Railway, Madras-23, in respect of the supply of timber logs to the consignee, the District Controller of Stores Southern Railway, Golden Rock, as per E. P. No. SS4/1231 of 28-3-1951 by the Controller of Stores, Nagapatam, now officed at Madras-23, for and on behalf of the President of India and for receipt of payment thereof or any part thereof to sign and deliver for me and in my name proper receipts and discharges for the same and to claim, demand and take back the tender security deposit amount of Rs. 10,000/-deposited in the name of the Little Flower Trading Company, Ollur, as per cash receipt No. V/90 of 17-5-1951 (Ext. P. 5) for Rs. 10,000/- remitted at the Financial Adviser and Chief Accounts Officer's Office, Trichinopoly, and do all other lawful acts and things effectively as I could do the same if were personally present and actin