The main legal point established in the judgment is that the bank was not a trustee for the subscriber and that the subscriber's claim for preferential payment must be negatived, and she could only rank as an ordinary creditor.

Venkataramana Rao, J.

1. This is an application by a subscriber to a chit conducted by the Travancore National Subsidiary Co. Ltd., for payment of a sum of Rs. 820 standing to the credit of the applicant in the accounts of the Travancore National and Quilon Bank Ltd., in preference to the ordinary creditors of the bank. She is a subscriber to a B class chit. According to Rule 1(a) of the rules governing the chit she had to subscribe at the rate of Rs. 40 each month for 25 successive months as the chit amount is Rs. 1000. She subscribed to the chit on 17th January 1938 and on the same day she deposited with the Mylapore Branch of the Travancore National and Quilon Bank a sum of Rs. 990. Her case is that the said amount of Rs. 990 was deposited for the specific purpose of paying the subscriptions-to the chit every month as and when they fell due and the Bank undertook to pay the-same as and when they fell due and therefore as the amount was received by the Bank for the said specific purpose, it was trust money in their hands. As the Subsidiary Company has now failed and the chit-has come to a close, she claims to be entitled to be paid the balance of Rs. 820 remaining, after payment of the instalments which fell due prior to the date on which the company was wound up. The Official Liquidator of the bank contests her claim and his case is that she was no more than an ordinary creditor of the bank. He submitted various, reasons therefore and those are:

(1) The deposit was made only with a view to earn interest at a higher rate;

(2) there was no obligation for any subscriber to deposit the amount in this account;

(3) the applicant was not obliged to have the monthly subscription in respect of her client adjusted from and out of such savings bank account as she had the option of paying the same without recourse to this account; and

(4) there is no limit to the amount to be deposited in the said account.

2. It was also pointed out in the counter-affidavit of the Official Liquidator, and this fact was not disputed before me, that Rule 4 of the Chitty Savings Bank Account was-not strictly applied in the case of non-prize subscribers. Rule 4 runs thus:

Amount deposited in the Chit Savings Bank Accounts shall not be available for withdrawal for purposes other than for payment of chit instalments till the termination of the particular chit in respect of which the account was opened.

3. The non-prize subscriber like the applicant was allowed to withdraw the amount-standing to his credit provided he accepted a lower rate of interest allowed in the case of an ordinary savings bank account and further loans were granted on the security of such amounts in the same way as in the-case of other deposits of the Bank. The main contention of Mr. Viswanatha Sastri is that Rule 18(b) of the Chit Fund Rules read with the rules of the Chitty Savings Bank Account clothe the Bank with a trust in respect of the amount deposited by a subscriber in the Chitty Savings Bank Account of the Bank. Rule 18(b) runs thus:

Arrangements have been made with the Travancore National and Quilon Bank Ltd. and its branches providing facilities to every chit subscriber of the company to open Chit Savings Bank Account with them from which chit instalments will be adjusted as and when they fall due.

4. The rules regarding the Chitty Savings Bank provide that the chit fund subscription due every month will be appropriated and adjusted from the Chitty Savings Bank Account as and when the subscription falls due for payment if there be sufficient balance to the credit in the account. It seems to me that none of these provisions makes the Bank a trustee for the subscriber. The account is opened by the Bank in pursuance of a letter addressed to them to open a deposit account which prima facie indicates that the amount was deposited by way of a deposit. It is no doubt true that the deposit was made subject to the rules relating to that account. So far as the arrangement evidenced by these