Banks must not knowingly be a party to the application of trust moneys to any purposes inconsistent with the trusts affecting them, and they are liable if they have knowledge of the misapplication of trust money received by their customer.

Horace Owen Compton Beasley, Kt., C.J.

1. This is an appeal by the Imperial Bank of India, the 2nd defendant in the suit. The facts out of which the suit and this appeal arise are as follows. The plaintiff is the son of one Sanjeevi Rangiah Naidu, who, on the 14th December, 1913, made a will bequeathing to the plaintiff, his younger son, the sum of Rs. 3,121-10-3 which had been deposited by him in the appellant Bank in fixed deposit, dated the 24th July, 1913. In this will the testator appointed Chellammal, his sister and R. Lakshmiah Naidu, his brother-in-law, and the plaintiffs maternal uncle the guardians of the plaintiff. It was further provided that these two guardians were to receive the accrued interest earned by the sum of money in fixed deposit already referred to once a year for the maintenance and education of the plaintiff till he attained majority when he would be entitled to receive the whole amount on fixed deposit from the Bank. The plaintiffs father died on the 20th January, 1914 and the two guardians applied to this High Court for the grant to them of letters of administration with the will annexed. The grant was ordered on the 10th February, 1916, on the necessary security being furnished. One of the sureties of whom there were three was the husband of the 1st defendant in the suit. The plaintiff was supported by Chellammal during her lifetime but she died in 1924 and thereafter the other guardian Lakshmiah Naidu would have nothing to do with the plaintiff or his support. The plaintiff attained majority in April, 1928 and discovered in 1929 that the sum of money in fixed deposit at the Imperial Bank had been withdrawn by Lakshmiah Naidu on the 18th March, 1916, together with one years interest from the date of the deposit by the testator of this money and that Lakshmiah Naidu had drawn it out on the pretext of investing it on more advantageous terms as to interest in house property or some other form of investment. In other words, the plaintiff discovered that the whole of the amount bequeathed to him by his father had gone. Lakshmiah Naidu died in September, 1929; and on the 1st February, 1930, the security bond having been assigned over to the plaintiff by the Registrar of the High Court, he filed this suit against the widow of one of the sureties and in consequence of her written statement he made the appellants also defendants. Before stating some further facts, it is necessary to refer to the will. In addition to the provisions already referred to there is the direction that the money in fixed deposit is to be transferred and renewed in the name of the minor son (the plaintiff). The testators intention therefore was that the money which he had invested on fixed deposit and which at the time of his making the will was still in fixed deposit should be transferred to the name of the plaintiff and the fixed deposit renewed. As a matter of fact on maturity according to the rules of the Bank the money was transferred to current account so that on the 24th July, 1914, this money ceased to be in fixed deposit and was placed in current account. It is now necessary to state some very important facts. On the 17th January, 1914, three days before the testators death, Lakshmiah Naidu and Chellammal, the two guardians appointed under the will, wrote through a vakil to the Secretary of the appellant Bank calling the Banks attention to the amount in fixed deposit standing in the name of the testator and stating that the testator had executed a will directing that the amount standing in fixed deposit should be renewed and should be paid to the minor on his attaining majority and that in the meanwhile the interest alone was to be drawn by the executors. It was also stated that the testators eldest son was attempting to draw out this money without any authority and the Bank was warned that the money was not to be transferred or otherwise dealt with till the guardians produced probate of the will. On the 15th Decemb