BRIJ MOHAN LALL, J.

( 1 ) THIS is a suit by the Official Liquidators of the U. P. Union Bank Limited to recover a sum of rs. 2,677-5-8 from Messrs. Dinanath Raja Ram, a firm of cloth merchants, at Budaun. The bank being in liquidation, the suit has been instituted, by virtue of the provisions of Section 45-3 of the Banking Companies (Amendment) Act (20 of 1950), in this Court.

( 2 ) THE defendant firm had a current account with the bank when it was a going concern. The defendant had overdrawn that account. The suit has been instituted to recover the amount of the overdrafts together with interest due to the bank from the defendant firm.

( 3 ) TWO pleas have been put forward in defence. In the first place, it is contended that no interest is chargeable on the overdrafts. Secondly, it is contended that the bank had wrongly refused payment of a cheque for Rs. 1,500/- to the defendant firm and the amount of that cheque should be set off against the banks claim.

( 4 ) THE first plea can be easily disposed of. It is stated in Paragraph 1 of the plaint that the defendant had agreed "to repay on demand the amount advanced to him together with interest at the rate of 71/2 per cent, per annum. " in Para. 1 of the written statement this paragraph of the plaint is unreservedly admitted. This means that there is a clear admission by the defendant of the agreement set up by the plaintiff. In the additional places, however, it is stated that the defendant had not agreed to pay interest. This plea is inconsistent with the unqualified admission of the plaintiffs allegation contained in the earlier portion of the written statement. Moreover, the practice of charging interest on the amount overdrawn is so common with the banks that the Court is justified in taking judicial notice of the practice. It may also be pointed out that the learned counsel for the defendant did not press this plea at the time of arguments. The plea must, therefore, be rejected.

( 5 ) IN order to appreciate the second plea, it may be mentioned mat one Syed Zia Ali Kazmi drew a cheque for Rs. 1,500/- in favour of the defendant firm and delivered it to it. The defendant presented the cheque to the plaintiff bank, but the cheque was dishonoured. The reason given in the Memo, attached to the cheque by the bank while returning it (the cheque) was that: "payment cannot be made due to the shortage of funds. "

( 6 ) IT is now conceded by the bank that the drawer oi the cheque had sufficient funds in his account to enable the bank to make payment. In other words, it is no longer in dispute that the cheque was wrongly dishonoured by the bank. It is the amount of this cheque which is sought to be set off against the plaintiffs claim. The argument advanced by the defendant is that wrongful refusal to pay the amount of the cheque gave rise to a claim in favour of the defendant and the amount of this claim should be deducted from the banks claim against the defendant.

( 7 ) RELIANCE is placed on Section 229, Companies Act (7 of 1913), which runs as follows: "application of insolvency rules in winding up of insolvent companies -- In the winding up of an insolvent company the same rules shall prevail and be observed with regard to the respective rights of secured and unsecured creditors and to debts provable and to the valuation of annuities and future and contingent liabilities as are in force for the time being under the law of insolvency with respect to the estates of persons adjudged insolvent; and all persons who in any such case would be entitled to prove for and receive dividends out of the assets of the company as may come in under the winding up and make such claims against the company as they respectively are entitled to by virtue of this section. "

( 8 ) IT may be pointed out that by reason of this section "rules" which are in force under the law of insolvency have been made applicable to winding up proceedings. The word "rules" has been used in this section as meaning the princ

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