Judgment :- 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. 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 attracted. 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 attracted. There is no question of insolvency in the case though the reduction under clause (f) of sub-section (5) of S.45 is ordered on the basis of the inability of the Bank to pay the full amounts due from the Bank to the creditors. The question has therefore to be answered on other considerations. 6. Counsel for the appellant based his arguments on the provisions contained in S.130 and 134 of the Transfer of Property Act, 1882. Those sections are in these terms: "130. Transfer of actionable claim. (1) The transfer of an actionable claim whether with or without consideration shall be effected only by the execution of an instrument in writing signed by the transferor or his duly authorised agent, shall be complete and effectual upon the execution of such instrument, and thereupon all the rights and remedies of the transferor, whether by way of damages or otherwise, shall vest in the transferee, whether such notice of the transfer as is hereinafter provided be given or not: Provided that every dealing with the debt or other actionable claim by the debtor or other person from or against whom the transferor would, but for such instrument of transfer as aforesaid, have been entitled to recover or enforce such debt or other actionable claim, shall (save where the debtor or other person is a party to the transfer or has received express notice thereof as hereinafter provided) be valid as against such transfer. (2) The transferee of an actionable claim may, upon the execution of such instrument of transfer as aforesaid, sue or institute proceedings for the same in his own name without obtaining the transferor's consent to such suit or proceedings, and without making him a party thereto. Exception. Nothing in this section applies to the transfer of a marine or fire policy of insurance, or affects the provisions of S.38 of the Insurance Act, 1938. 134. Mortgaged debt. Exception. Nothing in this section applies to the transfer of a marine or fire policy of insurance, or affects the provisions of S.38 of the Insurance Act, 1938. 134. Mortgaged debt. Where a debt is transferred for the purpose of securing an existing or future debt, the debt so transferred, if received by the transferor or recovered by the transferee, is applicable, first, in payment of the costs of such recovery; secondly, in or towards satisfaction of the amount for the time being secured by the transfer; and the residue, if any, belongs to the transferor or other person entitled to receive the same." 7. It was submitted that the effect of executing Ext. P3 & the handing over of the fixed deposit receipt duly discharged was to create an equitable assignment of the balance of the amount available with the Bank after setting off from the fixed deposit amounts the moneys due towards the chitti. It was argued that the promissory note (Ext. P2) debt should have been adjusted against this amount as on the date of the maturity of the fixed deposit receipt on 26-3-1964 there was an obligation on the part of the Bank to adjust amounts available under the fixed deposit receipt towards the promissory note debt. It is admitted before us that if there was an equitable assignment as contended and if there was an obligation to set off as pleaded by appellant's counsel the promissory note debt would have got discharged on 26-3-1964 and nothing would have been found due under the promissory note. Of course the contention on behalf of the respondent by counsel was that there had been no equitable assignment and no obligation to set off as pleaded by the appellant. 8. So the questions arising for decision arc whether on the facts and in the circumstances of the case and considering the terms of Ext. P3 and the fact of the discharge of the fixed deposit receipt Ext. P7 and the handing over of the same to the Bank, an equitable assignment had been created and whether there was an obligation on the part of the Bank to adjust the amounts available with the Bank towards the debt of the appellant under the promissory note Ext. P2. 9. P7 and the handing over of the same to the Bank, an equitable assignment had been created and whether there was an obligation on the part of the Bank to adjust the amounts available with the Bank towards the debt of the appellant under the promissory note Ext. P2. 9. S.130 of the Transfer of Property Act, 1882 shares some of the features of the statutory assignment of a chose in action as well as an equitable assignment of a chose in action according to English Law. Under the Common Law of England a chose in action was not assignable. English equity, however, recognised such assignments on the principle that equity considers that as done which ought to be done. Though S.130 of the Transfer of Property Act. 1882, enjoins that a transfer of an action should be effected only by the execution of an instrument in writing signed by the transferor or bis authorised agent, the section does not insist on any particular words being used or in any particular form being adopted. Nor is it necessary that the terms of the transfer must be discernible from a single instrument. The question in such cases will be what was the intention of the parties and was there any intention to transfer and has there been an instrument in writing signed by the transferor. Even after the Judicature Act of 1873 in England, a transfer of an actionable claim has to be absolute in law. In other words a transfer of an actionable claim by way of security was not permissible in law. But English equity recognised as assignment of an actionable claim by way of security. The Judicial Committee of the Privy Council held in Mulraj Khatau v. Vishwanath Prabhuram Vaidya 37 Bombay 198 that under S.10 of the Transfer of Property Act an absolute assignment as well as an assignment by way of security were both permissible. The principle of the decision appears to have been uniformly applied throughout India. It is therefore evident that under S.130 of the Transfer of Property Act an assignment of an actionable claim by way of security is permissible. Now the question is whether it is possible to spell out from the terms of Ext. P3 and the discharge of Ext. The principle of the decision appears to have been uniformly applied throughout India. It is therefore evident that under S.130 of the Transfer of Property Act an assignment of an actionable claim by way of security is permissible. Now the question is whether it is possible to spell out from the terms of Ext. P3 and the discharge of Ext. P7 fixed deposit receipt and the handing over of the same to the Bank there was an intention to assign the actionable claim represented by the fixed deposit receipt Ext. P7 by way of security for the repayment of the promissory note debt. 10. There can be few circumstances in which an equitable assignment can be inferred. Fisher on Mortgages deals with creation of an equitable assignment by way of security. It states that an equitable assignment by way of security may be made in the following manner: "(1) By an agreement between a debtor and his creditor that a specific thing in action which is, or will be, in the hands of or due from a third person and which belongs to the debtor, shall be applied in discharge of the debt; (2) By an order given by the debtor whereby the holder of a fund is directed or authorised to pay it to the creditor." (Fisher on Mortgages, Eighth edition at page 94) 11. Chitty L. J expressed the view in Durhan Brothers v. Roberston 18981 Q. B 765 at page 769 as follows: "A mere charge on a fund or debt operates as a partial equitable assignment. This is the 3rd way and the 4th is indicated in Fisher on Mortgages at page 96. "If, however, there is a sufficient indication that the supposed assignee is to have the benefit of the fund or thing in action in question, in addition to relying on the credit of the assignor, or, as it is sometimes put, is to be paid "out of the fund" as distinguished from "when the assignor gets the fund", a valid equitable assignment is created, provided that the transaction is for value. The intention must be that the property shall pass. The intention must be that the property shall pass. A cheque is not an equitable assignment of the drawer's balance at his bankers, being in the nature of a bill of exchange." The Supreme Court had to consider the question whether there was an assignment of a debt in favour of a Bank by the appellant in the case before the court in Seth Loon Karan Sethiya v. Ivan E. John and others AIR 1969 S. C. 73. The facts stated in the headnote of the decision are: "The appellant was indebted to a Bank. He executed a power of attorney in favour of the Bank authorising the Bank to execute a decree obtained by the debtor against a third person and credit the realisations to the debtor's account " 12. The question was whether there was an equitable assignment of the debt covered by the decree and the matter has been dealt with by the court in Para.7 of the judgment thus: "This takes to us to the question whether the power given to the Bank amounts in equity to an assignment of the decree or any portion thereof, to the Bank. From the power of attorney it is clear that the amount under the decree was specifically earmarked for discharge of the debts due to the Bank. It was constituted as a special fund for the said purpose. The power to realise that fund was made over to the Bank with the further authority to set off the amount realised towards the debts due to it. In other words, the power of attorney is an engagement to pay out of the particular fund the debt due to the Bank and hence the same constitutes an equitable assignment of the amount due under the decree or so much of that amount as is necessary for discharging the debts due to it 13. Having said so the court referred to the decisions in Watson v. Duke of Wellington (1830) 39 ER. 231 and that in Burn v. Carvalho (1839) 41 ER. Having said so the court referred to the decisions in Watson v. Duke of Wellington (1830) 39 ER. 231 and that in Burn v. Carvalho (1839) 41 ER. 265 and held that "the courts in India, which administer both law as well as equity, have followed the rule laid down in the above decisions." The decision in Seth Loon Karan Sethiya v lyan E. John and others, AIR 1969 S.C. 73, has been followed in a later decision by the Supreme Court in Bharat Nidhi Ltd. v. Takhatmal AIR 1969 S.C. 313. The facts therein were more or less similar. The Supreme Court has applied in these cases the rule stated by Fisher on Mortgages which we have extracted under the 4th head in para 10 above. 14. The classical statement regarding an equitable assignment is that contained in the decision by Lord Truro in Rodick v. Gandell (1850) 1 Deg M and G 763. The passage has been quoted in Lagdir Nauji v. Surendra Mohan Nag and another AIR 1938 Cal. 606 and by this court in Chacko v. Union of India 1961 KLJ 904 at page 906 Para.8. "An agreement between a debtor and a creditor that the debt owing shall be paid out of a specific fund coming to the debtor, or an order given by a debtor to his creditor upon a person owing money or holding funds belonging to the giver of the order, directing such person to pay such funds to the creditor, will create a valid equitable charge upon such fund; in other words, will operate as an equitable assignment of the debts or fund to which the order refers." 15. The above view was also followed by Rankin C. J. in Probodh Chandra Mitra v. Road Oils (India) Ltd. and others AIR 1930 Cal. 782 and by B. K. Mukherjea J. in Nishi Kanta Das Thakur and another v. Pramath Nath Das and another AIR 1938 Cal. 785. 16. A valid equitable charge is treated as an equitable assignment of the debts or funds to which the order refers and as we have noticed, Chitty L. J. has stated that "a mere charge on a fund or debt operates as a partial equitable assignment For the purpose of this case, it is unnecessary to go to that extent. 16. A valid equitable charge is treated as an equitable assignment of the debts or funds to which the order refers and as we have noticed, Chitty L. J. has stated that "a mere charge on a fund or debt operates as a partial equitable assignment For the purpose of this case, it is unnecessary to go to that extent. Apart from the creation of a charge on the balance of the fixed deposit amount (balance after setting off chitti dues) there appears to be sufficient indication of intention that there should be an assignment of the fixed deposit amount by virtue of the discharge of the fixed deposit receipt by the appellant and handing over the same to the Bank. Thus the benefit of the fund represented by the fixed deposit receipt was given to the Bank, pointing out that amount for discharge of the promissory note debt. In view of this, the principle applied by the supreme Court in the two decisions in Seth Loon Karan Sethiya v. Ivan E. John and others and Bharat Nidhi Ltd. v. Takhatmal AIR 1969 S. C. 73 and 313 is attracted. The earlier decision observed thus: "In other words, the power of attorney is an engagement to pay out of the particular fund the debt due to the Bank and hence the same constitutes an equitable assignment of the amount due under the decree or so much of that amount as is necessary for discharging the debts due to it" 17. Justice Raman Nayar considering the aspect of transfer for the purpose of S.130 of the Transfer of Property Act expressed himself thus in Para.19 of the judgment in Palai Central Bank Ltd. v. Cherian & Others 1962 KLT 896: "19. It is true that the instrument in writing contemplated by S.130 of the Transfer of Property Act need not be in any particular form and need not employ any particular words or any set formula. It is not even necessary that there should be a document which is the repository of the whole transaction. All that is required is that there should be something in writing from which the intention to transfer the actionable claim can be gathered. But, as I have shown, no such intention can be gathered from the documents in these cases. It is not even necessary that there should be a document which is the repository of the whole transaction. All that is required is that there should be something in writing from which the intention to transfer the actionable claim can be gathered. But, as I have shown, no such intention can be gathered from the documents in these cases. To say that the deposit receipt is to be held as security and that the money, when it becomes due is to be applied in a particular way, or to say that a particular sum in deposit is earmarked by way of security and that if a loan is not repaid in time it may be repaid from out of the deposit when the deposit becomes payable, does not to my mind manifest an intention to transfer the deposit itself. In the cases relied upon on behalf of the liquidator, namely Rama Iyen v. Venkatachalam Pattar (ILR. 30 Madras 75), Ardesir Bajonji Surati v. Syed Sirdar Ali Khan (ILR 33 Bombay 610 at page 627), Muthukrishnier v. Veeraraghava Iyer (ILR 38 Madras 297), Navajee v. The Administrator General of Madras ILR 38 Madras 500 Seetharama Ayyar v. Narayanawami Pillai (47 Indian Cases 749) and Offl. Liquidator, Hanuman Bank v. Thangavelu Nadar (1956) 26 Com. Cas. 81) the writing said more than this and indicated an intention to transfer the debt. In the first and last of these cases there was a direction to a third party debtor to pay the debt to the supposed assignee, not a direction to the debtor to pay himself on a contingency when the debt becomes repayable. In the third there was a mortgage of the debt which necessarily implied a transfer, and in the second and fourth there was a charge or lien created on the debt itself and hence a payment directed out of the fund, not merely when the fund becomes available. And in the fifth, an entry in a statement of account signed by the persons entitled to transfer the debt showed a payment by assignment of the debt. And in the fifth, an entry in a statement of account signed by the persons entitled to transfer the debt showed a payment by assignment of the debt. Even if it be that these cases are not really distinguishable, I am unable, with great respect, to accept them as authority for holding that the transactions we are now considering effect a transfer of the deposits concerned" Justice M. S. Menon as he then was dealing with facts which appear to be similar to those in the cases before the Supreme Court came to an opposite conclusion in Chacko v. Union of India 1961 KLJ. 904. The power of attorney, to be considered Ext. P5 in the case contained the following provisions: "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 " The court observed: "The only instrument on which reliance is placed is Ext. P5. We are unable to hold that the terms of that document spell either an assignment of the fund in question or the creation of a charge over it. All that Ext. P5 seems to contemplate is a collection of the amounts due, and a subsequent appropriation by the appellant, neither of which has happened in this case." 18. Whether the above conclusion can stand, in the light of the pronouncements of the Supreme Court in Seth Loon Karan Sethiya v. Iyan E. John and others and Bharat Nidhi Ltd. v. Takhatmal AIR. 1969 S.C. 73 and 313, we need not consider in this case for we think that Ext. P3 along with the discharge and handing over the fixed deposit receipt amounts to an equitable assignment. We hold that there has been an equitable assignment. 19. We are not called upon in this case to consider the correctness or otherwise of the decisions in Ramassami Pillai v. Muthu Chetti and others (1911) ILR. 34 Madras 53, Isri Prasad and others v. Rai Ganga Prasad Singh Bahadur and others (1910) 14 Cal. W. N. 165 and Ardesir Bejonji Surti v. Syed Sirdar Ali Khan and others 1909 ILR. 33 Bombay 610 and Gopalkrishna Iyer v. Gopalakrishna Iyer & Others (1910) ILR. 33 Born. 34 Madras 53, Isri Prasad and others v. Rai Ganga Prasad Singh Bahadur and others (1910) 14 Cal. W. N. 165 and Ardesir Bejonji Surti v. Syed Sirdar Ali Khan and others 1909 ILR. 33 Bombay 610 and Gopalkrishna Iyer v. Gopalakrishna Iyer & Others (1910) ILR. 33 Born. 123 laying down the rule that a holder of a charge by way of security is a transferee. The view expressed therein has been dissented from or distinguished by Justice Raman Nayar in Palai Central Bank Ltd. v. Cherian & Others 1962 KLT. 896 and also by Sundara Aiyar J. in Muthukrishnien and others v. Viraraghava Iyer and another (1912) 23 MLJ. 430. 20. We would like to add one word about the decision in Mulraj Khatau v. Vishwanath Prabhuram Vaidya (1913) 37 Born. 198. The above decision lays down that the transfer for the purpose of S.130 of the Transfer of Property Act can be an absolute transfer or a transfer by way of security. But in either case there must be a transfer. The decision is not an authority for the proposition that the creation of a charge amounts to a transfer. 21. In the light of the above discussion the further question that we have formulated arises whether on the 26th March 1964 there was an obligation on the part of the respondent to set off the balance amount in the fixed deposit receipt (balance after adjusting the chitti dues) towards the promissory note. A similar question arose in the decision in Issac Issac Poranganal House v. Palai Central Bank Ltd. AIR 1964 Kerala 1 a Full Bench decision of this court and the following passage from the decision in Chhunnu Lal v. Bank of Upper India Ltd. Delhi AIR 1917 Lahore 386 has been quoted at page 4 with approval. "A case of considerable interest is Chunnu Lal v. Bank of Upper India Ltd., AIR 1917 Lah. 386. In that case the plaintiff had a deposit of Rs. 4,000/- in the defendant bank payable on the 10th October 1914 On the 3rd September 1914 he borrowed Rs. 2,000/- from the bank on the security of his deposit and executed a promissory note for the amount. On the 8th October the bank suspended payment and on the 12th and 13th October the plaintiff wrote to the bank to pay him the balance of Rs. Rs. 2,000/- from the bank on the security of his deposit and executed a promissory note for the amount. On the 8th October the bank suspended payment and on the 12th and 13th October the plaintiff wrote to the bank to pay him the balance of Rs. Rs. 2,000/- after deducting his debt of Rs. 2,000 from his deposit of Rs 4,000/-. and received a reply that as the bank bad stopped business no action could be taken. The question for decision was whether the plaintiff's debt had come to an end and he was a creditor to the extent of Rs. 2,000/-. Shadi Lal and Le Rossignol, JJ. said: "The plaintiff's case is that on the 10th October, 1914, when the deposit of Rs. 4,000 fell due, his liability on the pro-note came to an end, and that he became a creditor to the extent of the balance. In answer to this case it is contended on behalf of the Bank that the plaintiff is a creditor in respect of the entire amount of Rs. 4,000, that the loan taken by him on the pro-note has not been discharged, and that he is liable to pay the same with interest at the stipulated rate. To obtain an adjudication upon the rights inter se of the parties the plaintiff brought the present action for a declaration that his liability on the pro-note had come to an end.;" and "There can be no manner of doubt that on the IOth October, 1914, when the deposit matured, the defendant Bank was not entitled to call upon the plaintiff to.pay the debt due on the pro-note, considering that it had already in its possession Rs. 4,000/- belonging to the plaintiff and payable to him at once. As observed already the debt was secured on the deposit, and the plaintiff took the further precaution of writing to the Bank to appropriate part of the money, which had become due to him, to the debt due by him on the pro-note. 4,000/- belonging to the plaintiff and payable to him at once. As observed already the debt was secured on the deposit, and the plaintiff took the further precaution of writing to the Bank to appropriate part of the money, which had become due to him, to the debt due by him on the pro-note. Whether we apply the rule of set off which finds expression in the Code of Civil Procedure (of which the application to companies in liquidation has been recognised in a Division Bench judgment of this Court reported as Mehr Chand v. Amritsar Bank, 28 Ind Cas 975: (AIR 1915 Lah 204 ) or treat the case as one of payment, it is manifest and indeed it is not contested by the defendant, that apart from the scheme sanctioned by the High Court in June 1915, the Bank could not have successfully maintained a suit for the recovery of Rs. 2,000. It is further clear that if the plaintiff had, prior to the enforcement of the scheme in question, brought an action for the balance of the deposit after giving credit for Rs. 2,000/-, the Bank could not have offered any resistance to that suit and could not have claimed that the debt on the pro-note had not been extinguished." This decision is quoted with approval in Mohanlal Malpani v. Loan Co. of Assam Ltd. Shillong, 196131 Com. Cas 91: (AIR 1960 Assam 191)." 22. The decision in Chunnu Lal v. Bank of Upper India Ltd., Delhi AIR 1917 Lahore 386 has been followed by the Assam court in Mohanlal Malpani v. Loan Co of Assam Ltd. Shillong AIR 1960 Assam 191. The respondent should therefore have set off the amounts and as has already been noticed, if there was such an obligation to set off, nothing is admittedly due after the set off under the promissory note. 23. We accordingly allow this appeal, set aside the decree of the lower appellate court and dismiss the suit. In the circumstances of the case we direct the parties to bear their costs throughout. Allowed.