Chakravartti, C.J. - (1.) The appellant bank which had obtained eight Demand Drafts from the Suri Banrch of the Pioneer Bank Ltd. against cash tender put in a claim in the liquidation of the latter bank for prior payment, but was admitted by the Liquidators only as an ordinary creditor. At the settlement of the claims before the learned Company Judge, the appellant's claim for being treated as a preferential creditor was pressed again, but it was rejected by Banerjee, j., who admitted as an ordinary creditors one Provash Chandra Mitra, the Manager of the appellant bank, in whose favour the drafts had actually been issued. The present appeal is directed against that order. It is contended that the amount of the drafts was actually paid over to the Suri Branch of the Pioneer Bank for transmission to Calcutta and there having thus been an entrust-ment for a specific purpose, the appellant bank was entitled in the liquidation of the Pioneer Bank to be repaid its money in preference to the ordinary creditors.
(2.) The undisputed facts are that on 31-8-1948, the appellant bank paid a sum of Rs. 34,000/-to the Suri Branch of the Pioneer Bank Limited through its Manager, Provash Chandra Mitra, and obtained seven several drafts for diverse amounts, totalling Rs. 34,000/-. Similarly, on the 14-th of September following, the appellant bank paid to the same branch of the Pioneer Bank a further sum of Rs. 28,000/- and obtained a Demand Draft for that amount. The total amount for which the eight drafts were issued was thus Rs. 62,000/-. They were drawn on the Calcutta Branch of the Pioneer Bank Limited and were made payable on demand "to the order of Sri Provash Chandra Mitra." Payment on them could not be obtained, because before they could be presented for encashment, the Pioneer Bank Ltd. closed its doors.
(3.) So far there is no dispute as to the facts. It is well-settled that a banker's draft is a bill of exchange and as such it is a negotiable instrument. That such is the nature of a banker's draft would appear from the definition of a Bill of Exchange and a Negotiable Instrument, as contained in the Negotiable Instrument Act. A banker's draft issued by one branch of a bank to another is specifically dealt with in Section 85A. It is there provided that "where any draft, that is, an order to pay money, drawn by one office of a bank upon another office of the same bank for a sum of money payable to order on demand, purports to be endorsed by or on behalf of the payee, the bank is discharged by payment in due course." The issue of a draft is regarded in banking practice as a matter of purchase and ordinarily the relationship between the holder of a Demand Draft and the bank issuing it is that of debtor and creditor. The holder of the draft is a creditor and his remedy is on the draft.;