Case: New Bank Of India Ltd Vs. Pearey Lal

the plaintiffs claim was not liable to be reduced under the scheme sanctioned by the High Court of East Punjab. The Court also negatived the plea of the Bank that the amount at Rs. 1,35,000/- was deposited with the Bank at Lahore for opening a fixed deposit account subject to the conditions which the Bank set up. The findings of the trial Court were confirmed in appeal, by a Division Bench of the High Court at Calcutta. 7. The facts found proved, according to the findings of the trial Court and confirmed by the High Court are therefore that the plaintiff delivered an amount of Rs. 1,25,000/- on July 18, 1947, and Rs. 10,000/- on July 19, 1947, to the Bank a Lahore for transmission to Calcutta, with instructions to await the directions of the plaintiff regarding the opening of accounts for keeping the same in fix deposit or otherwise in the Calcutta Branch of the Bank, and the plaintiff never gave instructions for opening any account, fixed deposit or otherwise, in regard to the amounts after they reached Calcutta. 8. Delivery of the amount for transmission to the Bank created ex facie a relationship of a fiduciary character. But counsel for the Bank contends that when the amount was handed over at Lahore to the Bank by the plaintiff who was an old constituent of the Bank it must be presumed that a relationship of debtor and creditor arose and by the addition of instructions for transmission of the amount to another branch the relationship of trustee and cestui que trust did not arise. He submitted that the contention that the relation between the plaintiff and the Bank was of creditor and debtor was supported by three important circumstances : (1) that the Bank agreed to pay interest on the amount delivered by the plaintiff ; (2) that the Bank charged no commission or remuneration for transmission of the amount and 3. that even on the plaintiffs case the amount was to be utilized for opening fixed deposit accounts at Calcutta. It is true that in the absence of other evidence a person paying money into a Bank, whether he is a constituent of the Bank or not, may be presumed to have paid the money to be held as bankers ordinarily hold the moneys of their constituents. If no specific instructions are given at the time of payment or thereafter, and even if the money is held in a suspense account the Bank does not thereby become a trustee for the amount paid. In other words, when a person dealing with a bank delivers money to the Bank an intention to create a relation of creditor and debtor between him and the Bank is presumed, it being the normal course of the business of the Bank to accept deposits from its customers. But this presumption is one of fact arising from the nature of the business carried on by the Bank and is rebutted by proof of special instructions, or circumstances attending the transaction. Where the money is paid to a bank with special instructions to retain the same pending further instructions (Official Assignee, Madras v. Natesam Pillai, ILR (1940) Mad 845 : (AIR 1940 Mad 441 )), or to pay over the same to another person who has no banking account with the bank and the bank accepts the instructions and holds the money pending instructions from that other person, Official Assignee of Madras v. D. Rajam Ayyar, ILR 36 Mad 499 (FB) ), or where instructions are given by a customer to his banker that a part of the amount lying in his account be forwarded to another bank to meet a bill to become due and payable by him and the amount is sent by the banker as directed, (Farley v. Turner, (1857) 26 LJ Ch 710), a trust results and the presumption which ordinarily arises by reason of payment of the money to the bank is rebutted. 9. It is not necessary in this appeal to consider whether because of an agreement to pay interest the relationship may be deemed to be of debtor and creditor, because it was field by both the courts below that no such agreement is proved, and according to the settled practice of this Court the finding is regarded as binding. 10. The Bank charged no commission or remuneration for transmitting the amount to Calcutta, but that, in our judgment, is a circumstance which permits of no inference against the plaintiff. Undoubtedly, when the amount was delivered to the Bank by the plaintiff it was his intention to open fixed deposit account in Calcutta with the Banks branch but the fixed deposit accounts were to be opened after instructions were received. 11. The transaction, as evidenced by the two receipts, was primarily one of entrustment of the amount to the Bank for transmission to Calcutta. After the purpose for which the moneys were entrusted was carried out, in the absence of further instructions the defendant did not cease to be a trustee. So long as instructions were not given by the plaintiff for appropriation of the amounts the Bank continued to hold the amounts transmitted for and on behalf of the plaintiff and there is no evidence that the plaintiff gave instructions or acquiesced in the opening of a fixed deposit account after the same reached Calcutta. It is immaterial that the Bank purported to open fixed deposit account in the name of the plaintiff with the amounts received at its head office at Lahore. That course of action was adopted without the consent of the plaintiff and it could not bind the plaintiff. The High Court was, therefore, right in holding that the amount delivered by the plaintiff to the Bank at Lahore remained in trust even after it reached Calcutta, and it was not held by the Bank, in deposit for the plaintiff within the meaning of the scheme sanctioned by the High Court of East Punjab.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]It is true that in the absence of other evidence a person paying money into a Bank, whether he is a constituent of the Bank or not, may be presumed to have paid the money to be held as bankers ordinarily hold the moneys of their constituents.If no specific instructions are given at the time of payment or thereafter, and even if the money is held in a suspense account the Bank does not thereby become a trustee for the amount paid. In other words, when a person dealing with a bank delivers money to the Bank an intention to create a relation of creditor and debtor between him and the Bank is presumed, it being the normal course of the business of the Bank to accept deposits from its customers. But this presumption is one of fact arising from the nature of the business carried on by the Bank and is rebutted by proof of special instructions, or circumstances attending the transaction. Where the money is paid to a bank with special instructions to retain the same pending further instructions (Official Assignee, Madras v. Natesam Pillai, ILR (1940) Mad 845 : (AIR 1940 Mad 441  )), or to pay over the same to another person who has no banking account with the bank and the bank accepts the instructions and holds the money pending instructions from that other person, Official Assignee of Madras v. D. Rajam Ayyar, ILR 36 Mad 499   (FB) ), or where instructions are given by a customer to his banker that a part of the amount lying in his account be forwarded to another bank to meet a bill to become due and payable by him and the amount is sent by the banker as directed,y v. Turner, (1857) 26 LJ Ch, a trust results and the presumption which ordinarily arises by reason of payment of the money to the bank is rebutted9. It is not necessary in this appeal to consider whether because of an agreement to pay interest the relationship may be deemed to be of debtor and creditor, because it was field by both the courts below that no such agreement is proved, and according to the settled practice of this Court the finding is regarded as binding10. The Bank charged no commission or remuneration for transmitting the amount to Calcutta, but that, in our judgment, is a circumstance which permits of no inference against the plaintiff. Undoubtedly, when the amount was delivered to the Bank by the plaintiff it was his intention to open fixed deposit account in Calcutta with the Banks branch but the fixed deposit accounts were to be opened after instructions were received11. The transaction, as evidenced by the two receipts, was primarily one of entrustment of the amount to the Bank for transmission to Calcutta. After the purpose for which the moneys were entrusted was carried out, in the absence of further instructions the defendant did not cease to be a trustee. So long as instructions were not given by the plaintiff for appropriation of the amounts the Bank continued to hold the amounts transmitted for and on behalf of the plaintiff and there is no evidence that the plaintiff gave instructions or acquiesced in the opening of a fixed deposit account after the same reached Calcutta. It is immaterial that the Bank purported to open fixed deposit account in the name of the plaintiff with the amounts received at its head office at Lahore. That course of action was adopted without the consent of the plaintiff and it could not bind the plaintiff. The High Court was, therefore, right in holding that the amount delivered by the plaintiff to the Bank at Lahore remained in trust even after it reached Calcutta, and it was not held by the Bank, in deposit for the plaintiff within the meaning of the scheme sanctioned by the High Court of East Punjab.