Case: Anumati Vs. Punjab National Bank

The appellant and her husband Mam Chand made a fixed deposit of Rs.20,000/- with the respondent bank on 31st May, 1988 for a period of 84 months (i.e. seven years). The fixed deposit would have matured on 31.5.1995 and the amount payable on maturity was Rs.39,930/- According to the appellant half of the deposited amount belonged to her and the other half belonged to her husband. On 24th June, 1988, a loan was taken by one Khem Chand in his sole proprietary business of M/s. Verma Agro Industries. In 1991 the respondent bank filed a suit against M/s. Verma Agro Industries, Khem Chand and the appellant husband Mam Chand. In the suit it was alleged that M/s. Verma Agro Industries and Khem Chand had executed various agreements with regard to the loan and credit facilities made available by the Bank to them. It was also pleaded in the suit that Khem Chand and Mam Chand had secured the amount of the loan by creating a mortgage in respect of immoveable property consisting of agricultural land. According to the plaint a total sum of Rs.2,57,625/- inclusive of interest was payable by M/s. Verma Agro Industries and Khem Chand to the respondent Bank. It was further pleaded that Mam Chand and one Nanak Chand had executed guarantee agreements on 24th June, 1988. The Bank prayed for a decree for Rs.2,57,625/- together with the additional interest and for enforcement of the claim against the hypothecated and the mortgaged properties with a further prayer that if the aforesaid securities were found insufficient for realization of the amount payable under the decree, it be given the liberty to recover the balance from the persons and other properties of the defendantsWhile the suit was pending, a legal notice was given on 28th November, 1992, to the respondent Bank by the appellant and Mam Chand through their advocate, asking for premature encashment of the fixed deposit receipt. It was alleged in that letter that the Bank had kept the original receipt and only issued a photo-copy of the same to Mam Chand and the appellant with the assurance that the amount deposited would be encashable whenever required. It was also stated that both Mam Chand and the appellant were illiterate and had relied upon such representation made by the Bank. It does not appear that the Bank had responded to this notice. A second notice was sent through an advocate by Mam Chand and the appellant on 26.5.1995, again demanding the amount payable on maturity of the fixed deposit stating that the original FDR receipt had been lost by the appellant and her husband. This letter also does not appear to have been replied to by the respondent BankOn 3rd July, 1995 the respondent Bank filed an application in the Court before which the suit was pending seeking to inform the Court that the fixed deposit receipt had been mortgaged as security towards the disputed loan and that it had after taking permission of higher officials deposited the amount covered by the fixed deposit in the disputed loan account. Mam Chand filed an objection to the Banks application saying that he had never given any such guarantee and that the fixed deposit receipt had never been mortgaged to the BankThe Trial Court allowed the Banks application holding that the amount of fixed deposit account had rightly been adjusted in the account of the disputed loan. Mam Chand challenged this order by way of a revision application under Section 115 of the Code of Civil Procedure. The Revisional Court held that the application was not maintainable under Section 115 of the Code of Civil Procedure as amended by UP Act No.31/1978. It was held by the Revisional Court that it was open to Mam Chand and his wife to initiate legal actions/proceedings for the recovery of the amount deposited, against the Bank. It was further held that the order of the Trial Court would not in any way inhibit the appellant from initiating such proceedings since she was not a party either in the suit or to any other proceedings initiated by Bank. The Revisional Court found as a fact that the fixed deposit receipt did not bear the thumb impression of the appellant and the only thumb impressions appearing thereon were that of Mam Chand. It was also held that since the FDR was not mortgaged as guarantee for the loan taken by Verma Agro Industries or Khem Chand, the dispute regarding the FDR was not in issue in the suit filed by the Bank. It was therefore held that the Trial Court should not have passed any order regarding the right of the Bank to adjust the amount of the fixed deposit towards the recovery of the loan alleged to have been taken by M/s. Verma Agro Industries and Khem Chand. Despite having come to the conclusion that the Trial Courts order was without jurisdiction, totally irrelevant and unwarranted, the Revisional Court did not interfere with the order of the Trial Court on the basis of the UP Amendment to Section 115 of the Civil Procedure CodeThe appellant then filed a complaint before the District Forum under the Consumer Protection Act. It was contended by the respondent Bank before the District Forum that both the Trial Court as well as the Revisional Court had held that the fixed deposit receipt had been mortgaged by Mam Chand as security for the loan granted by the Bank to M/s. Verma Agro Industries and that Mam Chand was entitled to do so because the fixed deposit receipt had specified that it was payable to either or survivor. The District Forum, however, came to the conclusion that the appellant was entitled to recover half of the amount of the FDR i.e Rs. 19,965/- together with interest from 1.6.1995 because she had never mortgaged her share of the fixed deposit in favour of any party. It was held that since the receipt was in the joint name of the appellant and her husband, the respondent Bank should not have accepted any pledge of the account without informing the appellant and getting her consent. Since it had not done so, the service rendered by the Bank to the appellant was deficient. The Bank was therefore directed to pay the appellant a sum of Rs. 19,967/- together with interest at 17% per annum thereon as well as Rs.3,000/- towards mental agony suffered by the appellant and costs of Rs.1,000/-Bank preferred an appeal to the State Commission. The State Commission proceeded on the basis that Mam Chand had validly pledged the FDR with the respondent-Bank. It held that since the fixed deposit receipt was payable to either or survivor it showed that the Bank could have got discharge by making payment to either of the account holders. According to the State Commission when payment could have been made to a single individual in terms of the directions of the depositors then the Bank was at liberty to accept mortgage of the fixed deposit receipt on behalf of one of the depositors and the consent of the other depositor was not necessary. The appeal was accordingly allowed and the complaint of the respondent was rejected. The National Commission merely reproduced the view of the State Commission with which it concurred. It also held that financial institutions had every right to protect their interest by taking conscious decisions. Since the Bank had taken a conscious decision in this case, it could not be faulted and there was no deficiency of services.

Reasoning:
The decision in Simla Banking and Industrial Company Ltd. vs. Mt. Bhagwan Kaur (supra) was followed by the Calcutta High Court in the case of Nath Bank Ltd. vs. Sisir Kumar Sarkar AIR 1954 Cal. 303 . In that case, there was a fixed deposit made by two persons, one of whom was indebted to the plaintiff-company. The fixed deposit receipt was repayable after a period of 12 months to either or survivor. The Calcutta High Court was of the view that during the joint lives of the two account holders or at least until due demand for repayment of the money was made by the Bank to the debtor - account holder the debt in the form of a fixed deposit receipt was that of the bank to the joint account holders and the bank could not set off a debt due from one of the joint account holders against such a joint debtrn vs. Evans (Barclays Bank Ltd., Garnishees), 1938 (2) KB 801) a joint deposit account was opened by A and B (who were husband and wife) and the bank was authorized to accept the signature of either A or B or of the survivor as a sufficient discharge for the repayment of the moneys deposited. This debt was attached by the third party in execution of a decree against A, the husband. Pursuant to the garnishee summons, the Bank paid As decretal debt to the decree holder. The Court of Appeal held that inasmuch as the debt which the bank owed was not a debt due to the husband alone, but to him jointly with his wife, it could not be attached to answer the judgment against the husbandour view, these decisions correctly set out the law. In the present case the contract in respect of the joint account was between the respondent bank and the husband and wife. The fixed deposit was not a debt due by the bank to Mam Chand alone which could be set off by the bank against any claim that the bank may have had against Mam Chand. Besides the right of Mam Chand was to receive the money deposited only after it matured, if he survived. Supposing Mam Chand had died before the fixed deposit matured, the only person entitled to get the money would be the appellant. This right of the appellant could not have been taken away without her consentThe decision cited by learned counsel on behalf of the respondents i.e. Punjab National Bank vs. Surendra Prasad Sinha 1993 (1) SCC 499  was not rendered in connection with a joint fixed deposit account in which only one of the account holders was a debtor. In that case, both the account holders stood guarantors to the principal debtor and had jointly executed the security bond and entrusted the fixed deposit receipt as security to adjust the outstanding debt from it at maturityWe have our doubts regarding the validity of the order of the Trial Court allowing the Banks information application. But it is unnecessary to pronounce on it as it does not bind the appellant as was correctly held by the Revisional Court. Nor does anything turn on the supposedly shifting stances taken by the appellant in the two legal notices as there is no dispute that there was in fact a fixed depositThe State and National Commission both erred in proceeding on the basis that the Civil Courts decision was that the FDR had in fact been pledged by Mam Chand to the bank. We have already quoted the observation of the Revisional Court earlier. In fact, the Revisional Court also held that the decision of the trial Court did not in any fashion bind the appellant. There is no independent finding by any of the fora that the pledge had indeed been created of the fixed deposit receipt by Mam Chand as claimed by the bankIn the circumstances, the Bank had no right to refuse payment of the amount deposited to the appellant. The refusal as disclosed to this Court, was contrary to banking norms. We are therefore of the view that the District Forum was correct in accepting, and the State Commission and the National Commission erred in rejecting, the appellants complaint.