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Smt. Pushpawati Vs. United Commercial Bank and ors. - Court Judgment

LegalCrystal Citation
SubjectBanking
CourtHimachal Pradesh High Court
Decided On
Case NumberCivil Revision Petition No. 24 of 1979
Judge
AppellantSmt. Pushpawati
RespondentUnited Commercial Bank and ors.
Appellant Advocate Bakshi Sita Ram, Adv.
Respondent Advocate S.S. Ahuja and; Rakeshwar Lal, Advs.
DispositionRevision petition allowed
Cases Referred(Ch D) and Arab Bank Ltd. v. Barclays Bank
Excerpt:
banking - jurisdiction - petitioner at the instance of respondent no 3 deposited certain amount of money in bank as fixed deposit in another state - respondent fraudulently entered his name in holder of fixed deposit - whether petition filed in civil court was without jurisdiction - suit can even be filed where bank had its branch office - facts revealed that aforesaid bank had its branch office in jurisdiction of civil court where petition was filed - no such condition regarding jurisdiction of court incorporated in fixed deposit receipt - held, suit filed in civil court was not without jurisdiction. - .....declaratory decree to the effect that she was entitled to receive the payment of the amount of the fixed deposit receipts detailed in the plaint. the total principal amount in respect of the fixed deposit receipts amounted to rs. 29,000. a mandatory injunction was also prayed to be issued directing the respondents nos. 1 and 2 to pay the amount of the fixed deposit receipts along with interest, to the petitioner. it is alleged in the plaint that the petitioner at the instance of respondent no. 3 went to chandigarh and got deposited through him an amount of rs. 29,000 in fixed deposit with respondent no. 2 bank at chandigarh. it is further alleged that the petitioner approached the manager of the respondent no. 2 bank and produced the fixed deposit receipts for payment, but he refused to.....
Judgment:

H.S. Thakur, J.

1. The petitioner has filed this revision petition challenging the order and judgment passed by the learned District Judge, Simla Division, Simla, dated 17th of November, 1978, affirming the order dated 12th December, 1977, passed by the subordinate judge, Simla, to the effect that the civil court at Simla had no jurisdiction to entertain the suit of the petitioner and directed the return of the plaint to the petitioner for presentation to the proper court.

2. The facts of the case may be stated. The petitioner filed a suit against the respondents for the grant of a declaratory decree to the effect that she was entitled to receive the payment of the amount of the fixed deposit receipts detailed in the plaint. The total principal amount in respect of the fixed deposit receipts amounted to Rs. 29,000. A mandatory injunction was also prayed to be issued directing the respondents Nos. 1 and 2 to pay the amount of the fixed deposit receipts along with interest, to the petitioner. It is alleged in the plaint that the petitioner at the instance of respondent No. 3 went to Chandigarh and got deposited through him an amount of Rs. 29,000 in fixed deposit with respondent No. 2 bank at Chandigarh. It is further alleged that the petitioner approached the manager of the respondent No. 2 bank and produced the fixed deposit receipts for payment, but he refused to make payment on the ground that respondent No. 3 had instructed him on 29th of October, 1975, not to pay the amount of the said fixed deposit receipts to the petitioner except for the interest accruing thereon. It is further contended in the plaint that the petitioner came to know that the respondent No. 3 had dishonestly and fraudulently got his name also inserted in the said fixed deposit receipts besides the name of the petitioner. It appears that in the fixed deposit receipts the name of the petitioner is given first and thereafter the name of the respondent No. 3 is incorporated and the money in respect of the said fixed deposit receipts is payable to either or survivor. The case of the petitioner is that the total amount of the fixed deposit receipts is payable to the petitioner and when she produced the fixed deposit receipts before the manager of the bank at Chandigarh, the bank withheld the payment, saying that since the respondent No. 3 had directed the bank to pay only the interest to the petitioner the principal amountcould not be paid to her. Under such a situation the petitioner had to renew the fixed deposit receipts for a further period of one year. It is further alleged that after the expiry of the renewal period of the said fixed deposit receipts, the petitioner through the Bank of Baroda, New Delhi, desired the collection of the principal amount with interest thereon on 12th of February, 1977. The respondent No. 2 bank, however, refused to encash the fixed deposit receipts. It was under these circumstances that the petitioner had to file the aforesaid suit.

3. After the petitioner had filed the suit, the respondents filed their written statements. Besides other contentions, it was contended by the respondents that the court in Simla had no jurisdiction to entertain the suit as the amounts were deposited with the respondent No. 2-bank at Chandigarh, the respondent No. 3 lived in Chandigarh and also the amount in respect of the fixed deposit receipts was payable at Chandigarh. Therefore, according to the respondents, only the court in Chandigarh had jurisdiction to entertain the suit.

4. On the contrary, it was contended by the petitioner that since the respondent No. 2-bank is a debtor and the petitioner is a creditor, the debtor has to seek the creditor and to make the payment at the place where she is now residing. The suit, according to the petitioner, is triable by the Simla court as at least a part of the cause of action has arisen in Simla. As pointed out earlier above, the trial court as also the lower appellate court have held that the Simla court has no jurisdiction. The petitioner has now preferred this revision petition.

5. In this revision petition the only legal question which is to be determined is whether on the facts of the case the court in Simla has or has not jurisdiction to try this suit.

6. I have heard the learned counsel for the parties at length and have also perused the pleadings. It is mainly contended by the learned counsel for the petitioner that the principle of law is well settled that a debtor must seek the creditor to make the payment. Since the petitioner is living in Simla, she is entitled to receive the payment in Simla in accordance with the above principle. As such the cause of action, if not wholly, has at least partly arisen in Simla. Accordingly it is contended that the suit in Simla court is maintainable. The lower appellate court, though it agreed with the contention of the petitioner that the relationship between the petitioner and the bank was that of a debtor and creditor, yet held that the doctrine that the debtor must seek the creditor was not attracted to the facts of this case since the debtor is a bank. It was on this account that the lower appellate court maintained the order of the trial court. The learnedcounsel for the petitioner has drawn my attention to a large number of reported cases in which the doctrine that the debtor should seek the creditor has been upheld. This proposition of law is not disputed on behalf of the respondents. It is, however, contended by the learned counsel for the respondents that a bank is not a debtor in the real sense. This contention of the respondents is repelled by a decision of the Supreme Court in Shanti Prasad Jain v. Director of Enforcement, Foreign Exchange Regulation Act [1963] 33 Comp Cas 231 ; AIR 1962 SC 1764. The Supreme Court in this case has observed that the law is well settled that when moneys are deposited in a bank, the relationship that is constituted between the banker and the customer is one of debtor and creditor.

7. It is further contended on behalf of the respondents that even if a bank may be a debtor, the doctrine that the debtor should seek the creditor will not apply to bankers. The learned counsel has mainly relied on two decisions, i.e., Allahabad Bank Ltd. v. Gulli Lal [1940] 10 Comp Cas 157 ; AIR 1940 All 243 and Delhi Cloth and General Mills Co. Ltd. v. Harnam Singh AIR 1955 SC 590.In Allahabad Bank Ltd., it was observed that (p. 159):

' It is certainly a strange doctrine of law that a fixed depositor may bring a suit for repayment from a bank in any place where he happens to reside. If, for example, the fixed depositor were in Calcutta, Bombay or Madras, the doctrine would involve that the suit may be brought in those places. Such a view of law appears to be quite intolerable. Nor does there appear to be any reason why the fixed depositor should be limited to India and if the rule existed, apparently the fixed depositor might go to any country in the world and bring a suit there if his deposit was not returned.'

8. Again, in Delhi Cloth and General Mills Co. Ltd., AIR 1955 SC 590, in para. (43a), as pointed out by the lower appellate court, it was observed that in banking transactions the following rules are now settled (p. 598):

' (1) The obligation of a bank to pay the cheques of a customer rests ' primarily ' on the branch at which he keeps his account and the bank can rightly refuse to cash a cheque at any other branch: King v. Irvine A. Lovitt [1912] AC 212 at p. 219 (PC), State Aided Bank of Travancore Ltd. v. Dhrit Ram [1942] 12 Comp Cas 80, 83-84 ; AIR 1942 PC 6 at pp. 7, 8 and New York Life Insurance Co. v. Public Trustee [1924] 2 Ch 101 at p. 117 (CA).

(2) A customer must make a demand for payment at the branch where his current account is kept before he has a cause of action against the bank.'

9. In view of the aforesaid position, the contention of the learned counsel for the respondents is that the petitioner can claim the payment at the branch of the bank where the amount is deposited. Since the branch of the respondent-bank where the fixed deposits were made is in Chandigarh, it is contended that the Simla court has no jurisdiction.

10. It is not the case of the respondents that the petitioner had not made a demand at Chandigarh from the respondent-bank. It is also not disputed that the payment is being refused to the petitioner by the respondent-bank on the ground that respondent No. 3 had instructed the bank not to make any payment towards the principal amount of the fixed deposit receipts to the petitioner.

11. There is also no dispute between the parties that the fixed deposit receipts are in the possession of the petitioner. It is further not disputed that the petitioner is now residing in Simla after she came back from Chandigarh or was turned out of the house by respondent No. 3 from Chandigarh. At this stage, it is not necessary to decide whether the respondent No. 3 was or was not competent to give instructions to the respondent No. 2-bank not to make the payment to the petitioner. It is also not to be decided at this stage as to whether respondent No. 3 has any claim to the amount of the fixed deposit receipts or not. The learned counsel for the petitioner has drawn my attention to certain decisions which go to show that in case a fixed deposit is made in the name of either or survivor, the payment is to be made to the person whose name appears first and who is also in possession of the fixed deposit receipt. Admittedly, the name of the petitioner appears first in the fixed deposit receipts in question, and the fixed deposit receipts are also in her possession. However, it is not desirable to decide this question at this stage. The petitioner is an aged woman and is alleged to be not keeping good health. The learned counsel for the petitioner has vehemently argued that the objection of jurisdiction has been taken by the respondents simply to harass the petitioner so that she may have to go to Chandigarh to pursue the proceedings in the suit, there. I am, however, not concerned with these considerations.

12. It cannot be disputed that the position of the respondent-bank in this case is legally that of a debtor. We have, however, to see as to what is the impact of the aforesaid two decisions on the facts of the case. I shall first discuss the case Allahabad Bank Ltd. [1940] 10 Comp Cas 157 (All). It is relevant to point out that in the said judgment a reference has been made to a decision in the case Sri Narain v. Jagannath, AIR 1917 All 128 ; 41 IC 890. While commenting on this judgment, it was observed thus (p. 160):

'This is a very brief ruling in which the facts are not clear. It is true the ruling refers to a bank but the plaintiff and the defendant aredescribed by the names of private persons. The facts are not stated in the ruling. It is not possible to know whether the money was lent at Cawn-pore or at Bikaner, the two places mentioned in the ruling.'

13. I have perused the judgment in Sri Narain, AIR 1917 All 128 ; 41 IC 890. I find that the facts in brief have been given in the said judgment and the relevant part of the decision on a question of law has also been reproduced in Allahabad Bank Lid. [1940] 10 Comp Cas 157 (All), which is also quoted below (p. 160):

' It is not desirable to say more about the facts than this, that in an ordinary case especially a case against a bank or some trader who holds himself out as a person to receive deposits, it would not necessarily follow that a repayment of the deposit was to be made at the place of business of the bank ; in the majority of such cases the intention of the parties is, obviously that the money should be paid to the depositor wherever he happened to be when he demanded repayment.'

14. The decision as contained in Sri Narain, [1917] 41 IC 890 ; AIR 1917 All 128, is contrary to the view taken in Allahabad Bank Ltd. [1940] 10 Comp Cas 157 (All).

15. Now I shall discuss the impact of the decision in Delhi Cloth and General Mills Co. Ltd., AIR 1955 SC 590, on the case in hand. It may be pointed out that the observations of the Supreme Court in the above case, as quoted above, have to be considered in the context of the facts of the case and other observations made in different parts of the judgment. It would be then alone that the cumulative effect of the judgment has to be inferred. After going through the entire judgment, I feel that it was not a case between a banker and a depositor. In fact it was a case of certain advances made by a buyer of goods for the purchase of goods. Since the ultimate balance tilted in favour of the plaintiff in that case, a suit was filed for the recovery of that amount after the formation of Pakistan. The transaction between the parties to the suit had been completed in Lyallpur which later on formed a part of Pakistan. The question was whether after the partition of the country the law as applicable at the relevant time in Pakistan was applicable to the amount due, or the law as applicable in Delhi was to be applied. The Supreme Court in that case held that since the entire transaction had been completed in Lyallpur, therefore, the plaintiff could not recover that amount from the defendant in India as the said debt stood adjusted according to the law applicable in Pakistan. It was under those circumstances that the above quoted observations were made by the Supreme Court. It may be relevant to refer to other relevant observations in the said judgment. In para. (35) (AIR 1955 SC 590) of the judgment, it is observed that (at p. 596):

' Cheshire points out in his book on Private International Law, 4th edn., pages 449 to 451, that the 'situs' rule is not logical and leads to practical difficulties when there is a succession of assignments because it is not possible to fix the situation of a debt under the 'situs' rule in one place and only one place. '

16. Similarly in para. (43) the following observations appear (at p. 598):

' ......' therefore, cases do arise where a debt may be enforced in onejurisdiction, and the debtor, being an ordinary living person, resides elsewhere'.' [New York Insurance Co. v. Public Trustee [1924] 2 Ch 101, 120 (CA)].

' 'Again, different considerations may arise in particular cases, as, for instance, where the stipulated performance is illegal by the law of the place of performance '.' [Mount Albert Borough Council v. Australasian Temperance and Genl. Mutual Life Assurance Spciety [1938] AC 224, 241 (PC)].

17. The observations in para. (44) are as under (Ibid):

' This class of case forms an exception to the rule that a debtor must seek his creditor because, though that is the general rule, there is nothing to prevent the parties from agreeing, if they wish, that that shall not be the duty of the debtor and, as Lord Reid explains in Arab Bank Ltd. v. Barclays Bank [1954] AC 495 at p. 531 (HL), a contract of current account necesarily implies an agreement that that shall not be the bank's duty, otherwise the whole object of the contract would be frustrated.'

18. In para. (45) the following observations are made (Ibid):

' We have stressed the word ' primarily ' because the rules we have set out relate to the ' primary ' obligation. If the bank wrongly refuses to pay when a demand is made at the proper place and time, then it could be sued at its head office as well as at its branch office and, possibly, wherever it could be found, though we do not decide that. But the reason is that the action is then, not on the debt, but on the breach of the contract to pay at the place specified in the agreement.' [New York Insurance Co. v. Public Trustee [1924] 2 Ch 101, 116, 121 (CA)].

19. Paragraph (46) is also quoted (Ibid):

' Now the rules set out above are not confined to the business of banking. They are of wider application and have also been applied in insurance cases. ' Fouad Bishara Jabbour v. Custodian of Israeli Absentee's Property of State of Israel [1954] 1 All ER 145 (QB).

20. In para. (47) appears the following quotation (Ibid):

' ' It is difficult to state the rule with exactitude, but it is probably true to say that a debt is properly garnishable in the country where,according to the ordinary usages of business, it would normally be regarded as payable'.' (Cheshire Private International Law, p. 461).

21. It is observed in para. (48) that (Ibib):

' It is true the judges purport to apply the lex situs but in determining the situs they apply rules (and modify them where necessary to suit changing modern conditions) which in fact are the very rules which in practice would be used to determine the proper law of the contract. '

22. The relevant observations in para. (49) are (at p. 599):

' 'A proper law intended as a whole to govern a contract is administered as ' a living and changing body of law ' and effect is given to any changes occurring in it before performance falls due '.'

23. And, finally a reference may be made to the observations made in para. (51) which is reproduced below (Ibid):

' It is necessary, however, to bear in mind that, under modern conditions, choses-in-action arising out of contract have two aspects: (1) as property, and (2) as involving a contractual obligation for performance. The property aspect is relevant for purposes of assignment, administration, taxation and the like; the contractual aspect for performance.

In the present case, we are primarily concerned with the property aspect because the Pakistan Ordinance regards debts as property and vests all evacuee property in the Custodian and requires every person holding such property to surrender it to the Custodian on pain of penalties prescribed by the Ordinance, and Section 11(2) states that-

'Any person who makes a payment under Sub-section (1) shall be discharged from further liability to pay to the extent of the payment made.'

The payment was made and that, in our opinion, exonerated the defendant from further liability. Such payment would operate as a good discharge even under the English rules : see Fouad Bishara fabbour v. Custodian of Israeli Absentee's Property of State of Israel [1954] 1 All ER 145 at p. 154 (QB), where a number of English authorities are cited, including a decision of Privy Council in---Odwin v. Forbes [1817] Buck 57.

That was also the result of the decisions in the following English cases, which are similar to this, though the basis of the decisions was the situs of the debt and the multiple residence of corporation : Fouad Bishara Jabbour v. State of Israel, [1954] 1 All ER 145 (QB), In re Banque Des Marchands De Moscou [1954J 2 All ER 746 ; 24 Comp Cas 498 (Ch D) and Arab Bank Ltd. v. Barclays Bank [1954] AC 495 (HL).'

24. As such, when the judgment as a whole is read and reference is made to para. 45 of the judgment as reproduced above, a suit can be filed evenat a place where a bank has its branch office. It may also be added that the two decisions of the Allahabad High Court have taken contrary views to each other. Both the cases are decided by a Division Bench. I am, however, inclined to follow the view taken in the earlier decision in Sri Narain [1917] 41 IC 890 ; AIR 1917 All 128. The view taken by the Allahabad High Court in the later judgment is based to some extent on hypothetical considerations.

25. In view of my aforesaid observations, I am inclined to hold that since the respondent-bank has also its branch office in Simla, the suit against the respondents can be filed in Simla court. Moreover, I have also perused the fixed deposit receipts. There is no such condition incorporated in the said fixed deposit receipts that the payment in respect of the said receipts would be made only at Chandigarh. Assuming that the payment was to be demanded in Chandigarh alone, the same was so demanded but was refused by the respondent-bank. But so far as the question of jurisdiction is concerned, I am inclined to hold that since the respondent-bank has its branch at Simla and the petitioner is also residing in Simla, the Simla court has jurisdiction to entertain the suit.

26. The revision petition is accordingly allowed, but in the circumstances of the case the parties will bear their own costs.

27. The fixed deposit receipts which are produced by the petitioner for perusal be returned to the petitioner against a receipt. The parties to appear before the trial court in Simla on 6th June, 1980.


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