Monday, September 26, 2022

Supreme Court says bank obligated to return customer’s money when asked for, can’t hold it as a trustee

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The Supreme Court has recently observed that it becomes the obligation of the bank to pay the amount deposited by a customer along with the set rate of interest as the money which is deposited with bank by the customer becomes a part of the fund belonging to the bank and not held by the bank as a trustee.

The bench comprising Chief Justice of India N.V. Ramana, Justice Surya Kant and Justice Hima Kohli considered a plea filed by N. Raghavender who worked as a Branch Manager in Sri Rama Grameena Bank, Nizamabad Branch and was convicted under for offences under section 120B, 409 and 477A of Indian Penal Code and for offences under section  13(2) read with 13(1)(c) & (d) of the Prevention of corruption Act. The case was registered by CBI Hyderabad.

The bench observed that the bank is liable to pay the money back to the customer whenever the customer who has deposited the money with the bank demands for it and such a relation between the person depositing the money and the money who takes the money is that of a debtor and s creditor. The bank can utilize the money deposited with in whatever way it pleases and make profits on it until and unless the customer asks the money back. The bank is obligated to give back the money.

Senior advocate, Sidharth Luthra appearing on behalf of the appellant submitted that,  the prosecution case is based upon surmises and conjectures, and the best neutral evidence has been withheld without any explanation and no investigation was made with regard to pre-mature withdrawal of the FDRs that whether the appellant was authorized to do so or not.

Luthra further contended that one of the significant allegation against the appellant is that he had unauthorizedly closed two pre-mature FDRs of B. Satyajit Reddy and a sum of Rs 10,00,000/- and 4,00,000/- respectively was transferred to the account of his brother-in-law.

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The prosecution on the other hand emphasized the conduct of the appellant where he deposited the interest into the account of B. Satyajit Reddy from his own account without the consent or knowledge of the FDR holder, the withdrawal was made in contravention of the law.

The background which leads to the above observations by the Apex court is that in the year May, 1990 the appellant herein being N. Raghavender worked as a Branch Manager in Sri Rama Grameena Bank, at the Nizamabad Branch from May, 1990 to September, 1995. Sandhya Rani, who is the accused No. 2 worked as a Clerkcum-Cashier in the same Bank from the year 1991-1996 and the accused no 3 i.e., Vinay Kumar who was the treasurer of the Nishita Educational Academy and is also the b brother-in-law of the appellant N. Raghavender. The appellant and the accused no 2 (Sandhya) conspired with Vinay Kumar (accused no.3) and allowed withdrawal of amounts up to Rs. 10,00,000/from the account of the Nishita Educational Academy though the account did not have the sufficient funds for the withdrawal.

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