Banking liability for interest turns on a completed deposit arrangement; unilateral instructions do not create a fixed deposit obligation.

Territorial jurisdiction under Clause 12 of the Letters Patent was upheld because Section 20 CPC was held inapplicable to a Chartered High Court proceeding and the defendant carried on business within jurisdiction. Limitation was computed from the date the claim for interest arose after the funds became payable under the defreezing order, so the suit was within time. Non-joinder failed because the remitting bank and customs department were not necessary parties for deciding the defendant bank's liability. On the substantive claim, a unilateral request to place funds in fixed deposit did not create a binding deposit arrangement, and current or sundry creditors balances do not ordinarily earn interest; the claim for interest was rejected.

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Issues: (i) Whether the Court had territorial jurisdiction to entertain the suit under Clause 12 of the Letters Patent; (ii) whether the suit was within limitation; (iii) whether the suit was bad for non-joinder of necessary parties; and (iv) whether the plaintiff proved entitlement to interest on the frozen amount and to a decree for the claimed sum.

Issue (i): Whether the Court had territorial jurisdiction to entertain the suit under Clause 12 of the Letters Patent.

Analysis: The objection based on Section 20 of the Code of Civil Procedure, 1908 was held to be inapplicable to a Chartered High Court proceeding under Clause 12 of the Letters Patent. The governing test was whether the defendant carried on business within the local limits of the Court's jurisdiction, and that requirement was satisfied.

Conclusion: The issue was answered in favour of the plaintiff.

Issue (ii): Whether the suit was within limitation.

Analysis: The claim for interest arose only after the amount became payable pursuant to the Court's order directing defreezing and release of the funds. Limitation was therefore computed from that point, and the suit was filed within time.

Conclusion: The issue was answered in favour of the plaintiff.

Issue (iii): Whether the suit was bad for non-joinder of necessary parties.

Analysis: Neither the remitting bank nor the customs department was necessary for adjudication of the dispute concerning the defendant bank's liability to pay interest. Effective relief could be granted in their absence.

Conclusion: The issue was answered in favour of the plaintiff.

Issue (iv): Whether the plaintiff proved entitlement to interest on the frozen amount and to a decree for the claimed sum.

Analysis: The alleged instruction to place the amount in fixed deposit was proved, but the bank was not bound to act on a unilateral request where no cheque, standing instruction, ECS mandate, or completed fixed deposit arrangement existed. A fixed deposit required a bilateral contract, and amounts in a current account or sundry creditors account do not carry interest.

Conclusion: The issue was answered against the plaintiff and in favour of the defendant.

Final Conclusion: The suit failed on the substantive claim for interest, and the defendant bank was not liable to create a fixed deposit or pay interest on the frozen amount.

Ratio Decidendi: A bank is not bound to convert funds held in a current or suspense account into a fixed deposit on the basis of a unilateral instruction by the customer in the absence of a completed bilateral deposit arrangement, and such balances do not ordinarily earn interest.

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