TaxTMI 
TaxTMI 
1999 (9) TMI 887
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....Judge, City Civil Court, Madras, set aside the findings of the trial court and decreed the suit. Hence, this second appeal. 3. The only point for determination is : Whether the reversal of the credit entry and debiting of Rs. 10,176.50 to the plaintiff by the defendant-bank is valid ? If so whether the plaintiff is entitled to claim the amount ? The points.-The plaintiff had opened an account with the defendant-bank on 22-3-1974, in Account No. 11734. The defendant has been paying interest due on the said account and for the period ending with 5-4-1983, the defendant has credited a sum of Rs. 10,176.59 by way of interest in that account. This interest has been paid for the period from 22-3-1974 to 5-4-1983. But, on 6-4-1983, the defendan....
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....take and, therefore, they are entitled to refund of the same. In this connection, section 72 of the Indian Contract Act, 1872 ('the Act') is relied upon. While the trial court had accepted the plea of the bank, the lower appellate court found that section 72 will not apply to the facts of the case. The appellant has been not made aware of the circular of the RBI. In fact, the account has been opened only after issuance of the circular. The bank cannot be heard to plead ignorance. No notice was issued by the bank to the plaintiff, informing that a mistake has been committed. Therefore, any unilateral action on the part of the defendant cannot bind the plaintiff. Therefore, the defendant-bank is not entitled to reverse the entry and debit the....
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....as credited into the account and the plaintiff had certain funds. Suppose the amount by mistake had been paid in cash and later the bank realises that the payment was made by mistake, unless the bank makes a claim within the period of limitation, they cannot succeed. Therefore, with regard to crediting of interest into the plaintiff's account, the bank must show that those entries of credit were made within three years of their coming to know about their mistake, which appears to be the date when they reversed the entry on 6-4-1983. Therefore, unless on 6-4-1983, the claim had not been barred by limitation, the bank is not entitled to unilaterally reverse the entries for making such entries on that day. They are actually making a claim for ....
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....e Banking Regulation Act, the plaintiff is not entitled to be paid interest on that account. Therefore, here, it is not a mistake of fact that has been committed by the bank, but it is a mistake of law. For it is a payment in ignorance of the regulation of the RBI. In order to claim recovery, the mistake must be one of fact. Therefore, if any payment is made in ignorance of law or rule, the money paid cannot be recovered. 9. In Holt v. Markham [1923] 1 KB 504 (CA) a certain amount was overpaid into the defendant's account, owing to misapprehension regarding certain war office orders. There, it was held by the English Court that the payment was not made owing to mistake of fact. According to the decision in Home & Colonial Insurance Co. Ltd....