TaxTMI 
TaxTMI 
2021 (10) TMI 898
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....may seem simple and ridiculous at the same time, for a person familiar with banking laws and the fundamentals of the law of contract, but which has some wedged corners as can be seen from the facts narrated below. 2. The following facts are not disputed. The petitioner, a Charitable Trust, is conducting an educational institution by name Sree Krishna College of Pharmacy and Research Centre at Parassala in Thiruvananthapuram district. The college was granted provisional affiliation on 19.09.2006. The petitioner had to provide a financial guarantee for a sum of Rs. 10 lakhs for the purpose of the affiliation. The petitioner furnished the financial guarantee on 20.09.2006, by means of a fixed deposit receipt, issued in the name of the petitioner by the 1st respondent Bank and endorsed in favour of the University. Ext.P3 is the copy of the fixed deposit. The receipt shows that the amount has been received from the petitioner. During 2009, the Kerala University of Health Sciences was established and the furnishing of financial guarantee was no longer required. The Syndicate of the University at its meeting held on 30.12.2015 considered the request of various Educational Agencies of S....
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....nder Section 13(a) of the Banking Ombudsman Scheme, 2006 and since such order is not appealable, the petitioner was given liberty to approach any other forum for the redressal of their grievances. 4. The contention of the petitioner is that a Banker who had received money from the petitioner and opened a term deposit account in the name of the petitioner is bound to repay the entire amount with accrued interest for the entire period as the relationship between the Banker and its customer is one of debtor-creditor relationship. Reliance is placed on the judgment in Anumati v. State of Punjab reported in [ (2004) 8 SCC 498]. The petitioner does not dispute the fact the amount for opening the fixed deposit account was debited from the account of the 5th respondent. The petitioner's case is that they got provisional affiliation as per Ext.P1 order dated 19.09.2006 and they had to provide financial guarantee on the next day, that is, 20.09.2006. It is stated that the petitioner had transferred amounts to the account of the 5th respondent for the purpose of facilitating the 5th respondent to transfer the amounts required for the fixed deposit. Reliance is placed on Ext.P2 statemen....
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....ity, by means of the demand draft dated 17.8.2019. 7. The 5th respondent has filed a counter affidavit contending that remedy of the petitioner is to approach the civil court. According to him, the 5th respondent had during the year 2006 supplied computers, accessories, etc. on orders placed by the Chairman of the petitioner Trust and the petitioner had paid the outstanding balance of Rs. 18,74,700/- to the 5th respondent on 20.09.2006. It is further stated that after making the payment of Rs. 18,74,700/-, the Chairman had requested the 5th respondent for an amount of Rs. 10 lakhs, to enable him to open an FD account in the name of the Trust, endorsed to the University of Kerala, as financial guarantee, as it was required on that day itself. It is stated that the Fixed Deposit was opened utilising his funds, on the basis of the above request. According to him, the amount of Rs. 10 lakhs was to be a loan which the petitioner had agreed to repay within three months. It is further submitted that the amount was not repaid within three months, that the petitioner requested for an extension and that there was a mutual agreement that the periodical interest from the FD will be credited....
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.... was issued under Section 131(1A) of the Income-tax Act, 1961 to the Chief Manager, Union Bank of India, Thiruvananthapuram Main Branch and the Bank was asked to furnish the account opening form relating to the fixed deposit FDR No. EL/TBA-0137611, the account to which interest was transferred, whether arrangement of transferring interest was still continuing or had stopped, whether the interest receipts arising from the FD referred to above were credited to any particular account based on instructions of the FD account holder or any other person and if instruction was from any other person, on what basis the Bank decided to do without instructions/concurrence from the FD account holder and details of the person who was the holder of the account to which interest receipts from the FD were credited including customer ID of all linked accounts, details of any loan granted, whether repayment of loan has been completed, status of loan account and details of TDS deducted from interest receipts to the account. 11. The report reveals the following facts: a) The Fixed Deposit account was opened in the name of the Chairman of Sree Sankara National Educational Trust endorsed in f....
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....with the Bank for issuance of demand drafts. k) The balance sheet of the Trust shows three assets, as Rs. 10 lakhs, Rs. 5 lakhs and Rs. 2.5 lakhs totalling to Rs. 17,50,000/-. l) The Chairman of the Trust had stated before the Department that the total purchase from M/s. Compu-Needs Communications was for a sum of Rs. 9,10,614/- and that the entire payments were made in cash barring an amount of about Rs. 1 lakh. m) The Trust had never accounted the income from interest arising out of the FD for Rs. 10 lakhs in its books. It is stated that according to the Chairman of the Trust, even if the full interest accrued on the fixed deposit account was taken into account, it would not exceed the limits of the exemption provided under the Income-tax Act. n) The 5th respondent gave a written submission before the Income Tax authorities stating that Rs. 18,74,700/- received was towards invoices for supply of computers, accessories, etc. and that Rs. 10 lakhs had been given to the Chairman of the Trust as a loan for the purpose of furnishing financial guarantee to the University of Kerala. o) According to the Report, the fixed deposit does not appea....
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....justly and reasonably in the interest of public and public good. 13. The counsel for the petitioner relied on the observation of the Hon'ble Supreme Court in decision in Federal Bank Ltd. v. Sagar Thomas & Ors. reported in [ (2003) 10 SCC 733], that unlike private companies in banking business, the case of Nationalised Banks may stand on a different footing, to submit that in the case on hand, the 1st respondent is a public sector Nationalised Bank. In para. 34 of the judgment the Court held that private company carrying on banking business as a Scheduled Bank cannot be termed as an institution or company carrying on any statutory or public duty. A private body or a person may be amenable to writ jurisdiction only where it may become necessary to compel such body or association to enforce any statutory obligations or such obligations of public nature casting positive obligation upon it. The Court held that there are no such conditions in respect of a private company carrying on a commercial activity of banking. The counsel submits that the Court specifically dealt with the case of a private company involved in the commercial activity of banking and was not considering the ca....
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....ng but a joint account which, as the name itself suggests, is repayable on the expiration of the agreed period. The fixed deposit receipt is merely a written acknowledgement by the bank that it holds a certain sum to the use of its customers. The bank is thus a debtor to the account-holders in respect of the amount deposited -- a debt which is repayable by the bank to the account-holders with interest on the expiry of an agreed period. An "either or survivor" clause in such an account means that the amount payable by the bank on maturity of the fixed deposit may be paid to either of the account-holders by the bank in order to obtain a valid discharge. In other words, under a tripartite agreement between the joint account-holders inter se and the bank, the bank may, on maturity, make payment only to either of them. This tripartite agreement cannot be bilaterally modified by one of the joint account-holders for example by pledging the account with any third party including the bank itself in its capacity of creditor, so that the amount becomes payable to such third party, without the consent of the joint account-holder. Thus in Tannan: Banking Law and Practices in India [(20th Edn.),....
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....rom the decisions referred to above, the position that emerges is that a writ petition under Article 226 of the Constitution of India may be maintainable against (i) the State (Govt.); (ii) Authority; (iii) a statutory body; (iv) an instrumentality or agency of the State; (v) a company which is financed and owned by the State; (vi) a private body run substantially on State funding; (vii) a private body discharging public duty or positive obligation of public nature (viii) a person or a body under liability to discharge any function under any Statute, to compel it to perform such a statutory function." The Court however added that even in cases where a writ petition under Article 226 is filed against a Body which is a "State" under Article 12, writ would not lie to enforce private law rights. The contention of the counsel is that the contract relating to the FD comes within the private law domain and has no public law element in it, justifying interference under Article 226 of the Constitution. 16. Sri Sadchith P. Kurup, Standing counsel for the 1st respondent relied on the decision of the Hon'ble Supreme Court in Federal Bank Ltd. v. Sagar Thomas & Ors. reported in [AIR 2....
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....re, casting positive obligation upon it. The case before the Court was one in which disciplinary action was initiated against its employee and it was held that it was not a case involving enforcement of any statutory duty on the part of the bank. 18. In K.C. John (supra), a Full Bench of this Court considered the question whether a writ petition was maintainable under Article 226 against a Co-operative Society. The Full Bench held that a writ would be maintainable only when a duty owed by the cooperative Society is of a public nature or where there is an infringement of any statutory Rules by such society. The case before the Full Bench was one in which the society had failed to return the title deeds of persons who had taken loans, despite the fact that the amounts due under the loans had been repaid. Writ petitions were filed seeking return of the title deeds. The Full Bench held that even in cases where the facts are admitted, jurisdiction cannot be exercised unless the authority against whom the writ is sought for, owes a public duty or a statutory duty to act in a particular manner towards the person who asked for such writ. The Full Bench found that the petitioner before t....
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....statutory authorities and instrumentalities of the State. It is in that context that the Court considered the question. In the case in hand, the 1st respondent is a Nationalised Bank and the Government of India is the majority shareholder having control over their affairs. It cannot hence be denied that 1st respondent is a State, within the meaning of Article 12 of the Constitution. In paragraph 13 of the judgment, after referring to the Full Bench decision in Bhaskaran (supra), the Larger Bench observed that the said judgment relates only to the question whether a writ petition will lie against a Co-operative Society if it is an authority within the meaning of Article 12 and held that the Full Bench judgment cannot be read as holding that writ petition will lie only against Co-operative Society which is State or authority within the meaning of Article 12. 20. In W.P.(C) No. 18243 of 2015, while considering the question whether the petitioner who had fixed deposits with a Cooperative Society is entitled to return of the same on maturity and whether a writ petition was maintainable for a direction to the society to return the amount, a learned Single judge held that the petition ....
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....o the petitioner as the banking business is carried on by the 1st respondent under the supervision and control of the Registrar of Co-operative Societies. On the aforesaid finding, the learned Single Judge directed repayment of the amounts held under fixed deposit. The judgment of the learned Single judge was challenged in appeal and in the judgment in The Gandhigram Agro-based Industrial Cooperative Society & Ors. v. Marangattupilly Service Cooperative Bank Ltd. reported in [2019(3) KHC 60] the Division Bench dismissed the writ appeal finding that it is not a case where the parties can be relegated to Section 69 of the Co-operative Societies Act, since it cannot be said that there is a dispute pending between the parties. The existence of the deposit was admitted and the factum that the deposit matured is also admitted and hence it is a case where liabilities are admitted. 23. In a recent decision in Radha Krishna Industries v. State of Himachal Pradesh & Ors. , the Hon'ble Supreme Court has considered and spoken about the entertainment of writ petitions under Article 226, when an alternate remedy is available. After considering the earlier decisions of the Court, in paragr....
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....ns were ordered. In paragraph 12 of the judgment the Hon'ble Supreme Court held that the High Court in some cases may enter into disputed questions of fact. In paragraph 35 of the judgment, the Apex Court held that a writ petition would lie against "State" within the meaning of Article 12 of the Constitution of India. Indisputably, exercise of jurisdiction by the High Court is permissible in a case where action of the State is found to be unfair, unreasonable or arbitrary. 25. On a detailed consideration of the issues involved, I am of the opinion that the relief claimed in the writ petition does not involve any detailed analysis of disputed facts. As the 1st respondent Bank is a debtor of the petitioner, with regard to amounts held in fixed deposit, the Bank cannot have a stand that they will not pay the amounts due on maturity of the fixed deposit to the deposit holder. The monetary claims if any, of the 5th respondent against the petitioner, are not matters on which the 1st respondent Bank, which is a public sector bank, can intermeddle. It is for the 5th respondent to agitate such claims in appropriate proceedings. Admittedly, the 5th respondent who claims to have advanc....