ANUMATI v.

PUNJAB NATIONAL BANK

NATIONAL LAW UNIVERSITY ODISHA

LAW OF CONTRACT-II
PROJECT ON
‘CASE STUDY OF ANUMATI v. PUNJAB NATIONAL BANK'

SUBMITTED TO:
MR. KANISHKA AND MS. SONAL

SUBMITTED BY:
AKASH DASH (2017/BALLB/055)
KUMARI ANJU (2017/BALLB/054)
AARYAMAN SIRISH TIWARI (2017/BALLB/053)
MOULIKA DIWAKAR (2017/BALLB/056)
 ANUMATI v. PUNJAB NATIONAL BANK

FACTS

“The complainant and her better half other made a fixed deposit of Rs. 20,000/ - with respondent
Bank on 31st May 1988 for a time period of 84 months or 7 years which was to be developed on
31.5.1995 and the sum payable on development or maturity was Rs. 39,930/-. On 24th June 1988,
a credit was taken by one Khem Chand for his sole proprietor of M/s Verma Agro Industries.1 In
1991 the respondent Bank recorded a suit against M/s Verma Agro Industries, Khem Chand and
against Complainant's husband.”
”It was argued in the suit that Khem Chand and complainant's better half had anchored the advance
sum by making a home loan in regard of relentless property comprising of horticultural land. The
respondent Bank in suit appealed to God or prayed for a pronouncement for Rs.2,57,625/ - together
with extra premium and for authorization of the claim against the hypothecated and the sold
properties with a further supplication that if the previously mentioned securities were discovered
deficient for acknowledgment of the sum payable under the declaration, it might be offered
freedom to recoup the adjust from the properties of complainant's better half and one other Nanak
Chand who executed assurance concession to 24th June 1988.”
“While the suit was pending complainant and her better half sent a lawful notice to the respondent
Bank requesting premature encashment of the fixed deposit receipt. Respondent Bank did not react
to the notice and from that point, a second notice was issued through a lawyer on 26.5.1995 again
requesting the sum payable on maturity of the fixed deposit expressing that the first FDR receipt
had been lost by the complainant and her better half. Respondent Bank did not reply to this notice
as well.”
“The respondent Bank on 3rd July 1995 recorded an application under the steady gaze of the court
where the suit was pending advising the court that the Fixed deposit receipt had been mortgaged
or sold "as security towards the questioned credit, complainant's husband documented a protest to
the Bank's application expressing that he had never given any such assurance and that the FDR
had never been mortgaged to the Bank. The trial court permitted the suit of the Respondent Bank

1
MANU/SC/0916/2004
 ANUMATI v. PUNJAB NATIONAL BANK

and held that the measure of fixed deposit account had properly been balanced in the record of the
questioned loan money. Complainant's husband challenged this verdict of the Trial court by the
method for Revision application. Revisional court expelled the application holding that same isn't
viable under section 115 CPC as amended by UP Act No.31/1978. It additionally held that
complainant and her better half can start lawful activities/procedures for the recuperation or
recovery of the sum deposited against the Bank.”
“The Revisional Court found as a reality that the fixed deposit Case Laws on Banking 57 did not
shoulder the thumb impression of the complainant and the main thumb impression showing up
subsequently was of complainant's husband. It additionally held that since the FDR was not sold
or mortgaged as certification for the credit taken by M/s Verma Agro Industries or Khem Chand,
the debate with respect to the FDR was not an issue in the suit documented by the Bank in this
manner, the trial court did not pass any verdict in regards to one side of the Bank to alter the
amount of the fixed deposit towards the recuperation of the credit affirmed to have taken by M/s
Verma Agro Industries and Khem Chand.”
“The complainant at that point documented a suit before the District court fighting inadequacy in
benefit against the respondent Bank. Before District court respondent Bank urged that both trial
court and also Revisional court had held that the fixed deposit receipt had been sold or mortgaged
by complainant's better half as security for the credit allowed by the respondent Bank to M/s Verma
Agro Industries and the complainant's husband was qualified for do as such in light of the fact that
the FDR had indicated that it was payable to "either or survivor". The District forum held that
complainant was qualified for recouping half of the sum of the FDR i.e. Rs.19, 965/ - together with
premium from 1.6.1995 on the grounds that complainant never sold her offer of the FDR for any
party. “It additionally held that since the receipt was in the joint name of the complainant and her
husband, the respondent bank ought not to have acknowledged any promise of the record without
informing the complainant and getting her assent.” Since the Bank acknowledged the same without
the assent of the complainant, Bank is inadequate in rendering administrations or services on its
part.”
“Against the verdict of the District forum respondent Bank documented a suit before the State
Commission. The State Commission held that since the FDR was payable to "either or survivor"
it demonstrated that the Bank could have released by making instalment to either of the record
holders.” The State Commission permitted the interest holding that when instalment could have
 ANUMATI v. PUNJAB NATIONAL BANK

been made to a solitary individual as far as the directions of the depositor then the Bank was at
Liberty to acknowledge mortgage of the FDR in the interest of one of the depositor and the assent
of the other contributor was redundant.
“The complainant, against the verdict of the State Commission, recorded Revision Petition before
the National Commission. “The National Commission affirmed the request of the State
Commission and furthermore held that financial establishments had each privilege to secure their
interest by taking "cognizant choice or decision".” Since the Bank had taken "cognizant choice or
decision" for this situation, it couldn't be blamed and there was no inadequacy in benefit.”
Against the order of the National Commission complainant moved toward Supreme Court by a
method of civil appeal.2

2
Anumati vs. Punjab National Bank [2004] SC 498
 ANUMATI v. PUNJAB NATIONAL BANK

ISSUES

“The above facts raise three main issues:

1. Whether the Bank has any right to adjust the amount of the FDR when there was no claim with
regard thereto and when the liability of the defendants in the 58 Case Laws on Banking suit was
yet to be quantified?
2. Can the bank adjust the unpaid or defaulted loan from the fixed deposit?
3. If the loan is given to one person who has a joint fixed deposit in the bank so in that case can
the bank take full amount of fixed deposit or half?”

So in the case Anumati v Punjab National Bank the facts were that the complainant and her
husband had a joint fixed deposit in the Punjab National Bank, which the husband used to take
loan on behalf of fixed deposit and later he defaulted to make a payment and the bank adjusted the
money from the joint fixed deposit account.
“The State Commission continued on the premise that Mam Chand had legitimately swore the
FDR with the respondent Bank. It held that since the fixed deposit receipt was payable to "either
or survivor" it demonstrated that the Bank could have discharge by making payment to both of the
record holders.” “As indicated by the State Commission when payment could have been made to
one individual as far as the bearings of the investors then the Bank was at freedom to acknowledge
loan of the fixed deposit receipt in the interest of one of the contributors and the assent of the other
investor was redundant.” The interest was as needs be permitted and the grumbling of the
respondent was rejected. “The National Commission only duplicated the perspective of the State
Commission with which it agreed. It likewise held that a financial institution has each right to
secure their interest by taking 'conscious decision'.” “Since the Bank had taken a 'conscious
decision for this situation, it couldn't be blamed and there was no inadequacy of administrations.”
“The SC held that the terms of the fixed deposits were for payment of the intrigue and primary to
the joint accounts holders. The SC likewise said there was clear separation between instalment of
premium and additionally reimbursement and the privilege of either accomplice to vow the settled
 ANUMATI v. PUNJAB NATIONAL BANK

store with someone else or the bank itself. Besides, the agreement of the fixed deposits and the
privileges of the two accomplices to independently appreciate the advantages was just with respect
to the premium and reimbursement and did not give the bank the privilege to take the consent of
one of the accomplices to discard the sum in some other possible way.”
 ANUMATI v. PUNJAB NATIONAL BANK

ARGUMENTS

Respondent:
1. Khem Chand and the husband of complainant took loan by mortgaging their immovable
property that is their agricultural land.
2. It is prayed that Rs.2,57,625 with additional interests should be paid back.
3. The claim should be enforceable against the property which is mortgaged and hypothecated
if the above securities were found insufficient for the realization of the amount which was
payable. The liberty should be given to the loan provider for the recovery of balance money
from the husband of complainant and Nanak Chand who have executed guarantee dated
24th June, 1998.
4. The consent of complainant is not necessary as the account was an “either or survivor”
account and complainant’s husband can pledge the account with the bank.
5. Complainant’s husband has created pledge of his fixed deposit by executing the discharge
on FD receipt that complainant’s husband has pledged fixed deposit. The adjustment of the
fixed deposit is all legally done as per the judgment of civil courts. There is general lien on
account by bank.
Cited: Punjab National Bank and Ors. v Surendra Prasad Sinha3
Appellant:
1. Mam Chand had never given any guarantee to the bank additionally the fixed deposit
account had never been mortgaged either.
2. Bank cannot, from fixed deposit account, adjust the amount when there is no quantification
of liabilities from the side of the defendants and they had no claim even.
3. Without the consent or concurrenceor knowledge of Anumati, bank should not have acted
on the basis of pledge of complainant’s husband of the receipt fixed deposit. Therefore,
bank cannot claim in any event against the complainant.

3
Punjab National Bank v. Surendra Prasad Sinha [1992] CriLJ 2916.
 ANUMATI v. PUNJAB NATIONAL BANK

Cited: Simla Banking and Industrial Company Ltd. Ambala City v Mt. Bhagwan Kaur4;
Tannan’s Banking Law and Practices in India passage.
4. In bank securities the fixed deposit is not mentioned as securities.

4
Simla Banking and Industrial Co. v Mt. Bhagwan Kaur [1928] SC 326.
 ANUMATI v. PUNJAB NATIONAL BANK

JUDGEMENT

The Supreme Court in the case of Anumati v. Punjab National Bank declared that the parties to a
joint account do not possess the authority of pledging each other’s credit.
The Court to start with, stated the principle laid down by Sheldon and Fidler: Practice and Law of
Banking5 which stated that without an undertaking from each of the parties to severally or jointly
pay the loan, the bank should not lend money to any parties to such joint account and that it has
no right to set off the credit balance in the joint account, unless it is with respect to another joint
account of the same parties.6
The Court further went on describing the nature of the joint accounts in which the deposited
amount can be repaid on the expiration of the agreed time period and that an “either or survivor”
clause means that the amount deposited can be repayable to either of the account-holders. The
Court laid down that under a tripartite agreement, such as this, one of the account-holders cannot
bilaterally modify the agreement without the consent of the other account-holder. The Court
further cited Tannan: Banking Law and Practices in India7 to summarise this opinion.
To validate its opinion further, the Court cited a number of cases, to begin with Simla Banking and
Industrial Co. Ltd. v. Bhagwan Kuar8 in which the Bank credited the amount due under the fixed
deposit from the joint-account of the defendant and her son, to the son’s overdraft account. The
Lahore High Court stated that the bank had no authority, neither in law nor equity.
The Calcutta High Court followed the Lahore High Court’s judgement, in Nath Bank Ltd. v. Sisir
Kumar Sarkar in which the Court laid down that during the account-holders’ joint lives or at least
until the bank makes due demand of the repayment of the money to the debtor account holder, the
debt in the form of a fixed deposit receipt was that of the bank to the joint account-holders and

5
11thEdn., pg 71
6
ibid
7
(20th Edn.), 2001, Vol. 1 Chap. VIII. p. 259
8
Simla Banking and Industrial Co. v Mt. Bhagwan Kaur [1928] SC 326
 ANUMATI v. PUNJAB NATIONAL BANK

the bank did not the authority to set off a debt due from one of the joint-account holders against
such a joint debt.9
“In Hirschorn v. Evans, a third party attached the debt of a husband and wife’s joint account, in
execution of a decree against the husband, and pursuant to the summons, the Bank paid the decree-
holder from the husband’s decretal debt. The Court of Appeal declared that the debt which was
owed to the Bank could not be attached to answer the judgement against the husband, as long as
the debt owed was not due to the husband alone but jointly with his wife.”
The Supreme Court by validating these decisions, examined the circumstances of this specific
case. In the present case, the debt due from fixed deposit of the joint account was between the
appellant and Mam Chand, and not with Mam Chand alone. The Bank in such a case could not set
off any claim it may have against Mam Chand. Besides, Mam Chand had the right to the money
deposited after the maturity of the agreed time period, if he survived. In case of contrary, the wife
would have the right to the money. Without the consent, this right of the appellant could not be
taken away.
The Court stated that the State and the National Commissions were mistaken in deciding that Mam
Chand had in fact pledged the FDR to the Bank. It further noted that there was no evidence showing
that as claimed by the Bank, the pledge had been created of the fixed deposit receipt.
The Supreme Court declared that the refusal of payment of the amount to the appellant was against
the banking norms. The Court, then allowed the appeal and set aside the decisions of the National
and State Commissions and upheld the decision of the District Forum by confirming its costs.

9
Nath Bank Ltd. v. Sisir Kumar Sarkar [1954] Cal 303.
 ANUMATI v. PUNJAB NATIONAL BANK

CASE ANALYSIS

The application form mandatorily demands a specific statement about the mode of refund of the
amount deposited, when money in a fixed deposit account is deposited. In cases of account-
holders, it is necessary to specify whether the amount is to be repayable on maturity to “anyone
of the depositors” or “either or survivor” or “to all of them jointly". These instructions are to be
followed by the Bank scrupulously.

In the case of Anumati v. Punjab National Bank the issue that was raised was whether in the
case of an “either or survivor” clause, can a fixed deposit account be pledged by one of the two
account-holders, without the knowledge and authority of the other joint account holder?

In 2004, the Supreme Court declared in this case that the decision declared by the State and
National Commissions were wrong as in any case the one of the two depositors could not pledge
the fixed deposit amount without the consent of the other joint holder.

The Court held that, the debt sue was not due by the Bank to Mam Chand only, that it had the
authority to set off any claim it may have against him. Other than that, because of the “either or
survivor” clause, the appellant could be very well be entitled to the complete amount after its
maturity if Mam Chand were to die before the agreed time period. For these reasons, this specific
right of the appellant could not be taken away without her due consent.

The Supreme Court through this case at hand has resolved one of the most critical issues with
respect to the misuse of the rights of joint account-holders. It has resulted in providing a check on
the misuse of authority on the part of the banks where they pay off debts by using the fixed deposit
of the joint account, compromising the position of one. On the other hand, it also checks on the
power of the both the account holders, where one cannot unilaterally pay off the amount in their
joint fixed deposit for its individual use. Through this both the account-holders enjoy the power
over their specific shares, which they are equally entitled to.
ANUMATI v. PUNJAB NATIONAL BANK