2022 Supreme(Cal) 1538

IN THE HIGH COURT AT CALCUTTA
ANIRUDDHA ROY, J.
The West Bengal State Co-Operative Bank Ltd. & Anr. – Appellants
Versus
Punjab National Bank & Ors.- Respondents
WPA 19959 of 2014
Decided on : 18-05-2022

A writ court has the jurisdiction to adjudicate upon a money claim involving disputed questions of facts, if the material facts are not disputed and the claim gets a solid foundation from unequivocal admissions or documentary evidence.

Headnote:

WRIT PETITION - BANKING - FIXED DEPOSIT - FRAUD - LIABILITY OF BANK - RETURN OF DEPOSIT - INTEREST - DISPUTED QUESTIONS OF FACT - JURISDICTION OF WRIT COURT - RATIO DECIDENDI: 1. Where a bank unequivocally admits to have received a sum of money from a depositor on account of a fixed deposit, and issues a fixed deposit receipt (FDR) acknowledging the same, the bank is duty-bound to return the matured deposit proceeds to the depositor. 2. The mere existence of disputed questions of fact does not ipso facto prevent a writ court from determining such questions, if the facts permit the same. 3. In a case where the material facts are not disputed, such as the execution, existence, and exchange of documents evidencing the deposit transaction, the claim of the depositor for return of the deposit proceeds gets a solid foundation. 4. The fact that the bank's employees may have been involved in fraud or unauthorized acts does not absolve the bank of its liability towards the depositor, as the acts of the employees in the course of their employment bind the bank. 5. A writ court can issue suitable directions to set right the arbitrary actions of a bank or other instrumentality of the State, especially when the bank has failed to take appropriate steps to protect the depositor's interest or to recover the misappropriated funds. 6. The bank is liable to pay interest on the matured deposit proceeds from the date of maturity until the date of payment to the depositor, considering the prevailing interest rates and the principle of equity between the parties.

Fact of the Case:

The first petitioner, a State Co-Operative Bank, deposited a sum of Rs. 20 crores with the first respondent, Punjab National Bank (PNB), for a period of three years at an agreed rate of interest. PNB issued an FDR acknowledging the deposit and confirming the maturity value. However, when the deposit matured, PNB informed the petitioner that it had not opened any such fixed deposit account in the petitioner's name. The petitioner lodged a criminal complaint alleging fraud and misappropriation of funds against PNB and its officials. Some officials were arrested, and a criminal case was registered. The petitioner filed a writ petition seeking a mandamus directing PNB to return the fixed deposit proceeds, quash any adverse remarks made against the petitioner, and declare the amount as a performing asset instead of a non-performing asset (NPA). PNB defended by claiming that the amount was credited to the account of a third party, Laxmi Enterprise, which had utilized and withdrawn the funds. The petitioner denied any connection with Laxmi Enterprise and submitted that the documents relied upon by PNB were manufactured.

Finding of the Court:

The court found that the material facts, namely, the execution, existence, and exchange of documents evidencing the deposit transaction, were not disputed. The court held that PNB's unequivocal admission of receiving the deposit and issuing the FDR created a solid foundation for the petitioner's claim. The court rejected PNB's defense that its employees acted beyond their authority, as their acts in the course of employment bound the bank. The court also found that PNB had failed to take appropriate steps to protect the petitioner's interest or to recover the misappropriated funds.

Issues: 1. Whether the writ court has jurisdiction to adjudicate upon a money claim involving disputed questions of facts. 2. Whether the bank is liable to return the fixed deposit proceeds to the depositor despite the alleged fraud or unauthorized acts of its employees. 3. Whether the bank is liable to pay interest on the matured deposit proceeds.

Ratio Decidendi: 1. The mere existence of disputed questions of fact does not ipso facto prevent a writ court from determining such questions, if the facts permit the same. 2. The acts of the bank's employees in the course of their employment bind the bank, and the bank cannot absolve itself of liability by claiming that the employees acted beyond their authority. 3. A writ court can issue suitable directions to set right the arbitrary actions of a bank or other instrumentality of the State, especially when the bank has failed to take appropriate steps to protect the depositor's interest or to recover the misappropriated funds. 4. The bank is liable to pay interest on the matured deposit proceeds from the date of maturity until the date of payment to the depositor, considering the prevailing interest rates and the principle of equity between the parties.

Final Decision: The writ petition was allowed. The court directed PNB to return the matured deposit proceeds of Rs. 26,35,18,453.93/- along with simple interest @ 5% per annum from January 25, 2016, within six weeks from the date of communication of the judgment to PNB's Selimpur Branch.