Back
1978 Supreme(Del) 121
High Court Of Delhi
CENTRAL BOARD OF INDUSTRIESAND COMMERCE - Appellant
Versus
SHAM LAL GUPTA - Respondent
SECOND APPEAL 170 of 1974
Decided On : 08/21/1978
C.M.OBEROI, J.R.Goel
A fixed deposit receipt is assignable under the law of transfer of property, and a bank cannot exercise its right of set-off against an assigned deposit receipt if it has received notice of the assignment and has not raised any objection at that time.
Headnote:
BANKING LAW - ASSIGNMENT OF FIXED DEPOSIT RECEIPT - VALIDITY - BANK'S RIGHT OF SET-OFF - ESTOPPEL.
Fact of the Case:
A tenant deposited a fixed deposit receipt with the court as security for a stay of eviction proceedings. The bank, which had issued the receipt, objected to the enforcement of the security, claiming that the receipt was not transferable and that it had a right of set-off against the tenant and his wife, who was the surety.
Finding of the Court:
The court held that the fixed deposit receipt was assignable under the law of transfer of property, and that the assignment was valid since all the conditions of assignment had been fulfilled. The court also held that the bank was estopped from claiming a right of set-off or adjustment against the deposit receipt, since it had received notice of the assignment and had not raised any objection at that time.
Issues: 1. Whether a fixed deposit receipt is assignable. 2. Whether a bank has a right of set-off against an assigned deposit receipt.
Ratio Decidendi: 1. A fixed deposit receipt, even if it is marked "not transferable", can be assigned under the law of transfer of property. 2. A bank cannot exercise its right of set-off against an assigned deposit receipt if it has received notice of the assignment and has not raised any objection at that time.
Final Decision: The court dismissed the bank's objections and directed it to deposit Rs. 25,000 in court within two weeks.
( 1 ) THIS case raises a point of banking law and practice. The point raised is a short one but it arises in a tortuous litigation.
( 2 ) SHAM Lal Gupta is the landlord of building No. 16-B]iv situated at Asaf Ali Road, New Delhi. He let the ground floor of the building to one T. N. Mathur who was carrying on business under the names and style of the Central Board of Industries and Commerce at a monthly rent of Rs. 800. 00 per month. The tenant did not pay rent. The landlord filed an eviction case against him. Arrears of rent were due from the tenant from 1st December, 1965.
( 3 ) ON 17th December, 1969, the Additional Rent Controller passed an order under s. 15 (1) of the Delhi Rent Control Act 1958 (the Act ). Against the order the tenant appealed to the Rent Control Tribunal. The tribunal dismissed the appeal on 5th August, 1970. The tenant appealed to the High Court. His appeal was admitted. The tenant asked for stay of the operation of the order of the Additional Controller. On 2nd September, 1970, Sachar J. made an order that if the tenant deposits Rs. 20,000. 00 in cash before the Registrar on that very date and furnishes a security in the sum of Rs. 25,000. 00 within a week before the Additional Controller there shall be a stay. The tenant paid Rs. 20,000. 00 in cash. On 9th September 1970 his wife Mrs. Usha Nath Mathur furnished the security in the sum of Rs. 25. 000. 00.
( 4 ) THE wife had a fixed deposit receipt of the Bank of India (the bank) No. F-6/328 dated 29th August, 1970 of Rs. 25,000 for the period of one year. She had deposited Rs. 25,000 with the bank and obtained this deposit receipt. She furnished the security in terms of the court s order by pleading the receipt. The wife executed a surety bond wherein she said that her husband "shri T. N. Mathur shall produce at the disposal of the court when required the amount of Rs. 25,000" and "in default of his so doing I bind myself, my executors, to pay to the said court, at its order, the said sum of Rs. 25. 000 or such sum not exceeding Rs. 25,000 or any portion thereof as the said court may adjudge against my Fixed Deposit Receipt No. F-6/328 dated 29-8-70 due on 19-8-71 on the Bank of India, Connaught Place, New Delhi for Rs. 25,000 in the name of Mrs. Usha Nath". She handed over the fixed deposit receipt to the Additional Controller where she filed the surety bond. Before the Additional Controller Mrs. Usha Mathur made the following statement on 9th September, 1970 :
"i pledge this fixed deposit receipt in the name of the court according to the order of the High Court as security. My amount of Rs. 25,000 is in deposit with the Bank of India vide F. D. R. No. F-6/328 dated 29-8-1970. I pledge it in favour of the court and undertake that I will not withdraw the amount except with the order of the court. I shall be bound by the decision of the court. "
( 5 ) AFTER Mrs. Mathur had furnished the security the Additional Controller sent a notice to the bank on 3rd October 1970 directing it not to pay Rs. 25,000 to Mrs. Usha Mathur till the decision of the suit because, it was stated, "she had pledged the same in favour of the court by way of security". It is not disputed that this notice was received by the bank on 3rd October, 1970 itself.
( 6 ) ON 3rd May 1970 the second appeal of the tenant was dismissed by D. K. Kapur J. The tenant fell into further arrears of rent. A sum of Rs. 61,600 became due from him on account of arrears from 1st December, 1965 to 30th April 1972. A sum of Rs. 20,000 had already been paid in cash to the landlord. The balance of Rs. 41,600 remained due which the tenant did not pay. The Additional Controller passed an eviction order against the tenant on 25th October 1972 and in pursuance thereof the landlord took possession.
( 7 ) AFTER taking possession the landlord on 13th November, 1971 made an application to the Additional Controller for the enforcement of the surety bond of Mrs. Usha Mathur. On 22nd Dec
