The court established that loans against minors' fixed deposits, without the natural guardian's consent, are illegal, affirming joint liability for wrongful appropriation.

JUDGMENT :

ANUBHA RAWAT CHOUDHARY, J.

Heard the learned counsel appearing on behalf of the appellant.

2. This appeal has been filed against judgment and decree dated 08.12.2015 (decree sealed and signed on 21.12.2015) passed by the learned District Judge-II, Jamshedpur in Money Appeal No.1 of 1993 whereby the appeal has been dismissed, confirming the judgment and decree dated 18.02.1989 (decree sealed and signed on 04.03.1989) passed by the learned Subordinate Judge-III, Jamshedpur in Money Suit No.80 of 1985/143A of 1988 whereby the suit was decreed on contest and held that the plaintiffs are entitled to realize a sum of Rs.35,000/- against the defendants jointly and severally each.

3. The learned counsel for the appellant has submitted that the defendant no.1 was the principal loanee and the defendant no.2 was the concerned bank. He has submitted that as per the case of the plaintiffs, the defendant no.1 the uncle of the plaintiffs, had pledged the fixed deposits standing in the name of the plaintiffs, who were minor at the relevant point of time. It was pledged by defendant no.1, and he availed the loan and also became a defaulter and he has submitted that the defendant no.1 had misrepresented himself as the natural guardian of the plaintiffs.

4. The learned counsel submits that the liability has been fixed as joint and severally primarily on the ground that the interest which accrued in the fixed deposit was paid against the loan amount. The learned counsel has referred to the substantial questions of law which he has framed at Paragraph- (J) and (M) of the Memo of Second Appeal, which are quoted as under:

“(J) Whether the learned Courts below committed serious illegality by not appreciating that the appellant granted loan to the defendant no.1 against the security of the two Fixed Deposit Accounts standing in the names of plaintiffs/respondents no.2 &3, that too when it has been specifically admitted by the defendant no.1 that he had given the said loan amount to the plaintiffs to meet their urgent need of money after availing the same for their welfare, acting as their natural guardian?

(M) Whether the learned Appellate Court miserably failed to give clear finding on the aspect as to whether there was any collusion between the appellant and the defendant no.1 based on which the learned Trial Court observed that the appellant and defendant no.1 are jointly and severally liable to compensate the plaintiffs; thus, the appellate court exceeded its jurisdiction to hold that the grant of loan was illegal?”

5. This Court has gone through the impugned judgments and finds that one of the issues which was framed by the trial court was “Are the plaintiffs entitled to realize a sum of Rs.35,000/- against the defendants?

6. The learned trial court after scrutinising the materials recorded findings at Para-14 that the bank, defendant no.2 advanced the loan to the defendant no.1 without express permission from the natural guardian mother of the plaintiffs and without taking any permission of the mother. Therefore, collusion of the defendant bank is evident in advancing loan to the defendant No.1 and it cannot be ruled out in the nature and circumstances of the suit as appearing. Therefore, when there is an express provision of the bank that without the natural guardian’s consent and express permission, a minor’s fixed deposit cannot be pledged, then also the bank defendant no.2 has done it and gave loan to the defendant no.1 on the fixed deposit of the plaintiffs without taking permission from their mother, the natural guardian. It clearly goes to show that the bank authority in collusion with the defendant no.1 has done the same in violation of the rules of the bank prejudicial to the interest of the minor plaintiffs. The trial court held that defendant no.1 in collusion with the defendant no.2 appropriated the interest of the fixed deposit of the plaintiffs for his personal need and thereby took loan of Rs.15000/- also for his benefits and no