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IN THE HIGH COURT OF JUDICATURE AT MADRAS
T. RAVINDRAN, J.
V.T. Ittiyarkutty – Appellant
Versus
Syndicate Bank Rep. by its Manager, Nilgiris – Respondent
S.A. No. 1061 of 2008, M.P. No. 1 of 2008
Decided On : 19-01-2021
Indian Contract Act 1872 - Section 72 - Second appeal - Suit for recovery of money - Liability of person to whom money is paid, or thing delivered, by mistake or under coercion - Plaintiff, second defendant, as guardian and father of first defendant, opened a Pigmy Deposit A/c. with plaintiff's branch and abovesaid account is to be matured, second defendant, as guardian and father of first defendant, made an application for advance by way of loan on aforestated deposit for sake of his minor son's expenses and availed a loan amount from plaintiff's bank - Sum had been paid to second defendant vide loan on deposit A/c. and credited to S.B. A/c. of second defendant with plaintiff's bank and second defendant has also collected said sum from his S.B. account on same date - Second defendant had agreed to repay borrowed sum with accrued interest as per RBI guidelines as applicable from time to time - Second defendant, approached plaintiff's bank for pre-mature closure of Pigmy Deposit Account in name of first defendant and plaintiff's bank also closed said account and paid a total sum being proceeds with accrued interest thereon by crediting same to S.B. A/c. of second defendant with plaintiff's bank and second defendant had withdrawn entire amount on same day - At time of closure of Pigmy Deposit Account, plaintiff's bank by mistake paid entire sum stood to credit of first defendant without deducting loan amount on deposit and second defendant, in all, only paid a sum of Rs. 25,000/- towards loan amount and there is a balance of Rs. 15,000/- together with accrued interest, which he had availed and neglected to pay - Hence, suit for recovery of money - Whether judgment and decree of lower appellate court is sustainable especially when deceased first defendant-minor could not be a borrower - Whether decree granted against appellants personally is right especially when appellants are not borrowers as found by lower appellate court - Whether decree of lower appellate court is sustainable especially when suit is dismissed against first defendant he being borrower represented by his guardian first appellant from respondent/bank - Whether lower appellate court is right in granting a personal decree against second appellant she being legal representative of deceased first defendant – Held, when second defendant is found to be beneficiary of loan transaction as well as recipient of proceeds of Pigmy Deposit Account on its premature closure and second defendant has failed to establish that he has discharged entire loan amount which had been borrowed by him from plaintiff's bank, even though Pigmy Deposit Account has been opened in name of first defendant/minor, however, same had been transacted only by second defendant as father and guardian of first defendant/minor, in such view of matter, taking into consideration abovesaid factors in toto, first appellate court is found to be justified in granting decree in favour of plaintiff's bank as determined by it by rightly setting aside judgment and decree of court - In such view of matter, in Court’s considered opinion, no substantial question of law, as such, is involved in second appeal - Be that as it may, substantial questions of law formulated in second appeal, for reasons aforestated, are accordingly answered in favour of plaintiff's bank and against defendants/appellants - Second appeal is dismissed.
JUDGMENT :
T. RAVINDRAN, J.
1. Challenge in this second appeal is made to the judgment and decree dated 26.02.2008 passed in A.S. No. 2 of 2008 on the file of the District Judge (Appellate Authority), Nilgiris at Uthgamandalam reversing the judgment and decree dated 28.08.2000 passed in O.S. No. 224of 1997 on the file of the District Munsif Court, Coonoor.
2. For the sake of convenience, the parties are referred to as per their rankings in the trial court.
3. The defendants in O.S. No. 224 of 1997 are the appellants in the second appeal.
4. Suit for recovery of money.
5. Briefly stated, according to the plaintiff, the second defendant, as the guardian and father of the first defendant, opened a Pigmy Deposit A/c. No. 6009 on 02.11.1991 with the plaintiff's branch at Coonoor and the abovesaid account is to be matured on 02.02.1997 and on 14.09.1994, the second defendant, as the guardian and father of the first defendant, made an application for advance by way of loan on the aforestated deposit for the sake of his minor son's expenses and availed a loan amount of Rs. 40,000/- from the plaintiff's bank. The abovesaid sum of Rs. 40,000/- had been paid to the second defendant vide loan on deposit A/c. No. 189/94 and credited to S.B. A/c. No. 6379 of the second defendant with the plaintiff's bank and the second defendant has also collected the said sum from his S.B. account on the same date. The second defendant had agreed to repay the borrowed sum with accrued interest as per the RBI guidelines as applicable from time to time. The second defendant, on 04.04.1995, approached the plaintiff's bank for the pre-mature closure of the Pigmy Deposit Account No. 6009 in the name of the first defendant and the plaintiff's bank also closed the said account and paid a total sum of Rs. 94,076/- being the proceeds with accrued interest thereon by crediting the same to the S.B. A/c. No. 6379 of the second defendant with the plaintiff's bank and the second defendant had withdrawn the entire amount on the same day. At the time of the closure of the Pigmy Deposit Account, the plaintiff's bank by mistake paid the entire sum stood to the credit of the first defendant without deducting the loan amount on deposit and the second defendant, in all, only paid a sum of Rs. 25,000/- towards the loan amount and there is a balance of Rs. 15,000/- together with accrued interest, which he had availed and neglected to pay. Hence, the suit for recovery of money.
6. The defendants resisted the plaintiff's suit admitting that the Pigmy Deposit Account was opened in the said bank in the name of the minor, the first defendant, and the same was closed on 04.04.1995 and the plaintiff's bank paid the balance amount and the documents after adjusting all the amount due thereon after due verification. Therefore, it is incorrect to state that by mistake the entire amount was paid to the first defendant and still there is a balance of Rs. 15,000/- together with accrued interest to be paid by the second defendant. After verification of the accounts and settling the same, the plaintiff's bank cannot claim the suit amount stating that by mistake, the account had been closed. The suit is bad for non joinder of parties. There is no cause of action for the suit and hence, the suit is liable to be dismissed.
7. In support of the plaintiff's case PW-1 was examined, Exs.A1 to A11 were marked. On the side of the defendants, DW-1 was examined and no document has been marked.
8. On a consideration of the oral and documentary evidence adduced in the matter and the submissions put forth by the respective parties, the trial court was pleased to dismiss the plaintiff's suit with costs. On an appeal by the plaintiff, the first appellate court on an evaluation of the materials placed on record and the submissions put forth by the respective parties, was pleased to allow the appeal in part preferred by the plaintiff's bank and by way of the same, set aside the judgment and decree of the trial court and
SupremeToday
The court emphasized the principle of estoppel and the co-extensive liability of the surety with the principal debtor. It also highlighted the requirements for realizing a loan from a surety.
The court established that loans against minors' fixed deposits, without the natural guardian's consent, are illegal, affirming joint liability for wrongful appropriation.
Concurrent findings of fact by trial and appellate courts based on evidence are final in a second appeal. Additionally, a party cannot use appellate provisions to introduce additional evidence merely....
The plaintiff bank must prove negligence on the part of the collecting bank to recover losses from fraudulent transactions involving negotiable instruments.
The bank acted within its authority in allowing transactions by the deceased's brother, with no sufficient evidence of fraud or deficiency in service.
Banks are duty-bound to honor acknowledged deposits and pay maturity values, and cannot deny liability based on alleged fraudulent acts by their employees.
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