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2025 Supreme(Online)(Cal) 3402
CALCUTTA HIGH COURT
Debangsu Basak, Md. Shabbar Rashidi, JJ
Sri Swapan Kumar Chatterjee @ Swapan K. Chatterjee @ Kaloo Chatterjee – Appellant
Versus
Punjab National Bank & ors. – Respondent
M.A.T. 918 of 2025
For the Appellant: Mr. Chittapriya Ghosh, Ms. Aiswarjya Gupta
For the Bank: Mr. Pankaj Kumar Mukherjee
A bank as a trustee must compensate a depositor with interest up to maturity rates despite the depositor's inability to renew due to legal conditions.
Headnote:(A) Reserve Bank of India - Circular on Interest Rates on Deposits - Bank not liable to pay interest on overdue fixed deposits unless renewed; Appellant's inability due to criminal proceedings set aside the dismissal of writ petition and entitles him to interest at fixed deposit rates. (Paras 1, 2, 10, 18)
(B) Bank as trustee - Legal incapacity of appellant to encash fixed deposits does not warrant loss of entitled interest.
Facts of the case:
The appellant's fixed deposits were not encashed due to his involvement in criminal proceedings, which ended in acquittal. He claimed interest on the fixed deposits beyond maturity.
Findings of Court:
The bank acted as a trustee, thus liable to pay interest at fixed deposit rates post-maturity, based on valid reasoning around the delayed renewals owing to the appellant's legal incapacity.
Issues: Whether the bank holds liability for interest from maturity to encashment despite non-renewal of deposits.
Ratio Decidendi: The bank must honor deposit contracts and compensate at prevailing rates despite auto-renewal clauses not being applicable retrospectively.
Result: Appeal allowed, bank ordered to pay interest at fixed deposit rates.
| Table of Content |
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| 1. writ petition aimed to challenge dismissal regarding interest on matured deposits. (Para 1 , 2 , 5) |
| 2. bank denies interest citing non-renewal based on their published circular. (Para 3 , 4 , 12) |
| 3. the appellant faced legal challenges that hindered further action on the deposits. (Para 10 , 16) |
| 4. court advocates for entitlement to interest based on trustee obligations. (Para 17 , 18) |
For the Appellant : Mr. Chittapriya Ghosh, Advocate Ms. Aiswarjya Gupta, Advocate For the Bank : Mr. Pankaj Kumar Mukherjee, Advocate Heard on : 25.07.2025 Judgment on : 25.07.2025 DEBANGSU BASAK, J.:-
1. Appeal is at the behest of the writ petitioner and directed against an order dated May 19, 2025 passed in W.P.A. 3385 of 2025.
2. By the impugned order, learned Single Judge dismissed the writ petition. Learned Single found that, since, the two fixed deposits in question were not renewed bank was not liable to pay interest from the period of the date of maturity of the fixed deposit till its encashment.
3. Learned advocate appearing for the appellant submits that, appellant was not at fault in renewing the fixed deposit concerned prior to its maturity or subsequent thereto since, the two fixed deposits formed the subject-matter of a criminal case. In the criminal case, the appellant was entangled with Bank officials. The criminal case resulted in an order of acquittal only on March 14, 2024. Thereafter, the appellant requested the bank for encashment of the fixed deposit along with interest. Interest portion for the period subsequent to the date of maturity was denied and therefore, the writ petition was filed.
4. Learned advocate appearing for the Bank submits that, the Bank is not liable to pay interest for the period from the date of the maturity of the two fixed deposits till the date of its payment at any rate save and except the rate of interest for savings bank account. In support of such contention, learned advocate for the Bank, relies upon Clause 2.13 of Master Circular on Interest Rates on Rupee Deposits held in Domestic, Ordinary Non-Resident (NRO) and Non-Resident (External) (NRE) Accounts of the Reserve Bank of India. He submits that, the Board of Directors of Bank took a decision in terms of Clause 2.13 of such Circular on November 16, 2015 where, various scenarios with regard to non-renewal of fixed deposits were considered. Sum and substance of such decision, relevant to the facts and circumstances of the present case is that, when, the deposit holder does not renew the fixed deposit no interest is payable.
5. Learned advocate appearing for the Bank also relies upon a subsequent decision of the Bank dated March 30, 2020 which was issued in the name of Retail Banking Division (Resources) Consolidated Circular No.15/2020. He submits that, in terms of such circular, interest would be paid at savings bank rate of interest as applicable from time to time in respect of Overdue Term Deposit.
6. Appellant made two fixed deposits with Punjab National Bank on September 14, 1982 and September 9, 1982.
7. Those fixed deposits were for a tenure of one year and therefore, became payable on September 13, 1983 and September 8, 1983 respectively.
8. Fixed deposits were not allowed to be encahsed as they formed subject-matter of criminal proceeding. Appellant was also involved in the criminal proceeding as also bank officials.
9. Criminal proceedings resulted in an order of acquittal on March 14, 2022.
10. Appellant, therefore, suffered legal impediment in not encashing and nor renewing the fixed deposits and at least not receiving the proceeds of the fixed deposits alongwith interest for all this period till the order of acquittal on March 14, 2024.
11. Thereafter, the appellant applied for encashment of fixed deposits. Principal alongwith interest accrued till the date of maturity was forwarded to the appellant. The claim of the appellant is for interest for the period from the date of maturity till the date of receipt of payment.
12. Reli
