LexANUMATI versus PUNJAB NATIONAL BANK
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A ANUMATI v. . PUNJAB NA TI ON AL BANK OCTOBER 25, 2004 B [RUMA PAL AND ARUN KUMAR, JJ.] Banking : Fixed deposit-Jointly owned with an 'either or survivor' clause- C Pledge by one of them to bank for a loan-Adjustment by bank against that loan_:..correctness of-Held: 'Either or survivor' clause was a tripartite agreement between joint account holders inter se and bank that it may be paid on maturity only to either of them-It could not be bilaterally modified by one of them by pledging with any third party including the Bank itself D in its capacity as creditor, so that the amount becomes payable to such third party, without the authority, knowledge or concurrence of other account holder-Parties to a joint account are not automatically authorised to pledge each others credit. Appellant and her husband had a fixed deposit with respondent bank. E Amount covered by this deposit was adjusted by the respondent Bank against a loan taken by a proprietary firm of the husband on the ground that receipts of the deposit were mortgaged as security towards that loan. On complaint being filed by appellant to District Consumer Forunr, it was held that she was entitled to half of the amount of fixed deposit along with interest because she never mortgaged her share of the fixed deposit Appeal ofrespondent to State F Commission was allowed on the ground that the husband had validly pledged the fixed deposit receipts with respondent, and as it was payable to 'either or survivor', respondent could give discharge thereof by making payment to either of the account holders. Therefore, respondent was at liberty to accept mortgage thereof without consent of other depositor, viz. the appellant National G Commission rejected the appeal of appellant Hence the present appeal. Allowing the appeal, the Court HELD: 1. The District Forum was correct in accepting, and the State Commission and NatiOnal Commission erred in rejecting the appellant's H complaint 1618-F-Gl 610 • A NUMA TI v. PUNJAB NATIONAL BANK 611 2. A fixed deposit in the joint names of two persons is nothing but a A joint account which, as the name itself suggests, is repayable on the expiration of the agreed period. The fixed deposit receipt is merely a written acknowledgment by the Bank that it holds a certain sum to the use of its customers. The bank is thus a debtor to the account holders in respect of the amount deposited-a debt which is repayable by the bank to account holders with interest on the expiry of an agreed period. An 'either or survivor' clause B in such an account means that the amount payable by the Bank on maturity of the fixed deposit may be paid to either of the account holders by the Bank in order to obtain a valid discharge. In other words under a tripartite agreement between the joint account holders inter se and the Bank, the Bank may, on maturity, make payment only to either of them. This tripartite C agreement cannot be bilaterally modified by one of the joint account holders by pledging the account with any third party including the Bank itself in its capacity of creditor, so that the amount becomes payable to such third party, without the consent of the joint account holders. [616-D-F) Punjab National Bank v. Surendra Prasad Sinha, (1993) 1 SCC 499, D held in applicable. Simla Banking and Industrial Company Ltd. Ambala City v. Mt. Bhagwan Kaur, AIR (1928) Lahore, 316 and Nath Bank Ltd. v. Sisir Kumar Sarkar, AIR Cal. 303, approved. Hirschorn v. Evans (Barclays Bank Ltd, Garnishees), (1938) 2 KB 801 (L), referred to. Tannan 's Banking Law and Practice in India, (20th Edn.) (2001) Volume 1, Chapter VIII page 259, referred to. 3.1. Parties to a joint account are not automatically authorised to pledge each others credit. A banker should not lend money to the parties to a joint account, either by means of an overdraft or in any other way, without obtaining from each of the parties an undertaking to be severally as well as jointly liable E F to pay the loan. The Banker has no right to set off the credit balance in the G joint account of the same parties. The difference between the joint savings, . Current or other account is, that there is no right in the depositors to operate such account and withdraw the moneys except upon maturity. [616-B-C) Sheldon and Fidler's Practise and law of Banking, 11th Edition, page ~~~~ H 612 SUPREME COURT REPORTS [2004) SUPP. 5 S.C.R. A 3.2. In the pres
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