UCO BANK versus HEM CHANDRA SARKAR

Citation: [1990] 2 S.C.R. 709 · Decided: 25-04-1990 · Supreme Court of India · Bench: K. JAGANNATHA SHETTY · Disposal: Dismissed

Judgment (excerpt)

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UCO BANK 
A 
V, 
HEM CHANDRA SARKAR 
APRIL 25, 1990 
[K. JAGANNATHA SHETfY AND M. FATHIMA BEEVJ, JJ.] 
B 
Indian Contract Act, 1872: Chapters lX and X-Bailment-
Agency-Distinguishing features-Duty of Banker-bailee-What is-
Bank entrusted with charge of goods/documents by customer-Whether 
an agent or bailee-Whether any fiduciary relationship exists between 
parties. 
c 
Banking Law-Bank and Customer-Existence of fiduciary 
relationship-Whether could be inferred from entries in current 
account. 
The respondent, who was indenting and lifting goods fro,;. textile 
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mills situated in different places, and was maintaining a current 
account with the appellant-Bank for this purpose, filed a suit against 
the Bank for accounts, damages, compensation and delivery of goods or 
their equivalent in money, for non-delivery of goods despite receiving 
payment thereof, contending that there was an oral agreement with the 
appellant-Bank, regarding receipt and payment of bills, etc. and receipt 
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and storage of goods on his behalf, and delivery of goods to him as and 
when required. and that under the said terms and conditions, the 
Banker constituted himself and acted as an express trustee and/or agent 
of the respondent in relation to the said goods and documents and thus 
stood in fiduciary relationship with the respondent. 
The appellant. denying the allegations, contended that it had 
never acted as an agent. trustee or depositee of the respondent in 
respect of the goods and docun1ents and that no fiduciary relatioµship 
existed between the parties. 
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The trial court decreed the suit holding that from the evidence 
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and entries in the current account, it could be inferred that there was 
agreement or arrangement between the parties, and the appellant acted 
as agentjtrustee of the respondent, and that there was fiduciary rela-
tionship between the parties. 
The High Court, affirming the decree of the trial court, held that 
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709 
710 
SUPREME COURT REPORTS 
[ 1990] 2 S.C.R. 
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if the respondent had paid the value of the goods and the appellant Bank 
neither delivered the goods nor rendered accounts, a fiduciary relation-
ship could exist between the respondent and the Bank in respect of the 
goods for which value was paid by the respondent. 
In the appeal, by special leave, on behalf of the appellant Bank it 
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was contended that the Bank was only a collecting agent for the supply 
of goods, and not an agent or trustee for the respondent; adjustment of 
bills by debiting to the current account without cheques from the re-
spondent would not change the ordinary relationship of bank and 
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customer; no special relationship was created either by opening the 
current account or storing the goods meant for delivery to the respon-
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c dent and there was nothing to take the parties outside the usual course 
of banking business; and the bank received and took charge of the goods 
only as bailee and any inference of fiduciary relationship between. 
parties was unwarranted and unjustified. 
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Dismissing the appeal. this Court. 
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HELD: I. The courts below were not justified in holding that a 
fiduciary relationship could exist between the parties in respect of goods 
for which the suit claim was base<'. This inference was drawn primarily 
from the debit entries in the respondent's current account. Collection of 
bills. remittances to mills. meeting expenses of storing the goods and 
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debiting the same to the current account even without cheques from the 
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respondent could not lead to an inference that the Bank acted as agent 
of the respondent and that there was fiduciary relationship between 
parties. There is nothing in this method of operation t_o take the parties 
outside the ordinary relationship of banker and customer. This is the 
normal method of banking operation and the maintenance of the cur-
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rent account in the instant case is not outside this principle. [716D-G I 
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Law of Banking by Lord Chorley oth ed. at 167-168 and Pager's 
>--. 
Law of Banking, 9th ed. at 8->83, referred to. 
1. l Banks take charge of goods, articles, securities as bailee and 
G not as trustee or agent. Bailment is the delivery or transfer of possession 
of a chattel or other item of personal property with a specific mandate 
which required the identical res either to be returned to the bailor or to 
be dealt with in a particular way by the bailee as per directions of the 
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bailor. One important' disti

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