UNITED COMMERCIAL BANK LTD. versus OKARA GRAIN BUYERS SYNDICATE LTD. & ANR.

Citation: [1968] 3 S.C.R. 396 · Decided: 04-03-1968 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Dismissed

Judgment (excerpt)

UN11ED COMMERCIAL BANK LTD. 
v. 
OKARA GRAIN BUYERS SYNDICATE LTD. & ANR. 
Marcil 4, 1968 
(J. C. SiIAH, R. S. BACHAWAT AND G. K. MITTER, JJ,] 
Banking-Deposit Rectif!t-Syndicate openinl/ account in Bank-De· 
posit rteeipt in the name of Syndicate account DiJtrict Mqistrate If con-
stitutes him owner of deposit-Condition of deposit that on due date 
deposit receipt should be discharged by depositor-Non 
production of 
deposit receipt-Equitable jurisdiction of High Court. 
The respondent-a syndicate with its registered office in Montgo= 
in undivided Punjab, had depOl!ited certain amount with the appellant-Bank 
and obtained a Fixed Deposit Receipt. The deposit was required to be 
made for due performance of the conditiona of a scheme for procure-
ment devised by the Government of Punjab in 1946. The receipt was 
made out in the name of the Syndicate Account District 
Magistrate, 
Montgomery. No account was opened in the bank's books in the name 
of the District Magistrate and under the conditions of deposit it was repay-
able to the respondent on demand on due date. The respondent served 
a notice of withdrawal upon the Bank. An endorsement in that behalf 
was made on the receipt which was handed over to the District Magistrate, 
Montgomery. Following the communal riots in 1947 the staff of the res-
pondent migrated to India and the respondent aet up a new business at 
Amritsar. 
The respondent demanded the money to which the appellant 
replied that the amount could not be returned until the respondent obtains 
a discharge from the District Magistrate, MontgOmery (in Pakistan) of his 
lien on the fixed deposit reccipt. The respondent filed a petition before the 
Debt Adjustment Tribunal, Amritsar, for an order directing the appellant 
to pay the amount with interest, and impleaded the District Magistrate, 
Montgomery as a respondent. 
The District Magistrate filed no claim 
before the Tribunal. The Tribunal 'dismissed the petition holding that the 
amount stood forfeited by' order of the Disliict Magistrate, Montgomery. 
Jn appeal, the High Court made an order in terms of the prayers in the 
petition, subject to the condition that the respondent shall give an indem-
nity for restitution of the amount in case the bank had to pay the amount 
to the District Magistrate, Montgomery. 
In appeal to this Court. 
HELD : The deposit receipt gave rise to no contractual obligation in 
favour of the Disliict Magistrate, Montgomery nor was the bank a trustee 
for that officer. By an express condition the receipt was not tranlferable. 
The name in which the receipt was made out was by itself not sufficient 
to create an interest in the amount in favour of the District Magistrate. 
The District Magistrate was not in Jaw constituted owner of the money 
deposited by the respondent with the appellant by virtne of the delivery 
of the, receipt. Jn the books of the appellant the fund stood to the credit 
of the resp0ndent : the respondent was the owner thereof and it was the 
respo.ndent alone which was entitk:d to d .. ~m.uid payn1ent of the fund. Jn 
the absenre of any obligalion--cuntractual or fiducia.ry-un:dertuken 
by 
the appellant. in favour of the District ~1agistrate, the appellant could not 
withhold payment of money deposited after-the expiry of the period of 
notice. [399 D-HJ 
A 
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c 
D 
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G 
H 
A 
B 
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tl. CO. BANK V. tJ. G. B. SYNDICAtE (Shah, J.) 
397 
Even if the condition in the terms of deposit that on due date the de-
posit n!ceipt should be discharged by the depositors was to be considered 
a condition pn!eedent to the enforcement of the obligation of the Bank 
in favour of the respondent, the High Court was right in the exercise of 
its equitable jurisdiction to direct that the money be paid to the respondent 
without production of the receipt. It might =nably be inferred that 
the receipt was lost or was destroyed and in such cases the court's equitable 
jurisdiction ·could appropriately be exercised. 
fhe . direction of the Hill!' 
Court that an indemnity be given by the n!spondent to the Bank for resti-
tution if the Bank was to pay the amount to the District Magistrate, 
Montgomery has fully protected the Bank against any possible Joss and 
this eminently reasonable direction was 
not liable to 
be 
set 
side. 
1400 F-Hl 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 449 of 
1965~ 
Appeal from the judgment and order dated August 29, 1960 
of the Punjab High Court in F.A.0. No. 14 of 195

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