Sree Sankara National Institute of Educational Trust, Rep by its Chairman Dr. K. Monikantan Nair V. Union Bank of India, Statue Branch Rep by its Branch Manager and The Deputy General Manager, Union Bank of India and The Banking Ombudsman, O/O. of the Banking Ombudsman, Kerala & the UT of Lakshadweep, Reserve Bank of India Buildings and The University of Kerala, Rep by its Registrar and Gokul Govind and The Regional Director, Reserve Bank of India and The Chief Commissioner of Income Tax

WP(C)/16011/2020

AI Insights

The case revolves around a dispute concerning the release of funds from a fixed deposit account held by the petitioner, Sree Sankara National Institute of Educational Trust, with the Union Bank of India. The deposit was initially made as a financial guarantee to the University of Kerala and later involved in a dispute when the bank required consent from Gokul Govind, a third party, for releasing the funds. The petitioner argued that the bank's demand for consent from a non-customer was unreasonable and not supported by banking laws. The Banking Ombudsman initially sided with the bank, leading the petitioner to challenge this decision in the High Court of Kerala.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 803546 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 27-09-2021
• Assessment Year: misc
• Other Referred Cases: Anumati v. State of Punjab, Ashok Amritraj v. Reserve Bank of India, Zonal Manager, Central Bank of India v. Devi Ispath Ltd. & Ors., Federal Bank Ltd. v. Sagar Thomas & Ors., Indian Bank v. Godhara Nagrik Co-operative Credit Society Ltd.
• Laws Referred To: Banking Ombudsman Scheme, 2006, Income-tax Act, 1961
• Result in Favour of: Applicant
• Court: HIGH COURT
• Department Lawyers: A S P KURUP; SADCHITH KURUP; MILLU DANDAPANI; THOMAS ABRAHAM; MEERA GOPINATH; D KISHORE; R MURALEEKRISHNAN MALAKKARA; P K RAVINDRANATHA MENON; JOSE JOSEPH
• Assessee Lawyers: PRAVEEN VYAS
• Keywords: Banking Law; Contract law; Fixed Deposit; Public sector bank; Writ petition
• Section: 131(1A); 13(a)

Judgement Text

" WP(C) NO.16011 OF 2020 1 “CR” IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE T.R.RAVI MONDAY, THE 27TH DAY OF SEPTEMBER 2021 / 5TH ASWINA, 1943 WP(C) NO. 16011 OF 2020 PETITIONER: SREE SANKARA NATIONAL INSTITUTE OF EDUCATINAL TRUST, REP BY ITS CHAIRMAN DR.K.MONIKANTAN NAIR, HEAD OFFICE-ARDHANA, CONVENT ROAD, ALUMOODU, NEYYATTTINKARA P.O., THIRUVANANTHAPURAM,PIN- BY ADV PRAVEEN VYASAN RESPONDENTS: 1 UNION BANK OF INDIA, STATUE BRANCH REP BY ITS BRANCH MANAGER, UNION BANK BUILDINGS, STATUE, THIRUVANANTHAPURAM,PIN-695 001 2 THE DEPUTY GENERAL MANAGER, UNION BANK OF INDIA, UNION BANK BUILDINGS, STATUE, THIRUVANANTHAPURAM,PIN-695 001 3 THE BANKING OMBUDSMAN, O/O. OF THE BANKING OMBUDSMAN, KERALA & THE UT OF LAKSHADWEEP, RESERVE BANK OF INDIA BUILDINGS, BAKERY JUNCTION, THIRUVANANTHAPURAM, PIN-695 033 4 THE UNIVERSITY OF KERALA, REP BY ITS REGISTRAR, UNIVERSITY BUILDINGS, PALAYAM, THIRUVANANTHAPURAM, PIN-695 033 ADDL.R5 IMPLEADED: 5 ADDL R5: GOKUL GOVIND, TC NO.25/299(1) PANAMUGHAM, PRESS ROAD, PULIMOODU, TRIVANDRUM-695 001,MOB.[phone] ALTERNATE ADDRESS GOKUL GOVIND, COMPUNEEDS, D-O, PERIYAR BLOCK, TECHNOPARK, TRIVANDRUM-695 581. ADDL R5 IMPLEADED AS PER ORDER DATED 03-12-2020 IN IA 1/2020. WP(C) NO.16011 OF 2020 2 6 ADDL R6: THE REGIONAL DIRECTOR, RESERVE BANK OF INDIA, P.B.NO.6507, BAKERY JUNCTION ROAD, NANDAVANAM, PALAYAM, THIRUVANANTHAPURAM-695 033 7 ADDL R7: THE CHIEF COMMISSIONER OF INCOME TAX, AYAKAR BHAVAN, PEROORKADA ROAD, KOWDIAR, THIRUVANANTHAPURAM-695 033 ADDL R6 AND ADDL R7 ARE SUO MOTU IMPLEADED AS PER ORDER DATED 06-01-2021 IN WP(C) 16011/2020 BY ADVS. R1 & R2 BY SRI.A.S.P.KURUP, SC, UBI SRI.SADCHITH.P.KURUP R3 & R6 BY SRI.MILLU DANDAPANI R4 BY SRI.THOMAS ABRAHAM, SC, UNIVERSITY OF KERALA R5 BY SMT.MEERA GOPINATH SRI.D.KISHORE SRI.R.MURALEEKRISHNAN (MALAKKARA) R7 BY SRI P.K.RAVINDRANATHA MENON (SR.) JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON ON 06.08.2021, THE COURT ON 27.09.2021 DELIVERED THE FOLLOWING: WP(C) NO.16011 OF 2020 3 “CR” T.R.RAVI,J. ----------------------------- W.P.(C)No.16011 OF 2020 ------------------------------- Dated this the 27th day of September, 2021 JUDGMENT Can a public sector Nationalised Bank, refuse to pay the proceeds of a fixed deposit, to the holder of the deposit, on the ground that a consent is required from a person from whose account the amount for opening the fixed deposit account was debited; is the question that needs to be decided in this writ petition. A question which may seem simple and ridiculous at the same time, for a person familiar with banking laws and the fundamentals of the law of contract, but which has some wedged corners as can be seen from the facts narrated below. 2. The following facts are not disputed. The petitioner, a Charitable Trust, is conducting an educational institution by name Sree Krishna College of Pharmacy and Research Centre at Parassala in Thiruvananthapuram district. The college was granted provisional affiliation on 19.09.2006. The petitioner had to provide a financial WP(C) NO.16011 OF 2020 4 guarantee for a sum of Rs.10 lakhs for the purpose of the affiliation. The petitioner furnished the financial guarantee on 20.09.2006, by means of a fixed deposit receipt, issued in the name of the petitioner by the 1st respondent Bank and endorsed in favour of the University. Ext.P3 is the copy of the fixed deposit. The receipt shows that the amount has been received from the petitioner. During 2009, the Kerala University of Health Sciences was established and the furnishing of financial guarantee was no longer required. The Syndicate of the University at its meeting held on 30.12.2015 considered the request of various Educational Agencies of Self Financing Colleges, for return of the fixed deposit receipts submitted at the time of affiliation with the University, whose affiliations had been shifted to the Kerala University of Health Sciences and it was resolved to release the FD receipts only to those colleges whose affiliations have been shifted to the Kerala University of Health Sciences, which have no outstanding dues including annual administration fee towards the University. The petitioner had outstanding dues of Rs.3,75,000/-, which was cleared by submitting a demand draft dated 17.08.2019. By Ext.P7 dated 02.11.2019, the Registrar returned the fixed deposit to the Bank requesting to WP(C) NO.16011 OF 2020 5 release the same to the depositor after cancelling the lien endorsed in favour of the Registrar, University of Kerala. 3. Coming to the dispute. The 1st and 2nd respondents (representing the concerned Bank) took a stand that the fixed deposit was opened in the name of the petitioner as per instructions by one Gokul Govind, who is the 5th respondent in the writ petition and by debiting the account of Sri Gokul Govind and that there was no Banker-customer relationship between the Bank and the petitioner. One fails to understand how a Bank which has issued a fixed deposit receipt in the name of a person, take a stand that there is no Banker-customer relationship with such person!!. In Ext.P11 issued by the 2nd respondent it is stated that the Bank requires confirmation from the 5th respondent for making the payment to the petitioner. The aggrieved petitioner approached the 3rd respondent Banking Ombudsman contending that the Bank was bound to release the proceeds of the fixed deposit to the depositor and there is no requirement to get approval from any stranger to the transaction. By Ext.P13, the 3rd respondent passed orders finding that the deposit was opened as per instructions from Gokul Govind who was a customer of the Bank, by debiting his account and that the interest WP(C) NO.16011 OF 2020 6 of the fixed deposit has been regularly credited to the account of Sri Gokul Govind, for which the petitioner had not raised any objection. The 3rd respondent has noticed the stand of the Bank that they have never refused to refund the money and that the proceeds of the fixed deposit was either to be refunded to the account of Gokul Govind or to any other account as per his instructions for closure. The 3rd respondent closed the complaint under Section 13(a) of the Banking Ombudsman Scheme, 2006 and since such order is not appealable, the petitioner was given liberty to approach any other forum for the redressal of their grievances. 4. The contention of the petitioner is that a Banker who had received money from the petitioner and opened a term deposit account in the name of the petitioner is bound to repay the entire amount with accrued interest for the entire period as the relationship between the Banker and its customer is one of debtor-creditor relationship. Reliance is placed on the judgment in Anumati v. State of Punjab reported in [(2004) 8 SCC 498]. The petitioner does not dispute the fact the amount for opening the fixed deposit account was debited from the account of the 5th respondent. The petitioner's case is that they got provisional affiliation as per Ext.P1 WP(C) NO.16011 OF 2020 7 order dated 19.09.2006 and they had to provide financial guarantee on the next day, that is, 20.09.2006. It is stated that the petitioner had transferred amounts to the account of the 5th respondent for the purpose of facilitating the 5th respondent to transfer the amounts required for the fixed deposit. Reliance is placed on Ext.P2 statement of the account of the petitioner with State Bank of Travancore which shows that a sum of Rs.18,74,700/- was transferred from the petitioner's account to the account of M/s Compu Needs Communication. Reliance is placed on Ext.P15 circular to submit that the Bank should have identified the customer at the time of opening of the account itself and they cannot take the stand that amount in the name of the petitioner will be released only after getting consent from the 5th respondent. Regarding the observation of the Ombudsman that interest is being credited to the 5th respondent and the petitioner had not objected to the same, it is contended that the petitioner was never aware that the Bank was crediting the interest to the account of the 5th respondent. It is the specific contention that the petitioner had not issued any such instructions to the Bank. 5. A statement has been filed by the Standing Counsel for WP(C) NO.16011 OF 2020 8 the 1st respondent. It is stated that the fixed deposit was opened on 20.09.2006 on instructions by the authorised signatory of the account M/s.Compu-Needs Communications by debiting their account. It is stated that there was no Banker-customer relationship with the petitioner. It is further submitted that once the deposit is received from the 4th respondent University, the Bank is ready to pay the principal amount of Rs.10 lakhs to the holder of the receipt after obtaining a no objection certificate from the authorised signatory of M/s.Compu-Needs Communications for avoiding any future legal complications, since the account is opened on their instructions. A definite stand is taken that money was deposited by a third party in the name of the petitioner and without the said person's concurrence, the money cannot be paid to the petitioner. It is further contended that the issue is a contractual dispute involving disputed questions of fact which cannot be adjudicated in a proceedings under Article 226 of the Constitution of India and no relief can be granted to the petitioner. 6. A statement has been filed by the Standing Counsel for the 4th respondent University, affirming the fact that the fixed deposit receipt had been received and that the same had been WP(C) NO.16011 OF 2020 9 returned to the Bank, on the basis of the decision taken by the Syndicate on 30.12.2015 and after the petitioner paid the amount of Rs.3,75,000/- which was outstanding to the University, by means of the demand draft dated 17.8.2019. 7. The 5th respondent has filed a counter affidavit contending that remedy of the petitioner is to approach the civil court. According to him, the 5th respondent had during the year 2006 supplied computers, accessories, etc. on orders placed by the Chairman of the petitioner Trust and the petitioner had paid the outstanding balance of Rs.18,74,700/- to the 5th respondent on 20.09.2006. It is further stated that after making the payment of Rs.18,74,700/-, the Chairman had requested the 5th respondent for an amount of Rs.10 lakhs, to enable him to open an FD account in the name of the Trust, endorsed to the University of Kerala, as financial guarantee, as it was required on that day itself. It is stated that the Fixed Deposit was opened utilising his funds, on the basis of the above request. According to him, the amount of Rs.10 lakhs was to be a loan which the petitioner had agreed to repay within three months. It is further submitted that the amount was not repaid within three months, that the petitioner requested for an extension WP(C) NO.16011 OF 2020 10 and that there was a mutual agreement that the periodical interest from the FD will be credited to the account of the 5th respondent as the interest towards the loan amount. It is stated that the loan was thereafter being extended from time to time and no legal action was taken against the petitioner for recovery, since the 5th respondent was under the bonafide belief that the amount was secured with the University of Kerala, and that the amount will be credited to his account on maturity of the fixed deposit. The 5th respondent denied the contention that the FD account was opened in the name of the petitioner using the petitioner's money which had been transferred to the 5th respondent. The 5th respondent also contends that his permission is required to withdraw the FD amount, since it is a monetary transaction between the petitioner and the 5th respondent. A further contention is made that huge amounts are due from the petitioner to the 5th respondent and hence the FD cannot be released to the petitioner. Regarding Ext.P2 Bank statement of the petitioner's account from which an amount of Rs.18,74,700/- had been transferred on 20.09.2006 to the 5th respondent, it is contended that the petitioner could have very well taken the fixed deposit from their own account on that day instead of opening a WP(C) NO.16011 OF 2020 11 fixed deposit account with the 1st respondent with funds transferred from the 5th respondent's account. It is further contended that the statement in the writ petition in paragraph 5 about mutual consent, actually refers to mutual consent between the petitioner and the 5th respondent. 8. On 06.01.2021 this Court expressed a doubt whether such transaction would fall within the purview of benami transaction and whether such deposits are permissible under the Banking Regulations. The Regional Director, Reserve Bank of India and the Chief Commissioner of Income-tax were suo motu impleaded as additional respondents 6 and 7 and were directed to file reports. 9. A counter affidavit has been filed by respondents 3 and 6 wherein it is stated that the issue involves disputed questions of fact involving contractual obligations between the petitioner and additional 5th respondent and hence the writ petition is not maintainable. 10. The 7th respondent has submitted a report before this Court. The Additional Director of Income-tax (Investigation) Thirivananthapuram had conducted an enquiry into the transactions. It is stated that on 02.03.2021, summons was issued under Section WP(C) NO.16011 OF 2020 12 131(1A) of the Income-tax Act, 1961 to the Chief Manager, Union Bank of India, Thiruvananthapuram Main Branch and the Bank was asked to furnish the account opening form relating to the fixed deposit FDR No.EL/TBA-0137611, the account to which interest was transferred, whether arrangement of transferring interest was still continuing or had stopped, whether the interest receipts arsing from the FD referred to above were credited to any particular account based on instructions of the FD account holder or any other person and if instruction was from any other person, on what basis the Bank decided to do without instructions/concurrence from the FD account holder and details of the person who was the holder of the account to which interest receipts from the FD were credited including customer ID of all linked accounts, details of any loan granted, whether repayment of loan has been completed, status of loan account and details of TDS deducted from interest receipts to the account. 11. The report reveals the following facts: a) The Fixed Deposit account was opened in the name of the Chairman of Sree Sankara National Educational Trust endorsed in favour of the Registrar of the University of WP(C) NO.16011 OF 2020 13 Kerala. b) In the subsequent renewal of the certificate on 12.11.2019, the FD amount is shown to have been received from the Registrar of the University of Kerala and there is no endorsement. c) During the period from the financial year 2006-07 to 2020-21 a sum of Rs.11,65,250/- had been paid out as interest and an amount of Rs.95,319/- has been collected as TDS. d) The 1st respondent had in their letter dated 05.03.2021 stated that the account opening form relating to the FD is not traceable and hence it cannot be produced. e) The 1st respondent Bank did not furnish any instruction given by either the 5th respondent or the petitioner or any person on behalf of the entities, regarding renewal of the deposit and credit of interest. f) From the period 21.12.2019 to 20.12.2020 the interest had been credited to the Bank's interest accruing account. WP(C) NO.16011 OF 2020 14 g) On 20.09.2006 a sum of Rs.18,74,700/- was transferred to M/s.Compu-Needs Communications from Sree Sankara National Institute of Educational Trust. It is noticed that the 5th respondent was managing the affairs of the business of the firm and was the authorised signatory of the firm and that the amount of Rs.18,74,700/- was credited into the account of his wife Mrs.Suria Lekha which was also being maintained with the Union Bank of India. h) The account of Mrs.Suria Lekha shows that on 20.09.2006 there was a debit of Rs.17,57,577/-, that on the same day there was a credit on cancellation of DD 11402 and a further debit on account of FDR 0211398 in favour of the Registrar, University. The explanation for the above entries is that the debit of Rs.17,57,577/- was the entry relating to the placing of the above funds at the hands of the Bank by the account holder for taking demand drafts. i) The follow up of the above transactions shows that three demand drafts were actually taken by the account WP(C) NO.16011 OF 2020 15 holder, all of which are in the name of the Registrar, University of Kerala for Rs.5,00,010/-, Rs.2,50,010/- and Rs.10,00,010/- totalling to Rs.17,50,030/-. It is stated that the demand draft for Rs.10 lakhs was cancelled and the fixed deposit was opened for Rs.10 lakhs as FDR 0211398. j) Mrs.Suria Lekha received a sum of Rs.18,74,700/- from the Trust and had also placed Rs.17,57,577/- with the Bank for issuance of demand drafts. k) The balance sheet of the Trust shows three assets, as Rs.10 lakhs, Rs.5 lakhs and Rs.2.5 lakhs totalling to Rs.17,50,000/-. l) The Chairman of the Trust had stated before the Department that the total purchase from M/s.Compu- Needs Communications was for a sum of Rs.9,10,614/- and that the entire payments were made in cash barring an amount of about Rs.1 lakh. m) The Trust had never accounted the income from interest arising out of the FD for Rs.10 lakhs in its books. It is stated that according to the Chairman of WP(C) NO.16011 OF 2020 16 the Trust, even if the full interest accrued on the fixed deposit account was taken into account, it would not exceed the limits of the exemption provided under the Income-tax Act. n) The 5th respondent gave a written submission before the Income Tax authorities stating that Rs.18,74,700/- received was towards invoices for supply of computers, accessories, etc. and that Rs.10 lakhs had been given to the Chairman of the Trust as a loan for the purpose of furnishing financial guarantee to the University of Kerala. o) According to the Report, the fixed deposit does not appear to be a benami property from both the view of the Trust and that of the 5th respondent. From the point of view of the petitioner, it is their money that they are claiming and from the point of view of the 5th respondent, it is a loan and there is a private arrangement for payment of interest. p) The report says that certain questions are unanswered as to why the Chairman settled the entire WP(C) NO.16011 OF 2020 17 outstanding dues of Rs.18,74,700/- with M/s.Compu- Needs Communications and on the same day took the loan of Rs.10 lakhs from them as claimed by the 5th respondent, as to why the Bank was crediting the interest into the account of M/s.Compu-Needs Communications, as to why the Bank is denying closure of the account unless there was any written instructions from any authorised person, as to why the firm was not showing two demand drafts and fixed deposits in their balance sheets as assets, while the same was being shown as such by the Trust and as to why the Bank did not produce the application for FD account opening and the instructions, if any, given by either the 5th respondent or the Chairman of the Trust. 12. Sri Praveen Vysan, learned counsel appearing for the petitioner relied on the decision of the Madras High Court in Ashok Amritraj v. Reserve Bank of India reported in [(2012) 6 MLJ 509] wherein a question arose regarding the return of amounts held in fixed deposits and the Madras High Court held that a writ petition was maintainable for the said relief and granted the relief. Reliance WP(C) NO.16011 OF 2020 18 was placed on the decision in Zonal Manager, Central Bank of India v. Devi Ispath Ltd. & Ors. reported in [2010 (11) SCC 186] wherein the Hon'ble Supreme Court considered the situations in which public sector bank would be subjected to a writ of mandamus in contractual matters. The Hon'ble Supreme Court held that if the instrumentality of the State acts contrary to public good, public interest, unfairly, unjustly, unreasonably discriminatory and violative of Article 14 of the Constitution of India in its contractual or statutory obligation, writ petition would be maintainable. The Court held that a legal right must exist corresponding to legal duty on the part of the State and if any action on the part of the State is wholly unfair or arbitrary, writ courts can exercise their power. The Court further held that the Nationalised Bank is required to act fairly, justly and reasonably in the interest of public and public good. 13. The counsel for the petitioner relied on the observation of the Hon'ble Supreme Court in decision in Federal Bank Ltd. v. Sagar Thomas & Ors. reported in [(2003) 10 SCC 733], that unlike private companies in banking business, the case of Nationalised Banks may stand on a different footing, to submit that in the case on hand, the 1st respondent is a public sector WP(C) NO.16011 OF 2020 19 Nationalised Bank. In para.34 of the judgment the Court held that private company carrying on banking business as a Scheduled Bank cannot be termed as an institution or company carrying on any statutory or public duty. A private body or a person may be amenable to writ jurisdiction only where it may become necessary to compel such body or association to enforce any statutory obligations or such obligations of public nature casting positive obligation upon it. The Court held that there are no such conditions in respect of a private company carrying on a commercial activity of banking. The counsel submits that the Court specifically dealt with the case of a private company involved in the commercial activity of banking and was not considering the case of a public sector Nationalised Bank. So also it is submitted that the decision in Y.Sleebachan v. State of Kerala & Ors. reported in [2020 KHC 631] also did not deal with the case of a public sector Nationalised Bank and will not apply to the facts of the case. Another contention that is put forward by the counsel for the petitioner is that the petitioner has challenged the order of the Ombudsman and hence the writ petition is maintainable, even otherwise. On facts, the counsel submitted that during the year 2006, when the fixed deposit was issued, there was WP(C) NO.16011 OF 2020 20 no necessity for a savings bank account with the Bank. It is submitted that the fact that the amount for starting the fixed deposit account was debited to the 5th respondent's account has no relevance at all, since the fact remains that the FD account has been started in the name of the petitioner. The Standing counsel for the 1st petitioner and the counsel for the 5th respondent also rely on the judgment in Sagar Thomas (supra). 14. Regarding the contention that a writ petition under Article 226 of the Constitution should not be entertained where disputed questions of fact of complex nature requiring production of documentary evidence, the counsel for the 5th respondent relied on the judgment in Punjab National Bank & Ors. v. Atmanand Singh & Ors. reported in [2020 KHC 6374]. The above judgment may not be of much relevance, since in my opinion, this was not a case which involves any complex questions of fact, which needs to be proved. The necessary facts for deciding the writ petition are admitted, in the sence, it is not disputed that the FD is in the name of the petitioner. Hence, the parties to the contract are only the petitioner and the 1st respondent bank. The 5th respondent is a total stranger. Any agreement between the 5th respondent and the WP(C) NO.16011 OF 2020 21 petitioner will not in any way affect the obligations of the Bank with respect to the fixed deposit. The only question hence is whether there is any legal requirement that the Bank has to get a consent from a third party to the contract for the purpose of setting the amounts due under the fixed deposit account with the petitioner. In this context, the judgment in Anumati (supra) gains importance. In paragraph 12 of the judgment, the Hon'ble Supreme Court held as follows: \"12. A fixed deposit in the joint names of two persons is nothing but 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 acknowledgement 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 the account-holders with interest on the expiry of an agreed period. An “either or survivor” clause 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 agreement cannot be bilaterally modified by one of the joint account-holders for WP(C) NO.16011 OF 2020 22 example 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-holder. Thus in Tannan: Banking Law and Practices in India [ (20th Edn.), 2001, Vol. 1, Chapter VIII, p. 259.] the legal position has been summarised thus: “On the view that the terms of operation of a joint account constitute a term of the contract of deposit, any variation or revocation of instructions in a joint account, whether the operation is by ‘either or survivor’ or ‘former or survivor’ can be effected only under the joint signatures of all persons entitled to operate the joint account. One of the joint account- holders thus cannot unilaterally instruct the bank not to honour cheques signed by the others, issue duplicate deposit receipt, premature repayment or loan against fixed deposit.” (emphasis supplied) The Hon'ble Supreme Court was dealing with the inter se rights of joint holders of a Fixed Deposit. While considering the issue, the Apex Court has succinctly stated the nature of the transaction between the bank and the account holder in the case of a fixed deposit. It can be seen therefrom that the contract is only between the Bank and the customer, who can only be the account holder and no one else. It is well within the powers of this Court under Article 226 to grant relief in cases of this nature where the basic facts WP(C) NO.16011 OF 2020 23 required to grant relief are admitted.(See M/s. Hyderabad Commercials v. Indian Bank & Ors. reported in [1991 Suppl. (2) SCC 340] which was a case where amounts in one account were transferred to another account allegedly on oral instructions, where in paragraph 4 of judgment the Apex Court observed that such functioning of a Nationalised Bank is detrimental to public interest and if it follows the practice of transferring money of its customers to some other persons' account on oral authority, people will lose faith in the credibility of bank. 15. Another decision relied on is the decision of the Hon'ble Supreme Court in Saksena K.K. v. International Commission on Irrigation and Drainage & Ors. reported in [2014 KHC 5162]. In the above said case, the Court was considering whether the International Commission on Irrigation and Drainage is a “State” under Article 12 of the Constitution and whether they are amenable for judicial review under Article 226 of the Constitution. In para.35 of the judgment, the Apex Court considered the decision in Sagar Thomas (supra) and cited with approval para.18 of the said judgment, which reads as follows; “18. From the decisions referred to above, the position that WP(C) NO.16011 OF 2020 24 emerges is that a writ petition under Article 226 of the Constitution of India may be maintainable against (i) the State (Govt); (ii) Authority; (iii) a statutory body; (iv) an instrumentality or agency of the State; ( v) a company which is financed and owned by the State; (vi) a private body run substantially on State funding; (vii) a private body discharging public duty or positive obligation of public nature (viii) a person or a body under liability to discharge any function under any Statute, to compel it to perform such a statutory function.” The Court however added that even in cases where a writ petition under Article 226 is filed against a Body which is a “State” under Article 12, writ would not lie to enforce private law rights. The contention of the counsel is that the contract relating to the FD comes within the private law domain and has no public law element in it, justifying interference under Article 226 of the Constitution. 16. Sri Sadchith P.Kurup, Standing counsel for the 1st respondent relied on the decision of the Hon'ble Supreme Court in Federal Bank Ltd v. Sagar Thomas & Ors. reported in [AIR 2003 SC 4325] and the decisions of this Court in K.C.John & Anr. v. Liquidator, Wadakkanchery Housing Co-operative Society Ltd. & Ors. reported in [2006 KHC 300], Association of Milma Officers, Ksheera Bhavan, Trivandrum & Anr. v. State of WP(C) NO.16011 OF 2020 25 Kerala reported in [2015(1) KHC 779], The Choondacherry Service Cooperative Bank v. Meenachil Rubber Marketing Processing Co-operative Society Ltd. & Ors. in W.P.(C)No. 18243 of 2015, Meenachil Rubber Marketing Processing Co- operative Society Ltd. & Ors. v. The Choondacherry Service Cooperative Bank reported in [2018(2) KHC 180], Kerala State Co-operative Rubber Marketing Federation Ltd. v. Poovarany Service Co-operative Bank & Ors. in W.A.No. 1597 of 2009, Marangattupilly Service Co-operative Bank Ltd. v. The Gandhigram Agro-based Industrial Co-operative Society & Ors. in W.P.(C) No. 29293 of 2017, The Gandhigram Agro- based Industrial Co-operative Society & Ors. v. Marangattupilly Service Cooperative Bank Ltd. reported in [2019(3)KHC 60], Y.Sleebachan v. The State of Kerala & Ors. in W.A.No. 1018 of 2020 and Unimoni Financial Services Ltd. v. IDBI Bank Ltd. & Ors. in W.P. (C) No. 17635 of 2020 in support of the contention that the Writ petition is not maintainable. 17. In Sagar Thomas (supra), the Hon'ble Supreme Court was considering whether a writ petition was maintainable against the Federal Bank Ltd., which is a private bank and not a 'State' or its WP(C) NO.16011 OF 2020 26 agency or instrumentality, within the meaning of Article 12 of the Constitution of India. The Court considered the question whether such private companies would normally be amenable to the Writ jurisdiction under Article 226 and held in the negative. However, the Apex Court observed that there may be situations where a writ can be issued with regard to activities which are governed by statutory provisions. The Court further held that private companies carrying on the business of commercial activity of banking, do not discharge any public function or public duty. Such activities may be subject to regulatory measures. It is held that a private company carrying on banking business as a scheduled bank, cannot be termed as an institution or company carrying on any statutory public duty and they will be amenable to writ jurisdiction only where it may become necessary to compel such body to enforce any statutory obligations or such obligations of public nature, casting positive obligation upon it. The case before the Court was one in which disciplinary action was initiated against its employee and it was held that it was not a case involving enforcement of any statutory duty on the part of the bank. 18. In K.C.John (supra), a Full Bench of this Court WP(C) NO.16011 OF 2020 27 considered the question whether a writ petition was maintainable under Article 226 against a Co-operative Society. The Full Bench held that a writ would be maintainable only when a duty owed by the co- operative Society is of a public nature or where there is an infringement of any statutory Rules by such society. The case before the Full Bench was one in which the society had failed to return the title deeds of persons who had taken loans, despite the fact that the amounts due under the loans had been repaid. Writ petitions were filed seeking return of the title deeds. The Full Bench held that even in cases where the facts are admitted, jurisdiction cannot be exercised unless the authority against whom the writ is sought for, owes a public duty or a statutory duty to act in a particular manner towards the person who asked for such writ. The Full Bench found that the petitioner before the Court, who was a member of the 2nd respondent Primary Co-operative Society, which in turn was a member of the 3rd respondent Apex Society had an alternate remedy for resolution of the dispute under Section 69 of the Co-operative Societies Act. The Full Bench further held that the question whether the issue involved is within the public law or the private law domain must be decided in each case with reference to a particular action, WP(C) NO.16011 OF 2020 28 the activity in which the State or the instrumentality of the State is engaged while performing the action complained of. 19. In Association of Milma Officers' (supra) a larger Bench of this Court considered the question whether a writ petition was maintainable against a Co-operative Society registered under the Kerala Co-operative Societies Act. The Larger Bench held that when the complaint in the writ petition is of any statutory violation or if it falls within the public domain or relates to a breach of public duty, a writ petition would be maintainable and in the absence of such breach of statutory duty or a public duty, a writ petition cannot be entertained. However, the Larger Bench approved an earlier Full Bench decision of this Court in Bhaskaran v. Additional Secretary reported in [1987 KHC 610], to the extent that a writ petition would be maintainable against such Co-operative Societies, which can be termed as an authority within the meaning of Article 12. In paragraph 10 of the judgment, the Larger Bench has extracted paragraphs 14,15,19,20 and 21 of the decision of the Hon'ble Supreme Court in S.M.V.S.J.M.S.Trust v. V.R.Rudani reported in [1989 KHC 891]. In paragraph 19 of the said judgment, the Apex Court has held that, what is relevant is the nature of the duty WP(C) NO.16011 OF 2020 29 imposed on the body and that the duty must be judged in the light of positive obligation owed by the person/authority to the affected party and that it is only when a positive obligation exists, that mandamus cannot be denied. However it has to be noted that the said observation was made after stating that Article 12 is relevant only for the purpose of enforcement of fundamental rights under Article 32 and that Article 226 confers power on the High Courts to issue writs for enforcement of the fundamental rights as well as non- fundamental rights and the words \"any person/authority\" used in Article 226 are therefore not to be confined only to statutory authorities and instrumentalities of the State. It is in that context that the Court considered the question. In the case in hand, the 1st respondent is a Nationalised Bank and the Government of India is the majority shareholder having control over their affairs. It cannot hence be denied that 1st respondent is a State, within the meaning of Article 12 of the Constitution. In paragraph 13 of the judgment, after referring to the Full Bench decision in Bhaskaran (supra), the Larger Bench observed that the said judgment relates only to the question whether a writ petition will lie against a Co-operative Society if it is an authority within the meaning of Article 12 and held WP(C) NO.16011 OF 2020 30 that the Full Bench judgment cannot be read as holding that writ petition will lie only against Co-operative Society which is State or authority within the meaning of Article 12. 20. In W.P.(C) No.18243 of 2015, while considering the question whether the petitioner who had fixed deposits with a Co- operative Society is entitled to return of the same on maturity and whether a writ petition was maintainable for a direction to the society to return the amount, a learned Single judge held that the petition is maintainable and directed the Society to pay the amounts. The judgment of the learned Single Judge was challenged in Writ Appeal No.1977 of 2017 and the Division Bench of this Court allowed the appeal, relying on the decision in K.C.John (supra). The Division Bench held that there is no pleading in the writ petition regarding violation of any statutory provisions or breach of any public duty and in the absence of such pleadings, the question of maintainability cannot be decided. The Court further found that there was an alternate remedy available under Section 69 of the Co- operative Societies Act. 21. In the judgment in Writ Appeal No.1597 of 2009, a Division Bench of this Court considered the question whether a writ WP(C) NO.16011 OF 2020 31 can be issued directing repayment of amount which had been deposited, on its maturity. The Division Bench held that the bank has a public duty to repay the amount deposited, (emphasis supplied) on its maturity and that for non-performance of that public duty, a writ petition under Article 226 is maintainable. To quote the Rt Hon Lord Denning- “The House of Lords have recently spoken of a \"dichotomy\". They did in it Cocks v. Thanet District Council[(1982) 3 WLR 1121]. That word only means \"dividing a whole into two parts\". They have divided the functions of a public authority into two parts: one part is its public law function; the other part is its private law function. But how are you to decide between the two? Which is public? Which is private? Likewise its duties are divided into two. One part is its public law duties. The other part is its private law duties. But the division is very difficult to make. So difficult indeed that I can foresee an infinity of trouble arising from it. It makes me regret that the dichotomy was ever made. But still it has been done and you will all have to live with it in perpetuity.” -- The Rt Hon Lord Denning in The Closing Chapter Thirty Four years gone by. The struggle to understand the difference is still continuing. 22. In W.P.(C) No. 29293 of 2017, a learned Single judge considered the question whether direction can be issued to a society WP(C) NO.16011 OF 2020 32 to release amounts held as fixed deposits, on maturity. The learned Single Judge held that since the society is carrying on banking business based on permission granted by the Registrar of Co- operative societies, the public law remedy is available to the petitioner as the banking business is carried on by the 1st respondent under the supervision and control of the Registrar of Co-operative Societies. On the aforesaid finding, the learned Single Judge directed repayment of the amounts held under fixed deposit. The judgment of the learned Single judge was challenged in appeal and in the judgment in The Gandhigram Agro-based Industrial Co- operative Society & Ors. v. Marangattupilly Service Cooperative Bank Ltd. reported in [2019(3) KHC 60] the Division Bench dismissed the writ appeal finding that it is not a case where the parties can be relegated to Section 69 of the Co-operative Societies Act, since it cannot be said that there is a dispute pending between the parties. The existence of the deposit was admitted and the factum that the deposit matured is also admitted and hence it is a case where liabilities are admitted. 23. In a recent decision in Radha Krishna Industries v. State of Himachal Pradesh & Ors. reported in [2021 SCC WP(C) NO.16011 OF 2020 33 OnLine SC 334], the Hon'ble Supreme Court has considered and spoken about the entertainment of writ petitions under Article 226, when an alternate remedy is available. After considering the earlier decisions of the Court, in paragraph 28 of the judgment, the Apex Court stated the legal position thus: \"28. The principles of law which emerge are that: (i) The power under Article 226 of the Constitution to issue writs can be exercised not only for the enforcement of fundamental rights, but for any other purpose as well; (ii) The High Court has the discretion not to entertain a writ petition. One of the restrictions placed on the power of the High Court is where an effective alternate remedy is available to the aggrieved person; (iii) Exceptions to the rule of alternate remedy arise where, (a) the writ petition has been filed for the enforcement of a fundamental right protected by Part III of the Constitution; (b) there has been a violation of the principles of natural justice; (c) the order or proceedings are wholly without jurisdiction; or (d) the vires of a legislation is challenged; (iv) An alternate remedy by itself does not divest the High Court of its powers under Article 226 of the Constitution in an appropriate case though ordinarily, a writ petition should not be entertained when an efficacious alternate remedy is WP(C) NO.16011 OF 2020 34 provided by law; (v) When a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion; and (vi) In cases where there are disputed questions of fact, the High Court may decide to decline jurisdiction in a writ petition. However, if the High Court is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with.\" 24. In Indian Bank v. Godhara Nagrik Co-operative Credit Society Ltd. reported in [(2008) 12 SCC 541], the Apex Court considered a case where deposit holders who were Co- operative societies, had sought refund of the amounts held in fixed deposits. That was a case where initially fixed deposits were made and later loans taken and the Bank took a contention that the amounts in fixed deposits were already paid as loans. On facts, several fraudulent transactions were noticed and investigations were ordered. In paragraph 12 of the judgment the Hon'ble Supreme Court held that the High Court in some cases may enter into WP(C) NO.16011 OF 2020 35 disputed questions of fact. In paragraph 35 of the judgment, the Apex Court held that a writ petition would lie against “State” within the meaning of Article 12 of the Constitution of India. Indisputably, exercise of jurisdiction by the High Court is permissible in a case where action of the State is found to be unfair, unreasonable or arbitrary. 25. On a detailed consideration of the issues involved, I am of the opinion that the relief claimed in the writ petition does not involve any detailed analysis of disputed facts. As the 1st respondent Bank is a debtor of the petitioner, with regard to amounts held in fixed deposit, the Bank cannot have a stand that they will not pay the amounts due on maturity of the fixed deposit to the deposit holder. The monetary claims if any, of the 5th respondent against the petitioner, are not matters on which the 1st respondent Bank, which is a public sector bank, can intermeddle. It is for the 5th respondent to agitate such claims in appropriate proceedings. Admittedly, the 5th respondent who claims to have advanced money to the petitioner has not initiated any legal proceedings for realisation of the same, even after all these years. So also, the 1st respondent cannot transfer any funds that accrue to the fixed deposit of the petitioner, WP(C) NO.16011 OF 2020 36 to any stranger, so long as there are no specific instructions to that effect from the petitioner. The petitioner has specifically pleaded that they have not issued any such instructions. The Bank has not produced any instructions issued either by the petitioner or any other person authorised by the petitioner to transfer the interest accrued on the fixed deposit to the 5th respondent. The Bank could not have acted on instructions of the 5th respondent, since the 5th respondent is a stranger to the contract. In view of the authoritative pronouncements of the Apex Court which have been extracted above and that of a Division Bench of this Court that the Bank owes a public duty to pay the amounts due on a fixed deposit which has matured, I am of the opinion that the writ petition is maintainable and the petitioner is entitled to the relief prayed for. 26. In the result, the writ petition is allowed. The 1st respondent is directed to pay the maturity value of Ext.P3 Fixed Deposit with the applicable interest as per the Reserve Bank of India Circulars from the date of deposit, to the petitioner within two weeks from the date of receipt of this judgment. Ext.P3 order of the Ombudsman is set aside. The above direction is without prejudice to the right if any, of the 5th respondent to proceed against the WP(C) NO.16011 OF 2020 37 petitioner for the claim put forward by them and the right if any of the 1st respondent Bank to recover the amounts transferred by them to the 5th respondent as interest on the fixed deposit and the rights of defence available to the persons against whom such claims may be made. The parties will bear their respective costs. Sd/- T.R.RAVI, JUDGE dsn WP(C) NO.16011 OF 2020 38 APPENDIX OF WP(C) 16011/2020 PETITIONER EXHIBITS EXT.P1 TRUE COPY OF THE PROVISIONAL ORDER DATED 19.09.2006 EXT.P2 TRUE COPY OF THE BANK STATEMENT COVERING THE PERIOD FROM 09.03.2006 TO 31.03.2013 DATED 13.11.13 OF THE PETITIONER EXT.P3 TRUE COPY OF THE FIXED DEPOSIT RECEIPT DATED 20.09.2006 BEARING ACCOUNT NO.30211398 IN THE NAME OF THE PETITIONER EXT.P4 TRUE COPY OF THE COVERING LETTER FROM THE UNIVERSITY EXT.P5 TRUE COPY OF THE REPLY TO THE UNIVERSITY BY THE PETITIONER EXT.P6 TRUE COPY OF THE DEMAND DRAFT NO.266806 DATED 17/8/19 OF FEDERAL BANK EXT.P7 TRUE COPY OF THE LETTER DATED 02.11.2019 ISSUED BY THE UNIVERSITY EXT.P8 TRUE COPY OF THE LETTER DATED 16.11.2019 ISSUED TO THE 1ST RESPONDENT EXT.P9 TRUE COPY OF THE REMINDER DT 17.01.2020 ISSUED TO THE 1ST RESPONDENT EXT.P10 TRUE COPY OF THE LETTER DATED 17.02.2020 TO THE 2ND RESPONDENT DEPUTY GENERAL MANAGER OF THE BANK EXT. P11 TRUE COPY OF THE REPLY RECEIVED FROM THE 2ND RESPONDENT DT 20.02.2020 EXT. P12 TRUE COPY OF THE COMPLAINT DATED 25.04.2020 FILED BEFORE THE OMBUDSMAN EXT.P13 TRUE COPY OF THE ORDER OF THE OMBUDSMAN DATED 29.5.2020 EXT. P14 TRUE COPY OF THE LETTER DATED 16.06.2020 REQUESTING TO RETURN THE FD EXT. P15 TRUE COPY OF THE KYC NORMS ISSUED BY THE REGULATORY AUTHORITY OF THE RESERVE BANK OF INDIA EXT. P16 TRUE COPY OF THE CODE OF CUSTOMERS RIGHTS OF BANKING PRACTICES BROUGHT FORTH IN JANUARAY 2018 "