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2016 (6) TMI 865 - BOMBAY HIGH COURT

2016 (6) TMI 865 - BOMBAY HIGH COURT - 2016 (339) E.L.T. 252 (Bom.) - Recovery of demand through bank - current account was frozen - whether the bank is bound to keep the amount lying to the credit of the current account of the Plaintiff in a Fixed Deposit. - certain sum retained by the Defendant bank by freezing the Plaintiff's account on instructions of the customs department of Government of India. - The Plaintiff claims to have issued a mandate to the Defendant bank to keep the said sum in f .....

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, the bank was obliged not to honour any payment instructions from the Plaintiff due to the requisition of the Collector of Customs and also instructions received by it from the remitting bank. In the premises, the Defendant was not liable to act on the letter of 7 July 1998, unilaterally issued by the Plaintiff, and hold the amount in a fixed deposit. Any contract of Fixed Deposit with a bank is a bilateral matter involving both the bank and the constituent. - There is no dispute between th .....

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e Bank. The decretal amount consists of interest, claimed as having accrued to the Plaintiff, on a certain sum retained by the Defendant bank by freezing the Plaintiff's account on instructions of the customs department of Government of India. The Plaintiff claims to have issued a mandate to the Defendant bank to keep the said sum in fixed deposit whilst the account was frozen. The Plaintiff's case is that despite such mandate, the amount was kept in a suspense account which did not earn .....

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the Defendant that the Plaintiff's exports in connection with a particular L/C were under investigation and that preliminary investigations had revealed that as against purported exports of ₹ 8 Crores, no physical exports had been made, but only paper transactions had been carried out. The Commissioner of Customs, in the premises, called upon the Defendant bank to withhold any operations of the subject L/C and not to release any payment to any party thereunder without prior clearance o .....

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ubject remittance was remitted by State Bank of India to the Defendant bank under specific instructions not to disburse the amount to the beneficiary till clearance was received from the Commissioner of Customs (Prevention). The Defendant, accordingly, kept the amount of the remittance in the sundry creditors account. In the meantime, by its letter dated 7 July 1998, the Plaintiff claims to have issued instructions to the Defendant to keep the remittance amount in a fixed deposit so as to enable .....

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allowed the writ petition inter alia by ordering defreezing of the Plaintiff's current account and release of the remittance withheld by the Defendant in the account. On 2 November 2004, the Defendant released the amount without any interest and after deducting charges of ₹ 15,997/. The Plaintiff claims interest during the period 7 July 1998 to 2 November 2004 at the rate of 18% p.a. 3 The Defendant contests the suit. In its written statement, the Defendant submit .....

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ank for its business; that no mandate was actually received from the Plaintiff for placing the said amount in Fixed Deposit; that in any event, the Defendant was not liable to place, and could not have placed, the amount in Fixed Deposit in the facts of the case; that even the order of this Court does not direct the Defendant to pay any interest; and that no interest is payable by the Defendant to the Plaintiff on the amount. Apart from a contest on merits, the Defendant pleads the bar of limita .....

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have been placed in fixed deposits as requested by the Plaintiff ? 5. Whether the Plaintiff proves that they are entitled to a decree in the sum of ₹ 1,21,91,105/along with further interest at 18% p.a. from the date of filing of the suit until payment/realization ? 6. What decree ? What order ? 5 Both parties produced documentary and oral evidence, and made submissions through Counsel. 6 The ground of want of jurisdiction is urged by the Defenda .....

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support of his submission. In the case of Agencia (Supra), the Supreme Court held that in the case of a bank which operates through its branches, the branches are regarded for many purposes as separate and distinct entities from the Head Office and from each other. The obligation of a bank to pay the cheque of a customer or honour his mandate rests primarily on the branch at which he keeps his account and the bank can rightly refuse to cash a cheque or honour his mandate at any other branch.

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usion that when the defendant corporation has a subordinate office at a place where the cause of action has arisen, it is the Court of that place alone which has jurisdiction to entertain a suit and not of the place where the defendant has the principal office. Altogether different considerations apply when a plaintiff invokes the jurisdiction of this Court under Clause 12 of Letters Patent. As held by the Supreme Court in the case of Jindal Vijayanagar Steel Vs. Jindal Praxair Oxygen Company Lt .....

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is totally unnecessary and, in fact, futile to refer to another legislation such as the CPC (which is not applicable) to determine the jurisdiction of the Chartered High Court. Under Clause 12 of the Letters Patent, if and to the extent the defendant carries on business within the local limits of the jurisdiction of this Court, this Court has jurisdiction to entertain a suit against the defendant. Issue No.1 is, accordingly, answered in favour of the Plaintiff and against the Defendant.

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ount due to the Plaintiff is within time. Issue No.2 is also, accordingly, answered in favour of the Plaintiff and against the Defendant. 8 Neither State Bank of India nor Customs Department can be said to be a necessary party to the present suit. Neither is their presence necessary for determining the controversy in the present suit nor can it be said that in their absence no effective decree can be passed. Issue No.3 is also, accordingly, answered in favour of the Plaintiff and agai .....

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h instructions or mandate was issued by the Plaintiff to the Defendant, was the Plaintiff bound to accept such mandate and transfer the amount lying in the current account or held in the sundry creditors account to a fixed deposit. Learned Counsel for the Plaintiff relies on the Code of Bank s Commitment issued by the Reserve Bank of India, which sets standards of banking practices for banks to follow when they deal with individual customers. According to this Code, the Bank is bound to honor di .....

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itten statement. It is submitted that the onus was on the Plaintiff to prove its receipt by the Defendant; that though this document was admitted in evidence and marked, its receipt by the Defendant was a matter at large, to be tried at the hearing of the suit. A document is usually marked in evidence after a formal proof of the same is tendered by the party producing it or its production and exhibiting is not opposed to by the opponent, though, as held by the Supreme Court in the case of Sait T .....

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t by the Defendant. There are two important things to be noticed here. Firstly, after such formal proof was tendered, the Defendant did not appear to have objected to the marking of the document. Secondly, there is absolutely no cross-examination of PW1 on this point. In the premises, the only inescapable conclusion to be drawn is that the existence, receipt and contents of the document are duly proved by the Plaintiff. I hold accordingly. 11 The more important point, however, is, whe .....

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