ORDER
Abhay M. Naik, J.
1. This petition has been preferred for quashment of the order dated 11 -4-2005 Annexure P-1, passed by the office of Banking Ombudsman.
2. Short facts relevant for the purpose of the petition are that the petitioner No. 1 is a sole proprietor of M/s. Raghbir Singh & Sons. He availed an overdraft facility from the State Bank of India to the extent of Rs. 6 lacs against one FDR of Rs. 4 lacs and 2 FDS of Rs. 1 lac each. The FDRs were pledged with the bank to secure the overdraft limit. Maturity value of FDR was Rs. 6,71,620/-(against FDR of Rs. 4 lacs) and Rs. 1,67,905/- (against each FDR of Rs. 1 lac). Maturity date of FDR was 3-1-2005. Petitioner No. 1 on 24-11-2004 received an information from the Bank that the facility of overdraft limit was reduced to Rs. 2.60 lacs from Rs. 6 lacs. In turn, the petitioners informed vide Annexure P-2, dated 24-11-2004 that the overdraft limit of Rs. 6 lacs was granted against the FDRs worth Rs. 6 lacs. Petitioner No. 1 expressed apprehension about tampering of the accounts and security. A report was also lodged with the Police Station Omti, District Jabalpur, vide Annexure P-3. Petitioners further came to know that his father Shri Raghbir Singh got the FDR encashed in a prematured manner. According to the petitioner No. 1, the FDR was gifted to him by his father on 1-4-2002 vide notarially registered gift deed and it could not be encashed by the respondent No. 2 alone in the impugned manner. The petitioners were, thus, cheated by respondent No. 1. A complaint was submitted before the Consumer Disputes Redressal Forum, Jabalpur, which was withdrawn and the proceedings before the office of the Banking Ombudsman, were initiated. It has been specifically contended that the FDR of Rs. 4 lacs was initially in the names of respondent No. 2 and petitioner No. 2 and, later on, the name of petitioner No. 1 was also added on it. On 8-7-2004, the Bank (respondent No. 1) deleted the names of petitioners without any information. Copy of FDR after the wrongful changes were made on 8-7-2004 is on record as Annexure P-l 1. Respondent No. 1, in order to save itself, procured a letter from respondent No. 2 directing the bank to recredit the deposit to his account.
3. The Banking Ombudsman vide order dated 11-4-2005 (Annexure P-l) decided the complaint of the petitioners against him on the ground that there were instructions of “former or survivor” in the subject FDR. Accordingly, it has been found by the Banking Ombudsman that nothing wrong has been committed by the Bank.
4. Impugned order contained in Annexure P-1 has been challenged on the ground that the FDR of Rs. 4 lacs could not have been permitted to be encashed at the request of the respondent No. 2 alone and the prematured encashment was not permissible without the consent of the petitioners.
5. Respondents submitted their return and refuted the claim of petitioners. It has been stated in the return that the FDR account of Rs. 4 lacs was with the instructions of “former or survivor”. The respondent No. 2 being the former, had every right to withdraw from the security and seek encashment of the amount of FDR even in a prematured manner.
6. Shri Narendra Chauhan, learned Counsel for petitioners, contended that the petitioner No. 1 had availed an overdraft facility of Rs. 6 lacs and the FDR in question was deposited with the Bank as security. Petitioners were also named in the FDR and without their consent, the respondent/Bank had no power or authority to allow prematured encashment at the request of respondent No. 2 alone. For this purpose Shri Chauhan, learned Counsel relied on Supreme Court’s decision in the case of Anumatl v. Punjab National Bank I (2005) BC 345 (SC). Reliance has been placed in specific on Paragraph 11 of the aforesaid decision wherein a passage from Tannan’s Banking Law and Practice in India, (20th Edition), 2001 Vol. I, Chapter VIII page 259, has been quoted which is reproduced below for convenience:
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, 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.
Reliance has also been further placed on the decision of Gujrat High Court in the case of Indian Overseas Bank, Madras and Anr. v. Naranprasad Govindlal Patel and on the decision of Punjab and Haryana High Court in the case of Pushpawati v. Oriental Bank of Commerce and Ors. II (2006) BC 450.
7. It may be seen that in Anumati’s case (supra), the fixed deposit account in question was with an instruction of “either or survivor”. Thus, there was no occasion before the Supreme Court in the case of Anumati’s case (supra), to decide the rights of survivors in the case of FDR with instructions of “former or survivor”. Similarly, the instructions of “former or survivor” were not the subject matter of consideration in the remaining the two cases mentioned herein above. Thus, none of the authorities cited by the petitioners lays down a law that in a FDR account with the instructions of “former or survivor” the consent of survivor is required during the life time of former.
8. Shri Rajesh Maindiretta, learned Counsel for the respondents made available circular dated 14-2-2005 issued by the State Bank of India. It cannot be made applicable to the account of FDR which was encashed earlier.
9. It is gainsaid that the account (FDR in the present case) is opened in the bank with specific instructions about operations. They may be “either or survivor”, “former or survivor”, “joint operations” etc. It is operated as per the contract between the bank and customers subject to permissible limits under the Banking Law. In case of “former or survivor” so long as the former is alive, survivor does not enjoy the status of holder. It is only after the death of former that the survivor mentioned in the FDR may recover the proceeds of FDR. In the present case, admittedly, the respondent No. 2 was described as former and the instructions were admittedly issued as “former or survivor”. Thus, the respondent No. 2 being named as former in the subject FDR had a right to get the FDR encashed even in a prematured manner and the bank was under no obligation to seek consent from the petitioners in allowing the operation of FDR by respondent No. 2 alone.
10. Shri Narendra Chauhan, learned Counsel for the petitioners, submitted that the subject FDR of Rs. 4 lacs was gifted to him and the same were shown by him in the balance sheets of his partnership firm as his own.
11. On perusal of the gift deed (Annexure P-8), it may be seen that there is absolutely no reference to the subject FDR in it. Vide Annexure P-8, the running business was gifted by respondent No. 2 to his son, i.e., the petitioner No. 1. However, the FDR in question has not been established to be an asset of business. It has not been established by the petitioners that the FDR in question was ever treated as an asset of the business. As regards accounts maintained by the petitioners (Annexure P-4), it may be seen that same are self-serving documents and are not binding on respondent No. 2 who was described in the FDR as former. Respondent No. 2 is neither an author of Annexure P-4 nor is it’s signatory in any manner.
12. As regards the passage from Tannan’s Banking Law and Practice in India, it may be seen that the same author has dealt with the deposits in the name of “former or survivor”. In Chapter VII. It has been mentioned as under:
Deposits in the name of “Former or Survivor:
Some banks open accounts with instructions to pay to “Former or Survivor”. In such an account in the names of A and B, the operation is by A, the first named party, so long as he is alive and after his death, by B; he is not entitled to operate during the life-time of A; he can operate only on and after A’s death; if B dies first, the account can be operated solely by A and the legal representatives of B will have no right to the operation. The principle underlying the operation of these accounts is that instructions for operation constitute one of the terms of the contract of deposit. It is necessary that both A and B should sign the Account opening form and the instructions for the operation.
13. In view of the aforesaid, it is observed that the FDR of Rs. 4 lacs with instructions of “former or survivor” was rightly allowed to be encashed at the request of the former alone and the respondent-Bank was under no obligation to seek consent from the petitioners.
14. In the result, there is no substance in the writ petition and the same is, hereby, dismissed, however, without order as to costs.