IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P.(C) No.1543 of 2008
Bokaro Steel Employees Co-operative House Construction Society Limited,
B.S.City...............................................................Petitioner
Vrs.
The State of Jharkhand & Others...............................Respondents
PRESENT : HON'BLE MR. JUSTICE AJIT KUMAR SINHA
For the petitioner : Mr. A.K. Sinha, Sr. Advocate
Mr.Krishna Murari,Advocate
For the respondents : M.K.Roy, Advocte
----------------
C.A.V. on 15.10.2008 Pronounced on : 25.10.2008
---------------
1. The present writ petition has been preferred for the following
reliefs:-
A. For direction upon the respondents to forthwith release/pay the up
to date maturity value as against the investments made in fixed deposit scheme
at Bokaro Steel Centre Branch vide FDR Certificates No.2871 dated 21.12.95,
2876 dated 30.12.95, 6816 dated 12.5.98 and 6817 dated 8.6.98 with initial
value of Rs.3396591/-, Rs.414375/-. Rs.1803840/- and Rs.966992/- respectively,
which was refused to be renewed after 21.3.04 and accordingly to renew the
same with retrospective effect till the date of liquidation and pay the entire
amounts which comes about Rs.2,21,29,374/-(Two Crores Twenty One Lakhs
Twenty Nine Thousand Three Hundred Seventy Four only) as more fully
described in table chart duly annexed at Annexure-6.
B. Further for direction upon the respondents to also activate the SB
A/c No.1 and SB A/c No.2 (appertaining to the Provident Fund of the employees)
of the society and accordingly to allow its operation and withdrawal of amount
with admissible interest there from; in which the standing balance was
Rs.200234.75/- and Rs.462659.39/- as on 31.3.2001, since the operation of the
said accounts were stopped on non-est and frivolous ground of stay by the
D.C.O., Dhanbad and Officer In-charge/Investigating Officer in connection with
B.S. City P.S. Case No.329/96, in which after investigation, the final form has
already been submitted on 09.01.1998 and therefore accordingly to direct the
respondents concerned to pay the entire amount with up-to-date interest totaling
to Rs.8,43,382.43/- (Eight Lakhs Forty Three Thousand Three Hundred Eighty
Two & Paisa Forty Three only), as more fully described in table chart duly
annexed as Annexure-6.
C. Further for direction upon the respondents to show cause as to
why suitable cost & compensation in addition to the relief(s) sought for be not
awarded for causing undue prejudice & hardship to the society by not paying the
complete up-to-date dues amount of Rs.2,29,72,756.43/-(Two crores Twenty
2
Nine Lakhs Seventy Two Thousand Seven Hundred Fifty Six & Paisa Forty Three
only) as per Annexure-6.
2. The facts, in brief, is summarized as under:-
The petitioner is a registered Cooperative Housing Society bearing
registration No.47/1968 and is engaged in providing housing accommodation and
maintenance thereof to its members who are the employees of the Bokaro Steel
Plant, Bokaro. It appears that in the year 1973 on the request of the petitioner
the company in question agreed to allocate 210 acres more land in addition and
adjoining to the previously allocated 19 acres of lands to accommodate rest of
the 173 members. However, land was never leased out and transferred in
favour of the society due to one reason or the other. The management of the
petitioner society had collected the development charges from the 173 members
for an amount of Rs.31,550/- each totaling to about Rs.65 lakhs approximately.
However, due to non-allotment of land the aggrieved members filed a complaint
before the Assistant Registrar, Cooperative Officer, Chas, Bokaro who in turn
lodged an F.I.R. being B.S. City Case No.329/96 corresponding to G.R.
No.1240/96for the aforesaid irregularities against the Office bearers of the
society. The petitioner submits that it had bonafidely in order to keep the
money safe and secure invested the same in fixed deposit scheme with the
respondent Central Cooperative Bank.
In the meanwhile the Enquiry/Investigation was completed and
Final Form was submitted by the I.O. on 9.1.98 with the conclusion that it is a
case of mistake of facts and no offence is made out. It was also recorded that
the amount collected from the members was neither mis-utilised nor embezzled
and thus the stay order passed by the police got vacated/expired automatically
on the conclusion of the investigation. According to the petitioner pursuant to
the investment made in the fixed deposit with respect to a F.D.R.No.2871 the
same matured on 21.3.1998 and it was renewed initially till 21.3.2001 and then
up to 21st March, 2004 but thereafter neither the request for renewal was
accepted nor the payment was released with its matured value.
3. In the aforesaid background the petitioner submits that when the
land in question was not transferred to the society by the company, for onward
allocation and handing over the same to the Members from whom the
development charges were collected, they started pressing hard for the refund of
the same, but the society being financially crippled due to the aforesaid arbitrary,
and illegal withholding of the matured amount by the respondent Bank and thus
the petitioner was unable to refund the same. Resultantly several cases were
filed in the District Consumer Forum by those members against society, which
would be evident from the letter No.775/02 dated 27.6.2002 written by the then
Hon'ble Secretary of the society to the Officer Incharge, B.S.City Police Station
3
but again of no avail. The petitioner society approached the respondent bank
and requested to release the amount so as to liquidate the same for onward
repayment to its members but the respondent paid no heed to the same.
4. It is also stated that a cheque of Rs.6000/- in favour of one Vijay
Bahadur Singh was not even honoured by the bank. The petitioner thereafter
also served a legal notice through its counsel on 28.5.2007 to release the
admitted outstanding amount with interest but the bank is sitting tight over it.
The petitioner further submits that a series of orders have been issued by the
District Consumer Forum, Bokaro as well as State Consumer Forum, Ranchi in
favour of the one or other members for payment of their amount deposited but
due to the arbitrary attitude of the bank it could not be released. It has also
been submitted that the amount invested in Allahabad Bank has been released in
favour of the society without any obstacle and it is in this background that the
present writ petition has been filed with the prayer as indicated in Paragraph-1.
5. The main grounds raised by the learned Senior counsel Sri Anil
Kumar Sinha, appearing for the petitioner is that the bank has no legal or
justifiable ground to withhold the admitted amount deposited by the society in
the bank and the entire action of the bank is arbitrary, malafide and capricious
and thus illegal. It has also been submitted that the action of the bank is dehors
the agreement and the contract and the F.D. account matured has to be
refunded based on the matured value with interest.
6. The counsel for the petitioner further argued that the action of the
respondent bank constitute offence of cheating and defalcation and it is violative
of Article 14, 19 & 300-A of the Constitution of India. It has also been
contended that the bank is only a licensee and is duty bound to refund the
matured value of the amount to the beneficiary and it has no authority to
withhold the amount so deposited/invested. It has further been contended that
pursuant to orders being passed from time to time by the District Consumer
Forum as well as the State Consumer Forum warrants were issued against
society and it is the bank which is creating hurdle in refunding the payment
made by the members who deposited their amount and are seeking refund of
the same but due to the arbitrary and malafide attitude of the bank the money
can't be refunded to the members of the society..
7. The counsel appearing for the respondent Bank has raised a
preliminary submission with regard to the maintainability of the Writ Petition. It
is submitted that the administrator of the society who has sworn the affidavit
was appointed vide letter No.150 dated 14.11.07 for a period of three months
and that the period has expired in February, 2008 and thus he was not
competent after 14.2.2008 to institute the instant writ petition in March, 2008. It
has further been submitted on behalf of the respondent bank that a criminal case
4
bearing B.S.City Case No.329/96 was registered and during the pendency of
criminal case the Investigating Officer vide its letter dated 11.10.1996 requested
the answering respondent to suspend the operation of the bank account of the
society. It has further been submitted that audit team found several
discrepancies in the bank which has led to filing of a criminal case registered vide
case No.57/2001 and it is in these background that the Managing Company of
the Bank in its meeting held on 16.4.2002 resolved to suspend the account of
the petitioner society.
8. I have gone through the pleadings and heard the rival contentions
raised by the counsel for the parties. The bank is only a licensee to keep the
money deposited and further to refund the same on maturity without any
obstacle. The first contention raised by the petitioner with regard to the
pendency of a criminal case No.329/96 and the order of the Investigating Officer
dated 11.10.1996 to suspend the operation of the society is not only misleading
but erroneous for the sole reason that pursuant to the completion of
investigation and enquiry a Final Form was submitted by the I.O. himself on
9.1.98 concluding that it was a case of mistake of facts and no offence was
made out as alleged since neither the amount was unauthorisedly collected from
the members nor the same was mis-utilised or embezzled. It will thus be evident
that the order of stay passed bythe police automatically stood vacated/expired
with the conclusion of investigation and submission of final form on 9.1.98.
9. The second contention with regard to the competence of the
administrator since he was appointed only for a period of three months which
expired on 14.2.2008 whereas the writ petition was filed in March, 2008 is also
unsustainable. The respondents have nowhere submitted as to whether the
appointment of the administrator was renewed or cancelled or someone else was
appointed but these are arguments which are solely based on technicalities
which cannot prevail over justice. The fact remains that whosoever is the
competent authority of the society at the relevant point of time will be authorized
to issue the cheque in favour of the members of the society who in turn will have
to collect the cheque amount directly from the bank on presentation. A Specific
query in this regard was raised to the counsel for the petitioner that the money
should be paid directly to the members of the society who will be entitled to
collect the cheque from the society and present themselves before the bank and
collect their respective amount directly from the bank on presentation of their
respective cheques.
10. The third contention relates to an audit report against the
employees of the bank which has nothing to do with the petitioner society or its
members nor with the amount so deposited by them in the fixed deposit. The
deposit in F.D.I. has nowhere been denied and rather specifically admitted and
5
thus they have no right to withhold it or deny the benefits accrued to the
members of the petitioner society whose money has been deposited/invested in
the bank.
11. The fact remains that the money was deposited by the members
for allocation/allotment of land which was duly deposited by the society in fixed
deposit in the bank so that the interest accrued and no malafide can be attached
to it and once the allocation/allotment of land was not made the members of the
society were certainly entitled to refund of the amount with interest as accrued.
12. The counsel for the respondent has further in their counter affidavit
submitted in Paragraph-13 specifically that no order has been annexed of the
District Consumer Forum or State Consumer Forum to substantiate the
contention raised on behalf of the members. The counsel for the petitioner has
filed an I.A.No.1226/08 for bringing the award of the District Consumer Forum,
Bokaro on record and thus even this contention is incorrect. It has also filed a
chart indicating the details of the names of the members and the principal
amount to be refunded to non-plot holder members and the different orders
passed by the learned Consumer Forum.
13. It is well settled that the legal position of the banker in connection
with the fixed deposit is one of the debtor and the banker continues to be a
debtor, even though the period fixed for the deposit has expired. The fixed
deposit is a complete statutory contract between the bank and the depositor and
contractual obligation cannot be altered or changed. What is required under law
is that the banker should obtain a law of authority from the customer before
paying back such deposits to a person other than the depositor. In the instant
case once the petitioner who was the depositor issues the cheque to the
members the same will amount to conferring the law of authority on the Bank to
honour the cheque and pay the amount to the beneficiary.
14. In Delhi Cloth and General Mills Ltd. Company Vrs. Harnam Singh
AIR 1955 (SC) 590 the Hon’ble Supreme Court observed that in banking
transactions the following rules are now well settled:-
(a)The obligation of the bank to pay the cheque of the customer
and that the same can be collected from the branch at which he keeps his
account. The only condition on which the bank can refuse when police has
seized the money in the bank under Section 102 Cr.P.,C.,1973 and or under sub
Section 3 of Section 226 of the Income Tax Act, 1961 which is not the issue in
the present case.
15. In case the Banks are permitted to dishonour their commitments by
adopting such subterfuges, the entire commercial and business transactions will
come to a grinding halt. This principle has been reiterated in large number of
Bank Guarantee cases by the Hon’ble Supreme Court. The only exception is in
6
case of a fraud, which is of an egregious nature committed by the beneficiaries
against the Bank.
16. Considering the aforesaid facts and circumstances of the case this
writ petition is allowed with a direction to the respondent bank to forthwith
determine the up-to-date maturity value with interest as against the investment
made in fixed deposit scheme at Bokaro Steel City vide F.D.R. as per the details
given in Paragraph 1 of this judgment/order honour the cheques tobe presented
by the members of the society and further activate the S.B. Account No.1 and
S.B. Account No.2 appertaining to the provident fund of the employees of the
society and allow the operation of withdrawal of amount with admissible interest
in accordance with law.
17. This writ petition is accordingly allowed without any order as to costs.
(Ajit Kumar Sinha,J.)
Jharkhand High Court, Ranchi
Dated : 25.10.2008
NKC/ A.F.R.