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Supreme Court Of India

(From : 2002 (3) CPJ 230)

Hon'ble Judge(s): Ruma Pal, Arun Kumar , JJ

Banking Regulation Act (10 of 1949) , S.45Z— Contract Act (9 of 1872) , S.171— Fixed deposit - Jointly owned by husband and wife with 'either or survivor' clause - Cannot be pledged with Bank by one account holder without consent of other - Bank also cannot set-off fixed deposit against any claim in respect of one account holder. A fixed deposit in the joint names of two persons is nothing but a joint account which is repayable on the expiration of the agreed period. The fixed deposit receipt is merely a written acknowledgment by the Bank that it holds a certain sum to the use of its customers. The Bank is thus a debtor to the account holder 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 example by pledging the account with any third party including the Bank itself in its capacity of cre....