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Issues: Interpretation of court order directing deposit of funds in a cash credit account, liability of a bank to pay interest on funds deposited in a cash credit account, effect of subsequent court order on bank's liability for interest.
Interpretation of Court Order: The Punjab National Bank filed a petition seeking direction regarding the interpretation of a court order dated July 6, 1973, directing the deposit of a specific amount in a cash credit account. The bank contended that as per the order, the amount was deposited in a cash credit account, which, being akin to a current account, does not attract interest. The court examined the nature of a cash credit account as per the bank's instructions and concluded that it operates like a current account without interest obligations. The court emphasized that the order explicitly specified depositing the amount in a cash credit account, and the bank complied with this directive by depositing the sum in a separate cash credit account. Liability of Bank for Interest: The petitioners and respondents argued that despite the court's direction to deposit the amount in a cash credit account, the bank should pay interest as the intention was to deposit the funds in an interest-bearing account. They relied on a subsequent court order from September 24, 1987, which directed the bank to pay interest on the deposited amount. However, the court rejected this argument, emphasizing that the original order clearly stated depositing the amount in a cash credit account without any indication of an interest-bearing account. The court noted that the bank acted in accordance with the court's directive and did not credit any interest in the cash credit account as per the ledger entries. Effect of Subsequent Court Order: The court addressed the impact of a subsequent court order from September 24, 1987, which directed the bank to pay interest on the deposited amount. It highlighted that this order was passed without the bank's involvement or opportunity to be heard, and the bank only became aware of it after the fact. Despite the subsequent order, the court held that the bank was not liable to pay interest on the deposited amount of Rs. 10,12,778.87. The court allowed the Civil Miscellaneous Petition filed by the bank, ruling in favor of the bank's contention regarding the interpretation of the original court order and the absence of liability to pay interest. In conclusion, the Supreme Court clarified the interpretation of the court order directing the deposit of funds in a cash credit account, affirmed the bank's position that no interest was payable on the deposited amount, and disregarded the subsequent order requiring the bank to pay interest. The judgment favored the Punjab National Bank, absolving it from the obligation to pay interest and dismissing the petitioners' and respondents' contentions regarding the bank's liability.
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