9911796707
TMI Blog1999 (9) TMI 887X X X X Extracts X X X X X X X X Extracts X X X X ..... City Civil Court and on appeal, the 4th Addl. Judge, City Civil Court, Madras, set aside the findings of the trial court and decreed the suit. Hence, this second appeal. 3. The only point for determination is : Whether the reversal of the credit entry and debiting of Rs. 10,176.50 to the plaintiff by the defendant-bank is valid ? If so whether the plaintiff is entitled to claim the amount ? The points. The plaintiff had opened an account with the defendant-bank on 22-3-1974, in Account No. 11734. The defendant has been paying interest due on the said account and for the period ending with 5-4-1983, the defendant has credited a sum of Rs. 10,176.59 by way of interest in that account. This interest has been paid for the period from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... according to the defendant, the amount was credited by mistake and, therefore, they are entitled to refund of the same. In this connection, section 72 of the Indian Contract Act, 1872 ( the Act ) is relied upon. While the trial court had accepted the plea of the bank, the lower appellate court found that section 72 will not apply to the facts of the case. The appellant has been not made aware of the circular of the RBI. In fact, the account has been opened only after issuance of the circular. The bank cannot be heard to plead ignorance. No notice was issued by the bank to the plaintiff, informing that a mistake has been committed. Therefore, any unilateral action on the part of the defendant cannot bind the plaintiff. Therefore, the defend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copy of the account to show that a certain amount towards interest was credited into the account and the plaintiff had certain funds. Suppose the amount by mistake had been paid in cash and later the bank realises that the payment was made by mistake, unless the bank makes a claim within the period of limitation, they cannot succeed. Therefore, with regard to crediting of interest into the plaintiff s account, the bank must show that those entries of credit were made within three years of their coming to know about their mistake, which appears to be the date when they reversed the entry on 6-4-1983. Therefore, unless on 6-4-1983, the claim had not been barred by limitation, the bank is not entitled to unilaterally reverse the entries for ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, in view of the Circular issued by the RBI, under section 35 of the Banking Regulation Act, the plaintiff is not entitled to be paid interest on that account. Therefore, here, it is not a mistake of fact that has been committed by the bank, but it is a mistake of law. For it is a payment in ignorance of the regulation of the RBI. In order to claim recovery, the mistake must be one of fact. Therefore, if any payment is made in ignorance of law or rule, the money paid cannot be recovered. 9. In Holt v. Markham [1923] 1 KB 504 (CA) a certain amount was overpaid into the defendant s account, owing to misapprehension regarding certain war office orders. There, it was held by the English Court that the payment was not made owing to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... money in the account of some other person, as soon as the money is deposited in the account of such third person, who is a customer of the bank, the money becomes the money of the customer, and it is not open to the bank in such circumstances without obtaining the consent of the customer to reverse the entry of credit made in his account and in effect, pay back the money to the person who had deposited it, even though it might have been depo-sited by mistake. 12. Therefore, when a deposit made by a third party by mistake in the account of a customer in a bank cannot be touched by the bank by way of reverse entry without consent of the account holder, then equally without consent of the account holder, the entries of credit made in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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