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Banks Can Take From Individual Account to Recover Joint Debt, Says Consumer Commission

The Commission’s ruling could mean that if two persons have a joint account and also their separate accounts in the same bank, the banker has the authority to recover money from any of these accounts.

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Updated:January 7, 2018, 10:41 AM IST
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Banks Can Take From Individual Account to Recover Joint Debt, Says Consumer Commission
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New Delhi: A bank is entitled to withdraw money from your individual bank account if it has to recover an amount from your joint account.

According to the National Consumer Commission, this would not amount to an unfair trade practice because “a banker has a general lien on the amount deposited in his individual account”.

A ‘lien’ is a form of security interest granted over a property to secure repayment of a debt.

Thus, a bank can exercise its right to recover money although the individual bank account may not be the default at all.

The Commission’s ruling could mean that if two persons have a joint account and also their separate accounts in the same bank, the banker has the authority to recover money from any of these accounts.

It may also mean that if a company and its promoters or directors have a joint account apart from their individual accounts, any default would entitle the bank to withdraw money from either of the accounts.

“It is clear from the above provision that a banker has a general lien on the amount deposited by the complainant in his individual account. The said view has been expressed by the Hon’ble Supreme Court in the case, Syndicate Bank vs. Vijay Kumar & Ors as well. It has also been stated that unless a contract to the contrary is established, the Bank’s right of lien will have to be accepted,” held the Commission’s bench, presided by Dr B C Gupta.

The Commission’s order came while approving a similar withdrawal by the State Bank of India, Auroville branch, in Tamil Nadu.

In 2004, on a request made by a woman customer, the bank had transferred Rs 2 lakh to her father in Germany. The money was transferred from a joint bank account that she had with one Padmakar Mirajkar. Mirajkar also had an individual account in the same branch.

Due to a technical glitch, the bank, however, transferred Rs 2 lakh twice. It then requested the woman to return the excess money but to no avail and it was later known that she has also gone to Germany.

At this, the bank withdrew this amount from Mirajkar’s separate account. Mirajkar resisted this step by the bank, and moved the consumer forum contending the bank had no right to recover the money from his individual savings account.

His complaint was allowed by the district forum, which directed the bank to return the money since “there was no provision that enabled the bank to take away money from the individual account of the complainant”. The state consumer commission also upheld this view.

But on an appeal by the bank, the apex consumer commission has set aside the order of refund, citing the provisions of the Indian Contract Act on bank’s lien that entitled it to recover money.

“The excess money, which is stated to have been sent by the Bank to the father of Ms Elisabeth, is in fact public money and the Bank has every right to recover the same. It was the duty of the complainant, therefore, to ensure that recovery is got made of the excess amount remitted by the bank,” it held.

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| Edited by: Sanchari Chatterjee
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