The relationship between the banker and the customer is very important and complex, which depends on the interpretation and analysis of their mutual rights and obligations. To discuss the relationship between banker and customer, it is necessary to understand the meaning of banker and customer.
 |
| Banker Customer Relationship |
Banker's Customer Relationship
Meaning and definitions of Banker - Banker is meant to be an institution that does the business of money, which receives the money of its customers on deposits, provides payment on demand, credit facilities and other services. Is. According to the Indian Negotiable Instrument Act, 1881 (Indian Negotiable Instrument Act, 1881) doing banking work under a banker
Includes every individual (institution) and every post office, savings bank. likewise British
According to the Bills of Exchange Act, 1882, "the business of banking under a banker
a group of persons, whether amalgamated or not.
According to the Indian Banking (Regulation) Act, 1949, banking means to accept money on deposits from the public for lending and appropriation and to make arrangements for repayment by way of cheque, draft, order or otherwise, or otherwise.
Thus it is clear that the meaning of banker is taken from that institution or person who is doing the business of banking and dealing in currency is his main business. He accepts money from the public in the form of deposits and provides facility to withdraw money on demand. It often uses the words bank, banking or bank with its name.
Meaning of Customer - Generally any person or entity is considered to be a customer of the bank who has an account with that bank and has regular dealings with the bank.
(A) According to Sir John Paget in the ancient school of thought, a person cannot be called a customer of a bank merely by making a casual deal. To be a customer it is necessary to have some valid deal or habit. ,
A similar view was expressed in the Matthews Vs. Williams Brown and Company Dispute 1894 Judgment that by opening an account with the bank only on the first deposit a person cannot claim to be a customer of the bank as regularity in transactions (B) according to modern ideology Any person or entity bank dealing
Behavior be regular or irregular. In the case of Central Bank of India Vs V Gopinath et al., it was held that a person in the banking business is a customer whose money is accepted by the bank on the condition that the bank will return the money to the extent of the amount deposited in his account, whether Whether his relationship with the bank is short term or long term. According to Dr. Ha, a customer is one who has an account with the banker or for which the worker naturally takes upon himself the responsibility of acting as a banker."
According to Justice Baillache also, “When the first check is deposited in the account, then the person depositing the check becomes a customer of the bank. Two conditions to be called a customer - Criterion of the customer
It is clear from the above discussion that the customer of the bank is the same person or institution whose arms are
(i) having an account in his name with the bank and
(ii) having banking business dealings with the bank whether regular
Or why not be accidental? It is worth mentioning here that a person who does not have an account with the bank, but takes advantage of the utility services provided by the banks, such as making drafts from the bank, renting a locker, taking payment of checks received from other persons, for buying shares or debentures. Depositing money etc., then he cannot be called a customer of the bank. For a person or entity to be called a "customer", it is necessary that (i) that person or entity has an account with a bank whether it is a savings account, a current account or a fixed account; (ii) He should have dealings with the bank in the nature of banking business. Mere use of public utility services provided by the banker cannot make a person a customer.
banker and customer relationship
(Relation Between Banker and Customer)
The relationship between the banker and the customer depends on the nature, interpretation and limits of their mutual rights and obligations. In the modern era, due to the diversity and breadth of the functions of banks, the relationship between the banker and the customer has also become very complex and multifaceted. Where on the one hand they are the lender and debtor, on the other hand the banker acts as a trustee and sometimes an advisor or sometimes an agent for the customer. Therefore, from the point of view of study, we can divide the relationship between the customer and the customer into two categories.
banker and customer relationship
(A) general relation
(B) special relationship
(General Relationship)
(1) Relationship of lender and debtor (1) Rights of banker
(Special Relationship)
(2) Relationship as agent
(2) Liabilities of the Banker
(3) Relationship as trustee
(4) Relationship as a consultant
Their brief description is as follows
(A) general relation
(General Relationship)
In general relations, we include those relations of banker and customer which explain the relationship between bank and customer as lender and borrower, banker as agent, banker as trustee and banker as consultant.
(1) Relationship of lender and debtor
(Relationship as a Creditor and Debtor,
The most important relationship between a bank and a customer is that of a borrower and a lender. When a customer deposits money by opening an account with the bank, the bank becomes a borrower and a customer, but when a customer withdraws more money from the bank than his deposit, the customer assumes the form of a borrower and a bank lender. That is why Sir John Peset has said that "the relationship between the bank and the customer is primarily that of the debtor and the lender; each other's position is determined by the immediate position of the customer's account."
In the judgment of Foley V/s Hill, clarifying the relationship between the banker and the customer, it is written that "When the amount is deposited in the bank, it becomes the bank's not the depositor's. The equivalent amount has to be returned on demand. The bank can use it as its own money, also making profit from the appropriation which is its own. "Based on the prevailing method, it returns along with the principal and simple interest" . In the above situation between the banker and the customer, the banker is neither an agent nor a broker but he is a debtor.
Characteristics of the debtor and creditor relationship of the banker and the customer
(Characteristics of Debtor-Creditor Relationship) Following are the salient features of the relationship of banker and customer as debtor and creditor-
(1) Banker and Pak can be both Frani and Pak depending on the balance position in their account. When the bank deposits the amount by opening an account with the bank, but when the bank withdraws more than its deposit money, then the bank becomes the lender and the customer becomes the debtor. So it is clear that in both, who is the borrower and who makes it depends on the position of the balance amount in the account of the customer.
(II) Deposits are payable by the customer on demand only (Deposits are payable on demand only) – It is a well-known principle that the banker does not name the customer to pay his deposit on demand and neither the bank will return his deposit to the customers as per his wish. can. This is the reason why bankers pay deposits only on the demand of their customers.
Judgment in Jochimson v/s Swiss Banking Corporation in this regard makes it clear that "the relationship between a customer and a banker is that of a lender and a debtor, but one of the essential conditions in this heated contract is that the amount lent to the bank shall be subject to demand". No extra will be payable."
(iii) Demand at proper place and time – Mike should demand payment of his deposit from his banker at the appropriate place and time. In other words, it can be said that the demand for payment of deposit by the customer will have to be made at the same branch where he has his account and the time of demand is also in the banking hours. Demand for payment from branch after banking hours and elsewhere is not acceptable.
Indo Allied Industries Vs. Punjab National Bank 1970, it was clarified that “In the absence of any intention to the contrary, there is an implied covenant with a customer opening an account at any branch of a banking company that he shall send the customer to that branch only. Pay where his account is opened. It is payable during banking hours and this amount will be paid on the written order of the customer.
A similar decision was held in Jochisson v. Swiss Banking Corporation, that if the promise to repay the money is made at the same branch of the bank in which the customer's account is maintained, the demand for refund should be made during working hours on working days.
(iv) Demand of payment should be in proper manner) According to the Indian Banking Act, the customer can demand payment of his public amount only through the prescribed forms of the bank. The banker is not obliged to pay in any other way, such as telephone, orally or even on the written order of a form other than the prescribed forms.
(v) Law of limitation on deposit: The time limit on money deposited by the customer in the bank is applicable only from the date of payment thereof and against the bank only for three periods on the day of demand. can be done later. After three years of demand, the bank cannot be prosecuted for recovery due to time barred. It is to be mentioned that if the customer does not demand payment of his deposit, the amount deposited by the customer will remain with the bank for the life of the bank. The time limit law applies only to ganging.
(vi) Mutual Responsibilitics of Banker and Customer The banker, with the opening of the account of the banker, undertakes to pay the customer on demand. shall comply with the valid orders of the Customer and provide other banking services to him while the customer is under the obligation to demand payment at the appropriate place, time and by order in writing in the prescribed forms. It is also the responsibility of the banker and the customer to take utmost care.
(2) Relation of Banker as an Agent
In the modern era, there has been so much diversity and breadth in the functions of banks that now the relationship between the customer and the banker is not limited only to the borrower and the lender. Now a banker as an agent of his customer performs many functions which in brief are as follows
(i) taking payment of bills, banks, bills, promissory notes etc. of the customer;
(ii) payment of interest, insurance, rent, contribution and installments of loans on behalf of the customer.
sufferto know; (iii) to buy and sell shares, debentures, bonds and other securities on behalf of the customer;
(iv) To collect interest, dividend, rent, loan installments etc. for the customer: (v) to transfer money from one place to another for the customer and
(vi) to act as an agent of the customer; When the banker acts as the agent of the customer, the relationship between them
Agent and principal are there and the banker should act in such a situation only according to the order of the customer, otherwise the customer can hold the bank responsible for his compensation at any time, so it is necessary for the banker to be careful. Some of these are
(1) Acting on express orders from the customer while acting as an agent to the banker
Clear commands are required. If these orders are in writing, even better.
Oral orders should also be recorded as far as possible. (ii) Recovery of expenses and remuneration- The banker has the right to recover expenses and remuneration from the customer by acting as an agent.
(III) Liability for compensation for negligence and fraudulent behavior If the customer is harmed by the fraudulent behavior or negligence of the banker while acting as an agent, then the banker will be liable for compensation under section 162 of the Indian Contract Act. is responsible for
(3) Relationship of banker and customer as trustee
(Relationship of Banker as a Trustee) Nowadays banks provide many public utility services to their customers as a trustee. Bankers keep valuable jewellery, important instruments and money etc. of the borrowers safe and take the responsibility of returning them on demand. The goods kept for security are owned by the customer but the banker acts as a guarantor for them.
The banker has to exercise adequate caution in acting as a trustee for the customer.
Need. The following precautions are important---- (i) Proper entry of goods received for security The bank has to enter the goods received for security from its customers in the Safe Custody Register. Signature of the depositing customer in that register. It should be done and even after returning it, it is necessary to get the signature of the return done.
(ii) Safety of Property - Goods deposited for security
And the property should be protected by the bank in the same way as a person owns his own
does property. The banker will be liable for any damages caused due to negligence. (iii) Facility of Inspection - The banker should provide the facility of inspection of the goods kept for safety by the customer.
(iv) Handing over of property - The banker is obliged to return the property kept for security on demand by the owner or the person authorized by him to deposit it. On the death of the subscriber, it shall be returned to the person nominated by him and in the absence of nomination to the heir having proper succession certificate. There is an obligation to return the property deposited in the joint name on the unconditional consent of all. The banker will be liable to compensate for the return of the property to the unauthorized person.
(v) Liability of Compensation - When the security deposit property is lost or any damage is caused to it due to the negligence or irregularity of the bank, the banker will be liable to compensate it.
(vi) For specific purpose When the customer keeps any security with the banker for a specific purpose, then the banker is fully responsible for his security and he can recover remuneration for it. The banker will be liable for damages due to negligence and carelessness of the house kept property.
(4) Relation of Banker as an Advisor Due to the complexities of banking business and the specificity of financial matters
Modern banks also act as consultants to their customers. Many big banks also set up a separate advisory cell (Advisory Celly) to advise their readers.
The banker should advise his customer with great care and honesty
And nothing should be concealed which would hurt the interests of the customer. not so
If so, the banker can be held liable.
Yuis V/s Martins Bank Ltd. According to the decision given in the dispute, on the advice of Mr. Johnson, the manager of the bank, a customer named Woods took the B. R. Ltd. He was given a loan of 3000 pounds and bought his shares for 11,800 pounds. In this, the bank manager was held to compensate Buddhas for hiding facts and negligence in advice to the bank manager. It is therefore clear that caution should be exercised while acting as a consultant to a banker.
Honest and careful advice should be given and no such fact should be concealed
thereby harming the interests of the customer.
(B) Special Relationship of Banker and Customer
The special relationship between the banker and the customer arises out of the rights and obligations of the banks, which are due to the diversity and breadth of the modern banking business.have developed together. These specific relationships are summarized as follows
Banker and customer relationship
banker's rights
Banker's Liabilities
(Rights of Bankers)
(Obligations of Banker)
(1) lieutenant
(1) Liability to pay check
(2) Right to payment planning
(2) Liability for undue disrespect
(3) Right to adjust or respond (3) Liability for confidentiality of accounts
(4) Liability for interest, commission and other contingencies (4) Improper information
right of charge
(5) Right of limitation period
(5) Liability on attachment order
Their brief description is as follows
Rights of Banker
It enjoys five types of statutory rights against its customers, which include (i) lien, (i) right of payment planning, (ii) right of adjustment and response, (iv) commission for services rendered by it, interest on loans and Others include the right to surprise publicity and (v) the right of limitation period.
(1) Banker's lien against the customer
(Banker's Right of Lien against the Customer) Since the relationship between the banker and the customer is based on a contract, therefore, under section 171 of the Indian Contract Act, 1872, the banker has to take the property kept with the banker by the customer against his customer with clear instructions and for a specific purpose. In absence, he has the right to withhold until he pays off the outstanding debts of the banker.
According to banking terminology, the right of lien means the right to hold the property of another until that other person pays off his outstanding debts. In this context the banker's lien applies to all the properties of the customer which the customer has entrusted to him as a banker and his
There is no clear or specific instruction for this.
There are two forms of lien- (i) general lien and (ii) specific lien.
(1) Right of General Lien According to section 171 of the Indian Contract Act 1872, the banker has the right of general lien against the customer. According to the judgment in Yendo v/s Barnett (Brando V/s Barnett) dispute, "Unless there is a contract of express intent or circumstances inconsistent with the implied contract of the lien, the banker must be certain to have the entire property and securities of the customer." But the general lien is obtained which the customer has deposited with him in the form of goat." It may be noted that in the absence of an explicit or implied contract, the common lien is applicable to movable properties as well. (ii) Special Right of Licn: A banker gets a special lien when the banker has invested money in acquiring the property kept with him or has done some special work in obtaining that property.
Key Features of Lien
(Main Characteristics of Right of Lien)
(1) The Banker gets the General Right of Lien from Section 171 of the Indian Contract Act 1872.
(2) The general lien on the banker is applicable to the property and deposit which the customer has deposited to him as a banker and there is no specific purpose and clear instructions for the same. The banker can hold the asset until his debts are paid off. (3) The general lien of the banker is applicable only to the property and securities deposited in the name of the customer. Lien power not applicable for recovery of customer's debts on properties deposited jointly or in the name of close relatives of the customer
(4) The banker enjoys privileges in lieu of lien. He can sell his deposits and securities by giving proper notice to the reader.
(5) A banker's lien is valid only on the property which the customer has deposited with him as a banker. The banker's lien on the property deposited in trust, security or for a special purpose is not valid. That's a few exceptions to the lien.
Exceptions to banker's lien
(Exceptions of Banker's Right of Lien)
Banker's lien is not applicable in the following circumstances.
These exceptions of lien rights are important (1) When a customer entrusts his valuables, documents or jewelery to the banker for safe custody, the banker acts as a trustee for him, so the bank has to give such deposited property. did not get the entitlement.
(2) The banker's also on the property entrusted for a specific purpose or with specific instructions.
A lien is not applicable because it is a property assigned by a specific contract and has a specific purpose. (3) Property deposited in a trust account When a customer opens an account as a trustee of any other person or causes the property to be deposited, the money and property deposited in such account
But banker's lien does not apply as such property is in trustee's form. (4) The goods and property of the customer left by mistake or forcibly taken away
But banker's lien does not apply. (5) Property deposited by way of security of unsecured loan or disallowed loan
Or banker's lien on securities also does not apply because if the due date of loan is far away or banker's lien on securities kept for sanction of loan is not valid till the due date of loan paymentArrival or loan is not accepted.
(6) When the customer entrusts any article, property or securities with the banker for sale to the property deposited for the purpose of sale, then the lien of the banker does not apply to the property deposited for such a particular purpose. In the case Simons V/s Mulkern, it was held that securities deposited for the purpose of sale cannot be tax lien.
(7) Or even on the consent of deposits with other persons. This was confirmed in the decision of the Wollsteinfeedbank dispute.
(8) The lien of the bank on the property owned by the customer does not expire, but this rule does not apply to the securities if the bank has carefully obtained them by paying the value in trust. (2) Right of banker to settle customer's payments
(Banker's Right of Appropriation of Payments) If a customer has several different accounts in a bank branch and deposits money on different dates of the month without any clear instructions, then the banker will have to pay the customer's various credits. The payments have the privilege of appropriation at their discretion and will. In Clayton's case, the learned Judge ruled that "in the absence of clear directions, the bank shall regard each payment amount as the first payment of the loan due and the deposit entry
The adjustment of the name entry will be done in chronological order." It is clear from this that the bank gets the right to plan the payments of the customer at its discretion and desire only when there is a lack of clear or implied instructions from the customer. The banker should keep in mind the following points
(1) Planning of payments as per customer's instructions When a customer has multiple accounts in a bank branch, the banker should plan the payments as per the explicit instructions of the customer or as per the circumstances implied.
(ii) in the absence of directions, the banker shall be entitled to the discretion and the Clayton dispute.
Payments should be adjusted as per the decision. The banker can also plan such payments for the time-barred payments and the customer should be informed.
(ii) Payments received from the customer may be settled before interest payment and the balance amount may be used as per Clayton dispute decision.
(iv) If there is no instruction from the customer and the Bank has not decided in its sole discretion, the payment will be arranged as decided by Clayton Case.
(v) Notice of employment as desired by the banker When a banker does not arrange the payments of a customer according to the decision of Clayton dispute, but at his discretion and volition, it is necessary to inform the customer thereof. It is in the interest of the banker to verify.
(vi) Planning is not possible on new account – It is not possible to employ old payments in new account. They can only be adjusted against payments in old accounts.
(3) Banker's Right of Adjustment or Set-off
The banker has the statutory right to reciprocate/adjust the amount deposited in different accounts of any of his customers with the balance in the account of the same customer. For example, Rs 2 lakh in one account of a customer. If there is a deposit balance of Rs. Lakh Rs. Can claim for recovery of balance amount.
It may be mentioned here that the right of the banker to set-off is applicable not only to different accounts of the customer in the same branch, but also to different accounts of the customer opened in other branches of the same bank. Provided that these accounts of the customer are in his own name and the amount deposited in those accounts is not in the form of trust. From this statement we consider the following conditions necessary in the right of the banker to respond
Essential Conditions for Adjustment or Set-off by Banker (1) Different accounts are in the name of the same customer – the banker can apply the right of adjustment to different accounts of the customer only if they are in different accounts opened in the name of the same customer.
(2) Different accounts are in the same bank or its branches - The right of adjustment of the bank is possible only when the customer has different accounts in the same bank or any of its branches. This right will not be applicable if it is in other banks.
(3) No agreement to the contrary The banker's right of adjustment shall have effect only if there is no other agreement between the customer and the banker to the contrary to that right.
(4) The customer's account is not in the form of a trust - the chanker's right of adjustment applies only to accounts in the customer's own capacity. This right of the banker shall not apply to the account of deposits of other persons as trustees.
(5) Adjustment of joint account is not possible in a joint account nor adjustment of joint account is possible in joint account. The right of adjustment is applicable when the obligation to pay the debt is in both the forms separately.
(6) Adjustment right comes into force only when there is a matured and fixed debt obligation. The banker will not have the right of adjustment if the loan matures in future or the loan obligation for which payment is not yet outstanding.
(7) The right of adjustment shall be exercised only on the balance amount on attachment.Can go
(4) Banker's Right to Charge Interest, Commission and other charges from the customer
Incidental Charges from the Customers) The banker has the implied right to collect interest on loans and overdrafts given to his customers. Similarly, the banker also has the right to take commission for the services rendered on commission basis. Not only this, fees and other incidental expenses may be charged by the banker as consideration for other services rendered to his customers.
have the right to do so.
(5) Limitation period for the banker
(Period of Limitation) According to the Limitation Act 1963, the period of limitation for the banker to recover the payment is three years, which is considered beyond the due date of the loan. Similarly, the limitation period for payment of money by the banker to the customer is three years, which is reckoned from the date the customer calls for the money. The banker has the right to keep the customer's deposit intact if the customer does not demand it.
Banker's liability to customers
(Obligations of Banker to the Customers) The special relationship between the banker and the customer depends on the obligations of the banks to the customers.
We do. The main obligations of the banker towards the customer are as follows:
(1) Obligation of Banker to Pay Checks of the Customer
As per the provision of section 31 of the Indian Negotiable Instruments Act, 1881, every banker has a statutory obligation to pay the customer's checks provided the check is properly drawn and the drawee's account Have sufficient funds remaining. If the banker does not pay and dishonor the customer's checks knowingly, by mistake or without valid and reasonable reasons, the banker shall be liable to compensate the loss to the customer.
The statutory obligation on the banker to pay the customer's checks becomes effective only when the check drawn on the bank is in full; at the proper time, place and duly submitted; Sufficient amount should be withdrawable in the customer's account and there should not be any government attachment order on the same. It is clear that the banker's obligation to pay the customer's checks will be effective only if the following conditions are fulfilled:
(i) The customer's check is complete - The check written by the customer on the banker must be complete, that is, the check should be clearly written, date, amount, name and signature as per the drawing of the drawee, without tampering, amount written in figures and words. and the check should be complete and payable in all respects. Failure to complete these surveys may result in the bank's payment being withheld or refused.
(II) Sufficient amount is deposited in the account of the callee - on the banker's checks
There is also a liability to pay when sufficient amount is deposited in the customer's account or
The check has been written to the extent of the overdraft facility. (II) Bank check duly presented for payment The liability of payment arises on the banker when the check is completed as well as duly presented at the right time, at the right place and in a proper manner. In other words, the check should be presented at the same branch of the bank at which the check is drawn and duly presented during banking hours and the check is payable. If the check is presented after 6 months from the date of writing, it will not be payable after the check period is exceeded. Similarly, if a post-dated check is presented for payment before the written date, it will not be payable.
(iv) The banker is liable to pay the check if the customer has an account. The decision in the dispute Klemmer & Company vs. Dresner Bank confirms that the banker is liable to pay the check only if the customer has an account and not otherwise."
(v) If the facility of overdraft is breached unilaterally without prior notice, the banker is liable to pay the check. Indian Overseas Bank Vs Narayan Prasad Govind Lal Patel Dispute The Gujarat High Court judgment in 1980 confirms this, in which the bank paid Rs 500 to the customer for four years without any written contract. Overdraft facility was given. The bank took it back without prior notice and dishonored the customer's check. For this the banker was held liable for compensation for the loss caused to the customer.
It is to be mentioned here that after April, 1989, if a customer writes a check on the banker without sufficient deposit, there is a provision to fine the check drawee up to twice the amount of the check or one year imprisonment or both. Due to this reason, now it is also a legal obligation on every customer, the beneficiary, that he should not check the bank without sufficient deposit balance, otherwise he will be liable to punishment.
(2) Liability on banker for improper dishonor of customer's check
(Banker's Liability on Wrongful Dishonour of Customer's Cheques) If the banker wrongfully or willfully dishonors the customer's checks without valid reasons, the banker will indemnify the customer for loss as per the provisions of section 31 of the Indian Instrument of Exchange, 1881. will be responsible for
The damage caused to the customer due to undue dishonor of the customer's bank can be of two types
(1) Nominal Loss - Undue misconduct by the bank to the customer's bank
Dishonored is considered a simple loss when Icustomer dealer
Don't be a kidnapped industrialist. In the Gins v. West Minister Bank dispute, the bank mistakenly dishonored the check given by Mrs. Gibbons to the landlord. In his compensation, the court ordered simple compensation.
(2) Substantial Loss - When the check of a trader, businessman, kidnapped industrialist customer is dishonored by the banker by mistake, then the banker is liable to pay adequate compensation. This will depend on whether the dishonest check may result in (a) injury to the customer's business reputation, (q) cancellation of a significant deal or contract, (c) loss of creditors' trust in the customer, or ( d) Chances have arisen for the closure of the customer's business.
It is worth mentioning that the smaller the amount of the check, the bigger the blow and more damage is caused to the credit and reputation of the customer due to its improper dishonor. This opinion is corroborated by the decision of the Davidson v. Varclays Bank dispute, in which the Court ordered the bank to pay £250 for improper dishonor of a check of approximately £2.75 by Bank Davidson.
(3) Liability of confidentiality of customer's accounts on the banker
(Obligation of Secrecy of Accounts of the Customer) Every banker has a statutory obligation to maintain lawful confidentiality about the accounts of its customers and not to disclose any facts relating to the customer to third parties.
In the judgment of Ternier v. National Provincial Bank Dispute 1924, the learned judge held that it is the statutory obligation of the bank to keep confidentiality of the activities of the customer which arises out of the heated agreement between the bank and the customer, so the bank has to keep the account of its customer and any facts related thereto. should not be disclosed to any third party."
In the modern era, due to the increasing tendency of government interference in economic activities, many times banks have a statutory obligation to disclose the customer's accounts and facts related to it to the third parties authorized by the government, hence the Indian Banking Companies (Acquisition and Transfer of Undertakings) Act. Section 13 of 1970 provides for nationalized banks to "unless otherwise required by law, to observe the practices and customs prevailing in the banks and in particular not to disclose any information relating to the affairs of their constituents". unless circumstances make it necessary or expedient to give such information to him by law or in accordance with the practices and customs prevailing in the banks."
On the banker to give information about the facts related to the accounts and business of the customer.
circumstances of obligation
5.15
Although the banker has an aeronautical obligation to keep the confidentiality of the customer's accounts and facts related to their business, but in the following circumstances, the banker also has a legal obligation to give information about the customer's accounts and related facts to third parties.
(A) When there is a statutory compulsion to give information (Where Discloser is under Compulsion by Law) - If the facts related to the customer's accounts and his business are sought from the banker under any law, then it is a statutory compulsion for the banker to give the desired information. But this information should be limited to the extent it is sought. Under the following Acts, there is a legal obligation on the banker to provide information-
(i) Under the Income Tax Act, 1961 (Under Income Tax Act, 1961) - Income Tax Officers have the statutory right to obtain information about the accounts of that customer from the banker for determining the tax liability of a customer. (ii) Under Gift Tax Act, 1958 (Under Gift Tax Act,
1958) – Under section 36 of this Act also, the assessing officers are bankers.
But there is a legal obligation to provide information about the accounts of the customer.
(iii) Under the Foreign Exchange Control Act, 1973 (Under Foreign Exchange Regulation Act, 1973) - Under section 43 of this Act, its authorized officers have the right to check the accounts of customers and related forms and get information.
(IV) Under the Indian Banking Act, 1949 (Under Indian Banking Companies Act, 1949) Under section 26 of this Act, it is a statutory compulsion for every banking company to send a statement of such accounts and their amount to the Reserve Bank every year. In which no transaction has taken place for the last ten years.
(v) Under the Reserve Bank of India Act, 1934 (Under R.B.I. Act, 234) - Under section 45 (B) of this Act, every banking company has a financial obligation to pay the amount of loans given by them to the Reserve Bank. And send the list of giys regularly.
(vi) Under the Indian Companies Act, 1956 (Under Indian MPanies Act, 1956) - Under the provisions of sections 235 and 237 of this Act, an inspector appointed by the government for the investigation of a company should obtain necessary information about the company from the bank. have a statutory right
(vii) Under the Banker's Book Evidence Act, 1891 (Under Banker's Evidence Act, 1891) – According to the provisions of this Act, the court has a statutory right to obtain information about the accounts of the customer in the form of evidence.
(MH) Under Indian Criminal Procedure Code
Procedure Code for any matter under section 94 (B) of this Act.
hFor the purpose of investigation to the police officers involved in the investigation, the books of account of the bank
Have a statutory right to inspect and collect necessary information. (B) Where Discloser of Information is Essential in Public (Intcrest) is necessary in public interest If it is in public interest then it is the duty of the bank to give information regarding such customer.It will all depend on the immediate circumstances as to what information is in public interest to disclose.
(C) Discloser of Information with Express or Implied Consent of the Customer) Even if the customer has explicit or implied consent, the banker is justified in giving information about the facts of his accounts and business goes. Many times the customer himself orders to take a loan against security or to get the facility of overdraft from other bank and to give information about the facts of his business to the banker for any new business relationship, then the information given by the banker is justified.
(D) Where Discloser of Information about the Accounts of the Customer is essential in Banker's interest in the Banker's own interest to establish the authenticity of his point of view, it is in his own interest that the customer's accounts and accounts and Giving information about the facts of work to others is considered justified.
(E) Mutual Discloser by Bankers - It is a common practice among banks to give each other the information sought in relation to the customers so that the factual information of the customer is available to them and on the basis of that But the behavior can be increased. Such mutual information is also considered just and appropriate.
CAUTION IN CUSTOMER INFORMATION
(Precaution in Information) The banker should be very careful in giving information related to the accounts and business of the customer because sometimes for wrong and improper information the banker will not only be liable to compensate the customer but he will be liable to third party compensation. can be held. Therefore, the banker should take the following precautions while reporting the business and accounts of the customer -
Only factual information should be given - the banker should give his opinion or opinion
not suitable to express.
5.17
(II) Information should be given only to the authorized person or organization - it is not justified to give information to non-persons. (III) Information should be indicative and general – information about the customer to the banker is general
And it should be symbolic. Actual Figures and Fully Explanation Cause of Crisis
can become.
(iv) Indication of confidentiality and freedom from responsibility - While giving information, the banker should make it clear that this information should be kept confidential and the bank has no liability on the basis of the information.
(v) Not signed while giving information in respect of a banker's customer in England Do not sign to avoid liability. Many bankers in India also follow this.We do.
(4) unreasonable about the customer or Banker's Liability for Wrongful Information Although the banker has the responsibility of confidentiality of the facts of the customer's accounts and business, there is a need to provide information about the customer in the statutory obligation, banking practice and public interest. Therefore, the banker should be very careful while giving such information because in wrong and improperly given information, compensation can be sought by holding the banker guilty of negligence. In such a situation, the banker can be held liable not only to the customer but also to the third party to be informed, if he has suffered loss by relying on the information of the bank and it is proved that the bank has failed to provide the information. I have been negligent or the banker has given such information even though the information is not correct.
(5) Responsibility of Banker on Garnishee Order
Under Rule 46 Order 21 of the Civil Procedure Code, whenever the withdrawal of the debtor's money lying in the bank is prohibited by the order of attachment of the court on the request of the creditor, the responsibility of the bank to comply with the court order. goes. The order comes into force with immediate effect. When a copy of that order is given to the head office of the bank, it is deemed to have been given in all the branch offices also.
(A) Liability of the banker on attachment order by the court (1) As soon as the attachment order is received, it is deemed to be applicable with immediate effect, so the banker is obliged to stop the withdrawal of money from the account of the borrower. Even if the attachment order was given to the head office of the bank, it was deemed to have been given to all the branches. and comes into force with immediate effect. The Bank does not assume any liability on payments and withdrawals from the customer's account prior to receipt of this cookie order. (2) On the clarification of the amount in the attachment order, the amount will be deposited in the accounts of the customer.
(3) Cook's order is deemed to be applicable to all the accounts of the customer with that bank, hence the banker is obliged to stop the withdrawals in all the accounts. (4) Integration of all accounts of the customer as the cook order claims to stop the withdrawal of funds from the customer's bank on all types of accounts.There is a balance, so the entire deposit is
is liable to be transferred to any one account. (5) The order applies only to the existing accounts on the day of the attachment order - so the banker has no liability on the withdrawal of money by the customer from the new accounts opened after the order of attachment, only the obligation to stop the withdrawal of funds from the existing old accounts.
Cases of non-implementation of Cook's order - Although it is the responsibility of the banker to stop the withdrawal of money from the customer's accounts as soon as the order of attachment of the court is received, but in the following cases, due to non-implementation of the attachment order, the banker does not have any liability on him.
(i) Account in the form of trust - If the customer's account in the bank is as a trustee
Attachment order on the account of the trustee for personal liabilities of the customer if there is an account in the form does not apply.
(ii) Joint Account The joint account cannot be attached even if there is an attachment order against one of the account holders of the joint account.
(iii) Partnership Account When orders for attachment are placed on the personal account of any partner of a firm, the accounts of the firm cannot be attached.
It is to be mentioned here that if there is an order of attachment on a partnership firm, then only the accounts of the partnership firm will be attached, but the personal accounts of the partners can also be attached, but if there is an order of attachment on the personal account of a partner, then the accounts of the madari firm will be attached. Attachment orders do not apply. (iv) Attachment order on this new account of the customer on opening of new account by the customer does not happen. This order is applicable to existing accounts only.
(v) The order does not apply even if the name of the debtor in the attachment order is different from that of the account holder of the bank as it is difficult for the banker to ascertain that the attachment is on the account holder.
(vi) Attachment order does not apply to deposits made after receipt of attachment order.
(B) Banker's Responsibility on Garnishee Order by Income-tax Authorities
Under section 226(3) of the Income Tax Act, the Income Tax Officers are empowered to issue attachment orders on the bank account of such person or entity for recovery of arrears of income tax when a person or entity does not pay the income tax. It is the statutory obligation of the banker to comply with such attachment order. If the bank does not comply with the income tax attachment order, then action can be taken against him as an assessee in default.