Damayanti Kantilal Doshi v Indian Bank

• Judge: Chao Hick Tin J
• Judgment Date: 11 November 1998
• Neutral Citation: [1998] SGHC 369
• Citation: [1998] SGHC 369
• Defendant Counsel: Deborah Barker and Wong Rin Rin (Khattar Wong & Partners)
• Published date: 19 September 2003
• Plaintiff Counsel: Samuel Chacko and Sharanjit Kaur (Manjit Samuel & Partners)
• Date: 11 November 1998
• Docket Number: Suit No 1292 of 1992
• Court: High Court (Singapore)
• Subject Matter: Whether charge valid against co-depositor,Fixed deposits,Addition of co-depositor after charge,Whether bank's voluntary services convertible into legal duties,Nature of fixed deposit,Whether equitable assignment mortgage the fixed deposits exists,Banking,Deposit taking,Charge on fixed deposits

Judgment:

CHAO HICK TIN J

This is an action by the plaintiff (Damayanti) against the defendants, an Indian bank, for an account and for losses which she allegedly suffered due to the refusal of the defendants` branch in Singapore in paying to her moneys which were placed on fixed deposits (FD) in US dollar and Indian Rupee denominations in various branches in India of the defendants under the joint names of her husband, one Kantilal P Doshi (KPD), and herself. Those deposits were made by KPD under a special scheme (FCNRD or NRE) whereby Indian nationals resident abroad or persons abroad of Indian origin were encouraged to place moneys in India on attractive interest rates, rates which were higher than the prevailing international rates for the currency in question. This action is only concerned with such fixed deposits. For convenience, I shall hereinafter refer to the defendants as `IB` and their Singapore branch as `IBS`.

2.KPD was a Malaysian and resided in Johore Bahru. On 1 July 1991 he was killed under tragic circumstances. He was a customer of IBS for many years. He placed numerous sums on fixed deposits in various branches of IB in India under the joint names of himself and his wife, Damayanti, and also under his sole name. These FDs were under the special scheme.

3.Upon the death of KPD, Damayanti and her youngest son, Rogesh, became the executrix and executor respectively of the estate of KPD (the estate). Damayanti has two other sons. Jigarlal is the oldest and the second is Tilaklal. In this action Damayanti is suing in her personal capacity and not in her representative capacity as the executrix of the estate of KPD. She claims under the principle of survivorship in respect of those FDs which were in the joint names of her husband and herself.

4.Before his death, KPD was operating his business from Johore Bahru and one of his companies was Overseas Industries Sdn Bhd (OISB), in which he and his eldest son, Jigarlal, were the substantial shareholders. Unfortunately for the Doshi family, following KPD`s death a very serious dispute arose among them, with Jigarlal seeking to obtain control of OISB, which was KPD`s main business. Jigarlal obtained an injunction in Johore Bahru against his mother and siblings. Because of the injunction, Damayanti could not gain access to KPD`s Johore office and the documents kept therein, including the FD receipts.

5.At the death of KPD there were the following FDs in the joint names of KPD and Damayanti which IB say were charged to IBS for facilities granted by IBS to KPD and his associated firms:

No	Date	FD No	Branch	Amount
1	30.08.85	002346 issued in substitution for 158286. Renewed to FDR 401849 and then to 406019 for US$319,805.38	Richmond Circle	US$306,033.87
2	06.12.85	037735Renewed to FDR 003777 dated 6.12.90 for US$1,030,000.00 and then to FDR 164612 dated 8.8.94 for US$1,417,102.86	Harbour	US$1,030,000.00
3	10.12.85	533786Renewed to FDR 433953 dated 6.12.90 and then to FDR 000018 dated 1.2.94 for	Adyar	US$500,000
4	20.12.85	153575Renewed to FDR 585753 dated 28.12.90 for the sum of US$102,033.82	Ballygunge	US$102,033.82
5	10.01.86	154042Renewed to FDR 585785 dated 19.1.91 for the same amount	Ballygunge	US$96,436.12
6	01.04.86	031998Renewed to FDR 190216dated 3.4.91	Ernakulam	US$203,194.67
7	14.11.86	061110Renewed to FDR 72022 dated 23.11.89 US$16,695.91 and then to FDR No. 72066 for US$18,198.54 dated 18.11.90 and then to FDR No. 72113 for $19,017.47 dated 9.5.91	Rajkot	US$13,146.39
8	24.11.88	302995Renewed to FDR 430439 dated 15.11.89 in the name of KPD. Renewed to FDR 115262 dated 13.11.90 in the name of KPD	Panaji	US$1,751,770.41

6.While in the various documents, including the stamps placed on the FD receipts, the words `pledge` or `lien` were used, it is clear that what was intended was that those FDs would be charged for the repayment of the facilities granted by IBS. I shall hereinafter refer to these eight FDs as `the eight charged FDs`. I should also add that besides these eight charged FDs there were four FDs in the name of OISB which were similarly charged to secure those facilities.

7.At the time of KPD`s death, there were also other FDs which were placed at various branches of IB in India but which were not charged to IB. In respect of those, IBS say they did not maintain any proper record thereof, though most of them were probably placed through IBS. Pursuant to the request of Damayanti, and following inquiries, IBS eventually obtained the particulars thereof as follows. I shall hereinafter refer to these FDs as `the free FDs`.

No	Date	Number	Branch	Amount
1	30.01.84	052173Renewed to FDR 520115 dated 28.1.89	Cumballa Hill	Rs 34,410
2	12.12.91	72153Renewed to FDR 72081 dated 10.12.91	Rajkot	US$514,323.74
3	21.12.91	149176	Richmond Circle	US$12,579.52
4	03.01.92	462894061175 renewed to FDR 72158 for US$14,035.30	Harbour	US$1,971.83
5	21.01.92	Rajkot	US$10,323.00
6	01.06.92	004139	Harbour	US$7,244.62
7	21.06.92	242781	Harbour	US$36,195.14
8	06.09.92	540806	Harbour	US$2,396.33
9	11.02.93	72006 renewed to FDR2144442 to FDR $2,774.31	Rajkot	US$2,100.00
10	11.02.93	72034 renewed to FDR214471 for US$6,709.79	Rajkot	US$5,078.97
11	23.09.93	72095 renewed to FDR214535 to same unit	Rajkot	US$2,789.70
12	16.01.94	171742	Rajkot	Rs 1,541.21
13	30.01.94	457871	Rajkot	Rs 1,640.00
14	09.08.94	171951	Rajkot	Rs 9,678.94
15	08.10.94	171985	Rajkot	Rs 9,601.72
16	15.03.95	457563	Rajkot	Rs 115,299.93
17	29.04.93	457624	Rajkot	Rs 7,103.15
18	01.05.95	32330	Rajkot	Rs 6,720.00
19	26.02.96	171695	Rajkot	Rs 1,860.08
20	13.04.96	323291	Rajkot	Rs 10,743.60

8.It will be noted that except for one deposit which was for more than US$500,000, the other free FDs were all for relatively small sums. As at the date of commencement of this trial, most of those free FDs had been paid out to the plaintiff except for three small deposits listed at items 4, 6 and 8 above (all maintained at Harbour Branch). Damayanti has not applied to have them paid out presumably because she did not want to do so. It is also possible that she does not have the FD receipts in question. Even if it were true that she did not have the FD receipts, that could not be the reason Damayanti did not withdraw them if she had wanted to because she had withdrawn many such free FDs without producing the relevant receipts by executing indemnities.

9. Main complaints

A large amount of details (documentary and otherwise), including accounts, were placed before me. The figures as presented by IBS were accepted by Damayanti in the course of trial as being in order. As I see it, there are essentially two main complaints in this action. The first is that IBS failed to provide her with the information on all the FDs placed by KPD with the various branches in India, particularly the free FDs, and failed to carry out her instructions in relation thereto. This in turn raises the question whether there was, as alleged by Damayanti, a special arrangement/agreement reached between KPD and IBS as to the obligations of IBS in relation to the FDs placed through IBS, and if so what was the scope of those obligations.

10.The second main complaint in this action concerns three of the eight charged FDs which were maintained at Panaji, Harbour and Adyar branches (Nos 2, 3 and 8 of the charged FDs listed above). It is not in dispute that they were originally placed in the sole name of KPD. Damayanti`s name was added thereto as a co-depositor much later (in January 1991), by which time the three FDs had already been charged to secure facilities offered by IBS to KPD and his associated firms. In respect of the deposits at Harbour and Adyar branches, besides executing a security letter for each deposit in favour of IBS, KPD had also discharged the two FD receipts by signing them. However, when Damayanti`s name was added onto the two FD receipts, no fresh security letters were obtained from KPD and Damayanti jointly or from Damayanti alone. In the case of the Panaji FD, no specific security letter was obtained from KPD but there was correspondence evidencing a charge. The position taken by IB is that the addition of Damayanti as a joint depositor did not affect the charge already existing in favour of IBS. Before me, both parties are in agreement that the charging of the FDs to secure facilities granted by IBS was governed by Singapore law.

11. Duty to account or maintain list of FDs

I will now consider the first main issue and in reality it concerns primarily the free FDs. This is because as regards the eight charged FDs as early as 1 August 1991 (3DB426-8) Damayanti was informed about them. Nevertheless, the question here is a general one. Did IBS assume any additional obligations when they accepted moneys from KPD and placed them on his behalf in the various branches in India? Did IBS assume a duty to render an account to KPD in respect of the deposits so placed (or renewed) through IBS?

12.It is settled law that a bank is a debtor of a customer who has placed a sum on fixed deposit with the bank and the bank is not a trustee of the customer in respect of the money so placed: see Foley v Hill [1848] 2 HL Cas 28 and Poh Chu Chai on Law of Banking Vol 1 (3rd Ed) at pp 35-36. It is also settled law that a customer has no cause of action against a bank in respect of any money in a current or deposit account until a demand for payment has been made at the branch where the account is maintained: Joachimson v Swiss Bank Corporation [1921] 3 KB 110. For this purpose, branches of a bank are treated as separate entities: R v Lovitt [1912] AC 212 at 219 and Clare & Co v Dresdner Bank [1915] 2 KB 576.

13.Furthermore, in the case of a fixed deposit, repayment is subject to the terms of the contract. As stated by Poh Chu Chai (at p 40):

When money is placed in a deposit account by a customer, the money deposited is usually repayable by the bank subject to the fulfilment by the customer of the terms and conditions of the deposit. Until the conditions for the withdrawal of the deposit are complied with by the customer, the money deposited does not become payable. Thus,

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