Rai Bahadur Singh and Another v Bank of India

• Jurisdiction: Singapore
• Judge: Karthigesu J
• Judgment Date: 12 October 1992
• Neutral Citation: [1992] SGHC 264
• Docket Number: Suit No 2628 of 1991
• Date: 12 October 1992
• Year: 1992
• Published date: 19 September 2003
• Plaintiff Counsel: Dedar Singh Gill (Drew & Napier)
• Citation: [1992] SGHC 264
• Defendant Counsel: Eric Low (Khattar Wong & Partners)
• Court: High Court (Singapore)
• Subject Matter: Legal consequences of contract entered into by minor,Formation,Whether issue of mercantile law generally raised,Applicability of English law,Minor's contract,Civil Law Act (Cap 43, 1988 Ed),s 1 Family Law Reform Act 1969,Whether plaintiffs were minors or of full age when entering into contract with defendant bank,Contract,Words and Phrases,Renewal of contract after attainment of age of majority,Infants Relief Act 1874,Infants Relief Act 1874 [UK],Whether contract void or voidable as against minor,'Mercantile law generally',Legal capacity to enter into valid and binding agreement,Effect thereof,English Law,Test to be applied,Family Law Reform Act 1969,Second Charter of Justice 1826,Age of majority in Singapore,Applicability,s 5(1) Civil Law Act (Cap 43, 1988 Ed),Capacity of parties

Cur Adv Vult

By a letter dated 17 April 1985 the defendant bank (`the bank`) addressed a letter to S Pritam Singh Co Pte Ltd (`the company`), the material portions of which read as follows:

We are pleased to advise you that the credit facilities placed at your disposal have been reviewed at the existing level as follows:

The above facilities are sanctioned on the general terms and conditions enumerated below :

Security : (a) Pledge of fixed deposits of $535,000 supported by letter of set-off and appropriation.

(b) Mortgage of property at #10-1 High Street Plaza, 77 High Street, Singapore.

(c) Joint and several guarantee of Mr Jaswant Singh Bajaj, Mr Pavitar Singh, Mr Balbir Singh, Mr Vasdev Singh and Mr Prithipal Singh.

(d) Any other security documents as may be required by the bank from time to time.

(The remaining paragraphs are not relevant.)

It is common ground between the parties that the currency of the fixed deposits referred to above is in United States dollars. It is also common ground between the parties that the facilities granted to the company by the bank were secured by the mortgage of #10-1 High Street Plaza, 77 High Street, Singapore referred to in the above letter, although the date of the mortgage was not given to the court and further secured by the joint and several guarantee referred to, except that the letter of guarantee was executed by only three of the four named persons, namely, Jaswant Singh Bajaj, Pavitar Singh Bajaj and Vasdev Singh Bajay on 27 November 1985; that the letter of set-off and appropriation referred to was not executed until 29 March 1986 and the fixed deposit receipt evidencing the deposit of US$533,963.58 with the bank`s Richmond Town Branch, Bangalore, India is dated 16 August 1986.

The letter of set-off and appropriation dated 29 March 1986 reads as follows:

Bank of India

Singapore Branch

Dear Sirs

In consideration of your having at my/our request granted/agreed to grant advances and other banking facilities to Mr/Messrs S Pritam Singh Co Pte Ltd I/we hereby confirm and agree that in addition to the right which you have in law you shall also have the right at any time and without any prior notice to me/us to combine and consolidate all or any of my/our accounts with the bank, and/or to set off all moneys whatsoever due by the bank to me/us and whether on current account or deposit account (and whether payable at call or after notice or expiry of a fixed period) and whether in Singapore dollar or in any other currency, which the bank may at any time hold at any branch for my/our account against any liability incurred or to be incurred by the said Mr/Messrs S Pritam Singh Co Pte Ltd to the bank whether for or in respect of advances or other banking facilities or otherwise howsoever or whatsoever and whether in Singapore dollar or in any other currency, at any of your branches and whether any such liability be joint or several or primary or actual or contingent (all of which are hereafter collectively referred to as `the said liabilities of Mr/Messrs S Pritam Singh Co Pte Ltd`).

2 I/We also authorize you to withdraw and appropriate the amounts of any such deposits before the due date thereof, for satisfaction of any of the said liabilities of Mr/Messrs S Pritam Singh Co Pte Ltd to you, without any prior reference or notice to me/us.

3 I/We hereby agree to your crediting the interest payable on any such credit balances or deposits now or hereafter standing in my/our name/s to the loan/overdraft or other advance accounts and banking facilities of Mr/Messrs S Pritam Singh Co Pte Ltd or in or towards satisfaction and discharge of the said liabilities of Mr/Messrs

S Pritam Singh Co Pte Ltd to you.

4 I/We hereby declare that I/we have not encumbered, assigned or otherwise dealt with any such credit balances or deposits in any way and that they are and will continue to remain free from all claims or encumbrances by any third party.

5 I/We hereby expressly agree that nothing herein contained shall affect or prejudice or be deemed to be a waiver of your rights under law to combine or consolidate my/our various accounts and liabilities with you at any branch and in any currency whatsoever.

6 I/We undertake to execute at my/our costs in all respects such deeds and instruments as you may require hereafter to effectuate your rights hereunder.

7 This agreement shall be governed by and construed in accordance with the laws of Singapore and I/we hereby irrevocable (sic) submit to the non-exclusive jurisdiction of the appropriate civil courts in Singapore in respect of any disputes arising hereunder.

It should be noted that this letter of set-off and appropriation is a cyclostyled letter with the name `S Pritam Singh Co Pte Ltd` typed in where appropriate. It is not disputed by the plaintiffs that this letter bears the signatures of them both. There are two significant notations which should be mentioned. In the left bottom corner of the letter there is a rubber stamp bearing the words `document checked` which is initialled and `date` which has written against it in manuscript `29-3-86`. In the right bottom corner is written in manuscript the words `without co`s stamp`.

It is common ground between the parties that the two plaintiffs are shareholders in the company. They are not directors of the company and have no administrative responsibilities in the company.

There is no evidence before the court how the sum of US$533,963.58 came to be deposited with the bank`s Richmond Town Branch (Bangalore) on 14 August 1986. The first plaintiff in his affidavit affirmed on his behalf as well as on behalf of the second plaintiff and filed on 17 January 1992 at para 3 says:

... on or about 14 August 1986 the plaintiffs opened a fixed deposit account (No FCNR/11/7) under their joint names and deposited the sum of US$533,963.58 with the defendants (the bank) for a period of thirty-six (36) months with interest thereon at the rate of ten percent (10%) per annum (`the first FD`). Annexed hereto and marked `RBS-2` is a copy of the defendants` fixed deposit receipt dated 16 August 1986 acknowledging the plaintiffs` deposit.

The significant characteristics of the fixed deposit receipt are (1) it is a fixed deposit receipt on a `foreign currency (non-resident) account` and (2) the words typed on the receipt above the words `Bank of India` which are `Under lien of Bank of India, Singapore Branch`.

The bank also is unable to throw any light as to how the deposit came to be made. If there were any written instructions, they have not been exhibited and if any such instructions were oral they have not been deposed to. The manager in the bank`s credit department, V Srinivasan in his affidavit filed on 10 February 1992 simply adopts the defence filed, para 4 of which reads as follows:

On 14 August 1986, the plaintiffs opened a fixed deposit account with the defendants` (the bank`s) Richmond Town Branch in Bangalore, India (`the defendants` Indian branch`) whereby the sum of US$533,963.58 was deposited with the defendants` Indian branch for a period of 36 months at the interest rate of 10%pa (`the fixed deposit`). A receipt (No 27) dated 16 August 1986 with the endorsement `Under lien of Bank of India, Singapore Branch` was issued in favour of the plaintiffs.

It is common ground that when the fixed deposit of US$533,963.58 was made by the plaintiffs with the bank`s Richmond Town Branch, Bangalore on 14 August 1986, the first plaintiff was 19 years and 3 months old and the second plaintiff was 18 years and 1 month old.

The fixed deposit made on 14 August 1986 was due to mature on 14 August 1989. On 10 August 1989 the first plaintiff alone, requested the bank to extend the fixed deposit for a further period of 24 months and to continue thereafter unless interrupted. The first plaintiff`s letter of instructions to the bank dated 10 August 1989 reads as follows:

10 August 1989

The Manager

Bank of India

Bangalore Branch

Extension of fixed deposit

Ref: FCNR/11/7 dated 16 August 1986

Please extend the abovementioned fixed deposit for further period of twenty-four (24) months and to continue thereafter unless interrupted (sic).

Thank you.

(signed)

Rai Bahadur Singh

The bank acted on these instructions and duly issued a fresh deposit receipt No F/FCNR/8409/FDR/15/15 dated 16 August 1989 for US$533,963.58 in terms identical to the deposit receipt dated 14 August 1986. However, V Srinivasan, the bank`s manager in the credit department in his affidavit filed on 25 April 1992 states as follows in para 3 thereof:

I wish to state that further or in the alternative when the plaintiffs renewed the fixed deposit in question by their letter of 10 August 1989, they offered to do so on terms similar to the letter of set-off and appropriation dated 29 March 1986 which the plaintiffs had executed.

I must say here that what the bank says is not directly borne out by the first plaintiffs` letter dated 10 August 1989. It may well be that by the terms of the letter of set-off and appropriation dated 29 March 1986, a renewal of a deposit made pursuant thereto, impliedly, is renewed on terms similar. I think this is what V Srinivasan meant for he follows the paragraph I have set out above by setting out the terms of the letter of set-off and appropriation dated 29 March 1986 and then says in para 5:

The defendants (the bank) accepted the said renewal on the aforesaid terms by not setting off the said deposit with the indebtedness of the company then or upon its maturity as they were entitled to do so and/or further by continuing to grant banking facilities to the company.

It should also be noted, and there can be no dispute over this, that on 10 August 1989 both plaintiffs...