October 3, 2011
Case Law on Companies Act – Section 205(C) regarding Unclaimed Deposits – plaintiff wants refund – bank refuses to do so and suggests the amount to be claimed by the depositors – whether correct – held, noThe Peerless General Finance & Investment Co. Ltd. v. UCO Bank [Cal] Decided on: 15/06/2011 The plaintiff, a non-banking financial company obtains manager’s cheque (MC) from the defendant bank for issuing the same to the plaintiff’s depositors. On non-encashment of the deposited amount of Rs.8,41,500, the defendant wrote to the plaintiff asking it to furnish an indemnity bond of Rs.100 or to present the MC, failing which the amount would be transferred to its head office account. Consequently, though the plaintiff was willing to furnish the indemnity bond in manner suggested by the defendant, the defendant did not suggest any form for indemnity bond and subsequently, refused to honour its original commitment suggesting the plaintiff to return the manager’s cheques issued by the defendant also, for the bank to refund the amount. The plaintiff contended that such demand amounted to the bank attempting to appropriate the proceeds and that if the original instruments were returned to the bank, there would be no question of any indemnity bond being issued to cover any future claim in respect of the instruments to which the defendant contended saying that the suit is misconceived as the money does not belong to the plaintiff and so it would be open to the depositors to claim the amount. Decision: Application disposed off with direction. Reasons:
- The parties fight over the amount belongs to neither.
- The provisions of Section 205C of the Companies Act relates to deposits under Section 58A of that Act and section 58A does not cover deposits pertaining to non-banking financial companies.