Writ Petition Against Bank Maintainable For Unpaid Fixed Deposit Interest Claim Decidable On Admitted Records: Kerala High Court
The High Court held that SBI could be directed in writ jurisdiction to pay interest due on a fixed deposit where the dispute turned on admitted records and did not require a civil trial.
Justice M.A. Abdul Hakhim, Kerala High Court
The Kerala High Court has observed that a writ petition is maintainable for an unpaid fixed deposit interest claim where the dispute can be resolved on admitted facts, and the bank’s own records, and the customer need not be driven to a civil suit merely because the claim arises from a banking transaction.
The Court was hearing a writ petition filed by a partner of Asiatic Export Enterprises seeking payment of interest allegedly due on a fixed deposit maintained with SBI. Though the claim originally covered a longer period, the dispute was narrowed after SBI admitted liability for part of the period and paid that amount pursuant to an interim order.
A Bench of Justice M.A. Abdul Hakhim, while relying on the Supreme Court’s decision in M/s. Hyderabad Commercials v. Indian Bank (1991), observed that “when Bank resile from its promise to rectify the mistake committed by re-crediting the amount to the customer's account, the High Court in exercise of its writ jurisdiction could direct it to re-credit the amount to the account of the customer and there is no necessity to file suit.”
Senior Advocate A.V. Thomas appeared for the petitioner, while Standing Counsel Jawahar Jose appeared for SBI.
Background
The firm had placed Rs. 7.22 crore in a fixed deposit with SBI for twelve months. Due to disputes among the partners, the firm’s accounts could not be operated for some time. Earlier proceedings before the High Court resulted in directions concerning the release of the fixed deposits, after which SBI paid the maturity amount, deducting TDS.
The petitioner disputed the maturity value and claimed interest from the date of maturity of the original fixed deposit up to the date of payment. SBI admitted liability for interest from a later date and paid Rs.41,99,765 in compliance with an interim order. The remaining issue before the Court was whether SBI was liable to pay interest on the admitted deposit amount for the earlier period.
The petitioner relied on SBI’s circular, which provided that, in the absence of specific instructions from a customer, a term deposit would automatically renew on maturity for the same period at the rate prevailing on the date of maturity. SBI, on the other hand, argued that after the original deposit matured, the amount was transferred to the current account and therefore could not earn interest. It also contended that the claim arose from a contractual banking relationship and should be pursued through a civil suit.
Court’s Observations
The Court first addressed SBI’s objection that the writ petition was not maintainable. It examined the Supreme Court authorities relied upon by both sides, including M/s. Hyderabad Commercials v. Indian Bank (1991), Kerala State Electricity Board v. Kurien E. Kalathil (2000), Life Insurance Corporation of India v. Asha Goel (2001), ABL International Ltd. v. Export Credit Guarantee Corporation of India Ltd. (2004) and Punjab National Bank v. Atmanand Singh (2020).
The Court clarified that while writ courts ordinarily avoid adjudicating purely contractual disputes requiring evidence, there is no absolute bar where the matter can be decided on admitted documents and no complicated factual inquiry is required.
The Court noted: “The case at hand does not involve any interpretation of a clause in any contract. In ABL International Ltd. (supra), the Hon'ble Supreme Court held that even in a Writ Petition involving disputed questions of fact, the Writ Court has the jurisdiction to entertain such a writ petition in an appropriate case, and there is no absolute bar for entertaining it.”
On the facts, the Court found that the dispute did not require evidence from a civil court. The deposit, the closure of the fixed deposit account, the bank’s payment for a later period, and the remaining period in dispute were all borne out from the admitted records.
Turning to the merits, the Court found that SBI’s own circular supported the petitioner’s case. The circular provided for automatic renewal of the term deposit on maturity in the absence of any contrary instruction from the customer. SBI did not produce any circular, taking a different position.
The Court also found it significant that SBI did not plead that the amount was transferred to the current account at the request of the petitioner, the firm, or any person interested in the fixed deposit. Had the bank raised such a factual plea, the Court indicated, the matter may have required evidence. But no such case was set up.
The Court observed: “Ext.P18 Circular of the Respondent No.1 itself provides that on maturity, the Term Deposit is to be automatically renewed for the same period at the rate of interest prevailing on the date of maturity. The Respondents could not produce any Circular providing otherwise.”
The Court further rejected SBI’s reliance on the later deposit under the Army Group Insurance Fund. It noted that SBI had no case that the firm or the petitioner had falsely claimed eligibility for that scheme, or that the deposit was made in that scheme at their instance.
The Court stated: “Even assuming that the Petitioner had requested for deposit in the Army Group Insurance Fund with retrospective effect, the Bank should not have made such a deposit with retrospective effect. The Respondents have no case that either the Petitioner or the Firm had falsely claimed eligibility to deposit in the Army Group Insurance Fund.”
The Court therefore held that the fault was attributable to SBI and the petitioner could not be blamed for the manner in which the deposit was handled.
The Court then rejected SBI’s argument that the petitioner should be asked to file a civil suit. Since the remaining dispute could be resolved on admitted facts and documents, the Court held that relegating the petitioner to another round of litigation was unnecessary.
The Court underscored: “Complicated adjudication is not required even on admitted facts. It is well settled by the aforesaid decisions cited by the Counsel on both sides that there is no absolute bar in entertaining Writ Petition.”
It added that the writ petition had been pending since 2018 and that part of the amount had already been paid pursuant to the Court’s interim order. In such circumstances, the remaining claim could be decided within writ jurisdiction.
The Court stated: “The dispute regarding the remaining amount can be easily adjudicated on the basis of the admitted facts with reference to the admitted documents produced by the parties. In such case, I am of the view that the Petitioner is entitled to succeed in this Writ Petition.”
Having found SBI liable, the Court referred to the bank’s circular showing that the relevant interest rate on deposits for more than one year was 8.5% during the relevant period. It therefore directed SBI to pay interest at that rate on Rs. 8,00,19,849 for the remaining disputed period.
Conclusion
The High Court allowed the writ petition and directed SBI to calculate interest at 8.5% on Rs. 8,00,19,849 for the period from 18.07.2012 to 12.05.2013. The amount was directed to be credited to the current account of the firm within two months.
Cause Title: Narayan Bharathan v. State Bank of India & Another (Neutral Citation: 2026:KER:48642)
Appearances
Petitioner: Senior Advocate A.V. Thomas with Advocates Lijo Joseph (Thoppil) and Nidhi Sam Johns
Respondents: Jawahar Jose, SC, SBI