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sanjay (nil)     19 January 2010

Maturity of bank F.D.

I hold a F.D. with a Co operative bank in Joint names(A and B),operated on either or survivor basis.. On the due date, I requested the bank to remit the proceeds through a Pay Order, as I do not have a savings A/c with the bank. The request was to issue the Pay Order in the second persons (B`s) name. The bank refused to do so saying that the Pay Order can be issued only in the first holders(A`s) name. Can the Pay Order be issued in the second persons name? If so, how do I tackle the situation and make them do the needful? Please advice.


 6 Replies

V. VASUDEVAN (LEGAL COUNSEL)     19 January 2010

For any security and fixed deposit, the first holder/principal holder is the person recognized for issue of notices discharge etc. If your intention is to get the payment relaised in the name of the 2nd holder, you may deposit the cheque (obtained the 1st name) in a joint account where the 2nd holder is the principal holder and 1st holder is the joinholder (savings bank account)

1 Like

J. P. Shah (RTI & CONSUMER ACTIVIST)     25 January 2010

In your case, bank should issue pay order in the name of B. First name is important and relevant for tax matters only. Pl lodge complaint with RBI and refer my file relating to handling of bank problems

1 Like

Parthasarathi Loganathan (Advocate)     02 February 2010

In any Either or Survivor Joint account category, banks generally insist disposal of maturity proceeds to be disposed by means of account channels.  Since A does not have account he can very well open a  joint  SB account with B and get the deposit proceeds credited to this new account.  Bank can be insisted to issue pay order in join names to resolve the issue. Else, if the present account is having the title as B, then A can add his account under E or S category without even opening a fresh account.  These are the two valid options left.

TVD Rajkumar (Advocate)     10 February 2010

Mr. Sanjay,

If the instructions are E/S then bank has commited unpardonable blunder. You may issue them a legal notice, and haul them over coals in a consumer forum, for deficiency in service.

You may use this decision titled Anumati Vs PNB AIR 2005 SC 29; (2004) 8 SCC 498

12. A fixed deposit in the joint names of two persons is nothing but a joint account which, as the name itself suggests, is repayable on the expiration of the agreed period. The fixed deposit receipt is merely a written acknowledgement by the Bank that it holds a certain sum to the use of its customers. The Bank is thus a debtor to the account holders in respect of the amount deposited - a debt which is repayable by the bank to the account holders with interest on the expiry of an agreed period. An "either or survivor" clause in such an account means that the amount payable by the Bank on maturity of the fixed deposit may be paid to either of the account holders by the Bank in order to obtain a valid discharge. In other words under a tripartite agreement between the joint account holders inter se and the Bank, the Bank may, on maturity, make payment only to either of them. This tripartite agreement cannot be bilaterally modified by one of the joint account holders for example by pledging the account with any third party including the Bank itself in its capacity of creditor, so that the amount becomes payable to such third party, without the consent of the joint account holder. Thus in Tannan's Banking Law and Practice in India (20th Edn.) 2001 volume 1, Chapter VIII page 259) the legal position has been summarized thus: "On the view that the terms of operation of a joint account constitute a term of the contract of deposit, any variation or revocation of instructions in a joint account, whether the operation is by 'either or survivor' or 'former or survivor' can be effected only under the joint signatures of all persons entitled to operate the joint account. One of the joint account holders thus cannot unilaterally instruct the Bank not to honour cheques signed by the others, issue duplicate deposit receipt, premature repayment or loan against Fixed Deposit".


Suresh CSLLM (Service)     12 February 2010

Open a bank a/c in the name of 'B' with the said bank and make request to credit the matured amount, signd by B and A.




Parthasarathi Loganathan (Advocate)     12 February 2010

That would amount to conversion

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