Banking Recovery -- Debit of Widow's Independent Fixed Deposit for Husband's Loan -- Bank cannot recover deceased borrower's dues from third party's account absent privity of contract
(i) Constitution of India, Art.226 -- Banking Recovery -- Debit of Independent Account Without Privity of Contract -- A bank cannot unilaterally liquidate and debit an individual's independent fixed deposit account to recover outstanding dues of another person, in the absence of privity of contract or any legal relationship between the bank and the account holder. Where a bank has a right to recover dues of a deceased borrower from a legal heir's share in the estate, it must do so through due process of law and not through arbitrary or unilateral appropriation of an unconnected independent account. (ii) Banking Recovery -- Standing Instruction of Deceased Borrower -- An irrevocable standing instruction executed by a borrower authorising adjustment of his own retiral or terminal dues does not extend to authorising debit of an independent account held by a third party, including his legal heir, with which the bank has no privity of contract, and cannot be relied upon to justify such a debit.
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