Termination of the Banker-Customer Relationship by Operation of Law

Open Access

Year : 2023 | Volume :3 | Issue : 1 | Page : 25-37
By

N. Krishna Kumar

  1. Associate Professor Government Law College Kerala India

Abstract

The determination of whether the banker-customer relationship is in existence at a particular point of time has important legal consequences for both parties to that contractual relationship. As duration is not of the essence of the relationship, even a single transaction can give rise to it. It is therefore important to determine the conditions under which the banker-customer relationship may be terminated. Termination of the banker-customer relationship by operation of law may occur in the following ways, viz, death of the customer, mental incapacity of customer, bankruptcy of the customer, winding up of a company customer, winding up of a bank and outbreak of war. Since a detail examination on this point is unnecessary as far as our topic is concerned, it is avoided from further discussion. for legal purposes, the receiving of deposits by a bank from the public is regarded as a borrowing by the bank. But as a debtor, the bank is not like other commercial debtors; he has certain privileges and is burdened with contractual, statutory and customary obligations. It is with reference to this peculiar legal relationship that the behaviour of the bank in any particular case is scrutinized and any deficiency in service is detected. In this Article, an attempt is made to concentrate on the major decisions relating to the legal remedies available to Banking customers and the endeavour of judiciary to conceptualise the relation between banker and customer.

Keywords: Agent, Alternative remedies, Bailee, Bailor, Banking customers, Banking ombudsman, Beneficiary, Compensation, Customer, Damages, Deficiency in service, Legal remedies, Principal, Trustee

[This article belongs to Journal of Banking and Insurance Law(jbil)]

How to cite this article: N. Krishna Kumar. Termination of the Banker-Customer Relationship by Operation of Law. Journal of Banking and Insurance Law. 2023; 3(1):25-37.
How to cite this URL: N. Krishna Kumar. Termination of the Banker-Customer Relationship by Operation of Law. Journal of Banking and Insurance Law. 2023; 3(1):25-37. Available from: https://journals.stmjournals.com/jbil/article=2023/view=98166

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References

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  84. The Privy Council, in ‘State Aided Bank of Travancore Ltd v. Dhrit Ram’, [(1942) 12 comp. CAs. 80: M.S. Parthasarathy, ‘Banking Law-Leading Indian cases’, 2nd edn. Bombay, N.M. Tripathi, 1985, p.2] established the principle in relation to deposit accounts. In this connection it is to be noted that the principles will have application only in the absence of any contract to the contrary. Basically, the law which governs a contract depends upon the intention of the parties, express or implied. The question of implication arises only in the absence of express terms.
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  88. (1873) 3 AC 325
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  90. AIR 1955 SC 590
  91. The India Limitation Act 1963. Art. 44.
  92. Ibid.
  93. For eg., a banker who wrongly judges the relationship to be at an end and fails to honour a customer’s cheques is exposed to the possibility of substantial damages and sometimes, even for defamation.
  94. Commissioner of Taxation v. English, m Scottish and Australian Bank Ltd.,(1920) AC 683. See further, Central Bank of Idia Ltd. Bombay v. Gopinathan Nair and others, AIR 1979 Kerala74.
Regular Issue Open Access Article
Volume 3
Issue 1
Received March 10, 2020
Accepted April 10, 2020
Published March 3, 2023
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