SPECIAL TYPES OF BANKER’S CUSTOMERS

PROJECT FOR THE SUBJECT

BANKING AND INSURANCE LAW

SUBMITTED BY
Mr. Jay Thakkar (Roll No. 07BAL070)
Semester – VII (B.A.LL.B.)
UNDER THE GUIDANCE OF
Dr. ASHA MAM
Asst. Prof., ILNU

INSTITUTE OF LAW, NIRMA UNIVERSITY

AHMEDABAD
ACADEMIC YEAR (2010-11)
 DECLARATION
I jay p thakkar declare the work entitled “SPECIAL TYPES OF BANKER’S
CUSTOMERS” being submitted to Nirma University for the project in the subject
of “BANKING AND INSURANCE LAW” is original and where the text is taken
from the authenticated books, articles or web articles, appropriate reference is
given. It is true in my best of knowledge.

Date : Jay thakkar

Roll No 07 BAL 070

VII Semester, (2010-11)

Institute of Law

Nirma University
 CERTIFICATE
This is to certify that the thesis entitled “SPECIAL TYPES OF BANKER’S
CUSTOMERS” – submitted by Mr.jay p thakkar for the project work in
SPECIAL TYPES OF BANKER’S CUSTEMORS embodies independent and
original research work carried out by him under my supervision and
guidance.
To the best of my knowledge and belief, it is his original work submitted to fulfil
the project assignment for the Semester End Examination of seventh semester of
B.A.LL.B. Programme during the academic year 2010-11.

Date : ASHA

Asst. Professor in Law

Institute of Law,

Nirma University

Ahmedabad
 CONTENTS
Declaration

Certificate

Acknowledgement

List of cases referred (alphabetically)

Chapter – 1

Introduction and Research Methodology

1.1 Introduction to topic

1.2 hypothesis

1.2.1reseach methodology

1.2.2 objective

1.3scope and limitation

Chapter – 2

2.1 Necessity of creation of act

2.2 consept of the special customers

2.3 detailed salient features

Chapter - 3

Conclusion/ suggestion/ finding

 CHAPTER – 1
INTRODUCTION AND RESEARCH METHODOLOGY
1.1 Introduction :
The title of project is special types of banker’s customers. In this project it is
discuss that who are the special customers discus under various provision of
various banking laws. There are various explanation given under various laws
about such customers. The project will also discuss reason for with the reference of
the historical aspects.
1.3 Need for the Research :

To study the essence of the act in the present era

1.5 Objectives of the research :

The objectives of the research are as follows –

(1) To study, legal position of the special cases of banker’s customers
(2) To examine, the procedure of the act
(3) To find out, useful nature of the act
(4) to find out the precaution taken while dealing with such costomers
(5) The objectives of the research are as follows –
(6) To study the useful nature of act;
(7) To examine, how the act work
(8) To find out more easier way of applicability

1.6 Hypothesis :

1) The researcher assume that there is some special provision regarding the
special customer
2) The researcher assume that the
3) The reasercher assume that

1.7 Scope and limitations of present research :

The area of the researcher is restricted to the customers like minors,married women, .
The nature and scope of study is in relation to the topic of “special types of
banker’s customers. The researcher would be dealing with the topic along with
discussing the various concepts in details. The researcher will also quote the
statement of landmark judgments of Supreme Court in these regard.
1.8 Research Methodology applied :
The present research study is mainly a doctrinal and analytical. Keeping this in
view, the researcher utilized the conventional method of using libraries consisting
of primary sources like Judgment of the Supreme Court and High courts published
in various Law Journals.
As the study is in nature, historical and doctrinal methods are adopted because it is
not possible to study purely by experimental method.

The relevant material is collected from the secondary sources. Materials and
information are collected both legal and political sources. Material is also
collected from print and electronic media like Wikipedia etc. are also referred.

From the collected material and information, researcher proposes to critically

analyze the topic of the study and tries to reach the core aspects of the study.
All people can open account in bank to deposit money earned or collected from the
members of society. The above people can have there account in the bank:-

1) Those who are Legally entitle to enter in the valid contract

2) Those who Applies to the bankers in proper manner
3) Those who Accept the terms and condition stipulated by the laters

But right given to the bankers is to reject the application for opening the account if he is
not satisfied with the identification of the person people like the minor, are not competent
to enter in the valid agreement. In such a circumstance, some person, who can act on
behalf of them, but with limited powers.

Institutions like agents and trustees, schools colleges, clubs etc are impersonal customers
of the bank. The authority, power and there power are given as per the constitution and
convention. The bankers should take special care and precaution to ensure that the
accounts of these institutions are being conducted in accordance with the provision the
provision of the respective charters.
Minors

person who is below 18 year is in these category of minor. But if the guardian is
appointed by the court before completion of 18 yrs, he is minor for age up to 21 years. He
is not capable to do any contract under contract act. But in the contract of supply
necessaries of life it is valid contract.

A bank should take care about the above precaution while dealing with the matters of
minors:-

1) The bank account can be open but not the current account, on the name of minor in
above way:-
i) In the name of the minor, but operated upon by the natural guardian or
guardian appointed by the court. Such account can be opened by the joint
name of two or more minors, to operated upon by the guardian.
ii) In name of minor, to be operated upon by himself, if he attain the age of 12
years. Two minors can jointly open such account operated by them jointly.

The banker records the date of birth of minor given by the guardian of the minor. On the
attainment of majority the account of the minor in the name of guardian should be closed
and balance paid to minor or transfer in new account in his or her name. in the case of
joint account the minor is also permitted to operate the account and signature is taken on
the account opening form. If the father of the hindu minor dies, his mother become the
natural guardian. After the death of mother, during the minority of the boy there is either
the testamentary guardian or guardian appointed by the court. The bank may return the
money to the said guardian. If there is death of the minor then the balance of the account
is permitted to withdraw by the guardian and in case of joint account the balance will be
held at the absolute disposal of guardian.

If the advance is given to a minor on the guarantee of the third party, such advance
cannot be recover from the guarantor also because the contract of guarantee is invalid on
the ground that the contract between creditor and principle debtor i.e. minor is void
contract. The liability of surety is co-extensive with that of principle debtor, unless it is
otherwise provided by the contract. The surety cannot be held liable for the guarantee
given for default by minor1. A minor is disqualified to enter in the contract and he cannot
undertake a liability upon himself. Thus he cannot default. Surety’s liability is secondary
one and does not arise if the liability of the principle debtor does not arise.

1
Section 128 of the Indian contract act
In the case of edavan nambair v. Moolaki raman2 it was held by the madras high court
held that the liability of surety is ancillary. It materialized if there is valid obligation on
the part of the debtor whose debts or obligation is guaranteed. However, if the contract of
guarantee specially provides contrary to above, the guarantor may be held liable for the
debts of minor.

But if the minor enters into an agreement by representing himself as major and latter on
claim such a contract as void on account of his majority at the time of entering into
contract, the manor must restore the benefits derived by him under the agreement. In the
case of M/s Thiru Arooram sugars ltd. Vs. state bank of india 3 the high court observed
that as per section 65 of Indian contract act that if the contract is found void pr when a
contract become void, any person who has received any advantage under such an
agreement or contract is bound to restore it back to the person from whom he received it.

A minor may draw, endorse or negotiate a cheque or bill but he cannot be held liable on
such cheque or bill. He cannot be sued in respect of a bill accepted by him during his
minority. Such a bill will be valid instrument and all other parties will be liable in their
respective capacity u/s 26 of negotiable instrument act 1881. The bankers should be
punctual in dealing with negotiable instrument, to which the minor is party.

A minor can be agent on behalf of the principles. As per sec 184 of contract act 1872

Any person can be appointed as agent but no person who is not of the age of minority
and sound mind can be appointed as agent, so as to be responsible to the principal. So
minor cannot be held liable to the principal. The principal may be held responsible to the
the third party in respect to the act of minor agent act. Therefore all of the dealing with
the bankers will be valid and binding on principal. The bankers should obtain written
authority of the principal specifying the power and extend of authority entrusted to the
agent and should see that the minor agent does not deal beyond the delegated power.

There canbe three type of guardian

1) A natural guardian
2) A testamentary guardian
3) A guardian appointed by the court

2
Air 1957 madras 164
3
M/s Thiru Arooram sugars ltd. Vs. state bank of india
The first two are govern by the provision of hindu minority and guardianship act 1956,
where as a guardian is appointed by the court under guardian and wards act.

1) Natural guardian :- a minor boy or unmarried girl, his/her father and after him the
mother shall be the natural guardian4. In the case of married women the term her
husband will be natural guardian. The terms father or mother does not includes
step mother or father. If the father become sanyasi or does not remain hindu, he
shall not be entitle to remain as guardian. If father is alive and is not removed from
the guardianship, the mother cannot become the natural guardian.
2) Testamentary guardian:- a hindu father, who is entitle to act as natural guardian of
his minor legitimate children may, by will, appoint a guardian for any of them in
respect of minor person’s property.such guardian acts after the death of the father
or the mother
3) Guardian appointed by court:-

4
Sec 6 of the hindu minor and guardianship act 1956