Srinagar, Dec 3 The J&K and Ladakh High Court ruled on Wednesday that once a bank pays the balance of a joint account with ‘either or survivor’ mandate to the surviving account holder, the bank is fully discharged of its liability.
Justice Sanjay Dhar of the High Court said in his order, “A bank is fully discharged of liability when it pays the balance of a joint account with an ‘either or survivor’ mandate to the surviving account holder. Any subsequent dispute between the survivor and the deceased’s legal heirs is a matter for them to resolve civilly, and the bank cannot be held criminally liable for honouring the ‘either or survivor’ clause.”
The High Court further said that other court rulings, such as those from the Madras High Court, also support that the right to operate the account passes to the survivor upon the death of one account holder.
The order said that the bank’s duty is to release funds to the surviving account holder as per the “either or survivor” instruction.
“Paying the surviving holder is a complete and valid discharge of the bank’s obligation. Any dispute over the entitlement to the funds, after the survivor has received them, is a matter between the survivor and the legal heirs. This is a civil matter and not a basis for criminal proceedings against the bank. ‘Either or survivor’ mandate is a contract between the account holders and the bank. By signing for this clause, the account holders agree that the bank is entitled to pay the balance to whichever of the two is alive,” the order mentioned.
The principle that the right to operate the account passes to the survivor is supported by other High Court judgments in India. For instance, the Madras High Court ruled in a 2005 case that the survivor is the only person entitled to the balance in such an account.
Justice Sanjay Dhar made these observations while allowing two petitions filed by Shabeena Ibrahim and HSBC, both of whom had been arraigned as accused in a criminal complaint by one Mir Usman Disooki.
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