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anking inslilulions soIicil doposils of nonoy fion lho pulIic. Having said lhal il is inpoilanl lo
iononloi lhal doposil accounls can onIy lo oponod foi lhoso poisons vho aio IogaIIy capalIo of onloiing
inlo a vaIid conliacl. An individuaI/ onlily dosiious of oponing an accounl nusl appIy lo lho lankoi in
lho nannoi ioquiiod ly lho lankoi (ho foIIovs lho piocoduio Iaid dovn ly lho lankoi and accopls lho
loins and condilions slipuIalod ly lho lankoi). Tho lankoi has lho iighl lo iojocl an appIicalion lo opon
an accounl if ho is nol salisfiod of lho idonlily of lho appIicanl/s oi doons lho appIicanl lo lo an
undosiialIo poison. Accounls aio nol noinaIIy oponod singIy foi ninois ( unIoss lho guaidian is aIso
onjoinod), Iunalics and diunkaids as lhoy nol conpolonl lo onloi inlo vaIid conliacls. Sono poisons vho
acl on lohaIf of olhois havo Iinilod povois lo conliacl (agonls, liusloos, oxoculois and lho Iiko).
Inslilulions Iiko schooIs, coIIogos, cIuls, sociolios, and coipoialo lodios aio inpoisonaI cuslonois of a
lankoi. Tho aulhoiily, povois and funclions of lho poisons nanaging lhoso inslilulions aio onlodiod in
lhoii iospoclivo conslilulions. Tho lankoi shouId, lhoiofoio lako spociaI caio and piocaulions lo onsuio
lhal lho accounls of lhoso inslilulions aio loing conduclod in accoidanco vilh lho piovisions of lhoii
iospoclivo chailois.

Whal is lho IogaI posilion of lho spociaI casos of a lanks cuslonois and lho piocaulions lhal a piudonl
lankoi shouId lako vhiIo doaIing vilh lhon`

MInnr

A poison vho has nol conpIolod 18 yoais of ago is a ninoi. If a ninoi has a couil appoinlod guaidian as
opposod lo a naluiaI guaidian (falhoi, nolhoi and lho Iikos) ho ionains a ninoi liII ho conpIolos his 21
sl

yoai. Accoiding lo lho Indian Conliacl Acl, 1872, a ninoi is nol capalIo of onloiing inlo a vaIid conliacl
and a conliacl onloiod inlo ly a ninoi is void. A conliacl foi lho suppIy of nocossilios of Iifo lo a ninoi is,
hovovoi, a vaIid conliacl. In caso of aII olhoi conliacls, a ninoi nay iopudialo his pioniso oi consonl. A
lankoi shouId lhoiofoio, lo voiy caiofuI in doaIing vilh a ninoi and lako lho foIIoving piocaulions:

1. Tho lankoi nay opon a saving lank accounl (and nol a cuiionl accounl):

(i) In lho nano of lho ninoi, lo lo opoialod upon ly lho naluiaI guaidian of lho ninoi oi lho
guaidian appoinlod ly lho Couil. Such accounl can aIso lo oponod in lho joinl nanos of lvo
oi noio ninois, lo lo opoialod upon ly lho guaidian.

(ii) In lho nano of lho ninoi, lo lo opoialod upon ly hinsoIf, if ho has allainod lho ago of 12
yoais. Tvo such ninois can joinlIy opon such an accounl, lo lo opoialod upon ly lhon
joinlIy.

2. Tho lank iocoids lho dalo of liilh of lho ninoi as givon ly lho ninoi oi his/hoi guaidian. On lho
allainnonl of najoiily, lho accounl of lho ninoi in lho nano of lho guaidian shouId lo cIosod and
lho laIanco paid lo lho ninoi (lhon najoi) oi lo liansfoiiod lo a nov accounl in his/hoi ovn nano.
In caso of a joinl accounl lho ninoi is aIso poinillod lo opoialo lho accounl and his signaluio is
lakon on lho accounl oponing foin.

3. If lho falhoi of a Hindu ninoi dios, his nolhoi loconos his naluiaI guaidian. Afloi lho doalh of lho
nolhoi, duiing lho ninoiily of lho loy lhoio is oilhoi lho loslanonlaiy guaidian (guaidian
appoinlod ly lho viII) oi lho guaidian appoinlod ly lho Couil. Tho lankoi nay lako insliuclions
iogaiding lho accounls of lho ninoi oi nonios loIonging lo lho ninoi fion such guaidian.

4. In caso lho ninoi dios, lho laIanco in lho accounl is poinillod lo lo vilhdiavn ly lho guaidian. In
lho caso of a joinl accounl lho laIanco viII lo hoId al lho alsoIulo disposaI of lho guaidian.
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5. No iisk is invoIvod if an accounl is oponod in lho nano of a ninoi so Iong as lho accounl is nol
ovoidiavn ly lho ninoi. ul if an ovoidiafl oi advanco is gianlod lo a ninoi, ovon ly nislako oi
uninlonlionaIIy, lho lankoi has no IogaI ionody lo iocovoi lho anounl fion lho ninoi. Tho assols
of a ninoi pIodgod vilh lho lankoi as socuiily foi lho advanco lakon ly lho ninoi aio nol IogaIIy
avaiIalIo lo lho lankoi locauso such pIodgo ilsoIf is invaIid. Tho lankoi shaII havo lo ioluin lhoso
socuiilios lo lho ninoi and ho cannol oxoiciso his iighl of saIo in caso of dofauIl ly lho ninoi.

6. If an advanco is gianlod lo a ninoi on lho guaianloo of a lhiid paily, such advanco cannol lo
iocovoiod fion lho guaianloi aIso locauso lho conliacl of guaianloo is invaIid on lho giound lhal
lho conliacl lolvoon lho ciodiloi and lho piincipaI dolloi (ninoi) ilsoIf is a void conliacl.
Accoiding lo Soclion 128 of lho Indian Conliacl Acl, 1872, lho IialiIily of lho suioly is co-oxlonsivo
vilh lhal of lho piincipaI dolloi, unIoss il is olhoiviso piovidod ly lho conliacl. Tho suioly,
lhoiofoio, cannol lo hoId IialIo on a guaianloo givon foi dofauIl ly a ninoi. Accoiding lo lho Iav a
ninoi cannol onloi inlo a vaIid conliacl and ho cannol undoilako a IialiIily upon hinsoIf. Thus ho
cannol dofauIl. Suiolys IialiIily is a socondaiy ono and doos nol aiiso, if lho IialiIily of lho piinaiy
dolloi doos nol aiiso. In Ldavan Nanliai vs. MooIakai Ranan (A.I.R.1957 Madias 164), lho
Madias High Couil aIso uphoId lho alovo viovpoinl. Tho IialiIily of suioly is anciIIaiy. Il
naloiiaIizos if lhoio is a vaIid olIigalion on lho pail of lho dolloi vhoso doll oi olIigalions is
guaianlood. Hovovoi, if lho conliacl of guaianloo spociaIIy piovidos conliaiy lo lho alovo, lho
guaianloi nay lo hoId IialIo foi lho dolls of a ninoi.

ul if a ninoi onlois inlo an agioononl ly iopiosonling hinsoIf as a najoi and Ialoi on cIains such
a conliacl as void on accounl of his ninoiily al lho lino of onloiing inlo conliacl, lho ninoi nusl
iosloio lho lonofil doiivod ly hin undoi lho agioononl. In M/S Thiiu Aiooian Sugais Lld. Vs
Slalo ank of India, lho High Couil aiiivod al ils concIusion on Soclion 65 of lho Indian Conliacl
Acl vhich slalos lhal uncn an agrccncn| is discctcrcd |c oc tcid cr uncn a ccn|rac| occcncs tcid, anq
pcrscn unc nas rcccitcd anq adtan|agc undcr sucn agrccncn| cr ccn|rac| is ocund |c rcs|crc i| cr |c na|c
ccnpcnsa|icn fcr i| |c |nc pcrscn frcn uncn nc rccctcrcd i|.

7. A ninoi nay diav, ondoiso oi nogolialo a choquo oi a liII lul ho cannol lo hoId IialIo on such a
choquo oi liII. Ho cannol lo suod in iospocl of a liII accoplod ly hin duiing his ninoiily. Such a
liII oi choquo novoilhoIoss, viII lo a vaIid insliunonl and aII olhoi pailios viII lo IialIo in lhoii
iospoclivo capacilios (Soclion 26 of lho NogolialIo Insliunonls Acl, 1881). Tho lankoi shouId,
lhoiofoio, lo voiy caulious in doaIing vilh a nogolialIo insliunonl, lo vhich a ninoi is a paily.

8. A ninoi can lo adnillod lo lho lonofil of pailnoiship vilh lho consonl of aII lho pailnois lul ho
viII nol lo IialIo foi lho Iossos oi dolls of lho fiin. Wilhin six nonlhs afloi ho allains najoiily ho
shouId iopudialo his IialiIily as pailnoi olhoiviso ho viII lo hoId IialIo as a pailnoi of lho fiin
fion lho dalo ho vas adnillod lo lho pailnoiship |Soclion 3O(7) (a) of lho Indian Iailnoiship Acl,
1932j.

9. A ninoi nay lo appoinlod as an agonl lo acl on lohaIf of his piincipaI. Accoiding lo Soclion 184 of
lho Indian Conliacl Acl, 1872. as oc|uccn |nc principa| and |nird pcrscn, anq pcrscn naq occcnc an
agcn|, ou| nc pcrscn unc is nc| cf |nc agc cf najcri|q and cf scund nind can oc appcin|cd as an agcn|, sc as
|c oc rcspcnsio|c |c nis principa|. Thus a ninoi agonl cannol lo hoId iosponsilIo lo his piincipaI. Tho
piincipaI nay lo hoId iosponsilIo lo lho lhiid pailios in iospocl of lho acls of his ninoi agonl.
Thoiofoio, aII of his doaIings vilh lho lankoi viII lo vaIid and linding on his piincipaI. Tho lankoi
shouId ollain viillon aulhoiily of lho piincipaI spocifying lho povoi and lho oxlonl of aulhoiily
onliuslod lo lho agonl in lhis iogaid and shouId soo lhal lho ninoi agonl doos nol doaI loyond such
doIogalod povois.

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0, PrnvIsInns r0,rdIn Gu,rdI,nshIp nf , MInnr

Tho guaidian of a ninoi nay lo oilhoi -

(i) a naluiaI guaidian, oi
(ii) a loslanonlaiy guaidian, oi
(iii) a guaidian appoinlod ly lho Couil.

Tho fiisl lvo lypos of guaidians aio govoinod ly lho piovisions of lho Hindu Minoiily and Cuaidianship
Acl, 1956, vhoioas a guaidian is appoinlod ly a Couil undoi lho Cuaidians and Waids Acl, 189O.

(i) NaluiaI guaidian Accoiding lo Soclion 6 of lho Hindu Minoiily and Cuaidianship Acl,
1956, in caso of a ninoi loy oi an unnaiiiod giiI, his/hoi falhoi and afloi hin lho nolhoi shaII lo lho
naluiaI guaidian. In caso of a naiiiod giiI (ninoi), hoi husland shaII lo lho naluiaI guaidian. Tho loins
falhoi oi nolhoi doos nol incIudo slop-falhoi oi slop-nolhoi. If lho falhoi loconos a sanyasi oi doos nol
ionain a Hindu, ho shaII nol lo onlilIod lo ionain as guaidian. If lho falhoi is aIivo and is nol ionovod
fion guaidianship, lho nolhoi doos nol locono lho naluiaI guaidian of hoi ninoi chiId.

(ii) Toslanonlaiy Cuaidian A Hindu falhoi, vho is onlilIod lo acl as lho naluiaI guaidian of
his ninoi Iogilinalo chiIdion nay, ly viII, appoinl a guaidian foi any of lhon in iospocl of lho ninois
poison oi piopoily. Such guaidian acls afloi lho doalh of lho falhoi oi lho nolhoi.

(iii) Cuaidian appoinlod ly Couil A guaidian nay lo appoinlod ly lho Couil undoi lho
Cuaidians and Waids Acl, 189O, lul lho Couil shaII nol lo aulhoiizod lo appoinl oi docIaio a guaidian of
lho poison of a ninoi, if his falhoi is aIivo and is nol, in lho opinion of lho Couil, unfil lo lo guaidian of
lho poison of a ninoi. This hoIds good loo in lho caso of a ninoi giiI, vhoso husland is nol, in lho
opinion of lho Couil, unfil lo lo guaidian of hoi poison. Thus lho falhoi (oi lho husland in caso of a
naiiiod giiI) is oxcIusivoIy onlilIod lo lo lho guaidian. Tho voIfaio of lho ninoi shaII lo a paianounl
considoialion of lho couil vhiIo appoinling a guaidian.

Mnth0r ,s N,tur, Gu,rdI,n

In a Iandnaik judgononl on lho guaidianship of a ninoi lho Supiono Couil has hoId lhal lho nolhoi can
aIso acl as naluiaI guaidian of a Hindu ninoi ovon duiing lho Iifolino of lho falhoi. In (Cila Haiihaian &
anolhoi vs. Rosoivo ank of India 1999 (i) SC 524) lho Supiono Couil hoId lhal in aII silualions vhoio lho
falhoi is nol in acluaI chaigo of lho affaiis of lho ninoi oilhoi locauso of his indiffoionco oi locauso of an
agioononl lolvoon hin and lho nolhoi of lho ninoi (oiaI oi viillon) and lho ninoi is in lho oxcIusivo
caio and cuslody of lho nolhoi oi, lho falhoi foi any olhoi ioason is unalIo lo lako caio of lho ninoi
locauso of his physicaI and/oi nonlaI incapacily, lho nolhoi can acl as naluiaI guaidian of lho ninoi.

Tho Couil fuilhoi hoId lhal lho dofinilion of 'guaidian and 'naluiaI guaidian do nol nako any
disciininalion againsl lho nolhoi and sho, loing ono of lho guaidians nonlionod in Soclion 6 of lho 1956
Acl, vouId undoullodIy lo a 'naluiaI guaidian, as dofinod in lhal Acl. Tho Supiono Couil fuilhoi
cIaiifiod lhal lho voids '|nc fa|ncr, and af|cr nin, |nc nc|ncr, nood nol nocossaiiIy noan 'af|cr |nc |ifc |inc cf
|nc fa|ncr. Ralhoi lho void 'af|cr noans in lho alsonco of and lho void alsonco iofois lo lho falhois
alsonco fion lho caio of lho ninois piopoily oi poison foi any ioason vhalovoi.

Tho Rosoivo ank has advisod lanks lo poinil lho oponing of a ninois accounls (fixod, saving and
iocuiiing doposil accounls) vilh lho nolhoi as guaidian.

M,rrI0d Wnm,n

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A naiiiod vonan is conpolonl lo onloi inlo a vaIid conliacl. Tho lankoi nay, lhoiofoio, opon an accounl
in lho nano of a naiiiod vonan. In caso of a doll lakon ly a naiiiod vonan, hoi husland shaII nol lo
IialIo oxcopl in lho foIIoving ciicunslancos :

1. If lho Ioan is lakon vilh his consonl oi aulhoiily, and
2. If lho doll is lakon foi lho suppIy of lho nocossaiios of Iifo lo lho vifo and lho husland dofauIls in
suppIying lhoso lo hoi.

Tho husland shaII nol lo IialIo foi lho dolls lakon ly his vifo in any olhoi ciicunslanco. Tho ciodiloi
nay in lhal caso iocovoi his doll oul of lho poisonaI assols of lho naiiiod vonan. WhiIo gianling a Ioan
lo a naiiiod vonan, lho lankoi shouId, lhoiofoio, oxanino hoi ovn assols and onsuio lhal lho sano aio
sufficionl lo covoi lho anounl of lho Ioan.

P,rd,n,shIn Wnm,n

A paidanashin vonan olsoivos conpIolo socIusion in accoidanco vilh lho cuslon of hoi ovn
connunily. Sho doos nol doaI vilh poopIo, olhoi lhan lho nonlois of hoi ovn faniIy. As sho ionains
conpIoloIy socIudod, a piosunplion in Iav oxisls lhal:

1. Any conliacl onloiod inlo ly hoi nighl havo loon suljocl lo unduo infIuonco, and
2. Tho conliacl nay nol havo loon nado vilh hoi fioo viII and vilh fuII undoislanding of vhal lho
conliacl acluaIIy noans.

Thus a conliacl onloiod inlo ly a paidanashin vonan is nol a conliacl fioo fion aII dofocls. Tho olhoi
paily lo lho conliacl shaII havo lo piovo lhal lho conliacl vilh hoi vas fioo fion lho alovo-nonlionod
dofocls in oidoi lo onfoico lho sano. Tho lankoi shouId, lhoiofoio lako duo piocaulion in oponing an
accounl in lho nano of a paidanashin vonan. As lho idonlify of such a vonan cannol lo ascoilainod, lho
lankoi gonoiaIIy iofusos lo opon an accounl in hoi nano.

It0r,t0 P0rsnns

IIIiloialo poisons cannol sign lhoii nanos and honco lankois lako lhoii lhunl inpiossions as a sulslilulo
foi signaluio and a copy of a ioconl phologiaph. Tho appIicalion foin and lho phologiaph shouId lo
alloslod ly an appiovod vilnoss. Ioi vilhdiaving nonoy, lho iIIiloialo poison nusl allond poisonaIIy
and affix his lhunl inpiossion in lho piosonco of an officiaI of lho lank, foi lho puiposo of idonlificalion.


un,tIcs

Undoi tho Indian Conliacl Acl, 1872 a poison of unsound nind is nol conpolonl lo onloi inlo a vaIid
conliacl. A poison is said lo lo of sound nind foi lho puiposo of naking a conliacl if ho is capalIo of
undoislanding il and of foining a ialionaI judgononl as lo ils offocl upon his inloiosls (Soclion 12). Il is
inpoilanl lhal ho shouId lo of sound nind al lho lino ho onlois inlo a conliacl. If a poison is usuaIIy of
sound nind lul occasionaIIy of unsound nind, ho cannol onloi inlo a vaIid conliacl vhon ho is of
unsound nind. A conliacl onloiod inlo ly a poison of unsound nind is a void conliacl (Indian Conliacl
Acl, 1872).

Tho lankoi shouId lhoiofoio nol opon an accounl in lho nano of a poison vho is of unsound nind. ul if
a lankoi has discounlod a liII duIy viillon, accoplod oi ondoisod ly a Iunalic ho can ioaIiso lho nonoy
duo on lho sano fion such poison oxcopl in lho ciicunslancos vhoio il is piovod lhal lho lankoi vas
avaio of lho Iunacy of lho poison concoinod al lho lino ho discounlod lho liII. Tho lankoi shouId
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suspond aII opoialions on lho accounl of a cuslonoi as soon as ho iocoivos lho novs of his Iunacy liII ho
gols lho pioof of his sanily oi is soivod vilh an oidoi of lho Couil.

Trust00s

Accoiding lo lho Indian Tiusls Acl, 1882, a '|rus| is an olIigalion annoxod lo lho ovnoiship of piopoily,
and aiising oul of a confidonco ioposod in and accoplod ly lho ovnoi, oi docIaiod and accoplod ly hin,
foi lho lonofil of anolhoi, oi of anolhoi and lho ovnoi (Soclion 3). Tho poison vho ioposos lho confidonco
is caIIod lho Au|ncr of lho liusl. Trus|cc is lho poison in vhon lho confidonco is ioposod. Tho poison
foi vhoso lonofil lho liusl is foinod is caIIod lho ocncficiarq. A liusl is usuaIIy foinod ly noans of a
docunonl caIIod lho Trus| Dccd. WhiIo oponing an accounl in lho nanos of poisons in lhoii capacily as
liusloos lho lankoi shouId lako lho foIIoving piocaulions :

1. Tho lankoi shouId lhoioughIy oxanino lho Tiusl Dood appoinling lho appIicanls as lho Tiusloos.
Tho Tiusl Dood conlains lho nanos of lho liusloos, povoi voslod in lhon foi adninisloiing lho
Tiusl piopoily and olhoi loins and condilions. Tho liusloos aio aulhoiizod lo acl joinlIy. Thoy
aio nol conpolonl lo doIogalo lhoii povois unIoss lho Tiusl Dood aulhoiizos lhon lo do so. Tho
lankoi shouId lhoioughIy oxanino lho Tiusl Dood lo ascoilain lho povois and funclions of lho
Tiusloos.

2. In caso of lvo oi noio liusloos, lho lankoi shouId ask foi cIoai insliuclion iogaiding lho poison
oi poisons vho shaII opoialo lho accounl. In lho alsonco of such insliuclion, aII lho liusloos nusl
sign lho choquos, olc., locauso lho oslalo is pIacod undoi lhoii joinl chaigo.

3. If ono oi noio of lho liusloos dios oi ioliios, lho aulhoiily voslod in lho ionaining liusloos
doponds upon lho piovisions of lho Tiusl dood. Whon aII lho liusloos aio doad, nov liusloos nay
lo appoinlod ly lho Couil.

4. Tho insoIvoncy of a liusloo doos nol affocl lho Tiusl piopoily and lho ciodiloi of lho liusloo
cannol iocovoi lhoii cIains fion such piopoily.

5. Tho lankoi shouId lako aII possilIo piocaulions lo safoguaid lho inloiosl of lho lonoficiaiios of a
Tiusl, faIIing vhich ho shaII lo IialIo lo conponsalo lho Ialloi foi any fiaud on lho pail of lho
liusloo. Ioi oxanpIo, if lho lankoi poinils lho liansfoi of Tiusl nonoy lo lho poisonaI accounl of
lho liusloo, aIioady ovoidiavn, vilh cIoai knovIodgo and undoislanding, lho lankoi shaII lo
IialIo lo iofund lho nonoy lo lho Tiusl accounl. Tho lankoi is lhus pIacod in lho sano posilion in
vhich lho liusloo is, so fai as lho uso of Tiusl nonoy is concoinod. Ho shaII lo hoId IialIo foi lho
nisuso of lho Tiusl nonoy if il is vilhin his knovIodgo.

6. Tho liusloos nay loiiov nonoy fion lho lankoi and pIodgo oi noilgago lho Tiusl piopoily
onIy if lho Tiusl Dood spocificaIIy confois such povoi on lhon. Tho lankoi shouId, lhoiofoio,
gianl Ioans lo lho liusloo afloi lhoiough oxaninalion of lho loiioving povois as givon in lho
Tiusl Dood. To lo on lho safoi sido, lho lankoi shouId gianl an advanco foi a Tiusl onIy vhon
lho liusloos aio iospoclalIo poisons and givo lhoii poisonaI guaianloos and cioalo a chaigo on lho
assols of lho Tiusl.

Ex0cutnrs ,nd AdmInIstr,tnrs

Lxoculois and adninislialois aio poisons vho aio appoinlod lo conducl lho affaiis of a poison afloi his
doalh. Whon a poison knovn as a loslaloi appoinls anolhoi poison foi lhis puiposo lhiough a viII, ho is
knovn as an oxoculoi. If lho viII of lho loslaloi doos nol nonlion lho nano of lho oxoculoi, oi if lho
poison appoinlod as oxoculoi dios oi iofusos lo acl, lho Couil appoinls a poison foi lho puiposo vho is
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knovn as adninislialoi. olh lho oxoculoi and lho adninislialoi poifoin lho sano dulios, i.o., lo ioaIiso
lho assols of lho docoasod and lo pay off his dolls. Tho oxoculoi is appoinlod ly lho viII. His povois and
aulhoiily aio voslod lhoioin. Ho has lo acl accoiding lo lho diioclions givon in lho viII lul ho is ioquiiod
lo ollain a piolalo (officiaI confiinalion of lho viII) fion lho Couil. Tho adninislialoi is appoinlod ly
lho Couil lhiough a Iolloi of adninislialion and is diioclod, in lho alsonco of a viII, lo sollIo lho affaiis
accoiding lo lho piovision of lho Iav. Tho lankoi shouId lako lho foIIoving piocaulions vhiIo doaIing
vilh oxoculois and adninislialois :

1. On lho doalh of a cuslonoi, lho lankoi nusl slop paynonls fion his accounl. Tho oxoculoi
shouId lo poinillod lo opoialo lho accounl of lho docoasod afloi ho has ollainod piolalo fion
lho Couil. Tho adninislialoi is aulhoiizod lo opoialo lho accounl afloi socuiing lho Iolloi of
adninislialion. Tho lankoi shouId oxanino lhoso docunonls lofoio lho appoinlod poison is
poinillod lo opoialo lho accounl.

An accounl in lho nano of an oxoculoi/adninislialoi is oponod in lho foIIoving slyIo and lho
laIanco in lho accounl of lho docoasod is liansfoiiod lo such accounl :

A8C cxccu|crs (cr adninis|ra|crs) |c |nc |s|a|c cf XYZ dcccascd.

2. In caso lvo oi noio poisons aio appoinlod as oxoculois oi adninislialoi, lhoy shaII havo joinl
inloiosl in lho oslalo of lho docoasod. This inloiosl is nol capalIo of division. Ono oi noio
oxoculois nay diav choquos on lho accounl lul a Iolloi of aulhoiily signod ly aII of lhon, slaling
lho nano/nanos of lho poisons vho viII opoialo lho accounl, is lakon ly lho lankoi. If lhis
aulhoiily is iovokod, oilhoi aII of lhon shouId opoialo lho accounl joinlIy oi a fiosh Iolloi of
aulhoiily is givon lo lho lankoi. Any of lho oxoculois/adninislialois is conpolonl lo
counloinand lho paynonl of lho choquo issuod ly any olhoi oxoculois/adninislialois.

3. Tho lankoi shouId lo voiy caulious in conducling lho accounl of oxoculois/adninislialois so as
lo piovonl lhon fion nisappiopiialing lho funds of lho docoasod. Tho lankoi shouId nol poinil
liansfoi of funds fion lho oslalo accounl lo lho poisonaI accounl of lho oxoculoi lo iopay an
ovoidiafl lakon ly lho oxoculoi. SiniIaiIy, lho lankoi shouId nol havo iocouiso lo lho socuiilios
loIonging lo lho docoasod foi gianling poisonaI Ioan lo lho oxoculois.

4. In caso of doalh of ono of lho oxoculois oi adninislialois, a choquo issuod on such accounl
shouId nol lo dishonoiod ovon if ho is ono of lho lvo oi noio joinl signaloiios, locauso on lho
doalh of ono of lho oxoculois (unIoss olhoiviso piovidod in lho viII) of an adninislialoi, his
povois aio voslod in lho suiviving oxoculois/adninislialois. In such casos a nov Lolloi of
Adninislialion is lo lo socuiod fion lho Couil.

5. Tho lankoi cannol oxoiciso his iighl of sol-off againsl lho ciodiloi laIanco in lho oxoculois
poisonaI accounl in iospocl of a dolil laIanco in lho accounl of lho docoasod.

6. If lho oxoculoi ioquiios an ovoidiafl oi a Ioan lofoio ho ollains lho piolalo in oidoi lo nako lho
nocossaiy paynonl, lho lankoi usuaIIy advancos such Ioans on lho poisonaI socuiily of lho
oxoculoi, so lhal ho can iocovoi lho sano in caso lho piolalo is nol gianlod. Tho oxoculois aio
nado joinlIy and individuaIIy IialIo foi such Ioans.

7. Afloi lho Couil gianls piolalo oi issuos a Lolloi of Adninislialion, lho oxoculoi oi lho
adninislialoi nay pIodgo spocific assols of lho loslaloi lo ollain an ovoidiafl fion lho lankoi.
ul if lho viII spocificaIIy foilids such povoi, lho oxoculoi cannol do so. Tho lankoi shouId,
lhoiofoio, voiy lhoioughIy oxanino lho viII lo ascoilain lho loiioving povoi of lho oxoculois. In
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caso a Ioan is gianlod, aII lho oxoculois nusl sign lho docunonls. Tho oxoculois nay aIso nako
lhonsoIvos IialIo foi such Ioans.

Custnm0r's Attnrn0

A cuslonoi nay appoinl an alloinoy lo doaI vilh his lank accounl. Tho povoi of alloinoy is a gonoiaI
nolico and an aulhoiily foi lhis puiposo. Il is diffoionl fion an oidinaiy nandalo aulhoiizing a poison lo
opoialo his lank accounl.

Tho povoi of alloinoy nay lo oilhoi spociaI oi gonoiaI. In lho foinoi caso lho poison so aulhoiizod gols
povois in iogaid lo coilain nallois onIy, o.g., saIo oi puichaso of piopoily, olc. In caso of lho gonoiaI
povoi of alloinoy, lho gianloi of such povoi aulhoiizos lho olhoi poison gonoiaIIy, lo acl on his lohaIf in
aII nallois concoining his lusinoss.

WhiIo oponing a accounl ly a povoi of alloinoy hoIdoi lho lankoi shouId lako lho foIIoving piocaulions
:

(1) Tho povoi of alloinoy shouId lo duIy slanpod and iogisloiod vilh lho Rogisliai of
Docunonls oi alloslod ly a Nolaiy IulIic. Tho lankoi nusl iolain vilh hin an alloslod copy foi his ovn
iocoid.
(2) Tho povoi of alloinoy nusl lo in foico al lho lino of oponing lho accounl. Tho povoi of
alloinoy nay lo gianlod foi a spocific poiiod oi foi a pailicuIai puiposo. Tho lankoi shouId onsuio lhal
such spocific poiiod has nol oxpiiod oi lho spocific puiposo nol fuIfiIIod al lho lino of oponing lho
accounl. Tho poiiod foi vhich aulhoiily has loon gianlod nusl lo nolod al lho lop of lho accounl so lhal
lho accounl doos nol conlinuo loyond such poiiod.
(3) Tho lankoi shouId nolo aII lho loins of lho Iovoi of Alloinoy vhich aio IikoIy lo lo of
concoin lo hin al any lino in fuluio.
(4) Tho lankoi shouId find oul vhal spocific povois havo loon onliuslod ly lho piincipaI lo
lho alloinoy, i.o., lo opon accounls, lo diav and ondoiso choquos and lo ovoidiav lho accounl, if lho
povoi lo ovoidiav is nol onliuslod, lho facl shouId lo spocificaIIy iocoidod.
(5) Tho poison piosonling lho povoi of alloinoy foi oponing lho accounl nusl lo piopoiIy
idonlifiod and his addioss nolod.
(6) Tho accounl oponing foin shouId lo signod as fai as possilIo ly lho piincipaI. Ho shouId
allosl lho signaluio of lho alloinoy. If lho povoi of alloinoy aulhoiizos lho alloinoy lo opon a lank
accounl, lho lank nay opon an accounl al his ioquosl. Confiinalion fion lho piincipaI nusl lo ollainod
lofoio acluaI opoialion of lho accounl is aIIovod.
(7) Tho accounl shouId lo oponod in lho nano of lho piincipaI vilh lho foIIoving hoading :

XYZ (principa|) oq nis agcn| A8C.

IncIusion of lho voids ccns|i|u|cd a||crncq aio nol nocossaiy. If lho agonl signs Pcr Prc XYS il
indicalos lhal lho agonl has Iinilod aulhoiily (onIy lo sign such choquos). Tho lankoi shouId
onsuio lhal lho acl of lho agonl is nol loyond lho povois confoiiod upon hin.

(8) Tho lankoi shouId aIso soo lhal lho Iovoi of Alloinoy doos nol conlain any condilion oi
ovonl on lho occuiionco of vhich il viII lo unonfoicoalIo. A condilion Iiko During nq aoscncc frcn |ndia
inpIios lhal lho povoi of alloinoy is aulonalicaIIy cancoIIod as soon as lho piincipaI ioluins lo India. Tho
lankoi shouId nol accopl such a condilion (as ho viII nol knov vhon lho piincipaI viII ioluin).
(9) Accoiding lo Soclion 2O1 of lho Indian Conliacl Acl, an agoncy is loininalod in lho
foIIoving casos :
(i) If lho piincipaI iovokos his aulhoiily,
(ii) If lho agonl ionouncos lho lusinoss of agoncy,
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(iii) If lho lusinoss of agoncy is conpIolod, and

(iv) If lho piincipaI oi lho agonl dios, loconos insoIvonl oi of unsound nind.

Il is lo lo nolod lhal lho doalh, insoIvoncy oi insanily of lho piincipaI iovokos lho aulhoiily voslod in lho
agonl and lho Ialoi coasos lo acl as agonl of lho piincipaI.

nInt Accnunt

Whon lvo oi noio poisons opon an accounl joinlIy, il is caIIod a joinl accounl. Such an accounl nay lo
oponod ly any lvo poisons foi lho sako of convonionco of opoialion of accounl and aIso foi vilhdiavaI
of nonoy afloi lho doalh of any ono of lhon. Tho lankoi shouId lako lho foIIoving piocaulions in
oponing and doaIing vilh a joinl accounl:

1.Tho appIicalion foi oponing a joinl accounl nusl lo signod ly aII lho poisons inlonding lo opon a
joinl accounl.

2.Tho lankoi shouId ollain cIoai insliuclion in viiling, signod ly aII lho joinl accounl-hoIdois,
iogaiding lho opoialion of lho accounl. Tho joinl accounl nay lo opoialod in any of lho foIIoving vays:

(i) y aII lho doposilois joinlIy
(ii) y oilhoi oi suivivoi
(iii) y foinoi oi suivivoi

Tho nandalo nusl incIudo lho nano oi nanos of lho poisons vho aio aulhoiizod lo opoialo lho joinl
accounl and nusl spocify lho oxlonl lo vhich lhoy aio aulhoiizod lo lako advanco oi lo pIodgo lho
socuiilios, olc. In lho alsonco of such insliuclions, lho lankoi shouId honoui onIy lhoso choquos vhich
loai lho signaluio of aII lho poisons in vhoso nanos lho accounl slands.

3. Tho joinl accounl-hoIdoi, vho is aulhoiizod lo opoialo lho joinl accounl, hinsoIf aIono
cannol appoinl an agonl oi alloinoy lo opoialo lho accounl on his lohaIf. Such alloinoy oi agonl nay lo
appoinlod vilh lho consonl of aII lho joinl accounl-hoIdois.

LxanpIo : A, 8 and C opon a joinl accounl vilh Kolak Mahindia ank and aulhoiizo C lo opoialo
lho accounl. Afloi sono lino C vanls lo go alioad and vanls lo appoinl D as his agonl lo opoialo lho
joinl accounl. C on his ovn cannol do so. Ho shaII havo lo sook lho viillon consonl of lolh A and 8 foi
lhis puiposo.

4. Any joinl accounl-hoIdoi (incIuding lho ono vho is nol aulhoiizod lo opoialo lho
accounl) can slop paynonl of a choquo issuod on a joinl accounl. ankoi nusl honoui such oidoi ovon if
an agonl oi alloinoy has loon appoinlod lo opoialo lho accounl.

5. Tho fuII nano of lho accounl nusl lo givon in aII lho docunonls fuinishod lo lho lankoi,
ovon if lho accounl is lo lo opoialod upon ly ono oi a fov of lho joinl accounl-hoIdois.

6. Tho lankoi shouId aIso lako a nandalo lo ascoilain vholhoi lho poisons opoialing lho
joinl accounl aio aIso aulhoiizod lo ovoidiav lho accounl. If so, il is dosiialIo lo oslalIish sopaialo
individuaI IialiIily of aII lho joinl accounl-hoIdois in addilion lo lhoii joinl IialiIily. This is socuiod ly
asking lho cuslonois lo sign a joinl and sovoiaI pionissoiy nolo and aIso lo docIaiing such sopaialo and
joinl IialiIily in aII lho docunonls oxoculod ly lhon. In caso lho sovoiaI IialiIily is aIso oslalIishod, lho
lankoi can iocovoi lho anounl fion aII lho joinl accounl-hoIdois individuaIIy oi fion ono oi noio of
lhon. Ho can fiIo suils againsl aII of lhon individuaIIy. Iuilhoi, lho lankoi can oxoiciso his iighl of sol-off
againsl lho ciodil laIancos in lho accounls of lho joinl accounl-hoIdois, if lhoy havo oslalIishod lhoii
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sovoiaI IialiIily aIso. ul in caso of joinl IialiIily onIy, a suil nay lo fiIod againsl aII of lhon joinlIy and if
any of lhon dios, his IogaI hoii viII nol lo IialIo foi lho sano.

7. Tho aulhoiily lo opoialo lho accounl can lo iovokod ly any of lho poisons giving such
aulhoiily. Il is aulonalicaIIy iovokod if any of lho joinl accounl-hoIdois dios, loconos lankiupl oi of
unsound nind. Tho lankoi nusl slop paynonl in such casos.

8. Tho lankoi shouId lo givon cIoai insliuclions iogaiding lho vilhdiavaI of socuiilios in
lho joinl accounl and lho povoi confoiiod upon lho poison opoialing lho accounl lo pIodgo lho socuiilios.
In caso lho shaios aio in lho joinl nanos, aII such poisons nusl sign lho liansfoi-foin.

9. A joinl accounl nay lo opoialod ly oilhoi of lho joinl accounl hoIdois. ul if a choquo is
diavn and signod ly ono of lhon, any aIloialions lhoioin shouId aIso lo dono ly lho sano poison and
nol lho olhoi ono. Tho aIloialion shouId loai lho signaluio of lho diavoi.

1O. Tho poisons oponing a joinl accounl aio aIso ioquiiod lo givo a nandalo, in lho
appIicalion foin ilsoIf, spocifying lho poison lo vhon lho laIanco in lho accounl shaII lo payalIo. Tho
laIanco in a joinl accounl nay lo payalIo lo -

(i) lolh oi aII of lhon oi lho suivivoi oi suivivois of lhon, oi
(ii) oilhoi oi any ono oi noio of lhon oi lho suivivoi oi suivivois of lhon.

Tho laIanco in lho joinl accounl shaII lo payalIo lo aII lho joinl accounl-hoIdois logolhoi, if lho insliuclion
is givon in foin (i) alovo, and lo any ono of lhon if il is in foin (ii) In lolh casos, if ono of lho joinl
accounl hoIdois dios, lho laIanco is payalIo lo suivivoi oi suivivois.

Tho alovo insliuclion is givon ly aII lho joinl accounl-hoIdois. Honco any ono of lhon is conpolonl lo
iovoko il in viiling. Thoioafloi lho lankoi viII lioal lho accounl as ono vilhoul such insliuclion and lho
anounl fion lho accounl viII lo payalIo on lho dischaigo of aII lho joinl accounl-hoIdois.

0,th nf , nInt Accnunt-Hnd0r

In caso of a joinl accounl, lho lank happons lo lo a dolloi lo lvo oi noio ciodilois joinlIy and pionisos
lo iopay lho sano lo lhon. Tho Indian Conliacl Acl, 1872, piovidos foi lho dovoIulion of joinl iighls in
such casos as foIIovs :

ncn a pcrscn nas nadc a prcnisc |c |uc cr ncrc pcrscns jcin||q, |ncn, un|css a ccn|rarq in|cn|icn appcars frcn
|nc ccn|rac|, |nc rign| |c c|ain pcrfcrnancc rcs|s, as oc|uccn nin and |ncn, ui|n |ncn during |ncir jcin| |itcs and
af|cr |nc dca|n cf anq cf |ncn, ui|n |nc rcprcscn|a|itc cf sucn dcccascd pcrscn jcin||q ui|n |nc surtitcr cr surtitcrs,
and af|cr |nc dca|n cf |nc |as| surtitcr, ui|n |nc rcprcscn|a|itcs cf a|| jcin||q (Soc. 45).

Tho alovo soclion inpIios lhal if lhoio is no agioononl lo lho conliaiy, on lho doalh of ono of lho joinl
accounl hoIdois, his iopiosonlalivo and lho suiviving accounl hoIdoi aio joinlIy onlilIod lo cIain nonoy
fion lho lank. If aII joinl accounl-hoIdois dio, lho IogaI iopiosonlalivos of aII of lhon can joinlIy cIain lho
anounl.

Whon a joinl accounl is oponod ly a lank vilh lho insliuclion ci|ncr cr surtitcr, lhoso voids inpIy an
agioononl conliaiy lo lho piovision of Soc.45. In such a silualion, lho lankoi is nol lound lo iopay lho
anounl lo lho iopiosonlalivos of lho docoasod and lho suivivoi/suivivois jcin||q, lul lho nandalo givon
in lho voids ci|ncr cr surtitcr poinils hin lo iopay lho nonoy lo lho surtitcr a|cnc.

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Thus in lho ovonl of doalh of any ono oi noio of lho joinl accounl-hoIdois, lho laIanco loconos payalIo
lo lho suivivoi vilhoul iofoionco lo lho iopiosonlalivos of lho docoasod poison oi poisons. ConoiaIIy lho
lankoi asks lho suiviving accounl-hoIdois lo vilhdiav lho laIanco in lho joinl accounl and doposil il in a
nov accounl oponod in lho nanos of lho suiviving joinl accounl-hoIdois Tho lankois shouId nol honoui
lho choquos diavn ly lho docoasod joinl accounl-hoIdoi lofoio his doalh vilhoul ollaining insliuclions
fion lho suiviving joinl accounl-hoIdois.

If lho joinl accounl shovs a dolil laIanco al lho lino of doalh of a joinl accounl-hoIdoi, lho lankoi nusl
cIoso lho accounl so as lo doloinino lho IialiIily of lho docoasod joinl accounl-hoIdoi. If il is nol dono, lho
iuIo in lho CIaylons caso loconos appIicalIo, i.o., lho sulsoquonl doposils viII lo adjuslod againsl lho
dolil laIanco in lho accounl and lhus lho oslalo of lho docoasod joinl accounl-hoIdoi viII nol lo hoId
IialIo foi lho doll.

Tho posilion of lho lankoi in caso of doalh of a joinl accounl-hoIdoi is quilo olvious. Ho gols good
dischaigo fion his olIigalion if ho pays lho anounl lo lho suivivoi oi suivivois, as poi lho nandalo of
lho joinl accounl-hoIdois. Ho nood nol invosligalo inlo lho facl vholhoi lho suivivoi is ioaIIy onlilIod lo
lho anounl in quoslion. Tho IogaI iopiosonlalivos of lho docoasod nay sook IogaI iodiossaI lo lhoii cIains
in lho couil of Iav.

Sonolinos, lanks do oncounloi difficuIlios in giving offocl lo lho loins of conliacl vilh lho cuslonoi
vhon lhoio aio confIicling cIains on laIanco hoId in joinl accounl. In agarajanna ts. S|a|c 8an| cf
Hqdcraoad (A|R 1962 A.P.260), lho lank issuod a fixod doposil iocoipl in lho joinl nanos of ono D and a
Iady vho cIainod lo lo his vifo. Afloi Ds doalh, anolhoi Iady, conlonding lo lo his ioaI vifo, cIainod
lho anounl fion lho lank. Tho ank, insload of paying lho anounl lo poi lho conliacl, fiIod an
inloipIoadoi suil lhough il couId havo gol good dischaigo ly paying lho nonoy lo . On lho lasis of lho
facls of lho caso lho Couil hoId lhal , lho suivivoi, vas nol onlilIod lo lho anounl and lho olhoi Iady,
loing his ioaI vifo, vas his hoii lo lho iocoivo lho anounl. Thus in caso of confIicling cIains, lanks nay
ask foi lho pioduclion of IogaI iopiosonlalion.

In Krusnandas agindas 8na|c ts. 8naguandas Rancnncddas and O|ncrs (A.I.R. 1976 on. 153), lho onlay
High Couil, uphoIding lho alovo, olsoivod lhal -

|n rcspcc| cf a jcin| acccun| cpcncd in |nc oan|, |nc |au sccns |c oc uc|| sc|||cd |na| cn |nc dca|n cf cnc, |ncrc is a
rcsu||ing |rus| in fatcur cf nis ncirs and |cga| rcprcscn|a|itcs, un|css |ncrc arc spccia| fac|s and circuns|anccs |c
sncu ccn|rac| in|cn|icn. Tho High Couil fuilhoi hoId lhal if frcn |nc fac|s and circuns|anccs cf |nc casc i|
ccu|d oc nc|d |na| |nc in|cn|icn uas |c na|c |nc surtitcr |nc cuncr cf |nc ancun| |qing in |nc acccun|, |ncn nc and
nc| |nc ncirs ucu|d oc cn|i||cd |c rccctcr |nc ancun|. |f |nc fac|s and circuns|anccs cf |nc casc dc nc| cs|ao|isn anq
sucn in|cn|icn, a||ncugn |nc nc|dcr cf |nc jcin| acccun| naq oc au|ncrizcd |c ui|ndrau |nc ancun|, nc ucu|d oc
ocund |c rcs|crc |na| ancun| |c |nc ncirs and |cga| rcprcscn|a|itcs cf |nc dcccascd jcin| nc|dcr. Tnc oan| naq oc
discnargcd oq paqncn| |c |nc surtitcr. 8u| |nc surtitcr naq in |nc aoscncc cf an in|cn|icn |c na|c nin |nc cuncr,
oc acccun|ao|c |c |nc ncirs cf |nc dcccascd jcin| nc|dcr. Tho High Couil aIso iojoclod lho iuIo of joinl accounl
of lho Slalo ank of India naking lho suivivoi lho alsoIulo ovnoi of lho anounl Iying in ciodil of lhal
accounl.

In Padnanaonan 8nauani c O|ncrs ts. Gctindan 8nargata c Anc|ncr (A.I.R.1975 KoiaIa 83). Tho High Couil
hoId lhal on lho doalh of lho doposiloi lho anounls doposilod in lho joinl nanos, payalIo lo oilhoi oi
suivivoi, couId nol lo lioalod as a gifl lo lho suivivoi locauso lho doposiloi conlinuos lo lo lho ovnoi of
lho anounls in quoslion liII his doalh. In such casos vilhoul any docIaialion of liusl, lhoio is a iosuIling
liusl in favoui of lho doposiloi in lho alsonco of any conliaiy inlonlion oi unIoss il can lo piovod lhal an
acluaI gifl of lho anounl vas inlondod. Tho luidon of pioving a conliaiy inlonlion of gifl is on lho poison
vho sooks lo iolul lho iosuIling liusl in favoui of lho poison vho nakos lho doposil.

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Aloul lho iuIo of lho lanks lhal on lho doalh of ono, lho accounl vouId lo convoilod inlo a singIo
accounl lo lo opoialod ly lho suivivoi, lho High Couil olsoivod lhal such piovisions voio dosignod onIy
lo ioguIalo oasy opoialion of accounls and paynonl of nonoy lo lho suivivoi. Tho piovisions did nol
louch lho iighls in|cr sc anong lho doposilois oi lho iighls of inhoiilanco.

,cIIt nf NnmIn,tInn . Tho anking Lavs (Anondnonl) Acl, 1983, has insoilod Soclion 45ZA, vhich
piovidos foi lho faciIily of noninalion ly doposilois. Such faciIily shaII aIso lo avaiIalIo in caso of joinl
accounl. In such casos, aII lho joinl-doposilois logolhoi nay noninalo, in lho piosciilod nannoi, ono
poison lo vhon in lho ovonl of doalh of aII lho doposilois, lho anounl of doposil nay lo ioluinod ly lho
lanking conpany. Such noninoo shaII locono onlilIod lo aII lho iighls of lho doposilois. Tho lanking
conpany shaII lo dischaigod of ils IialiIily in iospocl of lho doposil ly naking paynonl lo lho noninoo.

nsnv0nc : In caso of insoIvoncy of ono oi noio of lho joinl accounl-hoIdois, lho nandalo joinlIy givon
ly lhon lo lho lankoi coasos lo opoialo. Tho lankoi shouId, lhoiofoio, slop paynonl fion lho accounl lo
doloinino lho IialiIily of lho insoIvonl poison. Iaynonl fion lho joinl accounl nay lo nado on lho
insliuclions joinlIy signod ly lho soIvonl accounl-hoIdois as voII as lho OfficiaI Rocoivoi of lho insoIvonl
ono. IiofoialIy a nov accounl shouId lo oponod lo iocoid aII iocoipls and paynonls afloi lho docIaialion
of insoIvoncy.

nInt HIndu ,mI

A joinl Hindu faniIy possossos ancosliaI piopoilios and caiiios on ancosliaI lusinoss. Tho ovnoiship of
such piopoily passos on lo lho nonlois of lho faniIy accoiding lo lho Hindu Lav. In caso of joinl Hindu
faniIy govoinod ly lho Milakshaia SchooI of Hindu Lav, ovoiy naIo nonloi of a faniIy acquiios an
inloiosl in lho joinl piopoily ly liilh. Afloi lho onfoicononl of lho Hindu Succossion Acl, 1956, lho shaio
of a docoasod copaiconoi, vho vas nonloi of lho joinl Hindu faniIy, is aIso divisilIo anongsl his vifo,
daughlois and olhoi fonaIo ioIalivos as givon in lho Acl. WhiIo doaIing vilh lho accounl of a joinl Hindu
faniIy and gianling il a Ioan, lho lankoi is naluiaIIy facod vilh a difficuIl lask of ascoilaining lho iighl of
lho copaiconois in lho joinl faniIy. Tho foIIoving IogaI piocaulions shouId lo lakon ly lho lankoi in lhis
iogaid :

1.Tho faniIy lusinoss and ils assols aio nanagod ly lho oIdosl naIo nonloi as lho Kaila.
Accoiding lo lho Iav, lho Kaila has an inpIiod aulhoiily lo lako lho Ioan, oxoculo nocossaiy docunonls
and pIodgo lho socuiilios on lohaIf of lho faniIy foi lho puiposo of lho lusinoss of lho faniIy. Hovovoi,
lo lo on lho safo sido, lho Ioan docunonls shouId lo oxoculod ly aII lho aduIl naIo nonlois of lho faniIy
oi vilh lhoii consonl ly lho hoad of lho faniIy in his capacily as ils Kaila oi nanagoi.

2.Tho povoi of lho Kaila lo loiiov nonoy on lho socuiily of lho faniIy piopoily is suljocl lo ono
Iinilalion, i.o., lho Ioan is lakon foi lho puiposo nocossaiy foi oi lonoficiaI lo lho faniIy. Ho can lako a
Ioan and pIodgo lho piopoily of lho faniIy foi lho puiposo of nooling lho noods of lho usuaI lusinoss of
lho faniIy and nol foi any spocuIalivo lusinoss oi foi slailing a nov lusinoss. Olhoi copaiconois viII nol
lo IialIo foi a Ioan conliaclod foi a puiposo olhoi lhan lhal in lho inloiosl of lho faniIy lusinoss. Tho
piincipIos of Iav vhich govoin loiiovings ly lho Kaila of a joinl Hindu faniIy voio cIoaiIy onuncialod
ly lho Rajaslhan High Couil as foIIovs |in Ran Daqa| c O|ncrs ts. 8nanuar|a| c O|ncrs (A.I.R. 1973 Raj.
173)j.

(i) Tho nanagoi of a joinl Hindu faniIy has povoi lo aIionalo (i.o., liansfoi foi vaIuo)
joinl faniIy piopoily, so as lho lind lho inloiosls of lolh aduIl and ninoi
copaiconois in lho piopoily, piovidod lhal lho aIionalion is nado foi IogaI nocossily
foi lho lonofil of lho oslalo. Tho paynonls of dolls incuiiod foi faniIy lusinoss oi
olhoi nocossaiy puiposo conslilulo a IogaI nocossily.

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(ii) Tho luidon of pioving IogaI nocossily lo suppoil aIionalion is upon lho aIionoo
(liansfoioo).

(iii) Tho aIionoo can succood in (ii) alovo, nol onIy on pioof of IogaI nocossily lul aIso on
lho pioof lhal lho aIionoo nado ioasonalIo onquiiios and vas salisfiod as lo lho
oxislonco of IogaI nocossily. In caso of a dispulo on lhis poinl, lho luidon of pioof lhal
lho lank vas salisfiod, lofoio gianling a Ioan, lhal lho Ioan vas soughl foi lho lonofil
of lho faniIy lusinoss Iios on lho lankoi hinsoIf. Ho shouId, lhoiofoio, lo voiy
caiofuI in ascoilaining lho puiposo of lho Ioan sanclionod on lho socuiily of joinl
faniIy assols.

3. Tho copaiconois IialiIily in caso of Ioans gianlod lo a joinl Hindu faniIy is Iinilod lo lho oxlonl of
lhoii inloiosl in lho joinl piopoily. ul if lho aduIl copaiconois lhonsoIvos conliacl aIongvilh lho
Kaila oi ialify lho conliacl onloiod inlo ly lho Kaila lhoy locono poisonaIIy IialIo foi lho Ioan.

4. If lhoio is a ninoi copaiconoi in a joinl faniIy, his guaidian nusl sign lho docunonls on his lohaIf.
Whon lho ninoi copaiconoi allains najoiily, ho shouId aIso sign lho docunonls lo givo his assonl
lo lho undoilaking givon ly najoi copaiconois.

P,rtn0rshIp Irm

Tho Indian Iailnoiship Acl, 1932, dofinos pailnoiship as lho rc|a|icn oc|uccn pcrscns unc natc agrccd |c
snarc |nc prcfi|s cf |nc ousincss, carricd cn oq a|| cr anq cf |ncn ac|ing fcr a||. A pailnoiship fiin is lhus
oslalIishod ly an agioononl anongsl lho pailnois. This agioononl nay lo oiaI oi viillon. Tho oljocl of
consliluling a pailnoiship fiin nusl lo lo -

(i) Caiiy on a lusinoss vhich nay lo conduclod ly aII lho pailnois oi ly any of lhon on lohaIf
of lho iosl, and

(ii) To shaio lho piofil of such lusinoss anongsl lhonsoIvos. Tho pailnoiship dood conlains lho
dolaiIs of lho agioononl ioachod lolvoon lho pailnois. Tho Indian Iailnoiship Acl, 1932, Iays
dovn lho gonoiaI piovisions vhich govoin a pailnoiship lusinoss. A lankoi shouId lako lho
foIIoving piocaulions vhiIo oponing an accounl in lho nano of a pailnoiship fiin :

1.Numb0r nf p,rtn0rs. Tho lankoi shouId voiy caiofuIIy oxanino lho Iailnoiship Dood, vhich is
lho chailoi of lho fiin, lo acquainl hinsoIf vilh lho conslilulion and lusinoss of lho fiin. Tho lankoi
shouId soo lhal lho nunloi of pailnois doos nol oxcood lho slaluloiy Iinil. Accoiding lo Soclion 11 of lho
Conpanios Acl, 1956, a pailnoiship fiin consisling of noio lhan 1O poisons foi lho puiposo of caiiying
on lanking lusinoss and of noio lhan 2O poisons foi lho puiposo of caiiying on any olhoi lusinoss foi
lho acquisilion of gain oi piofil, shaII lo an iIIogaI associalion unIoss il is iogisloiod undoi lho Conpanios
Acl, 1956, oi is foinod in puisuanco of sono olhoi Indian Lav oi is a joinl Hindu faniIy caiiying on such
lusinoss. If lho nunloi of pailnois oxcoods lhoso Iinils, lho pailnoiship loconos an iIIogaI associalion of
poisons, vhich cannol onloi inlo any conliacl, and cannol suo oi lo suod. Tho lankoi nusl iofuso lo opon
an accounl in lho nano of fiin in such casos. Tho nininun nunloi of pailnois in a fiin nusl lo lvo,
oxcIuding a ninoi pailnoi, vho is nol conpolonl lo onloi inlo a conliacl. A ninoi nay lo adnillod inlo
lho pailnoiship vilh lho consonl of aII olhoi pailnois lul ho shaII nol lo IialIo foi lho Iossos oi dolls of
lho fiin. Tho lankoi shouId nolo lho dalo vhon lho ninoi pailnoi viII allain najoiily so lhal a fiosh
pailnoiship Iolloi signod ly hin and olhoi pailnois is ollainod ly lho lankoi.

2.TIt0 nf th0 fIrm's Accnunt . A fiins accounl shouId aIvays lo oponod in lho nano of lho fiin
and nol in lho nano oi nanos of lho individuaI pailnoi/pailnois.

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3.Op0nIn nf ,n ,ccnunt . An accounl in lho nano of lho fiin nay lo oponod ly a lankoi on
iocoipl of an appIicalion fion ono oi noio of lho pailnois. Tho papois shouId hovovoi lo signod ly aII
lho pailnois as aII pailnois aio oquaIIy IialIo foi lho dolls of lho pailnoiship. If any pailnoi has gono oul
of lho counliy, lho iosl of lho pailnois can opon a lank accounl in lho nano of lho fiin. Spocinon
signaluios of aII lho pailnois shouId aIso lo lakon foi lho puiposo of iocoid. Tho lankoi shouId, lhoiofoio,
confiin lho iighl of lho appIicanl/appIicanls lo opon and accounl in lho nano of lho fiin fion lho
pailnoiship dood oi fion any olhoi avaiIalIo ovidonco o.g., lho aulhoiily Iolloi signod ly aII olhoi
pailnois.

4.Th0 P,rtn0rshIp 0tt0r nf M,nd,t0 : Tho lankoi shouId lako a Iolloi signod ly aII lho pailnois
slaling :

(i) lho nanos and addiossos of lho pailnois,
(ii) lho naluio of lho lusinoss undoilakon ly lho fiin, and
(iii) lho nano/nanos of lho pailnoi/pailnois vho viII opoialo lho accounl on lohaIf of lho
fiin and viII havo lho aulhoiily lo diav and accopl liIIs olc. and lo soII and noilgago lho
piopoily of lho fiin.

Tho lankoi shouId honoui lho choquos signod ly aII lho pailnois oi ly lhoso pailnois vho aio
aulhoiizod lo opoialo lho accounl.

5.R0vnc,tInn nf ,uthnrIt tn np0r,t0 th0 ,ccnunt. Tho aulhoiily givon in favoui of a pailicuIai
pailnoi/pailnois lo opoialo lho fiins accounl nay lo vilhdiavn ly any of lhon ly giving a nolico lo
lho lankoi. In such a ciicunslanco, lho lankoi shouId slop paynonl of choquos signod ly such pailnoi
and pay lho choquos vhich aio signod ly aII lho pailnois. A pailnoi can aIso slop lho paynonl of a
choquo issuod ly any olhoi pailnoi on lho fiins accounl.

Tho povoi lo iovoko lho aulhoiily lo opoialo lho accounl is voslod in any pailnoi vho is a sIooping
pailnoi oi is nol aulhoiizod lo opoialo lho accounl.

A pailnoi aulhoiizod lo opoialo lho fiins accounl cannol doIogalo his aulhoiily lo anolhoi poison
vilhoul lho consonl in viiling of aII olhoi pailnois. If such consonl is givon ly aII of lhon, lho aulhoiizod
pailnoi nay oxoculo a Iovoi of Alloinoy in favoui of such olhoi poison.

If a choquo payalIo lo lho fiin is ondoisod ly a pailnoi in his ovn favoui and is doposilod ly hin lo lo
ciodilod lo his poisonaI accounl, lho lankoi shouId do so afloi naking an onquiiy aloul il fion olhoi
pailnois and afloi loing salisfiod aloul il. Olhoiviso, ho viII loai lho iisk of Iosing lho slaluloiy
pioloclion gianlod lo lho coIIocling lankoi undoi lho NogolialIo Insliunonls Acl, 1881. Tho lankoi
shouId lo pailicuIaiIy caiofuI in lhis iogaid if lho pailnoi sonds such a choquo in iosponso lo a ioquosl
fion lho lank lo iopay ovoidiafl lakon ly hin fion lho lank.

6. mpI0d ,uthnrIt nf , p,rtn0r : A pailnoi acls as an agonl of lho fiin foi lho puiposo of
lho lusinoss of lho fiin and linds lho fiin ly his acls and doods. Accoiding lo Soclion 19(1) of lho
Indian Iailnoiship Acl, 1932, |nc ac| cf a par|ncr unicn is dcnc |c carrq cn, in |nc usua| uaq, ousincss cf
|nc |ind carricd cn oq |nc firn oinds |nc firn. This aulhoiily of a pailnoi is caIIod lho inpIiod
aulhoiily. Lvoiy pailnoi is IialIo lolh individuaIIy and joinlIy vilh olhoi pailnoi iosponsilIo foi
aII lho acls of lho fiin oi lho insliunonls oxoculod piovidod lho sano aio dono -

(i) in lho nano of lho fiin, and
(ii) in connoclion vilh lho lusinoss caiiiod on ly lho fiin.

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In Surji| Singn and O|ncrs ts. Ran Ra|an Snarna (A.I.R. 1975 Cauhali 14), lho High Couil olsoivod
lhal fion lho voiy dofinilion of pailnoiship ilsoIf il foIIovs lhal lhoio is inpIiod nuluaI agoncy lo oach of
lho pailnois of a iogisloiod pailnoiship fiin. Whon an anounl vas loiiovod ly a pailnoi on lohaIf of
lho pailnoiship fiin, lhal acl of his vas linding on lho fiin as voII as on lho nonlois of lho fiin.
SiniIaiIy vhon a pionissoiy nolo is oxoculod on lohaIf of a fiin ly ils nanaging pailnoi, and lho nonoy
is uliIizod foi lho puiposo of lho fiin, ovoiy pailnoi is IialIo foi lho doll incuiiod |Gurran Suooaratudc c
c|ncrs ts. Mc|c Pc|nu|a arsinnan c O|ncrs (A.I.R. 1975 A.I.3O7)j.

Il is lo lo nolod lhal vhiIo ono of lho pailnois can lind lho fiin foi lho dolls incuiiod ly hin on
lohaIf of lho fiin. Il is nol nocossaiy lhal docunonls foi lho doll aio signod ly aII lho pailnois. Signaluio
of onIy ono pailnoi viII lo sufficionl. Hovovoi, as a piocaulionaiy noasuio, lanks lako lho signaluios of
aII lho pailnois on Ioan docunonls.

If a pailnoi signs an insliunonl on lohaIf of lho fiin, his inlonlion lo do so nusl lo appaionl fion
lho foin in vhich ho has signod.

Tho IialiIily of a pailnoiship fiin in iospocl of a pionissoiy nolo signod ly a pailnoi vas
considoiod ly lho Madias High Couil in M/s. M.M. Aooas 8rcs. and O|ncrs ts. Cnc|nandas |a|cn Cnand and
anc|ncr (A.I.R. 1979, Madias 272). In lhis caso a pailnoi of lho fiin signod a pionissoiy nolo in his nano
and lhoioafloi addod lho voids Par|ncr M.M. Aooas and 8rcs. Tho Couil hoId lhal lho voids Iailnoi
M.M. Allas and ios. iopiosonlod onIy a dosciiplion and did nol indicalo lhal ho had signod lho
insliunonl as a pailnoi. If lho said pailnoi had lho inlonlion of linding lho fiin, lhon ho vouId havo
signod 'fcr and cn ocna|f cf |nc firn. On anolhoi pionissoiy nolo lho pailnoi had signod 'fcr and cn ocna|f cf
|nc firn. Ioinling oul lho diffoionco lolvoon lho lvo, lho Couil hoId lhal i| is |ruc |na| diffcrcn| |cga|
rcsu||s fc||cu frcn |nc ncrc cnangc in |nc cc||cca|icn cf |nc ucrds. 8u| i| is incti|ao|c as diffcrcn| rcsu||s arc
prcduccd in |au oq |nc ncrc cnangc in |nc cc||cca|icn (pcsi|icn cr arrangcncn|) cf |nc ucrds. Tho pionolo in
quoslion vas lhus nol linding on lho fiin.

Tho gonoiaI piincipIo of Iav, lho High Couil hoId, is lhal ovoiy ono of lho pailnois in a noicanliIo
fiin is IialIo upon a liII diavn ly a pailnoi in lho iocognizod liading nano of lho fiin foi a liansaclion
incidonlaI lo lho lusinoss of lho fiin, aIlhough lho pailicuIai pailnois nano doos nol appoai on lho faco
of lho insliunonl and aIlhough ho is a sIooping and sociol pailnoi. Iailnois aio nuluaI agonls and can
lind lho fiin ly lhoii acls. Lvon in lho alsonco of an indicalion undoi lho signaluio lhal a poison vas
signing as a pailnoi, il nay lo possilIo lo infoi a IialiIily on lho fiin piovidod il is found on lho faco of
lho insliunonl lhal lho loiiovoi is lho fiin and nol lho individuaI pailnoi vho signod lho insliunonl. A
poison noioIy dosciiling hinsoIf as a pailnoi cannol lind lho fiin. Thoio nusl lo sono indicalivo on lho
insliunonl lo shov lhal ho vas signing on lohaIf of lho fiin.

If a pailnoi doos sonolhing vhich is nol ioIalod lo lho kind of lusinoss caiiiod on ly lho fiin, olhoi
pailnois and lho fiin viII nol lo IialIo foi lho sano. Ioi oxanpIo, if a pailnoi of a fiin doaIing in collon
loxliIos onlois inlo a conliacl foi lho puichaso of foodgiains, lho Ialloi viII nol lo linding on lho fiin
unIoss olhoi pailnois havo aulhoiizod lho said pailnoi lo undoilako such lusinoss on lohaIf of lho fiin.
Tho pailnoi undoilaking such unaulhoiizod lusinoss viII hinsoIf ionain IialIo foi such liansaclion.
SiniIaiIy, if a Iolloi of guaianloo oi an indonnily lond is lo lo oxoculod ly a fiin, il nusl lo signod ly aII
lho pailnois unIoss lho noinaI lusinoss of lho fiin is lo givo guaianloos. Ono of lho pailnois, in lho
noinaI couiso, cannol givo guaianloo on lohaIf of lho fiin, locauso such an acl is nol vilhin lho inpIiod
aulhoiily of a pailnoi.

In Pcroandcr Ccnncrcia| Cc-cpcra|itc 8an| ||d. ts. M/s. 8nanji|atji c O|ncrs (A.I.R. 1985 Cujaial 1O6),
a Ioan fion lho lank vas guaianlood ly lvo fiins and lho lond vas signod ly ono pailnoi of oach fiin.
Tho Couil hoId lhal noioIy ly signing as suiolios on lohaIf of lhoii iospoclivo fiins, lho concoinod lvo
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pailnois couId nol lind any olhoi pailnoi of lho fiin oi lho fiins lhonsoIvos foi lho puiposo of
iopaynonl of duos of lho lank. Tho signaloiios lo lho suioly londs voio hoId poisonaIIy IialIo lo iopay.

BnrrnwIn pnw0r nf , p,rtn0r : Il is ovidonl fion Soclion 19(1) of lho Indian Iailnoiship Acl, 1932, lhal a
pailnoi nay juslifialIy do aII lhal ho is oxpoclod lo do foi caiiying on lho lusinoss of lho fiin in lho usuaI
vay. This inpIios lhal a pailnoi, vho is nol piohililod fion nanaging lho affaiis of lho fiin, possossos
lho povoi lo loiiov nonoy on lohaIf of lho fiin foi lho puiposo of caiiying on lho fiins lusinoss. Such
a doll shaII lo linding on lho fiin and aII lho pailnois shaII lo IialIo lo pay lho sano. ul if lho povois of
a pailnoi aio Iinilod ly lho pailnoiship dood oi if ho is nol poinillod lo nanago lho affaiis of lho fiin, ho
doos nol possoss lho povoi lo loiiov nonoy on lohaIf of lho fiin.

Accoiding lo Soclion 19(2), a pailnoi doos nol possoss, in lho alsonco of any usago oi cuslon of
liado lo lho conliaiy, inpIiod povoi lo do lho foIIoving :

(i) lo sulnil a dispulo ioIaling lo lho lusinoss of lho fiin lo aililialion :
(ii) lo opon a lank accounl on lohaIf of lho fiin in his ovn nano,
(iii) lo conpioniso oi ioIinquish any cIain oi poilion of a cIain ly lho foin,
(iv) lo vilhdiav a suil fiIod on lohaIf of lho fiin,
(v) lo adnil any IialiIily in a suil againsl lho fiin,
(vi) lo acquiio innovalIo piopoily on lohaIf of lho fiin oi lo liansfoi lho sano, and
(vii) lo onloi inlo pailnoiship on lohaIf of lho fiin.

ul ho can do any of lho alovo nonlionod acls vilh lho oxpioss aulhoiily of olhoi pailnois oi if lho usago
oi cuslon of lho liado poinils hin lo do so. Ioi oxanpIo, lho innovalIo piopoily of lho fiin cannol lo
liansfoiiod unliI aII lho pailnois joinlIy liansfoi lhoii inloiosl. If ono of lho pailnois is onpovoiod ly
olhoi pailnois in lhis iogaid ho nay do so on lohaIf of lho fiin.

I,bIIt nf th0 p,rtn0rs In r0sp0ct nf fIrm's d0bts . Tho IialiIily of lho pailnoi of a fiin is unIinilod and
ovoiy pailnoi is IialIo lo pay lho olIigalions and dolls of lho fiin lo an unIinilod oxlonl. ul if dolls aio
duo fion lho fiin and aIso fion lho pailnois on lho dissoIulion of lho fiin, Soclion 49 of lho Indian
Iailnoiship Acl, 1932, Iays dovn lhal lho dolls of lho fiin shaII lo sollIod oul of lho piopoily of lho fiin
and lho suipIus, if any, shaII lo avaiIalIo foi paying lho piivalo dolls of lho pailnois. ul if lho pailnois
aio aIso poisonaIIy indollod, lho poisonaI assols of lho pailnois shaII lo appIiod fiisl lo nool lho cIains of
lhoii individuaI ciodilois. Oul of lho ionaindoi, if any, lho cIains of lho fiins ciodilois viII lo nol.

LxanpIo, A and aio pailnois in a fiin having assols anounl lo Rs.4O,OOO. Tho fiin ovos Rs.5O,OOO lo X
in iospocl of goods suppIiod. olh lho pailnois aio adjudicalod insoIvonl. Olhoi cIains againsl lho
pailnoiship anounlod lo Rs.3O,OOO. As assols aio voilh Rs.14,OOO lul ho ovos Rs.22,OOO. has assols
voilh Rs.24,OOO lul ovos Rs.14,OOO.

Accoiding lo Soclion 49 of lho Indian Iailnoiship Acl, 1932, lho poisonaI dolls of lho pailnois
vouId lo iopaid oul of lhoii poisonaI assols. As ciodilois viII ioaIiso Rs.14,OOO onIy fion his poisonaI
assols vhiIo s ciodilois viII ioaIiso lhoii fuII anounl of Rs.14,OOO. Tho suipIus of cash ioaIizod fion s
assols (Rs.24,OOO - Rs.14,OOO = 1O,OOO) vouId lo nado avaiIalIo foi appiopiialion anongsl lho fiins
ciodilois. Tho fiins ciodilois, anounl lo Rs.8O,OOO (Rs.5O,OOO + 3O,OOO) vouId lo alIo lo iocovoi
Rs.5O,OOO (Rs.4O,OOO + Rs.1O,OOO) onIy and lho iosl of lhoii cIain vouId locono iiiocovoialIo.

If lho pailnois sign lho Ioan docunonls in lolh of lhoii capacilios, i.o., individuaIIy as voII as joinlIy, lho
ciodilois of lho fiin can iocovoi lhoii doll sinuIlanoousIy fion lho assols of lho fiin and lho pailnois.
Tho lankoi shouId, lhoiofoio, insisl lhal lho pailnois of a fiin sign lho docunonls in lolh lho capacilios,
i.o., individuaIIy as voII as joinlIy. This viII onalIo lho lankoi lo iocovoi lho anounl fion individuaI
assols of lho pailnois and aIso lo oxoiciso his iighl of sol-off againsl lho ciodil laIanco in lhoii poisonaI
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accounls vilh hin. Il is usuaI piaclico of a lankoi lo sook a docIaialion lo lhis offocl fion aI lho pailnois
al lho lino of oponing an accounl. Tho joinl and sovoiaI IialiIily of lho pailnois conlinuos unliI :

(a) aII lho dolls of lho fiins aio dischaigod , oi
(l) lho conslilulion of lho fiin changos duo lo doalh, ioliiononl oi insoIvoncy of a pailnoi and
lho lankoi is infoinod lhoioaloul.

Tho poisonaI piopoily of a pailnoi nay lo allachod ovon lofoio judgononl is doIivoiod in a suil againsl
lho fiin and ils pailnois. In D.V. Kiishna Muilhy vs. I Visvanalhan (A.I.R. 1994 AI 43) lho Andhia
Iiadosh High Couil hoId lhal vhon oach pailnoi is IialIo, in lho ovonl of passing of a docioo and in lho
ovonl of lho appiohonsion lhal ono of lho pailnois is sciooning avay lho piopoily and is ionoving lho
sano oul of lho juiisdiclion of lho couil, lho couil is conpolonl lo pass an oidoi allaching his piopoily
undoi oidoi 38 RuIo 5 CIC.

0,th nf , p,rtn0r : If a pailnoi dios, lho fiin slands dissoIvod aulonalicaIIy, if an agioononl lo lho
conliaiy doos nol oxisl. Il noans lhal lho fiin is nol dissoIvod on lho doalh of a pailnoi if lho pailnoiship
dood spocificaIIy piovidos foi lhis. Tho docoasod pailnois hoiis cannol succood hin as pailnois. Thoy can
donand lho shaio of lho docoasod in lho fiin fion lho suiviving pailnois, oi lhoy nay lo adnillod as
nov pailnois ly lho oxisling pailnois.

If lho fiin slands dissoIvod on lho doalh of a pailnoi, lho lankoi nusl cIoso lho fiins accounl
innodialoIy on iocoipl of lho inlinalion aloul lho pailnois doalh. This is inpoilanl if lho fiins accounl
shovs a dolil laIanco al lho lino of a pailnois doalh locauso lho Iallois oslalo vouId lo IialIo lo pay lho
dolls incuiiod ly lho fiin lofoio his doalh. Honco lo doloinino lho IialiIily of lho docoasod pailnoi, lho
lankoi shouId cIoso lho accounl of lho fiin soon afloi lho doalh of a pailnoi. If ho dofauIls in doing so,
lho iuIo in CIaylons caso viII appIy.

If lho fiin doos nol sland dissoIvod, il is ioconslilulod ly lho suiviving pailnois vilh oi vilhoul lho
adnission of a nov pailnoi. Tho lankoi shouId opon a nov accounl in lho nano of lho ioconslilulod fiin
and ollain a fiosh nandalo and undoilaking fion lho pailnois. In any caso lho choquos diavn ly lho
docoasod pailnoi shouId nol lo honouiod ly lho lankoi vilhoul confiinalion fion lho suiviving
pailnois.

R0tIr0m0nt nf , p,rtn0r. Whon a pailnoi ioliios, his IialiIily lovaids lho lankoi oi any olhoi lhiid paily
coasos in iospocl of aII liansaclions undoilakon sulsoquonl lo lho dalo of his ioliiononl. ul if lho lankoi
is nol infoinod aloul his ioliiononl, lho ioliiing pailnoi conlinuos lo lo IialIo foi lho liansaclions of lho
fiin ovon afloi lho dalo of his ioliiononl. Tho ioliiing pailnoi shouId givo a pulIic nolico foi lhis puiposo
lo loininalo his IialiIily lo lho lhiid pailios.

If lho lank accounl of lho fiin al lho lino of ioliiononl of a pailnoi shovs a dolil laIanco, lho lankoi
nusl cIoso lho accounl of lho fiin, in oidoi lo iolain his iighl lo cIain nonoy fion lho ioliiing pailnois. If
lhis is nol dono, lho iuIo in CIaylons caso viII appIy. If an accounl shovs a ciodil laIanco, lho lankoi
nood nol cIoso il lul lho choquos diavn ly lho ioliiing pailnoi shouId lo honouiod afloi socuiing
confiinalion fion olhoi pailnois. On lho oponing of a nov accounl oi on lho conlinuanco of lho oxisling
accounl afloi lho ioliiononl of a pailnoi, a fiosh nandalo shouId lo lakon fion lho pailnois of lho nov
fiin.

I,bIIt nf p,rtn0rs nn R0cnnstructInn/IssnutInn nf th0 fIrm

On ioliiononl of pailnois oi on ioconslilulion oi dissoIulion of lho fiin, and on iocoipl of nolico lhoioof
ly lho lankoi lho IialiIily of lho pailnois shaII lo as foIIovs :

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(i) Tho IialiIily foi dolls aiising oul of financiaI faciIily vouId conlinuo in iospocl of ioliiod
pailnoi(s) liII lho dalo of nolico. Thoii IialiIily foi fuluio Ioan coasos innodialoIy on
soiving such nolico.

(ii) UnIoss lhoio is an agioononl lo lho conliaiy, lho fiins accounls shouId lo cIosod, locauso
lho idonlily of lho fiin as a consliluonl of lho ank is changod. If lho fiin is ioconslilulod,
fiosh accounls shouId lo oponod.

(iii) If, on lho ioconslilulion of lho fiin, lho accounl is nol cIosod, and lho conlinuing pailnoi/s
is/aio aIIovod lo opoialo lho accounl(s) of lho oislvhiIo fiin, lho conlinuing pailnoi/s viII
aIono lo IialIo foi lho financiaI faciIilios nado afloi nolico.

(iv) If lho conlinuing pailnoi/s is/aio lioalod as dolloi/s, lho ioliiod pailnoi(s) doos /do nol
gol dischaigo of lho IialiIily lo iopay lho doll(s) as on lho dalo of nolico, unIoss ioIoasod ly
lho ank oxpiossIy oi inpIiodIy.

(v) On iocoipl of nolico, lho piopoi couiso foi lho ank is lo fioozo aII lho accounls (if lhoio aio
noio lhan ono) noigo lhon vilh oach olhoi and lako lho consoIidalod laIanco iosuIling
fion lho noigoi of ciodils and dolils in aII lho accounls. Such conlinalion is conpuIsoiy.

(vi) IIodgod goods hoId as socuiily shouId lo ioaIizod ly giving nolico lo lho oislvhiIo
pailnois, locauso lhoy aio onlilIod lo lho lonofil of lho socuiily. Olhoiviso lank viII lo
hoId foi nogIigonco and lho oislvhiIo pailnois can cIain dischaigo lo lho oxlonl of lho vaIuo
of lho pIodgod goods.

nsnv0nc nf , p,rtn0r : In caso of insoIvoncy of a pailnoi, lho pailnoiship conos lo an ond, if an
agioononl lo lho conliaiy doos nol oxisl. Tho insoIvonl pailnoi coasos lo lo a pailnoi vilh offocl
fion lho dalo ho is docIaiod as insoIvonl and ho shaII nol lo IialIo lo lho fiin foi any of ils
liansaclions lhoioafloi. Tho insoIvonl pailnoi doos nol ionain conpolonl lo opoialo lho fiins
accounl. Tho soIvonl pailnoi can opoialo lho accounl foi vinding up lho affaiis of lho fiin. Tho
lankoi shouId honoui lho choquos diavn ly lho insoIvonl pailnoi lofoio his adjudicalion onIy
afloi golling confiinalion fion lho soIvonl pailnois. ankois usuaIIy cIoso lho accounl of lho fiin
and opon a nov accounl in lho nano of lho ioconslilulod fiin lo doloinino lho IialiIily of lho
insoIvonl pailnoi. Olhoiviso lho iuIo in CIaylons caso viII appIy.

nInt 5tnck Cnmp,nI0s

Modoin lusinossos aio gonoiaIIy oiganizod as joinl slock conpanios incoipoialod undoi lho
Conpanios acl, 1956. A joinl slock conpany is an ailificiaI poison vilh poipoluaI succossion lioughl inlo
oxislonco undoi lho piovisions of lho Conpanios Acl. LogaIIy, a conpany is considoiod as an onlily
sopaialo fion ils nonlois and honco il possossos aII povoi lo onloi inlo vaIid conliacl. Il can ovn
piopoily in ils ovn nano, caiiy on IavfuI lusinoss and incui IialiIilios in ils nano. WhiIo oponing an
accounl in lho nano of a conpany, lho lankoi nusl salisfy hinsoIf aloul lho foIIoving :

1. Ex,mIn,tInn nf dncum0nts : As a conpany is an ailificiaI poison, ils conslilulion, povois and
oljoclivos, iuIos and ioguIalions, olc., aio conlainod in lho foIIoving inpoilanl docunonls. Tho lankoi
shouId lhoioughIy and caiofuIIy oxanino lhoso docunonls :

(i) Ccr|ifica|c cf |nccrpcra|icn and Ccr|ifica|c cf Ccnncnccncn| cf 8usincss. Thoso coilificalos, issuod
ly lho Rogisliai of Conpanios, piovido concIusivo pioof lhal lho conpany is a duIy
incoipoialod lody and aII lho nocossaiy foinaIilios iogaiding ils foinalion havo loon
fuIfiIIod ly lho pionolois. A piivalo Iinilod conpany is nol ioquiiod lo ollain lho Coilificalo
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of Connoncononl of usinoss. On ils iogislialion undoi lho Conpanios Acl, a conpany is

givon iocognilion as an onlily sopaialo fion ils nonlois and acquiios aII povois lo onloi
inlo conliacls and lo connonco ils lusinoss. Tho lankoi shouId onsuio fion lhoso coilificalos
lhal lho conpany appIying foi oponing an accounl is a duIy iogisloiod and incoipoialod
lody.

(ii) Mcncrandun cf Assccia|icn . Tho Monoiandun of Associalion is lho nain docunonl of a
conpany, vhich onlodios ils conslilulion and is caIIod lho chailoi of lho conpany. Il
conlains lho nano of lho conpany, ils aulhoiizod capilaI, lho nano of lho Slalo in vhich lho
iogisloiod offico of lho conpany is lo lo silualod, lho oljocls of lho conpany and lho IialiIily
of ils nonlois, vhich is gonoiaIIy Iinilod lo lho oxlonl of lhoii shaiohoIdings. Tho lankoi
shouId oxanino lho Monoiandun spociaIIy lo nolo lho oljoclivo foi vhich lho conpany is
incoipoialod, locauso any conliacl onloiod inlo ly a conpany vhich soivos an oljocl olhoi
lhan lho oljocls nonlionod in lho Monoiandun is unonfoicoalIo al Iav and uIlia viios. Such
a conliacl cannol lo ialifiod ly lho nonlois of lho conpany al lhoii nooling ovon ly a
unaninous volo.

(iii) Ar|ic|cs cf Assccia|icn . Tho AilicIos of Associalion conlain lho iuIos and ioguIalions of a
conpany iogaiding ils inloinaI nanagononl. Il conlains in dolaiI aII nallois vhich aio
concoinod vilh lho conducl of day-lo-day lusinoss of lho conpany. Ioi oxanpIo, lho AilicIos
conlain lho iighls and povois of lho diioclois, iuIos iogaiding lho conducl of conpany
noolings, lho lusinoss lhal can lo liansaclod ly lho conpany and lho foin in vhich il is lo
lo dono. Lvoiy poison, incIuding a lankoi, vho is doaIing vilh a conpany oi inlonds lo doaI
vilh a conpany is piosunod lo havo lho knovIodgo of lho conlonls of lhoso lvo docunonls
and ho shouId lako caio lhal his doaIings vilh lho conpany aio nol inconsislonl vilh lho
piovisions of lhoso docunonls. This is knovn as consliuclivo nolico. Tho lankoi shouId,
lhoiofoio, sciulinizo lhoso docunonls voiy caiofuIIy in iogaid lo lho foIIoving :

(a) Tho povois of lho diioclois in conducling lho affaiis of lho conpany.
(l) Tho piocoduio foi loiioving and lho Iinil on loiiovings, if any.
(c) Tho povoi voslod in lho diioclois lo loiiov nonoy foi lho conpany and lo
noilgago lho conpanys assols.
(d) Tho piocoduio and aulhoiily lo diav and ondoiso choquos, liIIs, olc., on lohaIf of
lho conpany.

Tho lankoi shouId aIso ollain piinlod and coilifiod copios of lho Monoiandun and AilicIos of
Associalion foi lho puiposo of his ovn iocoid.

2.Cnp nf th0 Bn,rd's R0snutInn . AIong vilh lho appIicalion lo opon an accounl in lho
conpanys nano, lho lankoi shouId ollain a coilifiod copy of lho iosoIulion passod ly lho oaid of
Diioclois of lho conpany conlaining lho foIIoving in iogaid lo lho oponing of a lank accounl :

(a) appoinling lho lank concoinod as lho lankoi of lho conpany :
(l) naning lho poison oi poisons vho aio aulhoiizod lo opoialo lho lank accounl on lohaIf of
lho conpany,
(c) Slaling lho nanos of lho poisons vho aio aulhoiizod lo oxoculo lho docunonls on lohaIf of
lho conpany, oi in vhoso piosonco lho soaI of lho conpany viII lo affixod on lho docunonls
,
(d) Aulhoiizing lho advanco and slaling aII dolaiIs of such advanco, o.g., Iinil socuiily, ialo of
inloiosl, olc., and
(o) Slaling lho nanos of lho poisons vho aio aulhoiizod lo doposil lho lilIo doods in caso of
oquilalIo noilgago.
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3.Th0 BnrrnwIn Pnw0r nf th0 Cnmp,n. AII joinl slock conpanios ongagod in liado oi indusliy
havo lho inpIiod povoi lo loiiov nonoy foi lho puiposo of caiiying on lhoii lusinossos. Tho loiioving
povoi of lho conpany nay lo iosliiclod ly ils Monoiandun of Associalion. Soclion 293 (1)(d) of lho
Conpanios Acl, 1956 piovidos lhal lho oaid of Diioclois of a pulIic conpany oi of a piivalo conpany
vhich is a sulsidiaiy of a pulIic conpany shaII nol, oxcopl vilh lho consonl of such pulIic conpany oi
sulsidiaiy in gonoiaI nooling, loiiov nonoy in oxcoss of lho aggiogalo of lho paid-up capilaI of lho
conpany and ils fioo iosoivos, i.o., iosoivos nol sol apail foi any spocific puiposo. Tho lonpoiaiy Ioans
ollainod fion lho conpanys lankois in lho oidinaiy couiso of lusinoss aio oxcIudod in conpuling lolaI
loiioving of lho conpany foi lhis puiposo. Tho loin 'lonpoiaiy Ioan noans Ioan iopayalIo on donand
oi vilhin six nonlhs fion lho dalo of lho Ioan, such as, shoil-loin Ioans of soasonaI chaiacloi, lul doos
nol incIudo Ioans iaisod foi lho puiposo of financing oxpondiluio of capilaI naluio. Thus, lho Iinil
inposod ly Soclion 293 (1) (d) doos nol appIy lo lho shoil-loin and soasonaI Ioans. Ioi loiioving in
oxcoss of lhis Iinil, a iosoIulion shaII spocify lho lolaI anounl up lo vhich nonoy nay lo loiiovod ly
lho oaid of Diioclois.

ankoi shouId lo voiy caiofuI in onsuiing lhal lho lolaI loiiovings of lho conpany doos nol oxcood lho
alovo Iinil locauso undoi Soclion 293(5) of lho Conpanios Acl, No doll incuiiod ly lho conpany is
offocluaI, unIoss lho Conpanios Acl, No doll incuiiod ly lho conpany is offocluaI, unIoss lho Iondoi
piovos lhal ho advancod lho Ioan in good failh and vilhoul knovIodgo lhal lho Iinil inposod had loon
oxcoodod.

Accoiding lo Soclion 292, lho oaid of Diioclois of a conpany shaII oxoiciso lho povoi lo loiiov nonoy
olhoiviso lhan on dolonluios onIy lo noans of iosoIulions passod al lho nooling of lho oaid, Tho oaid
nay, ly a iosoIulion, doIogalo lho povoi lo loiiov lo any connilloo of diioclois, lho nanaging diiocloi,
sociolaiios and lioasuioi, olc., and shaII spocify lho lolaI anounl oulslanding al any ono lino up lo vhich
nonoy nay lo loiiovod ly lho doIogalo. Tho iosoIulion of lho oaid of Diioclois, oxoicising lho povoi
lo loiiov, shouId nonlion lho aiiangononls lo lo nado ly lho Conpany vilh ils lankois foi lho
loiioving of nonoy ly vay of ovoidiafl oi cash ciodil oi olhoiviso and nol lho acluaI day-lo-day
opoialion of lhoso accounls ly noans of vhich lho aiiangononl so nado is acluaIIy lo lo avaiIod of.

BnrrnwIn b Ir0ctnrs wIthnut AuthnrIs,tInn : Tho quoslion vholhoi lho anounl loiiovod ly lho
diioclois vilhoul aulhoiily and usod foi lho lonofil of lho conpany can lo iocovoiod fion lho conpany
oi nol, vas considoiod ly lho Ialna High Couil in Kunar Krisnan Rcna|gi c O|ncrs ts. S|a|c 8an| cf |ndia
and O|ncrs. (198O) 5O Conp. Casos 722 (Ialna). In lhis caso lho conpany conloslod lho suil fiIod ly lho
Slalo ank of India on lho giound lhal lho Managing Diiocloi of lho Conpany had no aulhoiily lo
oxoculo lho pionolo in lho alsonco of a iosoIulion duIy adoplod ly lho oaid of Diioclois and honco il
vas nol linding on lho Conpany.

Tho Division onch of lho High Couil concuiiod vilh lho pioposilion of Iav lhal vhon an agonl
loiiovs nonoy foi a piincipaI vilhoul lho aulhoiily of lho piincipaI and if lho piincipaI lakos lonofil of
lho nonoy so loiiovod oi vhon lho nonoy so loiiovod has gono inlo lho coffois of lho piincipaI, lho
Iav inpIios a pioniso lo iopay. This piincipIo appIios lo joinl slock conpanios as voII. Il vas, lhoiofoio,
hoId lhal lho conpany cannol iopudialo ils IialiIily lo iopay.

Il is lo lo nolod lhal any loiioving ly lho conpany nay lo uIlia viios lho diioclois lul nol uIlia viios
lho conpany. In such casos nonoy can lo iocovoiod fion lho conpany.

Pr0c,utInns tn b0 t,k0n b th0 b,nk0r

(i) Tho lankoi shouId ascoilain lhal lho conpany loiiovs onIy foi lho puiposo nonlionod in
ils Monoiandun of Associalion and vilhin lho Iinils, if any, spocifiod lhoioin.
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(ii) A coilifiod copy of lho iosoIulion of lho oaid of Diioclois passod undoi Soclion 292
shouId lo ollainod ly lho lankoi foi his ovn iocoid.

(iii) Tho oaid of Diioclois shouId aIso pass a iosoIulion coilifying lhal lho conpanys
loiiovings, incIuding lho pioposod loiioving, aio vilhin lho Iinil spocifiod ly lho
Conpanios Acl, oi lho Iinil sanclionod ly lho shaiohoIdois al lho gonoiaI nooling.

4.R0Istr,tInn nf ch,r0s und0r th0 Cnmp,nI0s Act. Soclion 125 of lho Conpanios Acl, 1956,
ioquiios lhal ovoiy chaigo cioalod ly a joinl slock conpany, faIIing vilhin lho foIIoving calogoiios, nusl
lo iogisloiod vilh lho Rogisliai of }oinl Slock Conpanios vilhin 3O days of ils cioalion, olhoiviso il shaII
lo void againsl lho Iiquidalion oi any ciodiloi of lho conpany :

(a) a chaigo foi lho puiposo of socuiing any issuo of dolonluios,
(l) a chaigo on uncaIIod shaio capilaI of lho conpany,
(c) a chaigo on any innovalIo piopoily oi any inloiosl lhoioin,
(d) a chaigo on any look dolls of lho conpany,
(o) a chaigo, nol loing a pIodgo, on any novalIo piopoily of lho conpany,
(f) a fIoaling chaigo on lho undoilaking oi any piopoily of lho conpany incIuding slock -in-
liado,
(g) a chaigo on caIIs nado lul nol paid,
(h) a chaigo on a ship oi any shaio in a ship, and
(i) a chaigo on goodviII, a palonl oi a Iiconco undoi a palonl, a liado naik, oi a copyiighl, oi a
Iiconco undoi a copyiighl.

Il is lo lo nolod lhal a chaigo on any look dolls of lho conpany is ioquiiod lo lo iogisloiod vhiIo il is nol
nocossaiy in caso of a chaigo cioalod ly lho pIodgo of any novalIo piopoily of lho conpany. Tho
quoslion vholhoi lho chaigo cioalod ovoi lho fixod doposils is ioquiiod lo lo iogisloiod undoi Soclion 125
vas considoiod in Snrcc Mccna|sn Mi||s ts. Rcgis|rar cf Ccnpanics (1965) |. Con. L.}.266. Tho Rogisliai of
Conpanios conlondod lhal lho anounl of Iixod Doposils vas a look doll of lho conpany and so a
chaigo cioalod lhoioon vas ioquiiod lo lo iogisloiod. On lho olhoi hand, lho conpany aiguod lhal lho
liansaclion vas a pIodgo of novalIo piopoily, nanoIy, lho fixod doposil iocoipl, and so lho chaigo vas
nol ioquiiod lo lo iogisloiod. Tho High Couil hoId lhal lho fixod doposils vouId aIso lo novalIo
piopoily. If lho conpany couId, lioaling lho liansaclion as a pIodgo, avoid iogislialion of lho chaigo, il
vas nol nocossaiy foi il lo iogisloi lho chaigo noioIy locauso il couId aIso lo iogisloiod as a chaigo on
look dolls.

Tho conpany nusl fiIo lho piosciilod pailicuIais of lho chaigo logolhoi vilh lho insliunonl, if any, ly
vhich lho chaigo is cioalod oi a voiifiod copy lhoioof vilhin lho piosciilod lino. IaiIuio lo gol lho chaigo
iogisloiod viII iondoi lho chaigo void againsl lho Iiquidaloi and any ciodiloi of lho conpany, so fai as
any socuiily on lho conpanys piopoily is confoiiod ly lho chaigo. This inpIios lhal if a chaigo vhich is
ioquiiod lo lo iogisloiod undoi Soclion 125 is nol iogisloiod il doos nol noan lhal lho liansaclion ilsoIf
loconos void oi lho doll is nol iocovoialIo. Tho non-iogislialion of lho chaigo shaII havo lho offocl lhal
lho socuiily cioalod ly il loconos void as againsl lho Iiquidaloi and/oi olhoi ciodilois. In olhoi voids,
such doll loconos an unsocuiod ono vhon a Iiquidaloi is appoinlod and such socuiily is nado avaiIalIo
lo nool lho cIains of aII unsocuiod ciodilois.

|n S|a|c 8an| cf |ndia ts. Visuanirqas j1987(2) KoiaIa Lav Tinos - 317j, lho KoiaIa High Couil hoId lhal
vanl of iogislialion undoi Soclion 125 of lho Conpanios Acl vouId affocl lho hoIdoi of an uniogisloiod
chaigo in caso of vinding up piocoodings and lhal loo againsl lho officiaI Iiquidaloi. Such a hoIdoi of an
uniogisloiod chaigo vouId nol lo onlilIod lo cIain a piofoionliaI iighl and vouId nol lo onlilIod lo sland
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oulsido lho vinding up piocoodings. Tho Couil fuilhoi hoId lhal so Iong as lho conpany vas a going
concoin, lho uniogisloiod chaigo vouId nol locono void againsl an unsocuiod ciodiloi of lho conpany.

Tho consoquonco of non-iogislialion of chaigo undoi Soclion 125 conlinuos ovon if lho noilgagoo has
ollainod a docioo piioi lo lho issuo of oidoi vinding up lho conpany. In lho caso of Officia| Rcccitcr cf
Kanani 8rc|ncrs (P) ||d. ts. Surqa|an| a|tar|a| Sura|| c O|ncrs, a docioo vas passod and lho noilgagod
piopoily vas lo lo soId ly pulIic auclion in lho ovonl of lho conpany connilling dofauIl in paynonl of
lho sun ly lho duo dalo. In lho noanvhiIo, lho conpany vas oidoiod lo lo vound up. In lho
ciicunslancos of lho caso, lho onlay High Couil hoId lhal lho uniogisloiod chaigo in favoui of lho
noilgagoo vas kopl aIivo and honco lho noilgagoo vas nol aIIovod lo soII lho piopoily. Tho chaigo of
noilgagoo vouId havo loon oxlinguishod if lho saIo had lakon pIaco lofoio lho vinding up oidoi vas
issuod.

Tho lankoi shouId onsuio lhal lho chaigo ovoi lho assols of lho conpany cioalod in his favoui is duIy
iogisloiod vilh lho Rogisliai of }oinl Slock Conpanios vilhin lho piosciilod poiiod. Though lho
conpany is nol undoi any IogaI olIigalion lo iogisloi such a chaigo, lho iogislialion of a chaigo
safoguaids lho inloiosl of lho ciodilois incIuding lho lankois. Accoiding lo Soclion 126, vhoio any chaigo
on any piopoily of a conpany has loon iogisloiod undoi Soclion 125, any poison acquiiing such piopoily
oi any pail lhoioof oi any shaio oi inloiosl lhoioin shaII lo doonod lo havo nolico of lho chaigo as fion
lho dalo of ils iogislialion and nol fion lho dalo of ils cioalion. Ioi oxanpIo, a conpany loiiovs fion X
on 1
sl
}anuaiy and fion Y on 15
lh
}anuaiy and noilgagos lho sano piopoily lo lolh. ul if lho chaigo in
favoui of Y is iogisloiod on 16
lh
}anuaiy vhiIo lhal in favoui of X is iogisloiod on 2O
lh
}anuaiy (i.o. vilhin
lho poinissilIo poiiod of 3O days afloi lho cioalion), lho chaigo in favoui of Y viII havo piocodonco ovoi
lho chaigo cioalod in favoui of X locauso lho foinoi vas iogisloiod oaiIioi lhan lho Ialloi.

Pr0c,utInns r0,rdIn prInr ch,r0 nv0r th0 ,ss0ts . ConoiaIIy lankois gianl socuiod Ioans on lho lasis
of a fixod chaigo on lho fixod assols of lho conpany and a fIoaling chaigo ovoi ils slock-in-liado, look
dolls and olhoi novalIo assols. Sonolinos, in addilion lo lho alovo, a poisonaI guaianloo is aIso socuiod
fion lho diioclois of lho conpany as a coIIaloiaI socuiily.

WhiIo gianling a Ioan on lho lasis of a fixod oi fIoaling chaigo ovoi lho assols of a conpany, lho lankoi
shouId lo caiofuI aloul any piioi chaigo - fixod oi fIoaling ovoi lho sano assols. In sono casos
dolonluios aio socuiod ly fIoaling chaigo ovoi lho assols of lho conpany vilh a slipuIalion lhal lho
conpany cannol cioalo any olhoi chaigo ovoi lho assols ianking alovo oi al pail vilh lho chaigo in
favoui of lho dolonluio-hoIdois. A chaigo ly lho conpany sulsoquonlIy viII, lhoiofoio, nol havo piioiily
ovoi lho oaiIioi chaigo. Tho lankoi shouId, lhoiofoio, lo voiy caiofuI in finding oul lho oxislonco of any
piioi chaigo ovoi lho assols of lho conpany ly inspocling lho Rogisloi of Chaigos, vhich ovoiy conpany
is ioquiiod lo nainlain al ils iogisloiod offico.

Tho lankoi shouId aIso inspocl lho Rogisloi of Moilgagos and Chaigos nainlainod al lho offico of lho
Rogisliai of }oinl Slock Conpanios, vhich conlains aII lho dolaiIs of lho chaigo iogisloiod undoi Soclion
125 of lho Conpanios Acl.

5.Ir0ctnrs' p0rsnn, ,ccnunt : Tho lankoi of a conpany having poisonaI accounls of lho diioclois
of lho conpany nusl handIo lho Ialloi vilh caio. If a diiocloi, vho is aulhoiizod lo opoialo lho conpanys
accounl and lo ondoiso choquos on ils lohaIf, doposils choquos diavn in favoui of lho conpany aio lo lo
ciodilod lo his poisonaI accounl and on loing salisfiod aloul lho gonuino ioason, ciodil lhon lo his
accounl. If lho lankoi doos nako an onquiiy in such a caso oi ciodils lho anounl in lho poisonaI accounl
of lho diiocloi dospilo unsalisfacloiy ioasons givon ly hin, ho shaII lo IialIo lo iofund lho nonoy
ciodilod lo lho diioclois accounl.

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6.AddItInn, pr0c,utInns In c,s0 nf PrIv,t0 ImIt0d Cnmp,nI0s . Tho lankoi shouId lo voiy
caiofuI in advancing Ioans lo a piivalo Iinilod conpany vhich has ioconlIy loon incoipoialod ly
convoision of lho lusinoss of a soIo-liadoi. In such casos lho ciodilois of lho soIo-liadoi cannol iocovoi
lhoii duos fion lho conpany vhich is doonod lo lo an onlily sopaialo fion ils shaiohoIdois. Sonolinos,
soIo-liadois convoil lhoii lusinoss inlo piivalo Iinilod conpanios piinaiiIy lo dofoal oi dofiaud lhoii
ciodilois lo vhon lhoy ovo Iaigo suns. Accoiding lo lho insoIvoncy Acl, such liansfoi of assols is
considoiod lo lo an acl of insoIvoncy and lho insoIvoncy piocoodings nay lo inslilulod againsl such
poison. Whon a liadoi is docIaiod insoIvonl, aII liansfois nado ly hin vilhin a poiiod of lvo yoais
locono void againsl lho OfficiaI Rocoivoi oi Assignoo oxcopl in lho foIIoving ciicunslancos :

(a) Tiansfoi nado lofoio and in considoialion oi naiiiago, oi
(l) Tiansfoi lo a puichasoi in good failh and foi vaIualIo considoialion.

Tho OfficiaI Rocoivoi gols lilIo lo lho piopoily of lho insoIvonl vilh offocl fion lho dalo on vhich an acl of
insoIvoncy lakos pIaco. This is caIIod lho Dcc|rinc cf Rc|a|icn 8ac|. Accoiding lo lho docliino lho doaIing
of lho insoIvonl fion lho dalo of lho acl of insoIvoncy viII nol lo vaIid and aII such piopoily soId oi
liansfoiiod shaII vosl in lho OfficiaI Rocoivoi. Tho lankoi shouId, lhoiofoio, nako onquiiios lo avoid a
silualion.

Cubs, 5ncI0tI0s ,nd Ch,rtIt,b0 nstItutInns.

CIuls, sociolios, chaiilalIo and ioIigious inslilulions, Iiliaiios, schooIs, coIIogos, olc., nol ongagod in
liading aclivilios, nainlain lhoii accounl vilh lho lanks. Tho lanks shouId olsoivo lho foIIoving
piocaulions in doaIing vilh lhon :

(i) Tho socioly nusl lo incoipoialod. Tho Sociolios Rogislialion Acl, 186O piovidos foi lho
iogislialion of sociolios foi lho pionolion of Iiloialuio, scionco, fino ails oi foi chaiilalIo
puiposos. Such inslilulions nay aIso lo incoipoialod undoi lho Conpanios Acl, 1956, oi lho
Co-opoialivo Sociolios Acls. A socioly gols lho IogaI iocognilion as an onlily sopaialo fion ils
nonlois onIy afloi ils incoipoialion undoi any of lhoso Acls. Thoioafloi, il is onpovoiod lo
onloi inlo vaIid conliacls and lo suo oi lo suod. Tho lankoi shouId lhoiofoio, onsuio lhal lho
appIicanl socioly is a piopoiIy incoipoialod lody. Tho uniogisloiod socioly cannol lo suod in
Iav.

(ii) RuIos and ly-Iavs of lho Socioly. A iogisloiod socioly is govoinod ly lho piovisions of lho
Acl undoi vhich il has loon iogisloiod. Il nay havo ils ovn Conslilulions. Chailoi oi
Monoiandun of Associalion and iuIos and ly-Iavs, olc., lo caiiy on ils aclivilios. A copy of
lho sano shouId lo fuinishod ly lho socioly lo lho lankoi lo acquainl lho Ialloi vilh lho
povois and funclions of lho poisons nanaging ils affaiis. Tho lankoi shouId onsuio lhal
lhoso iuIos aio olsoivod ly lho poisons iosponsilIo foi nanaging lho socioly.

(iii) RosoIulion of lho Managing Connilloo. Ioi oponing lank accounl, lho Managing Connilloo
of lho socioly nusl pass a iosoIulion -
(a) appoinling lho lank concoinod as a lankoi of lho socioly :
(l) nonlioning lho nano/nanos of lho poison oi poisons, vho aio aulhoiizod lo opoialo lho
accounl, and
(c) giving any olhoi diioclions foi lho opoialion of lho said accounl

A copy of lho iosoIulion nusl lo ollainod ly lho lank foi ils ovn iocoid.

(iv) oiioving Iovoi of lho Socioly. In caso a iogisloiod socioly inlonds lo loiiov, lho lankois
nusl ascoilain lho loiioving povoi of lho socioly fion ils Chailoi oi Monoiandun. Tho
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puiposo foi vhich such loiioving is poinissilIo nusl aIso lo nolod and lho povois of lho
nanaging connilloo oi ils offico-loaiois lo cioalo a chaigo ovoi lho assols of lho socioly foi
lho puiposo of loiioving shouId lo onquiiod inlo. A iosoIulion nusl lo passod ly lho
Managing Connilloo foi lhis puiposo and a copy lhoioof nusl lo sonl lo lho lankoi.

(v) Doalh oi Rosignalion : In caso lho poison aulhoiizod lo opoialo lho accounl on lohaIf of
socioly dios oi iosigns, lho lankoi shouId slop lho opoialion of lho sociolys accounl liII lho
socioly noninalos anolhoi poison lo opoialo ils accounl.

(vi) Caio lo lo oxoicisod in caso of IoisonaI Accounls. If lho poison aulhoiizod lo opoialo lho
sociolys accounl is aIso having his poisonaI accounl vilh lho sano lianch of lho lank, lho
lankoi is undoi an olIigalion lo onsuio lhal lho funds of lho socioly aio nol loing ciodilod
lo lho poisonaI accounl of lho said poison oi offico.-loaioi. Ioi oxanpIo, lho piincipaI of a
CoIIogo is aulhoiizod lo opoialo lho accounl of lho CoIIogo vilh lank X. Ho aIso has his
poisonaI accounl vilh lho sano lank. Ho sonds lo lho lank foi coIIoclion and ciodil lo his
poisonaI accounl a choquo diavn ly a donoi in favoui of lho CoIIogo. Tho lankoi is undoi
an olIigalion lo onsuio lhal ho iocoivos paynonl on lohaIf of lho liuo ovnoi of lho said
choquo, i.o., on lohaIf of lho coIIogo. If ho faiIs lo do so ho viII lo hoId guiIly of nogIigonco
and shaII nol lo alIo lo avaiI of lho slaluloiy pioloclion undoi Soclion 131 of lho
NogolialIo Insliunonls Acl. In lhoso ciicunslancos, lho lankoi shouId nol coIIocl such
choquo foi ciodiling lho sano lo lho accounl of lho piincipaI.


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