Deposit - Definition - Law Dictionary Home Dictionary Definition deposit

Definition :

Deposit, money paid to a person as an earnest or security for the performance of some contract, especially a contract for the sale of real estate. Also a naked bailment of goods to be kept for the bailor without recompense, and to be returned when the bailor shall require it. The appellation and the definition are both derived from the civil law. Depositum est quod custodiendum alicui datum est. It is, in the civil law, divisible into two kinds: (1) necessary, made upon some sudden emergency, and from some pressing necessity; as, for instance, in case of a fire, a shipwreck, or other overwhelming calamity, when property is confided to any person whom the depositor may meet without proper opportunity for reflection or choice, and thence it is called miserabile depositum; (2) voluntary, which arises from the mere consent and agreement of the parties. the Common Law has made no such division. There is another class of deposits, called involuntary, which may be without the assent or even knowledge of the depositor; as lumber, etc., left upon another's land by the subsidence of a flood.

The civilians again divide deposits into simple deposits, made by one or more persons having a common interest, and sequestrations, made by one or more persons, each of whom has a different and adverse interest in controversy touching it; and these last are of two sorts, conventional, or such as are made by the mere agreement of the parties, without any judicial act; and judicial, or such as are made by order of a Court in the course of some proceeding.

There is another class of deposits called irregular, as when a person, having a sum of money which he does not think safe in his own hands, confides it to another, who is to return to him, not the same money, but a like sum when he shall demand it. There is also a quasi deposit, as where a person comes lawfully to the possession of another person's property by finding it; and a special deposit of money or bills in a bank, where the specific money, the very silver or gold coin, or bills deposited, are to be restored and not an equivalent, Story on Balments, ch. ii.

A bank deposit is a mere debt.

In the case of contracts for the sale of land a deposit is regarded, not only as a land a deposit is regarded, not only as a part payment of the purchase money, but also as a guarantee that the contract shall be completed by the purchaser, and may be forfeited if he make default, Howe v. Smith, (1884) 27 Ch D 89; Hall v. Burnall, (1911) 2 Ch 551. See Law of Property Act, 1925, ss. 45 and 49. By s. 49(2), where the Court refuses to grant specific performance of a contract or in any action for the return of a deposit the Court may, if it thinks fit, order the repayment of any deposit, see also Sale of Goods Act, 1893, s. 5.

A deposit of title-deeds as a security for the repayment of a borrowed sum of money constitutes an equitable mortgage which does not require registration to establish its validity or priority of effect, see LAND CHARGES; NOTICE; RESCISSION; STAKEHOLDER.

Includes deposit of money with a bank company, proprietary concern, partnership firm, corporate body, trust or any other person. [Foreign Exchange Management (Deposit) Regulations, 2000, R. 2 (iv)]

Defined, means aggregate of the unpaid balances due to a depositor (other than a foreign Govern-ment the Central Government a State Government or a banking company) in respect of all his accounts, by whatever name called, with a banking company and includes credit balances in any cash credit account. [Deposit Insurance and Credit Guarantee Corporation Act, 1961 (47 of 1961), s. 2(g)]

The essence of a deposit is that there must be a liability to return it to the party by whom or on whose behalf it is made on the fulfilment of certain conditions, C.I.T. v. Bazpur Co. Sugar Factory Ltd., (1988) 3 SCC 553: AIR 1988 SC 1263 (1269).

A deposit is paid primarily as security that the buyer will duly accept and pay for the goods, but, subject thereto, forms part of the price. Accordingly, if the buyer is unable or unwilling to accept and pay for the goods, the seller may repudiate the contract and retain the deposit, Hanuman Cotton Mills v. Tata Air Craft Ltd, AIR 1970 SC 1986 (1991).

--Means the aggregate of the unpaid balances due to a depositor, in respect of all his accounts.