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2001 DIGILAW 806 (PAT)

Narendra Singh v. State Of Bihar

2001-08-30

RADHA MOHAN PRASAD

body2001
Judgment Radha Mohan Prasad, J. 1. In this writ petition, petitioner has prayed to direct the Respondent-Bank of Baroda to release payment of Rs. 41,876.50 with interest in his favour from his Savings Bank Account No. 1854 maintained at Banjaria Branch of the said Bank, which has been withheld on the plea that the amount has been earmarked and has been kept under lien against the loan taken by him from Muzaffarpur Branch of the said Bank : 2. The case of the petitioner, in brief, is that the petitioner applied for loan of Rs. 2,90,000/- for purchase of Ashoka Leyland Motor Vehicle from Muzaffarpur Branch of Bank of Baroda on usual terms and conditions of the Bank. He deposited Rs. 75,000/- in fixed deposit as security for loan and further paid a sum of Rs. 3,36,137.23 in several instalments. However, the Bank claimed that Rs. 2,76,614.48 paise is still due and filed Money Suit No. 19 of 1991 for recovery of the said amount along with interest, which was dismissed vide judgment dated 5.9.1995 passed by the learned Subordinate Judge Vth, Muzaffarpur (Annexure-2). Thereafter, the Bank filed First Appeal bearing First Appeal No. 783 of 1995 in this Court, which is still pending. Petitioner is maintaining a Savings Bank Account bearing No. 1854 with Banjaria, Motihari Branch of Bank of Baroda since 1992 and up-to-date balance in the aforementioned account is Rs. 41,876.50 paise. The petitioner was in need of money and when he made requisition for withdrawal of the said amount, the Bank refused to release the payment on the plea that the said account of the petitioner has been earmarked and has been kept under lien against the loan taken by him from Muzaffarpur Branch of the said Bank. 3. A counter affidavit has been filed on behalf of Respondents 2 to 4, in which it is stated that Bank of Baroda is one of the premium nationalised Bank and deals with public money and the loans are advanced for economic upliftment and social welfare, and that if the loans taken like that of the petitioner are not paid, there wiil be serious financial loss to the public institution like Bank of Baroda, therefore, the balance amount in S.B. Account of the petitioner at Banjaria Branch was earmarked towards payment of loan due against him. According to the case of the Respondent-Bank this step was taken in the interest of the Bank, as the Bank has right of general lien, as provided under Section 171 of the Indian Contract Act, and that where a customer, having two accounts with a Bank, owes to the Bank on one of them, the Bank can claim a lien on the other account and liquidate the debt due to it by transferring money therefrom. 4. Learned counsel for the petitioner has submitted that it is not a case where lien for taking loan from the Respondent- Bank was created as against the deposit made in the account in question. Thus, according to the learned counsel Section 171 of the Indian Contract Act has no application at all to the facts and circumstances of the present case. It has further been submitted that the Respondent-Bank having lost in money suit filed by them for recovery of the loan amount is not legally justified in withholding the payment of the amount in deposit in S.B. account in question, and, such action of the Bank is wholly arbitrary, malafide and amounts to showing distrust. 5. Learned counsel for the Respondent-Bank has submitted that it is true that the bank lost in money suit but first appeal is pending in this Court. According to him the Bank lost in money suit as it was barred by limitation, but in view of the law settled limitation bars the remedy and not the right, the right remains. In support of this, he has placed reliance on the decision of Allahabad High Court in the case of Rameshwar Bux Singh V/s. Ganga Bux Singh, reported in A.I.R. 1950 Allahabad 598. It has further been submitted by the learned counsel for the Respondent-Bank that in any view of the matter, Respondent-Bank is legally justified in claiming lien on the account in question to liquidate the debt of the petitioner in view of the provisions contained in Section 171 of the Indian Contract Act. In support of this, he placed reliance on the decision of the Apex Court in case of Syndicate Bank V/s. Vijay Kumar & others, reported in 1992 AIR SCW 945. 6. This Court is unable to accept the said submission of the learned counsel for the Bank. The provisions contained in Section 171 has no application to the facts of the present case. 6. This Court is unable to accept the said submission of the learned counsel for the Bank. The provisions contained in Section 171 has no application to the facts of the present case. Section 171 provides as follows: "171. General lien of bankers, factors, wharfingers, attorneys and policy-brokers. Bankers, factors, wharfingers, attorneys of High Court and policy brokers may, in the absence of a contract to the contrary, retain as a security for a general balance of account, any goods bailed to them; but no other person have right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to that effect." There cannot be any doubt that the bankers in absence of a contract to the contrary, retain as a security for a general balance of account, any goods bailed to them and has a general lien over all forms of securities or negotiable instruments deposited by or on behalf of the customer in ordinary course of banking business; and that the general lien is a valuable right of the banker judicially recognised and in the absence of an agreement to the contrary, a Banker has a general lien over such securities or bills received from a customer in the ordinary course of banking business and has a right to use the proceeds in respect of any balance that may be due from the customer by way of reduction of customers debit balance. But in absence of security in any form with respect to the account in question as against the ioan the provisions of Section 171 is not attracted. The reliance placed on the decision of the Apex Court in the case of Syndicate Bank vs. Vijay Kumar by the learned counsel for the Respondent-Bank is wholly misplaced. In the case before the Supreme Court to ensure compliance of the undertaking the judgment-debtor furnished a bank guarantee for a sum of Rs. 90,000/- in favour of the Registrar of Delhi High Court on submission of two fixed deposit receipts of Rs. 65,000/- and Rs. 25,000/- after duly discharging them by signing on the reverse of each F.D.R. The two covering letters were also issued as per which the judgment-debtor agreed that the deposits and renewals shall remain with the Bank so long as any amount or any account is due to the Bank from them. 65,000/- and Rs. 25,000/- after duly discharging them by signing on the reverse of each F.D.R. The two covering letters were also issued as per which the judgment-debtor agreed that the deposits and renewals shall remain with the Bank so long as any amount or any account is due to the Bank from them. In the appeal preferred by the judgment-debtor the High Court discharged the bank guarantee. The decree-holder made an interlocutory application in the pending execution petition for attachment of a sum of Rs. 35,000/- out of Rs. 90,000/- deposited as security for the Bank guarantee on the ground that the same belongs to the judgment-debtor and, therefore, is liable to be attached. The High Court made an order of attachment. The counsel for the decree-holder informed the appellant-Bank about it upon which the Bank raised objection against the attachment. On rejection of the objection, the appellant-Bank filed appeal. The Supreme Court in the facts and circumstances aforementioned held that the appellant Bank had liberty to adjust from the proceeds of the two FDRs towards the dues of the Bank and if there is balance left that will only be the amount which would belong to the depositor, namely, the judgment-debtor, and only such amount, if any, can be attached in discharge of a decree. The Apex Court took the view that the Bank had a general lien over the two FDRs. However, in the present case, it is not the case of the Respondent-Bank that the petitioner furnished the amount deposited in the account in question as security nor that he ever agreed that the deposits made therein shall remain with the Bank so long as any amount against any account is due to the Bank from him. Thus, in my opinion, withholding of the payment of the deposits of the account of the petitioner in the Savings Bank Account no. 1854 maintained at Banjaria Branch is wholly arbitrary inasmuch as the Bank which is an institution based on trust has acted in violation of the same and the petitioner has been made to unnecessarily suffer. Moreover, the Respondent-Bank lost in the suit and the appeal against the same is pending before this Court. Under such circumstances, Bank did not have any legal justification to withhold the payment from the deposit of the petitioner in the said savings bank account. Moreover, the Respondent-Bank lost in the suit and the appeal against the same is pending before this Court. Under such circumstances, Bank did not have any legal justification to withhold the payment from the deposit of the petitioner in the said savings bank account. 7 In the result, this writ application is allowed. The Respondent-Bank is directed to release payment with up-to-date interest accrued on the deposit of the petitioner made in the savings bank account no. 1854 maintained at Banjaria Branch of the said Bank forthwith.