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2006 DIGILAW 77 (HP)

KULDEEP KAUR GULATI v. ALLAHABAD BANK

2006-03-28

A.K.GOEL, NARINDER SINGH THAKUR, SAROJ SHARMA

body2006
ORDER: Justice Arun Kumar Goel (Retd.), President (Oral): Complainants have approached this Commission for the redressal of their grievance that there is deficiency of service on the part of the respondent and it is also guilty of unfair trade practice. 2. Facts of this are by and large not in dispute. As such, those are being briefly noted hereinafter. 3. Husband of complaint No.1 and father of complaints Nos. 2&3 had pledged two Insurance polices with the respondent. He also had two fixed deposit receipts. One was due on 28.7.2003 and its maturity value was Rs.12, 314/-, whereas the other was due on 31.12.2004 and its maturity value was Rs.38, 611/-. Said predecessor-in-interest of the complaints Shri Jagbir Singh Gulati died in a road accident on 19.1.2003, whereas the complaints and another person received multiple fractures besides burn injuries. They were hospitalized for different terms. Complaint No.1 under went operations. It took lot of time for here recovery. 4. After having recovered, complaint approached the Branch Manager of the respondent for release of the excess amount in respect of the two Life insurance Policies of the deceased that was lying with it, (the respondent) after adjustment of outstanding amount due and payable by the deceased. Complaints also furnished necessary documents of claim, indemnity regarding funds of the deceased individual, letter of relinquishment from the legal representatives of the deceased. In addition to this, per the complaints, they were asked to obtain succession certificate for release of the amounts. Needful was done by them. On 31.12.2004, complainant No.1 vide her communication addressed to the Manager of the respondent submitted requisite documents as detailed in her letter. On no action being taken by the respondent, a legal notice was got issued by the complaints but without any result, hence the complaint. In this back ground, complaints have prayed for the grant of relief in the sum of Rs.20, 94,264.51 P. They have claimed the sum of Rs.4, 24,312. 14P being the amount of two Fixed Deposit Receipts (F.D.Rs), as well as excess amount of the Life Insurance policies. They have also claimed interest @ 18% per annum besides compensation, expense incurred in obtaining succession certificate and also of legal notice. 5. 14P being the amount of two Fixed Deposit Receipts (F.D.Rs), as well as excess amount of the Life Insurance policies. They have also claimed interest @ 18% per annum besides compensation, expense incurred in obtaining succession certificate and also of legal notice. 5. Respondent has not disputed that the aforesaid sum of Rs.4, 24,312.14P i.e. the maturity value of two F.D.Rs supra on their dates of maturity together with surplus amount out of the two Life Insurance polices which were pledged by deceased with it was due and payable to the complainants. However, reason for not releasing this amount given by the respondent is that the deceased had stood surety in respect of two loans raised by two different loans form it and both these loanees had defaulted in repayment of the amount. Thus the respondent is well within its right to exercise bankers General Lien over the amount payable by it to the deceased. It is also stand of the respondent bark that the complaint was not maintainable and the complainants had not come before this Commission with clean hands. Two loanees for whom the deceased Shri Jagbir Singh Gulati had stood Guarantee are M/S Shiva Traders and Shri J.P. Rawat. The loan accounts of both these loanees had become non performing accounts. In respect of one, a suit has been filed, whereas qua the other, matter is under consideration with the higher authorities of the respondent .Averment regarding respondent-Bank having asked the complainant No.1 to fulfill the formalities so as to enable it to release the amount, were denied. Rather its stand is that it was the complainant who was forcing the bank for release of the amount in question. At no point of time, complaints were asked to obtain succession certificate as their position being the legal representatives of the deceased Shri Jagbir Singh Gulati was never disputed. Thus, there was neither any deficiency in service nor any unfair trade practice adopted by the respondent so as to entitle the complainants to maintain this complaint. 6. We may also observe that in this case after having sought time on 28.10.2005, reply to the complaint was not filed till 6.3.2006. At the request of Shri Dalmia, learned Counsel for the respondent, time was allowed to him on 6.3.2006 for filing reply. He has filed reply today. 6. We may also observe that in this case after having sought time on 28.10.2005, reply to the complaint was not filed till 6.3.2006. At the request of Shri Dalmia, learned Counsel for the respondent, time was allowed to him on 6.3.2006 for filing reply. He has filed reply today. On instructions received from the Branch Manager of the respondent-bank who was present alongwith him before us, he stated that his client is legally entitled to withhold the payment and at the same time to appropriate the sarrie in exercise of its bankers general lien qua the two loan accounts where deceased was a guarantor. Regarding one he stated that litigation is on and regarding the other he stated that keeping in view the outstanding amount, case for recovery is to be instituted before the D.R.T. Chandigarh and the matter is under consideration with the higher authorities. In view of the aforesaid facts which are by and large admitted by the parties, save and except to the extent of exercise of bankers general lien, as such in our view, there was no need of evidence being filed by the parties. In this behalf it may also be appropriate to notice that on 6.3.2006 when respondent did not file the reply to the complaint, its learned Counsel was asked on what basis the payment is being withheld, he stated that his client in law is entitled to exercise bankers general lien and in exercise of such power in law, payment has been rightly and legitimately withheld by the Bank. He was asked to bring the document, if any, on the basis whereof the respondent was authorized to exercise such a lien. When the case was taken up today alongwith reply, Shri Dalmia has placed on record as photo copy of deed of guarantee purported to have been executed by late Shri Jagbir Singh Gulati qua the bank facilities provided to M/S Shiva Traders, Proprietor Shiv Kumar. Regarding other loan, nothing was shown to us. Least that could be done by the respondent was to have atleast shown us a copy of the guarantee document purported to have been executed by the deceased in respect of the loan of Shri J.P. Rawat even if litigation was on. Regarding other loan, nothing was shown to us. Least that could be done by the respondent was to have atleast shown us a copy of the guarantee document purported to have been executed by the deceased in respect of the loan of Shri J.P. Rawat even if litigation was on. It is, however, obvious that guarantee document in this case would also be on the same terms as in the se of M/S Shiva Trader Proprietor Shiv Kumar. 7. Learned Counsel for the parties were, heard at length. Shri Dalmia on behalf of the respondent submitted that his client is entitled to set off the amount payable to the deceased against the account(s) for the repayment whereof deceased had stood guarantee. In this behalf he placed reliance on the following passage from the Book banking Law & Practice1 Fourth Edition- by Shri H.C. Agarwal:- "Set-off Against Guarantors Account. The right of set-off can be exercised only in respect of debts due and determined and not for the customers contingent liability, such as that under a guarantee to a banker. The liability of a guarantor is co-extensive with that of the principal debtor. Unless there is a default on the part of the principal debtor, the liability under the guarantee does not arise and accordingly no right of set-of is available to the banker in respect of an outstanding guarantee. But once the guarantors liability crystallizes and a noticed of demand is served on him, the banker can exercise the right of set-off. Shri Dalmia also placed reliance on the judgment of the Punjab & Haryana High Court in the case of Punjab National Bank Ltd. V. Satya Pal Virmani, (1956) 26 Company Cases 135. Thus, he urged for dismissal of the complaint with "costs, as there is nothing illegal, much less wrong having been committed by his client while withholding the payment of two fixed deposits on the date of their respective maturity as well as excess amount of the Life Insurance polices after adjustment to its outstanding dues. All these pleas were controverted by Shri Kanwar on behalf of the complaints. He stated that in order to exercise bankers general lien, respondent is duty bound in law to show that in the guarantee document it was contracted between the parties authorizing the respondent to have a right to exercise bankers general lien. All these pleas were controverted by Shri Kanwar on behalf of the complaints. He stated that in order to exercise bankers general lien, respondent is duty bound in law to show that in the guarantee document it was contracted between the parties authorizing the respondent to have a right to exercise bankers general lien. Thus, he prayed for allowing this complaint with costs, interest and compensation. 8. When a reference is made to the Photostat copy of the guarantee document purported to have been executed by the deceased Shri Jagbir Singh Gulati in the loan account of M/S Shiva Traders, Proprietor Shiv Kumar, it is evident that there is no clause in it enabling the respondent-Bank to exercise its so-called bankers general lien on other amounts payable to the deceased by the Bank. Thus in the absence of any such clause, there is no authority with the Bank where under the outstanding amounts due and payable to the complainants could be withheld by the respondent. For taking this view, we place reliance on the decision relied by Shri Dalmia in the case of Punjab National Bank Vs. Satya Pal Virmani (supra). In this case, in the document of guarantee, following was the condition in the Banks standard From of Agreement- And it is further agreed that the said bank shall have alien on all such stocks, shares and securities or on the proceeds after sale thereof (if sold) as security for or in part payment of any other debt due or liability then incurred or likely to be incurred by me/us to the said bank". At the risk of repetition, we may observe that no such condition is contained in the guarantee document placed on record by the respondent-bank. 9. We are further of the view that the exercise of bankers general lien would depend upon the terms and conditions subject to which guarantee had been furnished by the guarantor like the deceased in the present case. And as already observed, general lien could only be exercised when it was expressly agreed to where under the banker could exercise set-off in respect of its outstanding dues against a loanee like deceased Shri Jagbir Singh Gulati, predecessor-in-interest of the complainants. Incidentally, we may also observe that it is not the case of the respondent that either the amount is not due or the complainants are not entitled to it. Incidentally, we may also observe that it is not the case of the respondent that either the amount is not due or the complainants are not entitled to it. Rather the respondent has tried to justify its withholding only in exercise of its right of bankers general lien over the outstanding amount as above. 10. To be fair to Mr. Dalmia, we must notice tat he prayed for adjournment so as to enable him to seek instructions in the matter. This prayer was declined keeping in view the peculiar facts a noted hereinabove and also after being satisfied that no evidence needs to be produced by the parties in these proceedings. Therefore, learned Counsel were heard and complaint has been disposed of finally, as its pendency would not have served any fruitful purpose. 11 .No other point was urged. In view of the aforesaid discussion, while allowing this complaint, it is ordered that the respondent shall release the sum of Rs.4,24,312.14 with 12% interest from 14.7.2003 on this amount till the date of its payment, as also Rs.2,000/- being the cost of litigation and another sum of Rs.5,000/- being compensation. Office is directed to supply a copy of this order free of cost to the parties as per rules.