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2015 DIGILAW 880 (CAL)

Md. Nayabuddin v. Union of India

2015-10-14

DEBANGSU BASAK

body2015
JUDGMENT : Debangsu Basak, J. The writ petitioner seeks an order on the bank to allow him to repay the entire loan amount to the bank. The writ petitioner also seeks a direction on the bank to release the title deeds of the flat mortgaged in respect of such loan amount upon repayment. 2. It is contended on behalf of the writ petitioner that, he along with his brother has obtained a home loan from the bank upon deposit of title deeds of a flat as security. The bank is not allowing the writ petitioner to repay the home loan and to obtain release of the title deeds kept as security in respect of such home loan. According to the writ petitioner, the bank does not have a lien on the title deeds of the immovable property in respect of any other amount that may be outstanding to the bank. The title deeds kept as security for the home loan account cannot be withheld for the purpose of security for the cash credit limit taken by the brother of the writ petitioner. The provisions of lien and Section 171 of the Contract Act, 1872 does not apply in favour of the bank. Since the home loan is on the basis of a written contract and such contract does not allow the bank to exercise banker's lien, it cannot exercise such lien in respect of the title deeds for a different loan account. Reliance is placed on AIR 1993 Bom 87 (The State Bank of India v. Javed Akhtar Hussain), AIR 2005 SC 29 (Anumati v. Punjab National Bank), AIR 1982 Cal 62 (Krishna Kishore Kar v. United Commercial Bank) and AIR 1981 Del 126 (Vijay Kumar v. Jullunder Body Builders, Delhi) on the scope and ambit of a banker's lien. 3. On behalf of the respondent it is submitted that, the writ petition involves disputed questions of fact. The parties should be relegated to a suit. It is next contended on behalf of the bank that, the writ petitioner not having paid the entire home loan amount, the question of accord and satisfaction does not arise. Reliance in this regard is placed on (2009) 1 SCC 267 (National Insurance Company Limited v. Boghara Polyfab Private Limited). Referring to Section 60 of the Transfer of Property Act, 1882 it is contended that, the writ petitioner has a right to redeem. Reliance in this regard is placed on (2009) 1 SCC 267 (National Insurance Company Limited v. Boghara Polyfab Private Limited). Referring to Section 60 of the Transfer of Property Act, 1882 it is contended that, the writ petitioner has a right to redeem. The writ petitioner not having paid the home loan amount, the writ petitioner cannot be held to have exercised his right to redemption. Reference is also made to Section 63 of the Contract Act, 1872. According to the bank, Section 171 of the Contract Act, 1872 allows a banker to exercise banker's lien in absence of a contract to the contrary. Reliance in this regard is placed on 114 CWN 24 (Devi Ispat Limited v. The Central Bank of India). It is submitted that, the view expressed by the Single Bench has been upheld upto the Supreme Court in the case reported at (2010) 11 SCC 186 (Zonal Manager, Central Bank of India v.Devi Ispat Limited). On the scope and ambit of the banker's lien reliance is placed on AIR 1999 SC 2947 (The Board of Trustees of the Port of Bombay v. Sriyanesh Knitters) and AIR 1992 SC 1066 (Syndicate Bank v. Vijay Kumar). Referring to the home loan documents it is submitted that, the interpretation of those documents should not be embarked upon by way of the present writ petition. As disputed questions of fact have arisen, it is proper that the parties are relegated to a suit. 4. I have considered the rival contentions of the parties and the materials made available on record. 5. The writ petitioner along with his brother had obtained a home loan from the respondent no. 3 on May 26, 2011 with title deeds in respect of a flat being kept as security. The writ petitioner claims to have arranged funds to repay the entire home loan amount in one go. He had approached the bank for such purpose. Upon such approach being made, it is alleged that the bank did not allow the writ petitioner to pay the home loan amount. The writ petitioner had made a representation dated September 18, 2013 through his Advocate for repayment and release of security. Such representation has not been responded to. 6. The brother of the writ petitioner carries on a business through a partnership firm. Such partnership firm has obtained a cash credit facility from the bank. The writ petitioner had made a representation dated September 18, 2013 through his Advocate for repayment and release of security. Such representation has not been responded to. 6. The brother of the writ petitioner carries on a business through a partnership firm. Such partnership firm has obtained a cash credit facility from the bank. Such partnership firm has an amount outstanding to the bank. The bank is refusing to part of the title deed in respect of the immovable property to the writ petitioner on the ground that the bank has banker's lien on such immovable property for the outstanding in the cash credit facility obtained by the brother as a partner of such partnership firm. The brother of the writ petitioner is common to the home loan account and also to the partnership firm which has obtained the cash credit facility from the bank. 7. The provisions of banker's lien under Section 171 of the Contract Act, 1872 have been construed by the learned Single Judge in Devi Ispat Limited (supra). It has been held as follows:- “26. Section 171 of the Contract Act recognizes a special right of the five classes of persons referred to in the opening words specified therein. Such five classes of persons are conferred a right to retain any goods bailed to them subject to the two conditions that there must be no contract to the contrary and that the goods may be retained as a security for a general balance of account. Other bailees are not granted any statutory right to retain the goods bailed to them though the section recognises that there might be express contracts entitling such other bailees to retain the goods. A general lien is the right to retain the property of another for a general balance of account. The word “lien” apparently means “binding” and is derived from the Latin ligamen. Its lexical meaning is “the right to retain. 27. Lien is understood to be a right of defence and not a right of action. Since it is a right of defence, a creditor may exercise such right for obtaining satisfaction of the debt though an action to enforce the debt may be time-barred. Its lexical meaning is “the right to retain. 27. Lien is understood to be a right of defence and not a right of action. Since it is a right of defence, a creditor may exercise such right for obtaining satisfaction of the debt though an action to enforce the debt may be time-barred. In case of a banker's lien it is confined to the securities and properties in the custody of a banker and in respect of goods that belong to the customer and is held by the bank as security. The security may have been furnished in respect of one account but the banker's common law right of combining accounts may permit the banker to retain the security to secure the payment of the debt due from the same customer in respect of another account.” 8. On facts the learned Single Judge found that there was no outstanding amount due by the petitioner to the bank and, therefore, the bank had nothing to exercise its right of lien. In such circumstances, the learned Single Judge had directed the bank to make over the title deeds to the petitioner in Devi Ispat Limited (supra). 9. An appeal carried against Devi Ispat Limited (supra) was dismissed by the Division Bench. The Special Leave Petition against such order of dismissal was admitted. The Hon'ble Supreme Court in (2010) 11 SCC 186 had agreed with the directions issued by the learned Single Judge and as affirmed by the Division Bench. 10. Banker's lien has been considered by the Hon'ble Supreme Court in Vijay Kumar (supra). It has held in the facts of that case that, the bank has general lien in respect of the fixed deposits lying with it. It has held that, having regard to the mercantile customs as judicially recognized a banker has a general lien over all forms of deposits and securities made by or on behalf of the customer in the ordinary course of banking business. It goes on to say that merely because fixed deposit receipts have been furnished as security for the issuance of the bank guarantee the general lien of a banker does not come to an end when the bank guarantee is discharged. The bank has the liberty to adjust from the proceeds of the two fixed deposit receipts for any dues of the bank. 11. The bank has the liberty to adjust from the proceeds of the two fixed deposit receipts for any dues of the bank. 11. In Sriyanesh Knitters (supra) the nature of lien available to a port trust has been considered. 12. Section 171 of the Contract Act, 1872 is as follows:- “171. General lien of bankers, factors, wharfingers, attorneys and policy-brokers.—Bankers, factors, wharfingers, attorneys of a 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 persons have a right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to that effect.” 13. Section 171 of the Contract Act, 1872 has two parts. In the first part it recognizes that bankers, factors, wharfingers, attorneys of a High Court and policy-brokers have a right of general lien over goods coming into their possession in the usual course of their business for amounts outstanding to them. This right of general lien exists in favour of these five categories of persons unless there is an express contract to the contrary entered into between the bailor and those five categories of bailee. The second part of Section 171 of the Contract Act, 1872 provides that apart from the five categories of persons named therein any other bailee may have the right of general lien once such right is conferred upon the bailee by an express contract to such effect. 14. In the instant case, the writ petitioner is yet to pay the bank the entire home loan amount. Apart from the writ petitioner there is one more borrower, that is, the brother of the writ petitioner. The brother of the writ petitioner has obtained cash credit facilities from the bank. Amounts are outstanding in the cash credit account. Consequently, the bank has a lien over the title deeds of the immovable property of the writ petitioner as security for the outstanding amount in the cash credit account enjoyed by the brother of the writ petitioner through the partnership firm. 15. In the context of Section 11 of the Arbitration and Conciliation Act, 1996 the concept of accord and satisfaction has been considered in National Insurance Company Limited (supra). 16. 15. In the context of Section 11 of the Arbitration and Conciliation Act, 1996 the concept of accord and satisfaction has been considered in National Insurance Company Limited (supra). 16. The Single Bench of the Delhi High Court in Vijay Kumar (supra) has held that, a banker cannot hold a fixed deposit given as security for a guarantee for general balance due in an overdraft account of the customer. 17. In Javed Akhtar Hussain (supra) a Single Bench of the Bombay High Court has held that the bank cannot have banker's lien over a fixed deposit made by a defaulter in a joint account with his wife. 18. The views expressed in Vijay Kumar (supra) and Javed Akhtar Hussain (supra) appear to be contrary to that of the ratio laid down in Vijay Kumar (supra) by the Hon'ble Supreme Court. 19. In Krishna Kishore Kar (supra) it has been held that, whether there is an express contract between the parties creating a lien or security the same would exclude the portion of the operation of the general lien under Section 171 of the Contract Act, 1872. It recognizes that, a balance can be adjusted by appropriating the amount lying in separate account in exercise of general lien under Section 171 of the Contract Act, 1872. In the facts of that case, there was a counter guarantee and, therefore, it has been held that the bank is not entitled to exercise banker's lien. 20. In Anumati (supra) it has been held that, a fixed deposit jointly owned by the husband and wife with either or survivor clause cannot be pledged by one account holder without the consent of other. The fact scenario obtaining in the present case is wholly different than that of Anumati (supra). 21. In the present case, the loan documents for the home loan account have been made available. Such loan documents do not exclude the exercise of general lien by the bank against the writ petitioner under Section 171 of the Contract Act, 1872. The bank therefore has banker's lien over a security which has come in its possession in its usual course of business, namely, the title deeds of the immovable property pledged as security in respect of the home loan account. The bank therefore has banker's lien over a security which has come in its possession in its usual course of business, namely, the title deeds of the immovable property pledged as security in respect of the home loan account. The bank can exercise banker's lien over such title deeds for the amount outstanding in respect of the account maintained by the brother of the writ petitioner in respect of the cash credit account enjoyed by the partnership firm in which the brother of the writ petitioner is a partner. This is so as the brother of the writ petitioner has pledged the title deeds of the immovable property along with the writ petitioner in respect of the home loan account. Both the writ petitioner and the brother of the writ petitioner have enjoyed the home loan account. The brother of the writ petitioner is common to the home loan account and also the cash credit facility enjoyed by the partnership firm. 22. Moreover, the writ petitioner has not paid the entire amount of the home loan account. The bank has also not issued a No Due Certificate in favour of the writ petitioner or his brother in respect of the home loan account. 23. In the facts of this case, I do not find any merit in the present writ petition. W.P. No. 2111 (W) of 2014 is dismissed. No order as to costs. 24. Urgent photostat certified copy of this order, if applied for, be given to the parties on priority basis.