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2023 DIGILAW 135 (MAD)

N. Rajathi v. Manager, Canara Bank, Kombai Branch

2023-01-06

K.KUMARESH BABU

body2023
ORDER : Prayer: Writ Petition filed under Article 226 of the Constitution of India for issuance of Writ of Certiorarified Mandamus, calling for the records pertaining to the Impugned Letter dated 19.04.2013 issued to the petitioner vide Reference No. MSBR AGL 1059842014424 13 APP by the first respondent and quash the same as illegal with the direction to the first respondent to lift the lien on all petitioner's loan accounts and release Petitioner's jewels pledged in Agricultural Gold Account No. 1059842014424. 1. The instant writ petition has been filed seeking to quash the impugned letter dated 19.04.2013 issued by the first respondent and to consequently direct the first respondent to lift the lien on all the petitioner's loan accounts and release the petitioner's jewels pledged in agricultural gold loan Ac. No. 1059842014424. 2. Heard M/s.P.Jessi Jeeva Priya learned counsel for the petitioner and Mr.C.Jawahar Ravindran, learned counsel for the first respondent. 3. The learned counsel for the petitioner would submit that the petitioner hails from an agricultural family and in order to carry on the agricultural activities, she had pledged the gold jewelry with the first respondent Bank on 04.10.2011 for a sum of Rs.68,000/- and that on 11.09.2012, she had paid the entire gold loan amount together with interest, totally a sum of Rs.73,060/-. On receipt of payment, the first respondent had released the jewels in the gold loan account dated 04.10.2011. 4. The petitioner has also availed three other gold jewel loans on 10.04.2012, 17.07.2012 and 14.09.2012 respectively. As the gold loan availed on 10.04.2012 had to be redeemed before one year, the petitioner had approached the first respondent Bank and had paid the principal amount along with accrued interest towards the said gold loan. Acknowledging the said payment, the petitioner was also issued with a token, which should be handed over at the time of return of the pledged jewelry. However, the first respondent has refused to release the jewels claiming that the gold loan account dated 04.10.2011 had been mistakenly closed. Therefore, the petitioner was informed by the first respondent that unless the amount due under the gold loan dated 04.10.2011 is paid, the jewels in the gold loan dated 04.10.2011 would not be released. Being aggrieved by the same, the petitioner had approached the police. Therefore, the petitioner was informed by the first respondent that unless the amount due under the gold loan dated 04.10.2011 is paid, the jewels in the gold loan dated 04.10.2011 would not be released. Being aggrieved by the same, the petitioner had approached the police. But however, the Bank claimed that they are holding the jewels as a lien for payment of the amount due under the gold loan dated 04.10.2011. Thereafter, the petitioner had approached the Banking Ombudsman. The claim of the petitioner before the Banking Ombudsman was also rejected. Hence, the petitioner had approached this Court seeking the above relief. 5. M/s.P.Jessi Jeeva Priya, learned counsel for the petitioner would vehemently contend that the gold loan account dated 04.10.2011 was discharged by the petitioner validly and only after taking into consideration of the said discharge, the jewels were released to the petitioner. But now, the first respondent is making a false claim that he had not discharged the loan. Therefore, the release of jewels was mistake committed by the then Manager. The first respondent was very adamant in asking the petitioner to produce the Challan, under which he had deposited the amount. The said records would be very much available with the first respondent for the reasons best known to him, he was claiming that no such amount has been paid. 6. The learned counsel for the petitioner would further contend that the account has been closed and jewels have been released. It has to be presumed that he had discharged the loan in full. The first respondent do not have any authority to withhold the jewels of the second loan even after the payment towards the said second gold loan account. This act of the first respondent, according to her, is illegal, arbitrary and colorable exercise of power and a way to unjustly enrich itself. She would further plead that there can be no lien on a closed loan account. 7. She would further plead that if it had been a mistake committed by the then Manager, they should have initiated disciplinary proceedings against him. She would further plead that as the petitioner had duly discharged her commitment in discharging the loan, which has been acknowledged by the then Manager, the first respondent now cannot claim that the loan had not been discharged. She would further plead that as the petitioner had duly discharged her commitment in discharging the loan, which has been acknowledged by the then Manager, the first respondent now cannot claim that the loan had not been discharged. According to her, it is the case of the first respondent that the mistake has been committed by the then Manager of the first respondent Bank. The Bank had not enquired as to whether it is a mistake or mischief of the then Manager. Before conducting any such enquiry, the first respondent Bank has no authority to claim that the petitioner had not paid the amount due under the gold loan dated 04.10.2011. Therefore, she sought interference of this Court in setting aside the impugned communication and to direct the first respondent to release the Challan. 8. In support of her contention, she would rely upon the judgment of the Division Bench of this Court made in W.P. (MD) No. 12613 of 2016 (M. Shanthi vs. Bank of Baroda, Represented by its Chief Manager, Namakkal) dated 09.08.2017. Relying upon the said judgment, she would plead that the Bank cannot exercise the right to secure any other liabilities, which is in connection with the different transaction. 9. Countering her arguments, Mr.C.Jawahar Ravindran, learned counsel for the first respondent would contend that the petitioner had not deposited any money into the gold loan account. She had only deposited the amount in her savings bank account and showing the same, as if it is a remittance in the jewel loan account, she had got her jewels released. On the same day, she had also withdrawn the money that she had deposited in her State Bank account. 10. He would heavily rely on Section 171 of the Contract Act and claimed that the lien created in favour of the Bank by virtue of an agreement would continue even after the discharge of the said loan for recovery of money of other loan. He would further contend that even though the petitioner had paid the entire amount due under the second loan, the jewels have not been released, since by the mistake committed by the then Manager, the jewels of the first gold loan were released. The said mistake has been committed by the then Manager, because of the fraud committed by the petitioner. The said mistake has been committed by the then Manager, because of the fraud committed by the petitioner. The petitioner had deposited the money in her Bank account, but claimed before the then Manager that it has been credited to the jewel loan account and since due to the work pressure on that day, the then Manager negligently had released the jewels pledged under the first gold loan. There was no fraudulent intention on the part of the then Manager. 11. He would rely upon the judgment of the Hon'ble Supreme Court in the case of Syndicate Bank vs. Vijaykumar and Others, (1992) 2 SCC 330 to substantiate his claim that the Bank has a general lien over the property. He would also rely upon the decision of the Division Bench of this Court in the case of State Bank of India, Kotagiri Branch, Represented by its Branch Manager vs. Chokkalingam and Others, (2008) 1 MLJ 1009 to drive home the said contention. The learned counsel for the first respondent had also relied upon Halsbury's Laws of England, Chalmers on Bills of Exchange and Paget's Law of Banking, wherein the bankers had been in detail explained. On those grounds, he would contend that since the Bank has general lien over the properties pledged/mortgaged with it, it has a right to hold back the property pledged/mortgaged with it till all the loans are fully discharged. Hence, he would pray this Court to dismiss this writ petition and direct the petitioner to pay the amount due under the first gold loan dated 04.10.2011 to enable the first respondent Bank to release the jewels under the second loan account. 12. I have considered the arguments advanced by the learned counsel appearing on either side. 13. The petitioner had availed a jewel loan on 04.10.2011, which according to her, has been redeemed and the jewels under the said loan were returned to her by closing the same. This was countered by the first respondent claiming that the petitioner had not paid the amount under the said jewel loan and the same has been closed due to the mistake committed by the then Manager of the first respondent Bank. The reason attributed to the mistake was that the Branch was crowded. This was countered by the first respondent claiming that the petitioner had not paid the amount under the said jewel loan and the same has been closed due to the mistake committed by the then Manager of the first respondent Bank. The reason attributed to the mistake was that the Branch was crowded. When the petitioner went to redeem the second jewel loan, the first respondent has accepted the payment towards redemption of the same of the said jewel loan and that refused to release the jewels stating that there is a lien on the jewels, as the petitioner has not paid the amount due under the first jewel loan. 14. The learned counsel for the first respondent in support of his contention had raised that there is a statutory relief in view of Section 171 of the Contract Act. A useful reference could be made to the said provision: “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.” 15. He had also relied upon the judgment of the Hon'ble Apex Court in the case of Syndicate Bank vs. Vijaykumar and Others, (1992) 2 SCC 330 . The relevant paragraph that has been relied on by the petitioner is extracted herein: “15. Now the next question is whether the FDRs which are with the Bank and on which the Bank claims a general lien can be attached. So far as the attachment is concerned, the banker's lien cannot by itself be a bar for such attachment. In para 89 of Vol.3 of Halsbury's Laws of England, 4th Edn. the law is stated as under: “89. So far as the attachment is concerned, the banker's lien cannot by itself be a bar for such attachment. In para 89 of Vol.3 of Halsbury's Laws of England, 4th Edn. the law is stated as under: “89. Attachment of money on deposit account - For the purpose of satisfying a High Court or country court judgment for the payment of money, any sum standing to a person's credit in a deposit account in a bank is deemed to be a sum due or accruing due to that person, and to be attachable accordingly, notwithstanding that any condition applying to the account requiring that, before withdrawal, notice be given, or personal application be made, or a deposit book or a receipt for money deposited by produced, has not been satisfied.” From this it follows that if a deposit is payable at a future date or after the lapse of a Specified time it is still liable to attachment. What is attached is the money in the deposit account. The banker as a garnishee, when an attachment notice is served, has to appear before the court and obtain suitable directions for safeguarding its interest. This also become clear from the perusal of Order 21 Rule 46(a) of the Civil Procedure Code. The court, in such a situation has to take into account the banker's lien over the securities or deposits regarding which garnishee notice is issued.” 16. He would further contend that while passing the aforesaid order, the Hon'ble Apex Court had taken into consideration the Halsbury's Laws of England. He had also relied upon the Chalmers on Bills of Exchange and Paget's Law of Banking to buttress his contention. He had also relied upon the judgment of the Division Bench of this Court in the case of State Bank of India, Kotagiri Branch, Represented by its Branch Manager vs. Chokkalingam and Others, (2008) 1 MLJ 1009 . 17. An analysis of the judgment of the Hon'ble Apex Court as well as this Court and the definition relied upon by the petitioner as stated supra, it could be seen that a lien can be available upon the property, which is sought to be redeemed on a balance that is to be recovered from the persons, who had availed the loan facility on the basis of the security. In the facts of the case, the first jewel loan account has been closed. In the facts of the case, the first jewel loan account has been closed. After the closure, the first respondent Bank had not initiated any action whatsoever calling upon the petitioner to make payment on the alleged allegation that the amount has not been paid. As it is admitted even in the counter affidavit that there has been a mistake on the part of the then Manager, this Court queried upon the counsel for the first respondent as to what action has been initiated against the then Bank Manager for the mistake committed by him. The reply was in negative. Not having taken any action either against the then Manager for committing the mistake or against the petitioner, the first respondent cannot out of the blue claim that the petitioner has not paid the amount due under the first loan. 18. It would also be useful to analyze the order of the Division Bench of this Court made in W.P. (MD) No. 12613 of 2016 (M. Shanthi vs. Bank of Baroda, Represented by its Chief Manager, Namakkal) dated 09.08.2017 relied upon by the petitioner. The relevant paragraph reads as under: “31. Hence this Court is of the firm view that the respondent bank cannot exercise right of lien to secure any other liabilities of the mortgagor by retaining the documents of the mortgagor or guarantor, which are deposited with an intention to secure a particular loan transaction. Lien is primarily considered as a right to retain security. It is doubtful, whether in exercise of such right to retain the title deeds the mortgagee can bring the property for sale for recovery of some debt which is due from the mortgagor, in connection with a different transaction, which is not covered by the mortgage. 32. Any agreement conferring a right upon anyone to bring the property which is offered as a security for a loan transaction, is considered to be a transaction creating a right in immovable property and such agreement namely mortgage can be executed by way of a registered instrument. The right of lien, under Section 171 of the Indian Contract Act, will be contrary to the provisions of Transfer of Properties Act, if Section 171 is also made applicable to the title deeds, which are offered as a security in relation to a particular transaction. The right of lien, under Section 171 of the Indian Contract Act, will be contrary to the provisions of Transfer of Properties Act, if Section 171 is also made applicable to the title deeds, which are offered as a security in relation to a particular transaction. Considering the scope of Section 60 of the Transfer of Property Act, and the scope and object of Section 171 of the Indian Contract Act, this Court is of the firm view that the respondent Bank cannot retain the title deeds or proceed with the properties which were offered as security in relation to an independent loan transaction, even after the borrower discharged the entire liability of borrower in connection with the loan which is secured by deposit of title deeds.” 19. In this context, I am of the view that Section 171 of the Contract Act could not be available to the first respondent Bank, in view that the first jewel loan has been closed and that no action has been initiated to reopen the closed jewel loan. When the first respondent is not entitled to claim the benefit of Section 171 of the Contract Act, there can be no reason to retain the jewels belonging to the petitioner. In view of the aforesaid finding, I am constrained to set aside the impugned order passed by the first respondent dated 19.04.2013 vide reference No. MSBR AGL 1059842014424 13 APP and to direct the first respondent to release the jewels forthwith. 20. In fine, the Writ Petition is allowed. However, there shall be no order as to costs. Consequently, connected Miscellaneous Petition is closed.