M.A. No. 392 of 2014. Case: Dinesh Behl Vs Central Bank of India and Ors.. Delhi DRAT DRAT (Delhi Debt Recovery Appellate Tribunals)

Case NumberM.A. No. 392 of 2014
CounselFor Appellant: Sanjeev Bhandari representing Amit Dhall, Advocates and For Respondents: Vinay Sharma, Advocate
JudgesRanjit Singh, J. (Chairperson)
IssueIndian Contract Act, 1872 - Section 171
Judgement DateJanuary 15, 2016
CourtDelhi DRAT DRAT (Delhi Debt Recovery Appellate Tribunals)

Judgment:

Ranjit Singh, J. (Chairperson)

  1. Appellant herein had filed an application seeking release of the original perpetual lease deed executed in his favour which was lying in the possession of the respondent Bank. The Tribunal has dismissed this application by making reference to Section 171 of the Indian Contract Act holding the Bank entitled to claim general lien on the documents in its possession till the complete liability is discharged. Aggrieved against this order, the appellant has filed the present Appeal. A neat and pure question of law regarding, the right of the Bank to claim general lien over lease deed lying in its possession thus arises for consideration in this Appeal. The fact necessary to get a hang of the issue may now be noticed.

  2. The respondent Bank had instituted Original Application No. 281/1997 for recovery of a sum of Rs. 2,95,09,400/- with interest and cost. Respondent No. 2 Hind Protective Coating Ltd. was the principal borrower and the appellant being one of the Directors of the Company had given guarantee along with some Directors. The case set up by the Bank was that the appellant had created an equitable mortgage by deposit of title deed of the property bearing No. 9/4, Sarvapriya Vihar, New Delhi as collateral security. Appellant, however, had denied that he had ever created any mortgage. The issue which thus arose before the Tribunal below while deciding the Original Application was whether the property was mortgaged only for the Bank guarantee facility of Rs. 20 lacs. The finding by the Tribunal below is that this property of the appellant-9/4, Sarvapriya Vihar, New Delhi was offered as collateral security for the Bank guarantee facility of Rs. 20 lacs only and not for any other loan or facility and the Bank guarantee liability was not existing as the same stood discharged by return of the original Bank guarantees. The Tribunal below accordingly held that the said property was not a secured asset in the hands of the respondent Bank. In this background, the appellant had prayed for giving direction to the Bank for release of the title deed in respect of the said property which was deposited to create security only in respect of the Bank guarantee facility which stood discharged.

  3. The Tribunal, while taking note of Section 171 of the Indian Contract Act, has held that the respondent borrowers are yet to discharge huge liability and so the Bank is held justified in exercising lien by retaining the title deeds. The Tribunal, therefore, has declined to direct the Bank to return the title documents of the property of the appellant. This order is now under challenge in the present Appeal.

  4. The Counsel appearing for the appellant would contend that the Bank cannot claim general lien over the title document of the property once the said document was found to be offered as collateral security only for the Bank guarantee facility of Rs. 20 lacs. As per the Counsel, the claim of the Bank was that this property was offered as security for all the facilities for which the Original Application had been allowed and this in itself would be a contract contrary to the right of the Bank to claim general lien over the title document of this property. In support of his plea, the Counsel has placed reliance on the judgments in the cases of Krishna Kishore Kar v. United Commercial Bank, AIR 1982 Cal. 62 and Sree Vadivambigai Ginning Industries Pvt. Ltd. v. Tamil Nadu Mercantile Bank Ltd. through its Manager Pollachi,: IV (2015) BC 110: 2015 (4) MLJ 431.

  5. On the other hand, the Counsel appearing for the Bank would state that Section 171 of the Indian Contract Act is clear and would entitle the Bank to claim a general lien over the title document of this property to ensure recovery of the amount which had been allowed in the Original Application. Counsel would refer to the order passed in the Original Application, where the Tribunal, while recording the finding that this property was offered as collateral security only for the Bank guarantee facility of Rs. 20 lacs, had also observed that this property was a personal asset of the appellant and the Bank could lay claim on the personal assets of the appellant also if law permitted as the appellant was also found personally liable for the dues of respondent No. 2 as one of the guarantors. Otherwise, in support of his stance, the Counsel for the Bank has relied on the judgment in the case of Syndicate Bank v. Vijay Kumar, 1991 (SLT Soft) 141: AIR 1992 SC 1066 and judgment of Delhi High Court in the case of Smt. Sadhna Gupta v. Sh. R.C. Gupta, I.A. No. 8092/2001 in C.S. (O.S.) No. 1731/2001, decided on 10th August, 2009.

  6. I have considered the submissions made before me. Section 171 of the Indian Contract Act has recognized the concept of Bankers' general lien. This section gives a statutory recognition to the said concept. This section is as under:

    "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."

  7. As per Halsbury's Laws of England, 4th Edition, lien, in its primary or legal sense, means a right at common law in one man to retain that which is rightfully and continuously in his possession belonging to another until present and accrued claims of the person in possession are satisfied. Section 171 of the Contract Act gives statutory recognition to the concept of "Banker's general lien". This section provides that the Bankers 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. General lien of Bankers attaches to all goods and security deposited with them as Bankers by a customer or by a third person on a customer's account provided there is no contract, express or implied, inconsistent with the said lien. Thus, the Bankers can look to general lien as a protection against loss on account, or loss on loan or overdraft where a Banker has advanced money to another, he has a lien on all securities which come into his hand for the amount of his general balance, unless there is a contrary intention. Lien is and right to retain property belonging to another until a debt due from the latter is paid.

  8. The plea by the Counsel for the appellant is that this property being given as security for the Bank guarantee facility only would mean that there was an implied contract between the parties that Bank would not be in a position to claim general lien over this property. In other words, plea seems to be that this property being given as security for Bank guarantee is a contract inconsistent with lien. Concededly, there was no specific contract inconsistent with the Banker's lien. Section 171 of the Contract Act says that in the absence of contract to the contrary the Bank may retain as a security for a general balance of account any goods bailed to them. Thus, where there is a contract between the Bank and the party not to retain a security for general balance, in that event right to retain a security as lien in terms of Section 171 of the Act cannot be exercised. The appellant has not pleaded any specific contract between him and the respondent Bank which could act as bar for the Bank from claiming a right of general lien over this property. The plea is that the said property and document being offered as security for the Bank guarantee facility of Rs. 20 lacs would imply a contract that the parties have agreed that this property would not be liable to Bankers' general lien. The Counsel for the appellant has made an attempt to seek support for such plea canvassed by him...

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