Gauhati High Court
Tilendra Nath Mahanta vs United Bank Of India And Ors. on 5 February, 2001
Equivalent citations: [2002]111COMPCAS571(GAUHATI), AIR 2002 GAUHATI 1, (2001) 2 ARBILR 376, (2001) 3 GAU LR 316, (2003) 1 BANKCLR 169, (2002) 1 CURCC 70, (2002) 1 BANKJ 197, (2002) 111 COMCAS 571
JUDGMENT
1. The question is that whether on the facts of this case it can be said that the Bank has a lien over the F.D.Rs and the accounts for the alleged wrong/mischief with regard to joint account with his son for which an investigation is in progress. In order to decide the matter we must look to Sections 148 and 171 of the Contract Act. Section 148 deals with Bailment. Bailment is established only when there is delivery of goods by one person to another for some purpose upon a contract that they shall when the purpose is accomplished, be returned or disposed according to the direction of the person who delivers the goods. It is the duty of the bailee to deal with the goods according to the direction of the bailor. Under Section 171 of the Act Bankers lien can properly arise only over thing which belong to customer but which are held by the Bank as security. There will be no bailment in case of fixed deposits or separate accounts. It has not been given to the Bank as security for doing/accomplishing certain things. Fixed deposits are basically a loan in the hand of bankers. Where an amount is deposited with the Bank in a separate account which has no connection or relation with the loans in suit in a different account in the absence of a specific contract the amounts in the other account cannot be adjusted in the claim against suit. The lien of a bank over the money of its customer docs not extend to amounts which have been handed over accepted by the Bank for a specified purpose by the customers. If the contention of the Bank in this case is to be accepted it will create a chaotic situation and shall be death knell to the confidence of the customer in the Bank. It will give a handle and unbridled power to the Bank without the sanction or rule of law.
2. This writ application has been filed for a direction to the authority i.e. to the Respondent Bank to pay back/release the amount as mentioned in paragraph 4 of the writ application. Paragraph 4 is quoted below:
3. That the petitioner begs to state that he invested his terminal benefit deposited in the A/C No. 81 of the Naharkatia Branch of the United Bank of India in the following order.
Date Nature of Investment Date of Maturity Amount Invested 19.7.96 Fixed Deposit in A/C No. 359.
(One year) 19.7.1997 Rs. 75,600 24.7.96 Fixed Deposit In A/C No. 374/96 (One year) 24.7.97 Rs. 50,000 24.4.96 Fixed Deposit in A/c No. 199/96 (66 months) 24.1.2001 Rs. 30,316 23.11.95 Fixed Deposit in A/c No. 407/95 (72 months) 23.11.2001 Rs. 9,000 24.4.96 Fixed deposit in A/c No. 200/96 (66 months) 24.10.2001 Rs. 32,337 10.7.97 Savings A/c ____ Rs. 33,399.80p
4. It may be mentioned here that all the above mentioned bank accounts stand in the name of the petitioner and the money so deposited were his receipt of terminal benefits meant for his maintenance in his retired life.
5. The brief facts are as follows: The petitioner herein was a teacher and he retired from his employment under the Naharkatia Tea Estate on 31.12.1994. The petitioner received an amount of Rs. 1,69,239'87p vide A/C Payee cheque dated 28th June, 1995 of the State Bank of India issued by the Chairman of the Board of Trustees. the Assam Tea Plantations Provident Fund & Pension Fund Scheme as his terminal benefits. That is Annexure-1 to the writ application. The petitioner deposited the above mentioned account payee cheque in the Savings Bank Account together with another account payee cheque for Rs. 66,638'20p received as ATPPF Pension in the Savings Bank No. 81 opened in the Naharkatia Branch of the United Bank of India on 5.9.1995 and 25.6.1996 respectively. The investment which was made out of the terminal benefits received by the petitioner has already been quoted above. It may be stated that the son of the petitioner one Tridib Mahanta happened to be the Cash cum General Clerk of the Naharkatia Branch of the United Bank of India and along with son also he had a Joint Account in the Bank. That Joint Account is not the subject matter of this writ application. The son was involved in some illegal withdrawal of money from the Joint Account and that was detected in the latter part of 1996 and that Joint Account was freezed. That is Annexure-2 to the writ application. That letter is quoted below:
Shri Tilendra Nath Mahanta, Vill: Longjong PO: Naharkatia, Dist: Dibrugarh (Assam).
Dear Sir, It has been noticed that some fraudulent credit entries have been made in your Joint Savings Bank A/c No. 7401 with us. Moneys so credited have also subsequently been withdrawn from the account. The matter is under detailed scrutiny at our end.
Meantime, we have been advised by our higher authorities to inform you that it may be very difficult on the part of the bank to effect any payment from the aforesaid S.B. A/c as well as from your other accounts with us till the investigation is over.
Under the circumstances, we request you to please bear with us.
Thanking you, Yours faithfully, For and on behalf of the United Bank of India.
It was stated in that letter that not only the Joint Account will be freezed, but the other accounts also will not be operated till the investigation is over. There was a further letter vide Annexure-3 on 13th August, 1997 to the effect that the Bank at present is not in a position to restore fund to any account. Thereafter a demand was made on 16.9.1997 to pay the money, but a reply was given that it will be settled as early as possible. That is Annexure-5. A reply was further given on 1.11.1997 wherein it was stated that restoration of the other accounts is not possible. A demand was made again on 20.1.1998, but nothing was done. Hence, this writ application.
6. An affidavit in Opposition has been filed on behalf of the respondents where only one stand has been taken that the other account can also be touched in view of Section 171 of the Contract Act. Section 171 of the Contract Act is quoted below:
"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.
The only question to be decided is whether this stand of the Bank that the power can be exercised under Section 171 is correct proposition of law.
Section 171 provides for a general banker's lien. According to the law of merchant, the banker can look to his general lien as a protection against loss on account, or loss on loan or overdraft. And money has been held to be a species of goods over which lien may be exercised. Where a banker has advanced money to another, he has a lien on all securities which come into his hands for the amount of his general balance, unless there is contrary intention. The law is that a bank has no lien upon the deposit of a partnership for a balance due by one of he partners. The right of a Bank to apply a deposit to indebtedness due from the depositor, results from the right of set-off, which obtains between persons occupying the relation of debtor and creditor, and between whom there exist mutual demands. Mutuality is essential to the validity of a set-off against another, both must mutually exist between the same parties. Deposit of money in a bank is not a bailment, even if it be assumed that the word 'goods' includes money. There is a distinction between bailment and deposit. Money paid into a bank to be credited in the current account of the person making the payment does not constitute a case of bailment so as to make Section 171 of the Contract Act applicable to the case.
7. This is a case where for the fault of the son the father is sought to be punished which is not allowed under the law. Mr. DC Mahanta, learned Advocate for the petitioner places reliance in AIR 1990 Kerala 223 (Union Bank of India v. K. V. Venugopalan and Ors.) where the Kerala High Court in paragraphs 6, 7 and 8 pointed out as follows:
The question thus arising for consideration is; can the bank exercise the banker's lien in respect of the fixed deposit? An effective answer to this question could be had only if we understand the relation of banker to the customer in regard to fixed deposit. The fixed deposit is one of the three bank deposits and current deposits. We should in this connection remember that money lodged with banks as fixed deposits stricto jure is a loan to the bank. The banker in connection with the 'fixed deposit', therefore is a debtor. The depositor accordingly would cease to be the owner of the money in fixed deposit. The said money becomes the money of the bank, enabling the bank to do as the bank likes, that however, with the obligation to repay the debt on maturity. (See page 411 of Paget's on Law of Banking 9th edition).
Money put in fixed deposit constitutes a debt in the hands of the banker and a debt cannot be a suitable subject for a lien, because a. lien is a right recognized in a creditor to retain another man's property until the debt is paid (See page 412 of Paget's). Buddy J. in Halesowen Presswork and Assemblies Ltd. v. Westminister Bank Ltd. (1971) 1 QB has observed that 'a lien' postulates property of the debtor in the possession or under the control of the creditor'. A creditor enjoying the 'lien' as defined above however has no right to sell the thing or dispose it of. In other words he is only entitled to retain possession. (See Denning M.R. In Halesowen's case). Applying these principles to the facts of the case, I am of the view that the bank being a debtor, in respect of the money in fixed deposit, had no right to press into service the doctrine of 'banker's Hen' and return the money in fixed deposit. A similar view has been taken by the Madras High Court in the decision in Brahmayya and Co. v. K.P. Thangavelu Nadar, AIR 1956 Madras 570 and N. Mohammed Hussain Sahib v. Chartered Bank, Madras AIR 1956 Madras 266.
The above position notwithstanding the counsel representing the bank argued that the 'banker's lien' provided for under Section 171 Contract Act extends to even monies entrusted with or paid to the bank and if that be the position, it is further contended that, money in the fixed deposit can be adjusted towards the agricultural loan account, the bank has been maintaining in the name of E.V. John. This Section no doubt entitles a banker in the absence of a contract to the contrary, retain, as security for a general balance of account any goods bailed to them. This Section is one of the 24 Sections in the Contract Act governing the transactions called 'bailment'. To attract this provision a bank should therefore established that it is bailee within the meaning of Section 148 Contract Act. A bailment, going by the definition, is the delivery of goods by one person to another for such purpose, upon a contract that, they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. It therefore follows that there will not be a bailment if the thing delivered is not to be specifically returned or accounted for. That money when once put in the fixed deposit ceases to be the property of the customer and constitutes a debt of the banker to the customer is a proposition well established. Such a transaction, namely, the transaction evidenced by a fixed deposit would not constitute bailment within the meaning of Section 171 of he Contract Act, even assuming that, money is a species of goods over which lien may be exercised as observed by the Punjab High Court while construing Section 171 (See Punjab National Bank v. Satyapal, AIR 1956 Punjab 118).
I respectfully agree with this decision. On the other hand, Mr. Dutta, learned Advocate for the respondents places reliance in AIR (33) 1946 Nagpur 114 (Devendrakumar Lalchaandji v. Gulabsingh Nakhesingh). This case instead of helping the respondents helps the petitioner inasmuch as the Nagpur High Court pointed out as follows:
There is a distinction between bailment and deposit. Money paid into a bank to be credited in the current account of the person making the payment does not constitute a case of bailment (1848) 13 L.J. Ch. 182,32 Md. 68 and 13 Bom. 338, Foil."
The other case relied on by Mr. Dutta is AIR 1955 Punjab 250 9 (Firm Jai Kishan Dass Jinda Ram and others v. Central Bank of India Ltd.) That case has already been discussed in Kerala case (supra). That case is also of no help to the respondents.
In that view of the matter, this writ application is allowed and it is directed to the respondent Bank to pay to the petitioner the maturity value of the two fixed deposit receipts mentioned above and others also shall be paid as and when they matured. It is needless to say that the petitioner shall be allowed to operate the other S.B. Account No. 81 which is not a Joint Account. But the Joint Account shall not be allowed to be operated.