Delhi District Court
Sh. Naresh Chand Jain vs Oriental Bank Of Commerce on 17 July, 2014
IN THE COURT OF MS. SALONI SINGH, CIVIL JUDGE - 03,
PATIALA HOUSE COURTS, NEW DELHI DISTRICT,
NEW DELHI
CS. No. 20/13
Unique Case ID no. 02403C0105682013
1.Sh. Naresh Chand Jain S/o, Late Sh. Moti Lala Jain, R/o, 2534, Naiwala, Chawri Bazar, Delhi - 110006.
2. Mrs. Asha Jain, W/o, Sh. Naresh Chand Jain, R/o, 2534, Naiwala, Chawri Bazar, Delhi - 110006.
...Plaintiffs Vs.
1. Oriental Bank of Commerce Through, The Asstt. General Manager, Harsha Bhawan, E-Block, Connaught Place, New Delhi - 110001.
2. The Chief Manager, Oriental Bank of Commerce, Chawri Bazar, Delhi - 110006.
3. The Asstt. General Manager, Oriental Bank of Commerce, Service Branch, Rajinder Place, New Delhi - 110008.
4. Chairman, Oriental Bank of Commerce, Plot No.-5, Sector-32, Industrial Area, Gurgaon-122001 ...Defendants CS No. 20/13 Naresh Chand Jain & Anr. v. Oriental Bank of Commerce & Ors. 1/25 Suit for Permanent and Mandatory Injunction Date of institution : 17.08.2013 Date of Reserving Judgment/Order : 03.07.2014 Date of decision : 17.07.2014 Judgment:-
1. In the present suit, the plaintiff has prayed, inter alia, that the defendants be directed to restore the fix term deposit (the original amount with interest as per the term of the fix deposit), restrain the defendants from claiming any amount from the plaintiffs with regard to the cheque amount, direct the defendants to redeposit the appropriated amount in the fix deposit, direct the defendants to pay the appropriate amount to the plaintiffs as fit and proper for harassment, mental agony and injury for their wrongful act against the plaintiffs and costs of the suit.
2. The brief facts of the present case are as follows:-
(i) The plaintiff no.1 is an ex-employee of the defendant's bank.
The plaintiff no.1 and the plaintiff no. 2 are husband and wife having a joint savings bank account, bearing number 00072010005720 (hereinafter referred to as " the bank account"), with the defendant no.1 for about twenty years. Further, both the plaintiffs had deposited a FDR in the sum of Rs. 40,000/- (Rupees Forty Thousand Only) with the CS No. 20/13 Naresh Chand Jain & Anr. v. Oriental Bank of Commerce & Ors. 2/25 defendant no. 2 (in the account number 00153031054648) (hereinafter referred to as "FDR No. 1") and the plaintiff no. 1 had deposited a FDR in the sum of Rs. 25,000/- (Rupees Twenty Five Thousand Only) with the defendant no. 1 (in the account number 00073031064341) (hereinafter referred to as "FDR No. 2").
(ii)One day, the plaintiff no. 1 deposited a cheque, dated 19.01.2009, bearing no. 872606, in the sum of Rs. 1,80,000/- (Rupees One Lakh and Eighty Thousand Only), drawn on ICICI Bank Limited, (hereinafter referred to as the "cheque in question") in the aforesaid bank account. The said cheque was duly credited by the defendant no.1 on 20.07.2009, which was subsequently withdrawn by the plaintiff no.1 on 21.07.2009.
(iii)On 09.08.2012, the defendant no.1 issued a letter/notice, wherein the plaintiffs were intimated that the cheque in question had been credited to the bank account of the plaintiffs in anticipation of the payment. However, the cheque in question had been returned unpaid due to insufficiency of funds. Further, it was stated therein that as the amount of the said cheque had inadvertently not been debited to the account of the plaintiffs, the defendant no.1 had decided to debit the same into the account within a period of three days.
CS No. 20/13 Naresh Chand Jain & Anr. v. Oriental Bank of Commerce & Ors. 3/25
(iv)Subsequently, vide a letter dated 05.11.2012, issued by the defendant no. 3, the plaintiffs were informed that since a wrong credit was accorded to the bank account by the defendant no.1, they had exercised their right of lien and set off the CDR No. 00153031054648 (FDR No.1), standing in the name of the plaintiffs, against the liability of the plaintiffs towards the defendant bank. Further, vide a letter dated 19.11.2012, the CDR No. 00073031064341 (FDR No. 2), standing in the name of plaintiff no. 1, had been appropriated and credited in the bank account of the plaintiffs.
(v) Thereafter, on 14.08.2012, when the plaintiff no.1 deposited a cheque, bearing number 833236, in the sum of Rs. 5,000/- (Rupees Five Thousand Only) for getting it encashed, the said cheque was dishonoured on the ground that the bank account of the plaintiffs had been freezed by the service branch/defendant no. 3. The defendants have appropriated a sum of Rs. 1,10,000/- (Rupees One Lakh and Ten Thousand Only) lying in the bank account of the plaintiffs as well as the CDRs of the plaintiffs.
3. On 19.08.2013, summons of the suit were issued to the defendants returnable on 04.09.2013. On the date fixed for hearing, the defendants appeared and the written statement was filed on their CS No. 20/13 Naresh Chand Jain & Anr. v. Oriental Bank of Commerce & Ors. 4/25 behalf on 10.09.2013.
4. Several objections have been raised in the written statement, namely, that the suit is liable to be rejected as it does not disclose a cause of action; that the requisite court fees has not been paid; that the contents of the suit are vague and misleading; that the plaintiffs have failed to specifically pray for a decree in their favour, therefore, the relief cannot be granted and the suit is liable to be rejected; that the plaintiffs have concealed material facts and have not approached this Court with clean hands. It is further averred that the plaintiff is the ex-employee of defendant no. 1 and that his pension is being deposited with the defendant bank in his bank account. Also, the plaintiff no. 1, having worked over a long period of time with the bank, is well acquainted with the working of the banking sector. It is stated that the cheque in question was credited in the bank account of the plaintiffs, which had been returned unpaid with remarks, 'Insufficient Funds'. However, inadvertently due to human error, the reversal of the credit entry was not done in the bank account. This mistake was detected around August, 2012 during the reconciliation process of the service branch of the defendant bank. Thereafter, the notice dated 09.08.2012 was issued to the plaintiffs to deposit the amount of the cheque in question in the account as the same was going to be debited within a period of three days. It is alleged that the plaintiff had withdrawn the cheque amount deliberately knowing that the cheque of such a huge amount CS No. 20/13 Naresh Chand Jain & Anr. v. Oriental Bank of Commerce & Ors. 5/25 had not been honoured. Further, since sufficient amount was not available in the bank account of the plaintiffs, a lien was marked in the bank account on 09.08.2012. It is averred that the defendants in exercise of their right to general lien and set off under Section 171 of the Indian Contract Act, 1872 (for short, "Contract Act") appropriated a sum of Rs. 1,10,000/- (Rupees One Lakh and Ten Thousand Only) lying in the bank account/FDRs, on 26.11.2012, towards the outstanding amount. Further, it is submitted that general lien is a valuable right of the bankers judicially recognized and that the lien extends to FDRs/CDRs, which are remitted to the bank for the purposes of collection, and that this right can be exercised in respect of a joint bank account.
5. Replication was filed on behalf of the plaintiffs on 15.10.2013, denying the objections/submissions made in the written statement. It is stated therein that the defendants had not explained as to how and under what circumstances the reversal in the credit entry was not done and the mistake was detected after a lapse of more than three years. Further, the defendants have failed to show why and how the returning memo of the dishonoured cheque was not sent and why the plaintiffs were not intimated about the aforesaid alleged transaction. It is alleged that the defendants cannot take advantage of their own wrong. Further, it is stated that having admitted the wrong on their part, they cannot arbitrarily and deliberately place the liability on the plaintiffs. Further, the plaintiffs have no liability CS No. 20/13 Naresh Chand Jain & Anr. v. Oriental Bank of Commerce & Ors. 6/25 towards the bank, thus, the defendants cannot arbitrarily freeze the bank account of the plaintiffs and mark a lien thereon. It is further stated that the personal allegations made against the plaintiff no.1 were wrong and defamatory.
6. On completion of the pleadings of the parties, the following issues were framed :-
1. Whether the plaintiffs are entitled to a mandatory injunction directing the defendants to de-freeze the bank account of the plaintiffs? OPP
2. Whether the plaintiffs are entitled to restoration of the fixed term deposits appropriated by the defendants? OPP
3. Whether the defendants had rightfully exercised their right to general lien under Section 171 of the Indian Contract Act, 1872 in the present case? OPD
4. Whether the court fees paid by the plaintiffs is insufficient in the present suit? OPD
5. Relief
7. Both the parties were given an opportunity to lead their evidence. The plaintiffs proceeded to lead evidence and in order to substantiate their case, the plaintiff no. 1 stepped into the witness box as PW-1 and tendered his evidence by way of an affidavit, Exhibit PW-1/1, bearing his signatures at points 'A' and 'B' respectively, deposing on the same lines, as stated in the plaint. In addition, PW-1 placed on record and proved the following CS No. 20/13 Naresh Chand Jain & Anr. v. Oriental Bank of Commerce & Ors. 7/25 documents:-
- A photocopy of the pass book of the bank account (bearing number: 0007010005720) of the plaintiffs and the FDR in the sum of Rs. 25,000/- (Rupees Twenty Five Thousand Only), Exhibit PW-1/A (Colly) (OSR);
- A photocopy of the FDR in the sum of Rs. 40,000/- (Rupees Forty Thousand Only), in the name of the plaintiffs, with the defendant no. 2, Exhibit PW-1/B (OSR);
- A photocopy of the relevant page of the bank account of the plaintiffs, Exhibit PW-1/C (OSR);
- The letter/notice, dated 09.08.2012, issued by the defendants, Exhibit PW-1/D;
- A photocopy of the cheque, bearing no. 833236, dated 14.08.2012, in the sum of Rs. 5000/- (Rupees Five Thousand Only), drawn on Oriental Bank of Commerce, Exhibit PW-
1/E (OSR);
- A photocopy of the returning memo of the aforesaid cheque, Exhibit PW-1/F (OSR);
- A photocopy of the legal notice, dated 24.08.2012, sent to the defendant no. 1 by the plaintiffs in reply to the aforesaid notice dated 09.08.2012, Exhibit PW-1/G (Colly);
- A true copy of the acknowledgment, dated 11.09.2012, made by the defendants of the complaint letter dated 04.09.2012, filed by the plaintiffs with the defendant no. 2, Exhibit PW-
CS No. 20/13 Naresh Chand Jain & Anr. v. Oriental Bank of Commerce & Ors. 8/25 1/H;
- The letter, dated 05.11.2012, issued by the defendant no. 2 to the plaintiffs intimating with regard to exercise of their right of lien and set off of the FDR amount against the alleged plaintiffs liability, Exhibit PW-1/I;
- The letter, dated 19.11.2012, issued by the defendant no. 1 to its service branch/defendant no. 3, intimating as to appropriation of the FDR amount and credit of the proceeds in the bank account of the plaintiffs, Exhibit PW-1/J;
- A photocopy of the reply, dated 30.11.2012, of the defendants to the legal notice of the plaintiffs dated 04.09.2012, Exhibit PW-1/K (Colly);
- A photocopy of the legal notice, dated 22.11.2012, sent by the plaintiffs to the defendants, Exhibit PW-1/L (Colly);
- The original receipts of the registered post of the said legal notice dated 22.11.2012, Exhibit PW-1/M;
- The reply, dated 12.12.2012, of the defendants to the said legal notice dated 22.11.2012, Exhibit PW-1/N (Colly);
- The envelope of the said reply, Exhibit PW-1/O;
- A photocopy of the legal notice, dated 16.05.2013, of the plaintiffs sent to the defendants, Exhibit PW-1/P (Colly);
- The speed post receipt and its tracking report of the said legal notice, Exhibit PW-1/Q and Exhibit PW-1/R (Colly) respectively.
CS No. 20/13 Naresh Chand Jain & Anr. v. Oriental Bank of Commerce & Ors. 9/25 No other witness was examined by the plaintiffs. The Learned Counsel for the plaintiff closed plaintiff's evidence by way of a separate statement.
8. Thereafter, the matter was listed for defendant's evidence. On behalf of the defendants, Mr. Devendra Sikri, the attorney holder, posted as Senior Manager, at the regional office of the defendant bank, at Harsha Bhawan, Connaught Place, New Delhi, stepped into the witness box as DW-1 and tendered his evidence by way of affidavit, Exhibit DW-1/A, deposing on the same lines, as stated in the written statement. In addition, DW-1 placed on record and proved a photocopy of the General Power of Attorney, dated 09.09.2003, executed in favour of DW-1, Exhibit DW-1/1 (OSR); and a photocopy of the cheque in question, though exhibited as Exhibit DW-1/2 in the affidavit, was re-exhibited as Mark A- DW-1/2; No other witness was examined by the defendant. The Learned Counsel for the defendant closed defendant's evidence by way of a separate statement.
9. Arguments were advanced by the Learned Counsel for both the parties. Learned Counsel for the plaintiff reiterated in brief the facts of the case. He submitted that the cheque in question was deposited with the defendant no. 3 on 17.07.2009 and on the same being credited in the account of the plaintiff, was withdrawn on 21.07.2009. Thereafter, the defendant bank issued a notice dated CS No. 20/13 Naresh Chand Jain & Anr. v. Oriental Bank of Commerce & Ors. 10/25 09.08.2012, Exhibit PW-1/D, informing the plaintiff as to the said cheque being returned unpaid for want of sufficiency of funds and, thus, decided to debit the amount of the unpaid cheque within a period of three days. Learned Counsel for the plaintiff emphasized that the defendant bank issued the said notice belatedly after a lapse of approximately 37 months and without affording any opportunity, created a lien in respect of the amount lying in the account of the plaintiff the very same day. Further, Learned Counsel for the plaintiff referred to paragraph no. 8 of the affidavit of DW-1, Exhibit DW-1/A, wherein, it is admitted that owing to some human error, inadvertently, the reversal of the credit entry was not done. It was further pointed out that the defendants admittedly detected the mistake in the month of August 2012. Learned Counsel for the plaintiff argued that no returning memo of bank, in respect of the dishonoured cheque, has been placed on record by the defendants and for that he also referred to the statement made by the AR of the defendant company made on oath under Order X of Code of Civil Procedure, 1908 (for short, "Code of Civil Procedure"), wherein the AR has stated that he has no knowledge about the returning memo. Learned Counsel for the plaintiffs relied upon the following judgments, namely, Makers Development Services Pvt Ltd v. M. Visvesvaraya Industrial Research and Development Centre., AIR 2012 SC 437, M/s. Best Sellers Retail (India) Pvt. Ltd v. M/s. Aditya Birla Nuvo Ltd. & Ors., AIR 2012 SC 2448 and B. Chandra Sekhar Reddy and Ors v. K. Naga Raju Yadav and CS No. 20/13 Naresh Chand Jain & Anr. v. Oriental Bank of Commerce & Ors. 11/25 Anr., 2013 STPL (LE-Civil) 50427 AP, all pertaining to Order XXXIX Rules 1 & 2 of the Code of Civil Procedure. He further relied upon the judgment in K.S. Nagalambika v. M/s. Corporation Bank, Virajpet and Anr., 2000 STPL (LE-Civil) 7674 KAR, on Section 171 of the Contract Act, where in this case, the plaintiff had taken a loan from the defendant and the defendant had exercised lien in respect of the FDRs of the plaintiff to recover the loan amount. Lastly Counsel for the plaintiff relied upon the decision of the Hon'ble Supreme Court in Syndicate Bank v. Vijay Kumar and Others., AIR 1992 SC 1066 to emphasize that the banker's lien is to be exercised in respect of any balance that may be due from the customer and not otherwise. Further, Learned Counsel for the plaintiff argued that the defendant bank cannot take advantage of its own wrong and in support thereof relied upon two judgments, namely, Kusheshwar Prasad Singh v. State of Bihar & Ors., (2007) 4 SCALE 5341 and UCO Bank v. Hem Chandra Sarkar., AIR 1990 SC 1329.
10.Learned Counsel for defendants advanced his arguments submitting that the law on the banker's lien is well settled and quoted extensively from the decision of the Hon'ble Supreme Court in Syndicate Bank's case (ibid). Learned Counsel for the defendants argued that the facts in the suit were not disputed and the main issue was as to whether the defendant bank had rightfully and in a legal manner exercised their right to lien in respect of the FDRs of the CS No. 20/13 Naresh Chand Jain & Anr. v. Oriental Bank of Commerce & Ors. 12/25 plaintiffs and by freezing the bank account of the plaintiffs. He further referred to the following judgment, namely, Sh. Harjeet Singh v. Punjab & Sind Bank., RFA No. 250/2004, State Bank of India v. Smt. Goutmi Devi Gupta And Ors., AIR 2002 MP 81 and J and K Bank Limited v. Abdul Samad Chaloo, AIR 2008 J K 1, all of which have relied upon the decision of Syndicate Bank 's case to hold that the banker's lien extended to FDRs of the customer as well. Learned Counsel for the defendants submitted that the plaintiff's suit is an abuse of the process of court and that the suit be dismissed with heavy costs.
11. The submissions made on behalf of the both the parties have been considered and the record of the case has been thoroughly perused. The issue-wise findings of this Court are as given below. It is noted that the issues no. 1 to 3 are interlinked and while giving a finding on any one of them may inevitably impinge upon the other two issues. Thus, it may not be possible to segregate and decide one of the issues in isolation of the other.
Issue No. 1:-
1. Whether the plaintiffs are entitled to a mandatory injunction directing the defendants to de-freeze the bank account of the plaintiffs? OPP.
12.The burden of proving the first issue is on the plaintiffs. At the CS No. 20/13 Naresh Chand Jain & Anr. v. Oriental Bank of Commerce & Ors. 13/25 outset, it is imperative to mention the facts not in dispute between the parties, which are as follows:- The plaintiffs have a savings joint account, bearing number 00072010005720 (defined above as the 'bank account'), with the defendant no.1. The plaintiffs have deposited a FDR in the sum of Rs. 40,000/- (Rupees Forty Thousand Only) with the defendant no. 2 (in the account number 00153031054648) and the plaintiff no. 1 has deposited a FDR in the sum of Rs. 25,000/- (Rupees Twenty Five Thousand Only) with the defendant no. 1 (in the account number 00073031064341) (both defined above as 'FDR No.1' and 'FDR No. 2' respectively) A cheque dated 19.01.2009, bearing no. 872606, in the sum of Rs. 1,80,000/- (Rupees One Lakh and Eighty Thousand Only), drawn on ICICI Bank Limited, (defined above as the 'cheque in question') was deposited by the plaintiff no.1 in the bank account for it to be encashed. The said cheque was duly credited by the defendant no.1 on 20.07.2009 and the cheque amount was subsequently withdrawn by the plaintiff no.1 on 21.07.2009. A letter /notice dated 09.08.2012, Exhibit PW-1/D, was issued by the defendant bank to the plaintiffs, intimating them about the cheque in question having been returned unpaid and notice to debit the cheque amount into the bank account as the said amount had inadvertently not been debited by the bank. The same day, the defendant bank marked a lien in the bank account and set off the FDR No. 1. Further, the defendant bank appropriated the FDR No. 2 and credited it in the bank account of the plaintiffs, which they also freezed.
CS No. 20/13 Naresh Chand Jain & Anr. v. Oriental Bank of Commerce & Ors. 14/25
13. In light of the above admitted facts, the claim of the plaintiffs is that the defendants have on account of their own fault/mistake not reversed the credit entry and debited the amount of the cheque in question and have after a lapse of more than three years wrongfully set off and appropriated the two FDRs, while also freezing the bank account of the plaintiffs. The case of the plaintiffs is that the plaintiffs have no liability whatsoever towards the defendant bank and, thus, the act of the defendants is wrong and questionable and that the plaintiffs are entitled to the reliefs claimed. PW-1 has deposed that he deposited the cheque in question on 20.07.2009 and according to the entry in his passbook, the amount of the cheque was credited on 20.07.2009. Further, PW-1 confirmed that he withdrew the entire cheque amount of Rs. 1,80,000/- (Rupees One Lakh and Eight Thousand Only) on 21.07.2009. The Learned Counsel for the defendants, at the time of cross-examination of PW-1, suggested that the plaintiff no. 1 knew that the cheque in question had been wrongly credited in the bank account and thats why he withdrew the amount, which was denied by PW-1. The contention of the defendants is that the plaintiff no. 1, being the former employee of the defendant bank, was well acquainted with the functioning of the banking sector and he knew that the cheque of such a big amount had not been honoured. During the cross- examination of PW-1, it has come to light that the cheque in question had been presented by the plaintiff no. 1 a few times prior CS No. 20/13 Naresh Chand Jain & Anr. v. Oriental Bank of Commerce & Ors. 15/25 to him having deposited it on 20.07.2009 and that each of those times, the cheque was returned unpaid. If it were to be true that the plaintiff no. 1 knew that a cheque of such an amount would not be honoured, it is not explained as to why he would present the cheque in question again on 20.07.2009. The question that next arises is that did the plaintiff no. 1 know that the cheque in question would be credited into his account this time and therefore knowing the same he withdrew the entire amount. Nothing has been shown by the defendants in order to arrive at such a conclusion. Further, certainly, PW-1 would be aware about the working or functioning of the banking sector. However, it is not the case of the defendants that it is a matter of practice usually followed by the banks that whenever a cheque is presented to a bank, the amount of the cheque is always credited in the account of its customer in anticipation of its payment, without waiting for its clearance from the other bank or the same bank. Even if this were a practice followed by the banks and the same was well within the knowledge of the plaintiff no.1, why had the plaintiff no. 1 not utilized the opportunity to withdraw the cheque amount, on any of the previous occasions, when he had presented it, presuming that the amount of the cheque would have been credited each time into his bank account, in anticipation of the payment. Further, as per the entries in the passbook of the plaintiffs, in neither of the previous occasions when the cheque in question was presented, was the cheque amount credited in the bank account of the plaintiffs in anticipation of payment. Therefore, the argument/ CS No. 20/13 Naresh Chand Jain & Anr. v. Oriental Bank of Commerce & Ors. 16/25 allegation of the defendants that the plaintiff no. 1 knew that the cheque was wrongly credited into his account is without substance. Generally, if a cheque amount is credited into a customer's account, it is reasonable for any person to withdraw the amount, though in this case, the emphasis by the defendants is that the plaintiff no.1 deliberately withdrew the entire amount. It is an individual's choice to withdraw the entire amount or any portion of it or none of it. If the defendants were aware that the plaintiff no. 1 had deliberately withdrawn the entire cheque amount, knowing that it had not been honoured, the defendant bank had the option to initiate criminal action against the plaintiff no. 1 or file a suit for recovery of the cheque amount. However, the same was not done. To suggest or impose a mala fide intent would require compelling evidence or circumstances and it cannot be based on mere conjectures or surmises. From the above, it is clear that the plaintiff no. 1 withdrew the amount of the cheque in question which was credited in his bank account, without knowing that the cheque had been dishonoured.
14.Now considering that the plaintiff no. 1 withdrew the cheque amount without knowing that it was wrongly credited, can it be said that, therefore, the plaintiffs have no liability towards the defendant bank to repay the cheque amount and were entitled to the reliefs claimed. It is the case of the defendants that the amount credited was in anticipation of the payment, whereas the cheque was returned unpaid due to insufficiency of funds and, inadvertently, the CS No. 20/13 Naresh Chand Jain & Anr. v. Oriental Bank of Commerce & Ors. 17/25 credit entry was not reversed. At this juncture, it is pertinent to refer to Section 72 of the Contract Act, which reads as:- "A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it." The question is whether the case of the defendants would be covered by the said section. In this regard, reference is made to the decision of the Hon'ble High Court of Delhi in Shri Rajiv Khanpuri v. Canara Bank., MANU/DE/2580/2012, with similar facts, wherein the bank instituted a suit for recovery against its customer in whose account, amount of an unpaid cheque had been credited and that reversal of the credit entry had not been done. In light of the facts of the said case, the Court held that Section 72 of the Contract Act was applicable. The relevant portion of paragraph no. 12 of the said judgment reads as, " ...The payment by mistake in Section 72 of Contract Act refers to payment which was not legally due and which could not have been enforced. The mistake is in thinking that the money paid was due when in fact it was not due. In the present, as cheque of Rs. 1,50,000/- was dishonoured, the payment of this cheque was not legally due to the defendant and could not have been enforced by him. The bank committed a mistake by thinking that the cheque has been dishonoured. Therefore, the case squarely falls in the four corners of Section 72 of the Contract Act..." In light of the above decision, it can be stated that Section 72 of the Contract Act is attracted in the present case and that the plaintiff no. 1 may have to repay or return the amount of the cheque in question subject CS No. 20/13 Naresh Chand Jain & Anr. v. Oriental Bank of Commerce & Ors. 18/25 to proof of dishonour of the said cheque.
15.The case of the defendants is that the defendant bank, in exercise of their right to lien, had set off and appropriated the FDRs of the plaintiffs and then freezed the bank account of the plaintiffs in order to recover the cheque amount due by the plaintiff towards the bank. The burden of proof is on the defendants to prove that they had rightfully exercised their right to lien under Section 171 of the Contract Act. A banker's lien is a judicially recognized right, which can be exercised to recover an amount due towards the bank. The law relating to the banker's right of lien and its extent is enunciated in the decision of the Hon'ble Supreme Court in Syndicate Bank v. Vijay Kumar & others., AIR 1992 SC1066, and the same is quoted as follows:- "...The above passages go to show that by mercantile system the bank has a general lien over all forms of securities or negotiable instruments deposited by or on behalf of the customer in the ordinary course of banking business and that the general lien is a valuable right of the banker judicially recognised and in the absence of an agreement to the contrary, a Banker has a general lien over such securities or bills received from a customer in the ordinary course of banking business and has a right to use the proceeds in respect of any balance that may be due from the customer by way of reduction of customer's debit balance. Such a lien is also applicable to negotiable instruments including FDRs which are remitted the Bank by the customer for the purpose of CS No. 20/13 Naresh Chand Jain & Anr. v. Oriental Bank of Commerce & Ors. 19/25 collection. There is no gainsaying that such a lien extends to FDRs also which are deposited by the customer. .." From the above, it is no longer res integra that a banker's lien extends to FDRs of its customer. Undeniably, the defendant bank has a right of lien, however, for the defendants to prove that they had legally/rightfully exercised their right to lien in respect of the FDRs of the plaintiffs, it is for the defendants to show that the bank did so in order to recover the amount due by the plaintiffs towards the defendant bank. In other words, the defendant bank must show that they exercised their right to lien to recover the amount of an unpaid cheque, returned for want of sufficiency of funds, when presented in clearing to the bank on which it was drawn, and that the credit entry was not reversed. For this, it is necessary to refer to the first notice dated 09.08.2012, issued by the defendant no. 1 to the plaintiffs, Exhibit PW-1/D. In the said letter, it is stated that the cheque in question when submitted to the bank by the plaintiffs was sent through clearing for collection and in anticipation of the payment credited the amount of the cheque in the bank account of the plaintiffs. It is further stated that, "The above cheque was returned unpaid due to the undernoted reason
1. Insufficient Funds."
Thereafter, it is stated that inadvertently the amount of the unpaid cheque was not debited to the plaintiffs' account, which the bank had decided to debit into the bank account of the plaintiffs. Having alleged that the cheque in question was dishonoured, it is not the CS No. 20/13 Naresh Chand Jain & Anr. v. Oriental Bank of Commerce & Ors. 20/25 case of the defendants that the defendant bank had issued and sent the returning memo of the cheque in question to the plaintiffs either along with the notice dated 09.08.2012, Exhibit PW-1/D, or at any time prior to the said date. Further, the defendants have not placed on record copy or the original returning memo issued by itself or the drawer bank. In the affidavit of DW-1, there is no whisper of the returning memo etc. It is pertinent to note that at the stage of admission/denial of document, this Court examined both the parties on oath as to the issuance and receipt of the returning memo, if any, of the cheque in question under Order X of the Code of Civil Procedure. Mr. Surender Kumar appearing for the defendant no. 1 (who has verified the written statement) stated that he has no knowledge of a returning memo issued by the defendant bank. The plaintiff no. 1 stated that having withdrawn the cheque amount, he did not thereafter receive any returning memo in respect of the cheque in question. Further, attention is drawn to the deposition of DW-1, who during his cross-examination, has admitted that the original cheque in question is in custody of the bank, however, it is not within his knowledge as to whether any returning memo was issued by the bank. It is pertinent to note that when the cheque in question was previously presented and returned, the same is reflected in the passbook (Mark B) of the plaintiffs, however, the fact that the cheque in question was returned on 20.07.2009, there is no entry as to its return/rejection in the passbook. Further, as per the practice of the defendant bank, the returning memo of the unpaid CS No. 20/13 Naresh Chand Jain & Anr. v. Oriental Bank of Commerce & Ors. 21/25 cheque is usually sent within a period of 2-3 days and sometimes on the same day. It is not the case of the defendants that the returning memo was issued, however, the same is misplaced or lost in transit etc. The defendants are absolutely silent about the issue or receipt of the returning memo of the cheque in question. Further, the defendant bank could have examined or called as a witness any official from the drawer bank/ICICI Bank Limited to prove the return of the cheque in question unpaid for want of sufficiency of funds, which was also not done. Having failed to produce on record or show that the returning memo was issued by the defendant bank, it cannot be stated that the cheque in question was dishonoured. For Section 72 of the Contract Act to come into operation in the present case, it has to be proved that the cheque was dishonoured. Thus, the defendants have failed to show any liability of the plaintiffs in respect of which the defendants allegedly exercised their right to lien. Not only do the essentials of Section 72 of the Contract Act stand unfulfilled, the defendants have consequently failed to prove that it had rightfully exercise its right to lien. The defendant bank could not have exercised the right to lien to recover an amount not shown to be due by the plaintiffs to the defendant bank. In light of the above findings, the question as to whether the plaintiff no. 1 knew or did not know that the amount of the cheque was wrongly credited in his account seems irrelevant and even otherwise a finding on this has already been given.
CS No. 20/13 Naresh Chand Jain & Anr. v. Oriental Bank of Commerce & Ors. 22/25
16. From the above, this Court is of the view that the plaintiffs have discharged the onus placed on them to show that they are entitled to the relief claimed. Therefore, issue no. 1 is decided in the affirmative.
Issue No. 2:-
2. Whether the plaintiffs are entitled to restoration of the fixed term deposits appropriated by the defendants? OPP
17. In light of the findings of this Court on issue no. 1, this issue is decided in the affirmative.
Issue No. 3:-
3. Whether the defendants had rightfully exercised their right to general lien under Section 171 of the Indian Contract Act, 1872 in the present case? OPD
18.The burden of proving this issue is on the defendants. In light of the findings of this Court on issue no.1, it has been concluded that the defendants have failed to discharge the burden to prove that they had rightfully exercised their right to lien. Therefore, this issue is decided in the negative.
Issue No. 4:-
4. Whether the court fees paid by the plaintiffs is insufficient in the present suit? OPD CS No. 20/13 Naresh Chand Jain & Anr. v. Oriental Bank of Commerce & Ors. 23/25
19.The burden of proving this issue is on the defendants. The defendants have not shown how the court fees paid is insufficient in the present suit. However, reference is made to paragraph no. 20 of the plaint, wherein it is averred that, "the value of the suit for the purpose of jurisdiction, declaration, permanent injunction and mandatory injunction for purposes of Court fee is Rs. 1000/-. The appropriate Court fee has been affixed." The court fees affixed is Rs. 1000/- (Rupees One Thousand Only). On perusal of the averments in the plaint, the prayer of the plaintiffs is in effect the relief of permanent and mandatory injunction. As per Article 1 of Schedule I of the Court Fees (Delhi Amendment) Act, 2012 (as applicable on the date of institution of the present suit), the court fees appears to be proper. In view thereof, this issue is decided in the negative.
20.Having given a finding on all the issues framed by this Court, this Court is of the view that the plaintiffs are entitled to the reliefs sought for. In view thereof, the defendant no. 1 is directed with immediate effect to operationalize the joint savings bank account of the plaintiffs without creating any obstruction to its use by the plaintiffs. Further, the defendants are directed with immediate effect to release the lien created/marked in respect of the FDRs/CDRs of the plaintiffs and to restore the entire amount of the FDRs (FDR No. 1 and FDR No. 2) , appropriated and set off by the defendant banks, along with the interest (as would have accrued up-till date) in their CS No. 20/13 Naresh Chand Jain & Anr. v. Oriental Bank of Commerce & Ors. 24/25 respective accounts of the plaintiffs within a period of one month.
21.Accordingly, the suit of the plaintiff is decreed. Decree Sheet be prepared.
22.File be consigned to record room after due compliance.
Pronounced in Open Court today July 17, 2014 (SALONI SINGH) Civil Judge-03/PHC/NEW DELHI 17.07.2014 CS No. 20/13 Naresh Chand Jain & Anr. v. Oriental Bank of Commerce & Ors. 25/25