Gauhati High Court
Pranab Kumar Goswami vs Uco Bank & 3 Ors on 5 November, 2015
IN THE GAUHATI HIGH COURT
(THE HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
WP(C) No. 2488/2015
Sri Pranab Kumar Goswami
S/O Late Tarun Chandra Goswami
H. No. 19, Arunodoi Path
Hatigaon, Dispur
Guwahati-38.
.........Petitioner.
- Versus -
1. UCO Bank, a body corporate
having its Head office at 10, BTM
Sarani, Brabourne Road
Kolkata-700001 represented by its
Chairman and Managing Director.
2. The Zonal Head
Zonal Office Guwahati
UCO Bank, Guwahati.
3. The Deputy Zonal Head
Zonal Office Guwahati
UCO Bank, Guwahati.
4. The Chief Manager
UCO Bank, Dispur Branch
Dispur, Guwahati-6.
........ Respondents.
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WP(C) No. 2879/2015
Sri Pranab Kumar Goswami
S/O Late Tarun Chandra Goswami
H. No. 19, Arunodoi Path
Hatigaon, Dispur
Guwahati-38.
.........Petitioner.
- Versus -
1. UCO Bank, a body corporate
having its Head office at 10, BTM
Sarani, Brabourne Road
Kolkata-700001 represented by its
Chairman and Managing Director.
2. The Zonal Head
Zonal Office Guwahati
UCO Bank, Guwahati-3.
3. The Senior Manager
Dhaligaon Branch, UCO Bank
P.O. Dhaligaon, District-Chirang.
4. The Manager
UCO Bank, Bhetapara Branch
Guwahati-781028.
........ Respondents.
-BEFORE-
THE HON'BLE MR. JUSTICE Manojit bhuyan
For the Petitioner : Mr. N Nath.
For the Respondents : Mr. S Chamaria.
Date of hearing : 05.11.2015.
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Date of judgment : 05.11.2015.
JUDGMENT AND ORDER (ORAL)
Heard Mr. N Nath, learned counsel representing the petitioner. Also heard Mr. S Chamaria, learned counsel representing all the respondents. The same set of counsels represent the respective parties in both the cases, which are taken up together and decided by this common order. Barring a few facts, both the writ petitions are laid on the same premises in so far as the grounds of challenge are concerned.
2. The petitioner was a Bank Officer who had retired from service on 31.12.2012 in his capacity as the Senior Manager, Zonal Office of UCO Bank, Guwahati. While he was in service as Senior Manager of Dhaligaon Branch, UCO Bank, his son, i.e., Sri Debabrata Goswami had applied for Education Loan to the Dhaligaon Branch for an amount of Rs. 4 lakhs. The said Education Loan was sought for the purpose of pursuing B.Tech Course at Chennai. The petitioner herein stood as the Guarantor to the said loan. The application of the son of the petitioner was duly forwarded to the Zonal Office and the said Zonal Office, in turn, sanctioned the Education Loan of Rs. 4 lakhs. A loan agreement to that effect was executed by and between the parties. As indicated above, the petitioner retired from service on 31.12.2012 and he was allowed a pension of Rs. 30,140/- and for facilitating the credit of the monthly pension, he maintained a Pension Account bearing A/C No. 05720100003320. It is the case of the petitioner that soon after his son completed the B.Tech Course, there was strained relationship between them as a result of which he was not aware as to whether any payment of monthly installments against the loan had been made by his son. According to the petitioner, prior to 21.11.2014 he did not receive any letters from the Bank in connection with any outstanding amount of the loan. It was only during December 2014, when his son brought to his knowledge the letter dated 21.11.2014 issued from the Bank which indicated that the petitioner is required to repay the outstanding loan amount. Immediately thereafter, the petitioner had approached the Dhaligaon Branch of the UCO Bank to inquire into the matter with request that he be allowed time in order to persuade his son and to discuss for an earlier settlement of the loan amount.
33. The cause of action for instituting the present proceedings arose on and from 03.04.2015 when the petitioner while using his ATM Card pertaining to his Pension Account could not withdraw any money from the ATM of Bhetapara Branch of the UCO Bank. The response slip indicated 'unauthorized card usage'. A similar response was also received by the petitioner when he tried to withdraw money at the ATM of the Dispur Branch of the UCO Bank. Aggrieved, he visited the Branch Head, UCO Bank, Dispur Branch on 04.04.2015 and submitted a Representation to that end. The petitioner was informed by the Branch Head that the Deputy Zonal Head, Zonal Office, Guwahati had sent an e-mail on 29.03.2015 to the Chief Manager, UCO Bank, Dispur Branch advising freezing of the Pension Account for debit entries and for deducting the arrear Equated Monthly Installment (EMI) on the loan account. On the basis of the said e-mail, an endorsement was made in the Representation of the petitioner dated 04.04.2105 indicating that the account has been frozen on 30.03.2015 as per Zonal Office e-mail dated 29.03.2015.
4. The freezing of the Pension Account of the petitioner is the subject matter in WP(C) No. 2488/2015. Challenging the actions of the respondent Bank, prayer is made for quashing the e-mail dated 29.03.2015 with further direction to the respondent Bank not to make any adjustment towards the loan amount from the monthly pension of the petitioner which is credited to his Pension Account as well as for a direction that the petitioner be allowed to operate the Pension Account maintained at the Dispur Branch of the UCO Bank.
5. In so far as the said WP(C) No. 2488/2015 is concerned, challenge is made on the following grounds:-
[I] The freezing of the Pension Account of the petitioner amounts to attachment of the pension allowed to the petitioner by the Bank and, therefore, the same is in gross violation of the proviso (g) to Section 60 (1) of the Code of Civil Procedure.
[ii] Pension being 'property' contemplated under Article 300-A of the Constitution of India, the same cannot stand for deprivation without any sanction of law or without any authority of law.4
[iii] In view of the legal proposition laid down in the case of Radhey Shyam Gupta Vs. Punjab National Bank and Another, reported in (2009) 1 SCC 376, even under the provisions of the Code of Civil Procedure, the pension and gratuity cannot be attached.
6. In so far as the second writ petition is concerned, the same is primarily laid on the same premises, save and except, that for the purpose of recovery of the outstanding loan amount standing at Rs. 8,70,156/- as on 28.02.2015, the Fixed Deposit and Recurring Deposit maintained by the petitioner at the Bhetapara Branch of the UCO Bank under Account No. 24720310002759 and Account No. 24720110001127 respectively were marked 'lien'.
7. According to the petitioner he had invested Rs. 10 lakhs in the Fixed Deposit Account out of the terminal benefits received by him on superannuation from service. According to him, this fact is not in dispute.
8. The grounds of challenge made in the second writ petition, i.e., WP(C) No. 2879/2015 is a reiteration of the challenge made in the first writ petition, i.e., WP(C) No. 2488/2015, however, with certain additional grounds.
9. Mr. Nath again makes reference to the case of R adhey Shyam Gupta (supra) to say that pension and gratuity which have been converted by the petitioner into Fixed Deposit cannot be attached under the provisions of the Code of Civil Procedure, even in cases when all other property specified in Section 60 (1) of the Code is made liable to attachment and sale in execution of a decree. According to the petitioner, the attachment of pension and gratuity is not permissible in the absence of any authority of law.
10. In the same breath, Mr. Nath contends that the Fixed Deposit and the Recurring Deposit being marked 'lien', such action is without any legal support and to that end makes reference to Section 171 of the India Contract Act, 1872 to say that the general lien of a Banker, etc, in the absence of a contract to the contrary, to retain as a security for a general balance of account is only to the extent of any goods bailed to the Banker. Referring to Section 148 thereof, Mr. Nath submits that 'bailment' is defined as the delivery of goods by one person to another for some purpose, upon a contract that they 5 shall, when the purpose is accomplished, be returned or otherwise disposed of according to the direction of the person delivering them. Under the said Section 148, the person delivering the goods is called the 'bailor' and the person to whom they are delivered is called the 'bailee'. The submission therefore is that since a Fixed Deposit constitutes a debt of the Bank to the customer, the transaction evidenced by a Fixed Deposit will not constitute a case of 'bailment' within the meaning of Section 171 of the Contract Act. In other words, it is urged that Section 171 of the Indian Contract Act, 1872 cannot be pressed into service by the respondent Bank. To that end, reliance is placed upon the case of Tilendra Nath Vs. Union of India, reported in AIR 2002 Gauhati 1, to say that there can be no bailment in case of Fixed Deposit. At this juncture, Mr. Nath also draws notice of this Court to the statement made at paragraph 25 of the writ petition to say that the Fixed Deposit of the petitioner maintained at the Bhetapara Branch of the UCO Bank was not pledged with the Bank as security for repayment of the Education Loan. On the said premises the second writ petition, i.e., WP(C) No. 2879/2015 is placed for allowing the petitioner to close his Fixed Deposit as well as the Recurring Deposit Accounts maintained at the Bhetapara Branch of the UCO Bank.
11. Mr. S Chamaria, learned counsel representing the respondent Bank opens his argument by saying that the proviso (g) to Section 60 (1) of the Code of Civil Procedure is not applicable in the facts and circumstances of the case, inasmuch as, the freezing of the Pension Account and or 'lien' marking of the Fixed Deposit and Recurring Deposit is not by way of attachment in the execution of a decree. According to Mr. Chamaria it is an independent action solely based upon the guidelines contained in the UCO Bank Circular dated 01.06.2015 (annexed to the writ petition) pertaining to the subject of Education Loan to relatives of Staff Members/Grant of Loan to Bank Officers/Employees on commercial rates. According to Mr. Chamaria, the said Circular propounds the requirement that where the loan amount is Rs. 4 lakhs or above, one of the conditions in the event of retirement of the officer standing as Guarantor or Co-borrower is that the officer concerned will have to keep a Fixed Deposit equivalent to the balance outstanding of the loan under 'lien' to the Bank or in the case of equitable mortgage of the residential house, the same to continue until adjustment of the loan. Relying upon the said conditions in the Circular dated 01.06.2015, Mr. Chamaria submits that the action taken by the respondent Bank against the petitioner towards recovery of the loan 6 amount cannot stand to be faulted. He adds that there is no dispute to the fact that money is due from the petitioner and it is the corresponding moral duty of the petitioner to take steps towards liquidation of the loan. However, as in the instant case, the petitioner has deliberately flouted to discharge his obligation thereby causing loss to the Bank.
12. In respect of Section 171 of the Indian Contract Act, 1872, Mr. Chamaria submits that a general lien on all security deposit with it by the petitioner is also applicable in respect of negotiable instruments including FDR's. To this end, Mr. Chamaria makes reference to a catena of decisions as follows:-
[I] (1992) 2 SCC 331 (Syndicate Bank Vs. Vijay Kumar and Others).
[II] (1999) 7 SCC 359 (The Board of Trustees of the Port of Bombay and Ors. Vs. M/s Sriyanesh Knitters).
[III] 2002 (2) KCCR 1237 (Smt. K.S. Nagalambika Vs. Corporation Bank and Anr.).
[IV] WP(C) No. 19096 of 2011 of the Madras High Court (C. Lalitha Raj Vs. The Assistant General Manager).
Out of all the aforesaid cases, Mr. Chamaria heavily relies upon the case of Syndicate Bank (supra). In the context of Section 171 of the Indian Contract Act, 1872, Mr. Chamaria relies upon the said case to say that a Banker most undoubtedly have a general lien on all securities deposited with them by a customer, unless there is an express contract or circumstances that show an implied contract, inconsistent with the lien. According to Mr. Chamaria, by the mercantile system, the Bank has general lien over all forms or security or negotiable instruments deposited by or on behalf of the customer in the ordinary course of Bank business. He adds that the general lien is a valuable right of the Banker which has been judicially recognized and in the absence of an agreement to the contrary, a Banker has a right to proceed against in respect of any balance that may be due from the customer by way of reduction of the customer's debit balance. Relying on the said case, Mr. Chamaria further submits that such a lien is also applicable to negotiable instruments including FDR's. The case in Syndicate Bank 7 (supra) is a clincher to the issue in support of the action of the respondent Bank in marking lien on the FDR of the petitioner.
13. Mr. Nath, in reply, submits that each case being an authority for what it actually decides, the facts of the case involved in Syndicate Bank (supra) is required to be noted so as to ascertain the foundation upon which the legal proposition was rendered. To that end, Mr. Nath refers to the very first paragraph of the case in Syndicate Bank (supra) which goes to show that in that case the judgment-debtor had requested the Bank to furnish a Bank Guarantee for a sum of Rs. 90,000/- in favour of the Registrar of High Court of Delhi. The Bank agreed on the condition that the judgment-debtor should deposit the entire sum of Rs. 90,000/- as security for the guarantee with the Bank. On 17.09.1980, the respondent No. 3, a partner of the judgment-debtor firm, deposited by way of two Fixed Deposits Receipts of Rs. 65,000/- and Rs. 25,000/- respectively after duly discharging them by signing on the reverse side of each Fixed Deposit Receipts. The decision in the case of Syndicate Bank (supra) in respect of the general lien of the Bank, according to Mr. Nath, was rendered on the touchstone of the facts involved in that particular case. Mr. Nath adds that the facts in the instant cases are absolutely different and distinct, inasmuch as, the Fixed Deposit Receipt that had been marked as lien was not pledged with the Bank at any point of time. In fact, it was out of the terminal benefits received by the petitioner upon superannuation from service that he had invested in the Fixed Deposit. In other words, Mr. Nath submits that the case of Syndicate Bank (supra) do not come to the aid of the respondent Bank in the facts and circumstances of the case.
14. In so far as the conditions in the Circular dated 01.06.2005 is concerned which requires keeping a Fixed Deposit equivalent to the balance outstanding loan amount under lien with the Bank, Mr. Nath refers to the statement made on oath in WP(C) No. 2879/2015 to say that the said condition had been revoked by the respondent Bank vide letter No. ZOG/Retail/BR/100/07-08 dated 06.12.2007. From the affidavit-in-opposition filed by the respondent Bank, Mr. Nath submits that the said statement on revocation of the condition has not been denied by the respondent Bank. Mr. Nath also submits that the challenge in the writ petition is not with regard to denial of repayment of the loan but on the manner and method by which the loan amount is sought to be recovered.
8The petitioner submits that the procedure adopted to recover the loan is ex-facie non- est and without sanction of law.
15. The rival submissions made by the parties have been noted. At the outset it is observed that notwithstanding the contention put forth by the petitioner that the condition in the Circular about the requirement of keeping the Fixed Deposit under lien to the Bank had been revoked, it is not the case of the respondent Bank that fulfillment of the said condition had been insisted upon by the Bank and that the petitioner had deliberately refused or ignored to comply with the same. The limited question therefore is whether it is permissible on the part of the respondent Bank to adopt or take forward the impugned actions for recovery of the outstanding loan amount.
16. Article 300-A of the Constitution of India provides that no person shall be deprived of his property save by authority of law. Deprivation of property to be lawful has to be on the basis of law enacted by the State Legislature or the Parliament or by statutory Rules and Regulations or orders having the force of law and not by any executive fiat or order. In other words, there can be no deprivation of property without any sanction of law.
17. 'Property' in the context of Article 300-A of the Constitution of India also takes within its fold the sums due to employees under a statute, including pension. The respondent Bank cannot deprive the petitioner of his property without specific legal authority that can be established in a Court of law, however laudable the motive behind such deprivation may be. In case of a deprivation except under the authority of law, it is always open for the aggrieved party to institute proceeding for mandamus for undoing the wrong.
18. In the instant case, the action of the respondent Bank in the direction of depriving the petitioner of his property do not emanate from any statutory law, Rules or Regulations empowering the Bank to do so. Reliance placed by Mr. Chamaria upon the Circualr dated 01.06.2005 is of no legal assistance as it is not clothed by any statutory power/authority. It is merely an executive fiat that cannot be enforced for the purpose which is the subject matter of challenge herein. Turning to the provisions under the Code of Civil Procedure, particularly the proviso (g) to Section 60 (1) thereof, it restricts 9 attachment of stipend and gratuities allowed to pensioners of the Government or of a local authority or of any other employees even in extreme cases where a decree is put to execution. The proviso (g) to Section 60 (1) of the Code of Civil Procedure has also received interpretation of the Apex Court in the case of Radhey Shyam Gupta (supra) to mean pension and gratuity which had been converted into Fixed Deposits. Also, pension and gratuity received by way of retiral benefits continue to be covered by the proviso (g) to Section 60 (1) of the Code of Civil Procedure. Even at the cost of repetition, it is observed that the statement made by the petitioner on oath that out of the terminal benefits received on superannuation from service a sum of Rs. 10 lakhs has been invested by way of Fixed Deposit, the same has not stood controverted by the respondent Bank.
19. The submissions made by Mr. Nath on behalf of the petitioner in respect of Article 300-A of the Constitution of India and on the proviso (g) to Section 60 (1) of the Code of Civil Procedure finds sufficient force. The submissions made by both the parties in respect of Section 171 of the Indian Contract Act, 1872 is not gone into, save and except to say that the facts in the instant case are wholly different/distinct from the case in Syndicate Bank (supra).
20. From the discussions and findings above, the action of the respondent Bank in freezing the Pension Account of the petitioner as well as the action towards depriving the petitioner of his amounts held in the Fixed Deposit and Recurring Deposit cannot stand the scrutiny of law and is liable to be interfered with, which is accordingly done. As a necessary corollary, a direction is issued to the respondent Bank to allow the petitioner to operate his Pension Account No. 05720100003320 maintained in the Dispur Branch of the UCO Bank as well as to allow the petitioner to close his Fixed Deposit Account No. 24720310002759 and the Recurring Account No. 24720110001127, both maintained at the Bhetapara Branch of the UCO Bank. Needless to say that it is open for the respondent Bank to proceed against the petitioner for recovery of the outstanding loan amount in the manner recognized by law.
21. Before parting with the case, it would be essential to observe that the petitioner cannot shy away from discharging his obligation to repay/liquidate the loan amount. To 10 that end, it is expected that both parties can work upon an arrangement in order to put the issue at rest, once and for all.
22. In view of the aforesaid discussions, findings and directions, both the writ petitions, i.e., WP(C) No. 2488/2015 and WP(C) No. 2879/2015 stands allowed. Having regard to the facts of the case, the parties are left to bear their own cost(s).
JUDGE Nilakhi 11