National Consumer Disputes Redressal
Branch Manager, State Bank Of India vs Shantilal Maganlal Patel on 5 April, 2017
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 1615 OF 2011 (Against the Order dated 14/02/2011 in Appeal No. 114/2008 of the State Commission Gujarat) 1. BRANCH MANAGER, STATE BANK OF INDIA Gurukul Road Branch, 1 & 2, Sankalp Square, Opposite M.G. Labour Institute, Drive In Road, Memnagar Ahmedabad - 380052 Gujarat ...........Petitioner(s) Versus 1. SHANTILAL MAGANLAL PATEL Residing at K/102, Indraprasth Tower, Drive In Road Ahmedabad - 380052 Gujarat ...........Respondent(s)
BEFORE: HON'BLE DR. B.C. GUPTA,PRESIDING MEMBER HON'BLE MR. PREM NARAIN,MEMBER For the Petitioner : Ms. Tarunika Gupta, Advocate For the Respondent : Mr. Saransh Kumar, Advocate Dated : 05 Apr 2017 ORDER This revision petition has been filed by the Petitioner, State Bank of Saurashtra against the order dated 14.2.2011 passed by the State Consumer Disputes Redressal Commission, Gujarat, Ahmedabad (for short, 'State Commission) in First Appeal No.114 of 2008.
2. Brief facts of the case are that a partnership firm in the name of Vatan Cinema had obtained loan from the Maliya Miyana branch of the Petitioner- State Bank of Saurashtra wherein the son of the respondent Umang was partner and wherein the respondent i.e. Shantilal Maganlal Patel had been the guarantor. Thereafter, as the said amount could not be recovered, the Bank had filed Special Civil Suit No.63/86 in the Court of Civil Judge (Senior Division), Morbi. In the said suit, an order was passed to pay the said amount alongwith 15% interest on it by the respondent. The respondent separately placed different amount in Fixed Deposit with the Drive-in Ahmedabad branch of the said bank. The Petitioner bank had taken from the said fixed deposit an amount of Rs.2,47,044/- against the amount of decree passed in the suit.
3. Aggrieved with the alleged arbitrary action by the OP-Bank without any authorization from the depositor, the complainant/respondent filed a Consumer Complaint No.386 of 2006 before the District Consumer Disputes Redressal Forum, Ahmedabad City (for short, 'District Forum') alleging deficiency against the petitioner Bank. The complaint was resisted by the petitioner Bank/OP, State Bank of Saurashtra on the ground that the Bank has the general lien on all the fixed deposits deposited by the investors and that there was a decree against the complainant who was a guarantor of the loanee and was duty bound to discharge the liability under the decree passed by the Civil Court. As the decreed amount was not deposited, the Bank was constrained to enforce the general lien on the FDRs and an amount of Rs.2,47,044/- was adjusted from the FDRs of the complainant. The District Forum ultimately allowed the complaint vide its order dated 26.12.2007 as under:-
"1. The complaint is allowed. Right of lien exercised by the bank is set aside.
2 The bank shall pay the amount which is recovered from the proceeds of the fixed deposit receipts and from the savings bank account to the complainant within one month with running interest @ 11% from the date of withdrawal till realization.
The bank shall also pay Rs.2,000/- towards costs of this complaint to the complainant and bear its own.
The aforesaid order shall be implemented within one month.
5. The complaint is allowed to the extent indicated above.
6. Copy of this order shall be forwarded by the office to all the parties on record free of charge."
4. Aggrieved with the order dated 26.12.2007 of the District Forum, the OP Bank preferred Appeal before the State Commission bearing No.114 of 2008 which was dismissed vide order dated 14.2.2011of the State Commission. The operative part of the order reads as under;
"3. In our opinion, after passing order -decree in favour of the bank, the respondent Shantilal Patel had placed fixed deposit with the Drive in Road branch of the Bank. The Civil Court has not passed the order to attach (seize) the said amount. Also as per the law the Bank can recover its outstanding amount from the properties of the Partnership Firm. Therefore the amount of respondent Shantilal Patel has been taken into credit the said amount against the amount of decree passed against the partnership, by the Bank is against the partnership, by the Bank is against the rules and regulations. The Bank is liable to pay back the said amount. Therefore, as the order passed by the Learned Forum is being proper and appropriate, the same is not required to be interfered with."
5. Hence, the present revision petition by the Petitioner Bank.
6. Heard the learned counsel for both the parties and perused the record.
7. The learned counsel for the Petitioner Bank argued that the loan was taken on 20.2.1985 from Malliya Village Branch of the State Bank of Saurashtra. One Umang Shantilal Patel minor son of the complainant was a partner and the complainant was the guarantor. The complainant has signed a Deed of Guarantee dated 20.2.1985 wherein the duty is cast upon him to get the loan repaid. When the loan became outstanding, the Bank filed a Civil Suit dated 6.3.1986 for recovery which was decreed in favour of the Petitioner Bank vide order dated 18.9.1994. It was decreed to pay the dues alongwith 15% p.a. interest. However, the complainant paid nothing to the Bank and therefore the Bank had no choice but to adjust the amount of FDRs of the complainant which were kept with the Bank. In this context, the learned counsel argued that for such recovery, no consent of the complainant was required as there is a general lien of the Bank on all the deposited amounts including FDRs. To support the arguments, the learned counsel referred to the following judgments:
State Bank of India Vs. Smt. Goutmi Devi Gupta, C.R. No. 884 of 2001,wherein it is held:
"xxxxxxxxSecond objection is also not tenable. S. 171 of the Contract Act gives statutory recognition to the concept ofBanker's general lien. It 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. Money is a species of goods which may be the subject matter of bailment and over which lien may be exercised. The general lien of bankers, as judicially recognized, and dealt with in S. 171 attaches to all goods and securities 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 such lien. There is no gainsaying that such a lien extends to FDRs also which are deposited by the customer.xxxxxx"
12. In view of the above legal position the decree holder in the present case cannot be directed to proceed first against the hypothecated property and then against the surety.
17. xxxxxxxxxBank 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 recognized 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 to the Bank by the customer for the purpose of collection."
State Bank of Mysore Vs. Surjeet Kaur, 1993 (51) DLT 150 : 1993(2) BC 177wherein it is held:
"7. The aforesaid decision of this Court on which reliance was placed by the Executing Court had already been reversed by the Supreme Court in re: Syndicate Bank v. Vijay Kumar and others, AIR 1992 SC 1066. The Supreme Courtdecided that case on 5/03/1992 whereas the impugned order is dated 20/04/1992. It has been held by the Supreme Court that having regard to the mercantile custom as judicially recognized the bank has a general lien over all forms of deposits and securities made by or on behalf of the customer in the ordinary course of banking business. The Supreme Court not only relied upon the recital in the letters in the said case creating lien in favour of the bank but also pronounced about the right of the bank of general lien over all forms of deposits or securities made by or on behalf of the customer in the ordinary course of banking business."
8. It was further argued that the complainant was duty bound to pay all the liabilities of the laonee. It is not necessary that first the action for recovery be taken against the loanee himself and then after exhausting, action against the guarantor be taken. The learned counsel stated that the action against the guarantor for recovery can be taken simultaneously. The learned counsel referred to the judgement of this Commission in Gurgaon Gramin Bank and another Vs. Om Parkash, IV (2010) CPJ 385 (NC), wherein the following has been held:
"In the recent decision in Civil Appeal No.4613 of 2000. Industrial Investment Bank of India Ltd. Vs. BiswanathJhunjhunwala, VI (2009) SLT 625-IV (2009) BC 574 (SC) decided on 19th August, 2009, the Supreme Court has held that the liability of guarantor and principle debtor are co-extensive and not in alternative. That being the legal position, the petitioner Bank was fully justified in appropriating the said amount from the Saving Bank of the respondent towards the outstanding loan amount. Orders passed by Fora below, thus, being legally erroneous deserve to be set aside."
9. The learned counsel for the petitioner further submitted that the complainant has pleaded that the OP Bank was authorized to take action for recovery of dues through the hypothecated property only and not from the other property of the complainant. In this regard, it was submitted by the learned counsel that the judgment in State Bank of India Vs. Jawahar Lal, I (1996) CPJ 293 (NC) clearly allows the recovery to be made from any other property of the loanee or the guarantor in addition to the hypothecated property. The relevant portion of this judgement reads as follows:-
"Indian Contract Act, 1872 - Section 171 "Bank" - "General Lien" - Complainant had a Saving Bank Account, withdrew Rs.20,000/- for two term deposits of Rs.10,000/- each - Complainant at the time of getting these deposits told the Bank Manager to add one more name - name of his brother added - Deposits were to be matured on 9.4.1992 - Amount on maturity not paid as loan amount was standing against his brother -District Forum accepted the complaint - Order confirmed by State Commission - Hence revision - If any security is not expressly pledged or made a security for a loan, whether a Banker can appropriate the amount? Yes."
10. It was also stressed by the learned counsel for the petitioner bank that it is the public money that is given on loan and it is the ardent duty of the Bank to recover the same from the loanee or the guarantor. If the complainant/loanee or guarantor can keep the money in fixed deposits, why cannot he repay the dues? In the interest of public money, the Banks have been given the general lien on the amounts deposited with the Bank. There is no agreement which debars the application of general lien on these FDRs.
11. On the other hand, learned counsel for the respondent stated that the Bank does not have general lien on the FDRs as is clearly opined in the judgment Tilendranath Mahanta Vs. United Bank of India and others, MANU/GH/0214/2001which readsas under:
"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. D.C. Mahanta, learned Advocate for the petitioner places reliance in MNU/KE/00498/1990 (Union Bank of India Vs. 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 page'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 property until the debt is paid. xxxxxxxxxx"
12. The learned counsel further asserted that the decree in the civil suit was passed in 1994 and its execution was filed in 1996. However, the bank recovered the amount of Rs.2,47,044/- from the FDRs of the complainant on 6.10.2005. The decree of the civil suit clearly states that if the respondents committed default in making payments of the said amount within six months from the date of passing of the order of decree then the plaintiff by making a proper application before the Court for disposing off the mortgaged property as it deems fit. Obviously, the petitioner Bank has not obeyed this order of the civil court and has arbitrarily recovered the amount from the FDRs of the complainant.
13. It was further pointed out by the learned counsel for the respondent that no notice was given to the complainant by the petitioner bank that his amount in FDRs is being considered for recovery against the decretal amount. Proper procedure has not been followed. In this regard, the learned counsel referred to the judgment in ING Vysya Bank Ltd., Frazer Town Branch Vs. Y.G. Sreeram Setty S/o Late Shri Y.S. Gopalakrishna Setty, I (2006) CJ 182 (NC) wherein the following has been observed:
"1. The question requiring consideration in this revision is 'Whether a Banker in exercise of its lien under Section 171 of the Contract Act, straightway appropriate the money deposited by a guarantor in FDR without any bailment and without informing the guarantor.
6. This Section also requires delivery of goods, for some purpose, upon a contract, and that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. In the case of deposit of money with the Bank, it cannot be equated or construed as delivery of goods to the Bank. Secondly, it cannot be said that moneys were deposited 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.
14. Learned counsel for the Bank submitted that 'general lien of the banker' is to the effect that the bank can retain as security for general balance of accounts on any goods bailed to them. Section 171 specifically provides that in the absence of a contract to the contrary, the bank can retain as a security for general balance of accounts any goods bailed to them.
15. In our view, this submission is without any substance. The complainant has not bailed any goods to the bank. The FDRs were also not pledged with the Bank against the loan taken by M/s. Gautam Enterprises. The amount was deposited with the bank after more than one year of the loan given to M/s. Gautam Enterprises. The wording of the section are clear to the effect that the bankers would have general lien only on any goods bailed to them. If goods are not bailed, Bank cannot go and take away any goods, wherever they are lying into their custody and contend that they have lien over the same."
14. It was the contention of the learned counsel for the respondent that first of all the FDRs were of the other Branch and the dues recovered was from the other branch of the petitioner bank. Moreover, these FDRs were made roughly 18 years after the decree was passed. Obviously they were not pledged with the Bank. The general lien can extend only to the property bailed to the petitioner bank. Hence, in no case the recovery can be made from these FDRs. The learned counsel in this regard referred to the judgment in the case Union Bank of India Vs. Devinder Kumar, IV (2007) CPJ 126 (NC) wherein it is held:
"Submission advanced by Shri Hemant Chaudhuri, whom we heard on point of admission was that the FDR in question was kept by the respondent under lien with the petitioner bank towards guarantee issued by it on behalf of M/s. Ramji Dass& Company in the year 1978 and as that lien still subsists, the respondent is not entitled to the refund of principal amount as also interest. Submission is, however, without any merit. There is no dispute that FDR in question was taken by the respondent on 9.3.1979. How a lien could be created in favour of petitioner bank in 1978 in respect of FDR taken out subsequently on 9.3.1979. Further, copy of judgment dated 20.9.99 placed on the file would show that it was even conceded by the counsel of petitioner before the District Forum that lien of FDR in question had not been proved by petitioner bank. Thus, assuming that there is sufficient reason to condone delay in filing the petition, aforesaid orders does not call for interference in exercise of powers under Section 21(b) of the Consumer Protection Act, 1986.
15. We have carefully examined the record and have given a thoughtful consideration to the arguments advanced by the learned counsel for the parties. The admitted facts are that the son of the complainant/respondent was a partner in the partnership firm, namely, Vatan Cinema and the partnership firm obtained a loan from the State Bank of Saurashtra (now merged in the State Bank of India). The respondent was a guarantor for the said loan and had signed the Deed of Guarantee with the Petitioner Bank. When the loan was not repaid, the Petitioner Bank approached the Civil Court by filing Special C.S. No.63:86. A decree has been passed in favour of the Petitioner-Bank by Civil Judge-S.D. on 18.9.1994. However, the firm or the guarantor did not comply with the decree and the petitioner Bank adjusted the amount of Rs.2,47,044/- from the FDRs of the guarantor/respondent. The learned counsel for the petitioner has relied upon the two judgements i.e. State Bank of India Vs. Smt. Goutmi Devi Gupta (Supra) and State Bank of Mysore Vs. Surjeet Kaur (supra) wherein it is laid down that the banks have general lien on the amounts deposited with them. However, the learned counsel for the respondent has relied upon the judgment of High Court of Guwahati in TilendraNathMahanta Vs. United Bank of India and others (supra). In this judgement Guwahati High Court has given a finding that money kept in FDR is in fact a loan to the Bank and the lien is not applicable on debt. Learned counsel for the respondent has also relied upon the judgment in ING Vysya Bank Ltd., Frazer Town Branch Vs. Y.G. Sreeram Setty S/o Late Shri Y.S. Gopalakrishna Setty (supra), wherein this Commission has raised the issue of procedure to be adopted for exercising the general lien. It is true that no notice was given to the respondent for adjusting these amounts of the FDRs, but in the present case, there was already a decree passed in the civil suit. The loanee as well as guarantor both are simultaneously liable to re-pay the loan amount and in the event of non-payment of the loan, any of them can be proceeded against. In this case, we would like to rely on the judgment in Gurgaon Gramin Bank and another Vs. Om Parkash (supra) wherein it is clearly laid down that the liability of guarantor and principal debtor are co-extensive and not in alternative. Thus, in the present case, the bank has decided to adjust the amount of FDRs of the guarantor. As there was a civil decree, we are of the considered opinion that non- issuance of notice was no major lacuna in the whole process of exercising the general lien as banks lend public money and a loanee/guarantor on one side, cannot deny to re-pay the loan and on the other side, keep the money in FDRs with the same Bank.We are of the firm view that public money given as loan for development/running of an enterprise, cannot be allowed to be swindelled away by the loanee or the guarantor. In spite of a decree passed in the civil suit, the principal debtor or the guarantor did not come forward to re-pay the loan.
16. The Deed of Guarantee has been signed by the respondent and clause 3 of this deed clearly reads as under:
"3. This guarantee is additional and without prejudice to any securities or obligations which you may now or hereafter have in respect of any indebtedness or liability hereby guaranteed and all rights and remedies in respect thereof are reserved.
17. From the above clause, it is evident that this guarantee is in addition to the hypothecated property or any other securities. Hence, there seems to be no illegality committed by the Petitioner Bank in adjusting the amount from the fixed deposit of the guarantor/ respondent.
18. The learned State Commission has dismissed the appeal basically on the ground that the recovery of the decretal amount was not made from the hypothecated property in the loan agreement and has been effected from the FDRs of the guarantor/respondent. In this regard, it is pertinent to mention that this Commission in the matter of State Bank of India Vs. Jawahar Lal (Supra) has held that recovery of the dues may be made from any other property of the loanee or the guarantor in addition to the hypothecated property. Relying on this judgement, we feel that recovery from the property other than the hypothecated property is in order in the circumstances of the case.
19. Based on the above examination, we find that the Petitioner Bank rightly exercised the general lien on the amount kept as FDRs with the Petitioner bank itself. We do not find any merit in the arguments that FDRs were made after a long time from the date of decree because the liability to re-pay the loan/decretal amount is continuous till its realization. The learned counsel for the respondent has relied upon the judgement of this Commission in Union Bank of India Vs. Devinder Kumar(supra) in this regard. However, we find that the facts in the said case are different and it was specifically claimed that the FDR in question was kept by the respondent under lien with the Petitioner Bank towards guarantee, whereas in the present case the whole case is related to general lien and not with any specific lien towards guarantee. This Commission in the said case decided that due to difference of dates, the FDR in question could not be treated as lien for the guarantee at the time when the loan was given. We, therefore, see that the judgment of this Commission passed in Union Bank of India Vs. Devinder Kumar (supra) is not relevant for the present case.
20. Based on the above discussion, we find that the orders of the fora below are not based on correct appreciation of law and are liable to be set aside. Accordingly, the Revision Petition No.1615 of 2011 is allowed and the order dated 14.2.2011 of the State Commission and order dated 26.12.2007 of the District Forum are set aside. Consequently, the complaint also stands dismissed.
21. There shall be no order as to costs.
...................... DR. B.C. GUPTA PRESIDING MEMBER ...................... PREM NARAIN MEMBER