Kerala High Court
Syndicate Bank vs Sheela Julian on 24 October, 2018
Equivalent citations: AIRONLINE 2018 KER 1067
Author: V Shircy
Bench: K.Surendra Mohan, V Shircy
C.R.
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE K.SURENDRA MOHAN
&
THE HONOURABLE MRS. JUSTICE SHIRCY V.
WEDNESDAY,THE 24TH DAY OF OCTOBER 2018 / 2ND KARTHIKA, 1940
WA.No. 1053 of 2016
AGAINST THEJUDGMENT IN WPC 21944/2015 of HIGH COURT OF
KERALA DATED 23-03-2016
APPELLANT/RESPONDENT :
SYNDICATE BANK
REGIONAL OFFICE, 1ST FLOOR,PIONEER TOWERS,
SHANMUGHAM ROAD,ERNAKULAM - 682 031,
REPRESENTED BY ITS ASSISTANT GENERAL MANAGER.
BY ADV. SRI.R.S.KALKURA
RESPONDENT/PETITIONER:
SHEELA JULIAN
AGED 57, W/O. LATE JULIAN GOVER,CHERIA
PATTAPARAMBIL HOUSE,NERRA - 117, NETHAJI
ROAD,PALARIVATTOM, COCHIN - 682 025.
BY ADV. SRI.K.V.VINOD
THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 19.07.2018,
THE COURT ON 24.10.2018 DELIVERED THE FOLLOWING:
WA 1053/2016 2
JUDGMENT
Shircy V., J.
Syndicate Bank, a nationalized bank hereinafter referred to as the Bank is the appellant in this Writ Appeal. The respondent is the widow of one late Julian Gover who was an employee attached to the medical department at Lakshadweep. The respondent had filed Writ Petition, W.P(C) No.21944 of 2015 against the Bank seeking the following reliefs:
A) Issue a direction or other appropriate order directing the respondent bank to refund/restore the total debited amount of R.1,32,557.00 with interest from 28.2.2015 till the date of realization to the A/c.No.43102010063544 maintained by the petitioner with the Kaloor Branch of the respondent.
B) Issue such other reliefs as this Hon'ble Court may deem fit and proper to grant in the circumstances of case."
2. By a judgment dated 28th March 2016, the learned Single Judge has allowed the prayer and directed the Bank to re- credit the amount appropriated in her savings bank account WA 1053/2016 3 maintained at the Kaloor branch within a period of two weeks. Feeling aggrieved by the said judgment, this appeal has been preferred by the appellant/Bank.
3. We have heard Sri. R.S.Kalkura, the learned counsel for the appellant and Sri. K.V.Vinod, the learned counsel for the respondent.
4. Late Julian Gover while working in the medical department at Lakshadweep had availed a loan of Rs.1,60,000/- on 20.11.2011 from Willingdon Island Branch of the appellant bank, agreeing to repay the same in installments. But, unfortunately he expired on 20.12.2011 even before repaying the first installment which was due on 31.12.2011. One C.K.Surendran, a colleague of late Julian Gover, was the guarantor of the loan transaction. So after the death of Juilian Gover, he insisted for repayment of installments and thus the respondent his widow repaid an amount of Rs.72,800/-. But she could not clear off the entire amount outstanding in the account. While so an amount of Rs.3,38,546/-was credited in her account maintained in Kaloor branch of the Bank being the terminal WA 1053/2016 4 benefits of late Julian Gover by his department. Later she came to know that an amount of Rs.1,27,468.87 and an amount of 5087.89 were adjusted on different dates by the Bank towards the outstanding loan amount of Julian Gover without the consent or even knowledge of the respondent. Though the pensionary benefits are not liable to be attached, her request to refund the amount was rejected by the Bank and hence she was constrained to approach this Court with the Writ Petition. By the impugned Judgment, the entire amount debited by the Bank was ordered to be refunded to the account of the respondent, as prayed for.
5. The learned counsel for the Bank contended that the bank though made repeated requests to the respondent for re- payment of the loan amount, there was default on her side and she did not care to discharge the liability. In fact she approached the bank with a letter dated 23.10.2014 requesting for settlement of the entire transaction on payment of an amount of Rs.10,000/-. By virtue of the said letter, she made herself personally liable and responsible for repayment of the amount and thus the bank noted lien over the account maintained by her WA 1053/2016 5 by applying the core banking system and gave instructions to debit the amount as and when available and thus the amount was credited to the loan account and still an amount of Rs.29,110/- is due and outstanding as on 31.12.2015. It is further contended by the learned counsel for the appellant that the liability is fastened on the respondent as the terminal benefits of late Julian Gover had been credited to her savings bank account and then the amount deposited had lost the character of pension, thereby no exemption can be made available for the said amount. Therefore, the bank is not liable to refund the amount, is the stand taken by the Bank.
6. Admittedly, late Julian Gover had availed a personal loan for an amount of Rs.1,60,000/- agreeing to repay the loan in 48 equal monthly installments. He expired on 20.12.2011 even before payment of the first installment. The terminal benefits of Julian Gover amounting to Rs.3,38,546/- was deposited by the department in her SB Account at Kaloor Branch. Out of the same, without any information, the Bank debited in total an amount of Rs.1,32,557/- and adjusted towards the loan WA 1053/2016 6 transaction. The learned counsel for the Bank in the first place, has urged that the bank has a lien over the amount in the account of the respondent and hence debiting the said amount from the account of the respondent to adjust towards the outstanding debt is fully justified.
7. In this regard, Section 171 of the Indian Contract Act that deals with the general lien of bankers is reproduced below:
"S.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." Halsbury's Laws of England Vol.20,2 nd Edn.p.552, para 695, states lien as follows:
"Lien in its primary sense is a right in one man to retain that which is in his possession belonging to another until certain demands of the person in possession are satisfied. In this primary sense it is given by law and not by contract."
A lien means a right which a person in possession of property WA 1053/2016 7 holds and retains it against the other in satisfaction of a demand due to the party retaining it.
8. Here, the bank relies on Ext.R1(a), a letter dated 23.10.2014 alleged to have been submitted by the respondent before the bank expressing her pathetic financial constraints and inability to pay the amount, so as exercise the lien of the bank to justify the said withdrawal of the amount from her personal account. In fact she had requested to waive the outstanding loan because of her inability to repay due to her poor financial condition. However, it is stated that she was ready to pay a sum of Rs.10,000/- for clearing the loan.
9. According to the Bank by Annexure R1(a) letter dated 23.10.2014, the respondent had undertaken the liability for repayment of the loan and therefore, by exercising lien over the account of the respondent under Section 171 of the Contract Act certain amount was adjusted towards the dues,still amount is outstanding .
10. It has been brought to our notice that the respondent though approached the Banking Ombudsman WA 1053/2016 8 expressing her inability to pay the amount and requested to write off the loan there was no positive approach on the side of the bank. But despite her request on the date of the receipt of the terminal benefits, a sum of Rs.1,32,557/- was debited from her personal account without any information, is her grievance .
11. A Division Bench of this Court in Kodanad Service Co-operative Bank Ltd. v. K.K.Sushama and another (W.A.No.1628/2014) held that the gratuity amount received by the respondent therein on the death of her husband who was an employee of the appellant bank is not liable to be attached. Of -course, the said direction was made mainly on the basis of the overriding provisions of the Payment of Gratuity Act.
12. In Syndicate Bank v. Vijaykumar & Others (AIR 1992 SC 1066) the meaning of "Banker's lien" in the legal terminology and how it is understood and exercised in the banking system had been explained by the Apex Court. The question whether attachment can be effected by a decree-holder on Fixed Deposits offered as security while obtaining bank guarantee by a customer (Judgment debtor) of the bank to WA 1053/2016 9 ensure compliance of the decree debt, claiming general lien was considered and it has been held that the appellant bank has a general lien over the Fixed Deposit Receipts and hence it cannot be attached to adjust the debt of the judgment debtor. With the said observation the decision of the High Court under challenge to attach the amount in the FDRs. was set aside and it was held that the bank has a general lien over the FDRs and thus the attachment ordered against the FD amount to satisfy the decree of the decree-holders against judgment debtors/customer was rejected. The said finding was mainly because of the fact that there was a contract between the bank and the beneficiary of the guarantee furnished .
13. Based on the principles laid down in the decisions referred above, the learned counsel for the Bank contended that the respondent by executing Ext.R1(a) had confirmed her personal liability and responsibility for repayment of the loan. Undisputed factual position which emerged from the materials on record is that, the amount credited in the account of the respondent was only the 'terminal benefits' of her husband. It is WA 1053/2016 10 significant to note that there is no decree for enforcement or any proceedings before any court against the respondent regarding the issue in dispute. Still we think it appropriate to reproduce the relevant portion of Section 60 of the Code of Civil Procedure which reads as follows:
"60. Property liable to attachment and sale in execution of decree.-
The following property is liable to attachment and sale in execution of a decree, namely, lands, houses or other buildings, goods, in money, bank- notes, cheques, bills of exchange, hundis, promissory notes, Government securities, bonds or other securities for money, debts, shares in a corporation and, save as hereinafter mentioned, all other saleable property, movable or immovable, belonging to the judgment-debtor, or over which, or the profits of which, he has a disposing power which he may exercise for his own benefit, whether the same be held in the name of the judgment-debtor or by another person in trust for him or on his behalf:
Provided that the following properties shall not be liable to such attachment or sale, namely:-
(a) to (f) xx xx xx
(g) stipends and gratuities allowed to pensioners of the Government,(or of a local authority or of any other employer), or payable out of any service family pension funds notified in the official gazette by the Central Government or the State Government in this behalf and political pensions".WA 1053/2016 11
14. In Corporation Bank, Kasargod Branch v.
Subbaiah and others (W.P.(C)No.22032/2010) while dealing with the attachment of terminal benefits of a deceased Government servant in execution of a decree of money a learned Single Judge of this court held that the provident fund part of terminal benefits shall be segregated and exempted from attachment in execution of the decree. In Sebastian Jose v. Indian Overseas Bank Ltd (2010(1)KLT 980), one of us (K. Surendra Mohan,J.) while dealing with the issue whether life insurance policies come within the scope of exemption contained in Section 60(1)(kb) of the Code of Civil Procedure has held as follows:
" When the amount is received by the policy holder during his lifetime it becomes his personal property and when the same is received by his legal representatives after his death, it would become part of his estate. Either way, the money so received by him would be liable for attachment in his hands. But so long as the money retains its character as amounts payable under life insurance policy, it would continue to enjoy the benefit of exemption contained in Section 60(1)(kb) of the Code. The above being the legal position, it is clear that, the court below WA 1053/2016 12 was wrong in attaching the surrender value of the insurance policies of the revision petitioner".
In Radhey Shyam Gupta v. Punjab National Bank and Another [AIR 2009 SC 930] the Apex Court has held that pensionary benefits and gratuity received in cash and converted into Fixed Deposits, cannot be attached.
15. It is pertinent to note that there is difference with the issue involved in the case at hand as well in the decisions referred above. In all those matters, suit was filed either by the bank or by the creditor and obtained decree and in execution of the said decree, or during the pendency of the suit the issue of attachment of the pensionary benefits of the deceased was sought for. But, here the appellant Bank has not preferred any suit against the respondent. But Bank exercised the general lien over the savings account of the respondent on the basis of Ext. R1(a) letter addressed to the bank to convince or to recognize the realities of the situation and thereby to write off the debt due to her deceased husband. Here, it is also pertinent to note that no segregation of the terminal benefits is available to the WA 1053/2016 13 amount credited in the account of the respondent. In W.A.No.1628/2014 (supra) a Division Bench of this Court has observed that the gratuity amount out of the terminal benefits of the deceased employee cannot be attached. So also in W.P.(C) No. 22032/2010 (supra) it has been observed that the provident fund part of the terminal benefits of the deceased cannot be attached. In Sebastian Jose's case (supra) it has been held that the policy amount when retains the character as amount payable under the life insurance policies enjoy the benefit of exemption contained in Section 60(1)(kb) of the Code. Here, we cannot lose sight of the fact that the bank appropriated the amount which was credited in the account of the respondent as the pensionay benefits, which is not segregated. How much was the amount received as provident fund or gratuity or under the insurance policy exempted from attachment etc. are not at all discernible from the records. Obviously, the amount credited in her savings bank' account includes all those amounts. That being the position applying the principles laid down in the decisions referred above, though the bank has a general lien as WA 1053/2016 14 provided under Section 171 of the Contract Act and as held by the Supreme Court in Syndicate Bank's case (supra) it was not proper to appropriate the amount by the bank on the basis of a request like Ext.R1(a) alone, without adequate intimation to the respondent, especially when the terminal benefits are not segregated. The respondent has not entrusted or permitted/consented to adjust any amount due to the bank towards loan availed by her husband from her personal account. Without giving any intimation/information, the Bank exercised its lien on the basis of Ext.R1(a) and a substantial chunk of the terminal benefits was adjusted towards the outstanding loan. Ext.R1(a) alone cannot be considered as a fresh contract which is binding on the respondent making her personally liable and responsible for repayment of the loan availed by her husband mainly for the reason that there is no segregation of the terminal benefits; whether it is gratuity or provident fund or amount payable on insurance policy etc, are not discernible from the account. Suffice it to say that the situation would have been different in a case where a decree was passed by a court after WA 1053/2016 15 legally evaluating the entire aspects. On evaluating the entire aspects on the basis of the records, we are of the view that it would be better if a practice of obtaining an undertaking in definite and clear terms from the customers regarding repayment of amount due to the bank under any count is put in place. In the absence of such an undertaking, an intimation to the customers of the Bank ought to have been there, so as to give an opportunity to them to know what was happening, rather than subjecting them to the sudden surprise or shock, by adjusting a huge amount in a lump behind their back as done in the present case. The bank also had no authority to make such an adjustment from her bank account without her consent. Here, by interpreting her request to extend some leniency due to her indigent circumstances and treating the same as an undertaking to clear off the loan without any information about what has transpired, the amount has been adjusted, which action cannot be justified.
16. Bank (in commercial law) signifies a place where a great sum of money is deposited, returned by exchange, or WA 1053/2016 16 otherwise disposed of to profits. Therefore, while dealing with the money deposited or availed as loan by customers, the entire transactions must be in definite and specific terms and conditions, to ensure compliance of repayment, if any. Otherwise it will be against natural justice and such action will appear on the face of it as an unreasonable and outrageous one.
The writ appeal is dismissed. The Bank shall re-credit the amount within a period of three weeks from the date of receipt of a copy of this judgment.
Sd/-
K. SURENDRA MOHAN, JUDGE Sd/-
ks SHIRCY V., JUDGE
True copy
P.S.TO JUDGE
WA 1053/2016 17
WA 1053/2016 18