National Consumer Disputes Redressal
Ing Vysya Bank Ltd., Mr. N. Khetty vs Y.G. Sreeram Setty, Mr. U.I.Bhat & Mr. ... on 31 January, 2006
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION CONSUMER DISPUTES REDRESSAL COMMISSION CIRCUIT BENCH AT BANGALORE REVISION PETITION No. 2458 of 2003 (From the order dated 6.6.2003 in Appeal No. 306of 2001of the State Commission, Karnataka) ING Vysya Bank Ltd., Petitioner Frazer Town Branch, Bangalore 560 005 Versus Y.G. Sreeram setty, Respondent S/o late Shri Y.S.Gopalakrishna Setty, No.2247, 23rd Cross, Banashankari 2nd State, Bangalore 560 070 BEFORE: HONBLE MR. JUSTICE. M.B.SHAH, PRESIDENT MRS. RAJYALASHMI RAO, MEMBER. For the Appellant : Mr. N. Khetty, Advocate. For the Respondent : Mr. U.I.Bhat, Mr. K.C.sudarshan, Advocates. Dated the 31st January 2006 . O R D E R
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?
Obvious answer is -
No. For this purpose we would refer to Section 171 of the Indian Contract Act, 1972 which provides for general lien of bankers, factors, wharfingers, attorneys and policy-brokers, which reads thus:
171. General lien of bankers, factors, wharfingers, attorneys, and policy-brokers.Bankers, factors, wharfingers, attorneys of a High Court and policy-brokers may, in the absence of a contract to the contrary, retain as a security for a general balance of account, any goods bailed to them; but no other persons have a right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to that effect.
The afore-quoted Section, inter alia, provides that bankers may retain as security for a general balance of account, any goods bailed to them. However, this is subject to a contract to the contrary. Therefore, the aforesaid part of the Section can be divided in three parts: (i) bankers may retain a security for general balance of account; (ii) any goods; (iii) bailed to them.
The word goods is defined in Section 2(7) of the Sale of Goods Act, 1930 which reads as under:
goods means every kind of moveable property other than actionable claims and money; and includes stock and shares, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.
This would mean that money is excluded from the word goods.
The next part is bailed; whether money which is deposited in Fixed Deposits, can be considered to be goods for bailment with the Bank. Bailment is defined under Section 148 of the Contract Act, which reads thus:
A bailment is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. The person delivering the goods is called the bailor. The person to whom they are delivered is called the bailee.
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 persons delivering them.
In this connection we would refer to some pronouncements by the Apex Court. While dealing with the Advocates lien on the case papers under Section 171 of the Indian Contract Act, Apex Court in R.D. Saxena vs. Balram Prasad Sharma - (2000) 7 SCC 264, has analyzed Section 171 and observed thus:
8. Files containing copies of the records (perhaps some original documents also) cannot be equated with the goods referred to in the section. The advocate keeping the files cannot amount to goods bailed. The word bailment is defined in Section 148 of the Contract Act as the delivery of goods by one person to another for some purpose, upon a contract that they shall be returned or otherwise disposed of according to the directions of the person delivering them, when the purpose is accomplished. In the case of litigation papers in the hands of the advocate there is neither delivery of goods nor any contract that they shall be returned or otherwise disposed of. That apart, the word goods mentioned in Section 171 is to be understood in the sense in which that word is defined in the Sale of Goods Act. It must be remembered that Chapter VII of the Contract Act, comprising Sections 76 to 123, had been wholly replaced by the Sale of Goods Act, 1930.
Again, in the case of Board of Trustees of the Port of Bombay & Ors. Vs. Sriyanesh Knitters (1999) 7 SCC 359 with regard to Section 171 it was observed:
This section is in two parts. The first part gives statutory right of lien to four categories only, namely, bankers, factors, wharfingers and attorneys of High Court and policy-brokers subject to their contracting out of Section 171. The second part of Section 171 applies to persons other than the aforesaid five categories and to them Section 171 does not give a statutory right of lien. It provides that they will have no right to retain as securities goods bailed to them unless there is an express contract to that effect. Whereas in respect of the first category of persons mentioned in Section 171 the section itself enables them to retain the goods as security in the absence of a contract to the contrary but in respect of any other person to whom goods are bailed the right of retaining them as securities can be exercised only if there is an express contract to that effect.
Therefore, it is apparent that in a case of bailment of goods, the banker can retain as a security for general balance of account any goods bailed to them. However, this would not mean that bank can straightway appropriate the amount due and payable under the FDRs for a general balance of account. In any case, no such power can be exercised with regard to guarantors FDR without calling upon the principal debtor to repay the loan amount and also the guarantor to repay in case loan is not paid by the principal debtor.
The learned counsel for the complainant relied upon the decision rendered by the Kerala High Court in Union Bank of India vs. K.V. Venugopalan & Ors. [AIR 1990 KERALA 223] wherein the Court held that the money put in fixed deposit constitutes a debt in the hands of the banker and a debt cannot be a suitable subject for lien. He also relied upon the decision of the Madhya Pradesh High Court in State Bank of India vs. Madhya Pradesh Iron & Steel Works Pvt. Ltd. Raipur and Ors. [AIR 1998 Madhya Pradesh 93] wherein it has been held that Section 171 of the Contract Act, in terms did not apply to cases of deposit of money. In view of aforesaid discussion and the decisions rendered by the Apex Court, the aforesaid two decisions are not required to be discussed further.
Facts:
In this case, admittedly, the Respondent is a guarantor for an advance of Rs.80,000/- made by the Respondent Bank of Jayanagar Branch to one M/s.Gautam Enterprises, Bangalore, during the year 1983-84. It is also admitted that the Complainant has deposited a sum of Rs.20,000/- on 3.12.1986 and Rs.30,000/- on 6.12.1986, under the Akshaya Deposit Certificate Scheme of the same Bank of Fraser Town Branch. The maturity dates for payment of the said deposits were 3.6.1993 and 16.6.1993 respectively. Under the scheme, on maturity the Bank was liable to pay a sum of Rs.40,490/- and Rs.60,735/- to the Complainant respectively. The Complainant sent the two fixed deposit receipts (FDRs) to the Opposite Party Bank for payment of the maturity value on 3.7.1993. The bank returned both the receipts as there was no amount lying in the deposits to the credit of the Complainant. Thereafter, the Complainant issued lawyers notice to the Bank on 2.11.1993. The notice was not replied. Hence, the Complainant approached the District Forum, Bangalore, by filing complaint No. 341 of 1994 claiming the total sum of Rs.1,01,225/- with interest and compensation. By judgment and order dated 29th March, 2004 relying upon Section 171 of the Contract Act, the District Forum dismissed the complaint with costs.
Against that order, the Complainant preferred Appeal No.306 of 2005, before the State Consumer Disputes Redressal Commission, Karnataka at Bangalore. The State Commission by order dated 6.6.2003 allowed the appeal by holding that the FDRs held by the Bank were not pledged with the Bank. The Complainant had fixed deposits in Fraser Town branch, whereas the M/s.Gautam Enterpreses had obtained the loan from the Jayanagar Branch of the Bank. The State Commission has also held that the District Forum was not justified in holding that one branch of the bank has jurisdiction to exercise its powers on the other branch of the same bank under the provisions of Section 171 of the Contract Act to have general lien.
Against that order the bank has preferred this Revision Petition.
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.
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.
In support of his contention, the learned Counsel for the Petitioner relied upon the decision of the Apex Court in Syndicate Bank Vs. Vijay Kumar & Ors., (1992) 2 SCC 330 wherein the judgment debtor who was having two FDRs delivered to the Bank with specific letters. For this purpose, the Court noted in para 5 as under:
The two FDRs were duly discharged by signing on the reverse of each of them by the Judgment-debtor and were handed over along with two covering letters on the Banks usual printed forms on September 17, 1980 at the time of obtaining the guarantee. The relevant clause of the letter reads as under:
The Bank is at liberty to adjust from the proceeds covered by the aforesaid Deposit Receipt/Certificate or from proceeds of other receipts/certificates issued in renewal thereof at any time without any reference to us, to the said loan/OD account.
We agree that the above deposit and renewals shall remain with the Bank so long as any amount on any account is due to the Bank from us or the said M/s Jullundur Body Builders singly or jointly with others.
To the same effect is the other letter. The above recital in the letter clearly goes to show that a general lien is created in favour of the appellant Bank in respect of those two FDRs. The Bank is given the authority to retain the FDRs so long as any amount on any account is due from the Judgment-debtor. Thus the appellant Bank had a right to set-off in respect of these FDRs if there was a liability of the Judgment-debtor due to the Bank.
Thereafter, the Court referred to Halsburies Laws of England and others, and held as under:
Applying these principles to the case before us we are of the view that undoubtedly the appellant Bank has a lien over the two FDRs. In any event the two letters executed by the Judgment-debtor on September 17, 1980 created a general lien in favour of the appellant Bank over the two FDRs. Even otherwise having regard to the mercantile custom as judicially recognised the Banker has such a general lien over all forms of deposits or securities made by or on behalf of the customer in the ordinary course of banking business. The recital in the two letters clearly creates a general lien without giving any room whatsoever for any controversy.
In our view, the aforesaid judgment is based upon admitted fact that the two FDRs were delivered to the Bank with a specific contract that they shall remain with the Bank so long as any amount on any account was due to the bank, and, therefore, the general lien was created. In such a situation, the Court was not required to consider the effect of Section 171 of the Contract Act. In this case, there is no positive or implied act of bailment of the FDRs.
In this view of the matter, other judgments relied upon by the parties are not required to be discussed.
In the result, this revision petition is dismissed. The order passed by the State Commission is confirmed. The petitioner shall pay costs of Rs.5000/- to the complainant.
Sd/-
J. (M.B.SHAH) PRESIDENT Sd/-
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(RAJYALAKSHMI RAO) MEMBER