Document Fragment View

Matching Fragments

Petitioner, who is a former employee of the BSNL is receiving his superannuation pension through the savings bank account opened by him exclusively for the said purpose at the Puthuppally Branch of State Bank of India ('the Bank'). The petitioner had earlier availed a term loan from the Bank for the purpose of purchasing a car and since the instalments of the said term loan were not remitted, the Bank had proceeded against the car and since the proceeds of the car was not sufficient to cover the liability, a decree was obtained by the Bank for realisation of the balance amount due from the petitioner. It is stated that the proceedings instituted by the Bank for execution of the said decree is pending. While so, the Bank has issued Ext.P4 WP.(C).No.20685/2017-I. notice to the petitioner informing him that a sum of Rs.2,96,118/- is due from the petitioner to the Bank in terms of the decree and since the petitioner has not remitted the same, the Bank has decided to set off the credit balance and the future credits in the pension account against the said liability of the petitioner. As per the said notice, the petitioner was also informed that the operation of the pension account will not be permitted, in the circumstances, until the liability is over. It is stated that the petitioner sent a reply to Ext.P4 notice informing the Bank that the account referred to in Ext.P4 being his pension account, the Bank cannot exercise any right of set off in respect of the credit balance and future credits in the said account. On receipt of the said reply, the Bank issued Ext.P5 communication to the petitioner stating that the Bank is entitled to exercise its general lien over the credit balance in the pension account. Ext.P4 notice issued by the Bank intimating the petitioner that he will not be permitted to operate his pension account, in the circumstances, is under challenge in the writ petition.

2. A statement has been filed on behalf of the WP.(C).No.20685/2017-I. Bank justifying the stand taken in Ext.P4 notice and Ext.P5 communication.

3. Heard the learned counsel for the petitioner as also the learned Senior Counsel for the Bank.

4. The learned Senior Counsel for the Bank asserted that the general lien of the Bank extends over the amounts outstanding to the credit of the petitioner in his pension account as well and that therefore, the stand taken by the Bank in Ext.P4 notice and Ext.P5 communication is in order.

7. The fact that the account of the petitioner in the Bank as referred to in Ext.P4 notice is an account opened exclusively by the petitioner so as to enable his former employer to disburse the pension payable to him is not in dispute. By mercantile custom, Banks have a general lien over all forms of securities or negotiable instruments deposited by or on behalf of their customers in the ordinary course of banking business and the said general lien is a judicially recognised valuable right available to the Banks. In the absence of any agreement to the contrary, the Banks are entitled to exercise the said right of general lien over securities or bills received in the ordinary course of banking business for realising the amounts due to them from the customers. [See Syndicate Bank v. Vijay Kumar, (1992) 2 SCC 330]. The question is whether the said right of the WP.(C).No.20685/2017-I. Bank could be exercised over the pension amounts received by the Bank for disbursement to their customers.

8. As noted above, the account is one opened by the petitioner with the Bank exclusively for the purpose of receiving his pension as part of the norms prescribed by his erstwhile employer for disbursing pension and no other transactions are permitted in the said accounts. As such, the character of the amounts received by the Bank on behalf the petitioner and credited in the account would continue to be pension. [See Radhey Shyam Gupta v. Punjab National Bank, (2009)1 SCC 376]. If that be so, in the light of the provisions contained in Section 11 of the Pensions Act, 1871, the Bank is precluded from proceeding against the said amount for realisation of the amounts covered by the decree obtained by them. If the Bank is precluded from proceeding against the said amounts for realisation of the amounts covered by the decree by reason of the provisions contained in the Pensions Act, 1871, they must be necessarily precluded from exercising their general lien also over the said amounts, for, if the Bank is permitted to exercise the WP.(C).No.20685/2017-I. general lien over the amounts credited in such accounts, the same would defeat the very purpose of Section 11 of the Pensions Act, 1871. Further, as noted above, general lien can be exercised by the Bank only over securities and negotiable instalments deposited by the customers in the ordinary course of banking business and that too, only in the absence of an agreement to the contrary. As noted above, by permitting the customer to open a pension account, the Bank has only facilitated the disbursement of the pension sanctioned to the customer by his employer. The amounts received in such accounts cannot be treated as amounts received by the Bank on behalf of its customer in the ordinary course of banking business. Further, by reason of the fact that the account is one opened exclusively for disbursing pension to the customer, there is an implied agreement also in such cases between the Bank and the employer of the customer to the effect that the amount credited in the account will be disbursed to the customer. The Bank cannot, therefore, exercise their right of general lien over the amounts available to the credit of the customer WP.(C).No.20685/2017-I. in the pension account.