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"(10) That this agreement shall operate as a continuing security for all moneys, indebtedness and liabilities aforesaid notwithstanding the existence of a credit balance on the account or accounts at any time or any partial payments or fluctuations of accounts."

18. Section 171 of the Indian Contract Act reads as under :--

"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 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."
"That under the English law a banker has such a lien is laid down in several cases. In (1898) AC 693 it was held that 'as the bank was not shown to have received during the currency of the account notice of their trust character, the bank was entitled to set them off against its own claim against the company in liquidation.' In (1872) 8 Ex. 10 it was held that a banker is entitled to combine accounts and exercise a lien. Venkatesa Iyer in his law of Contracts, Edn. 3 at p. 902 says :
'In England, general lien of the kind contemplated in the section were first recognized in favour of bankers by the usages of trade which crystallized into the Law Merchant. Where a customer deposited securities with the bank, the banker was given a general lien over all the securities, except in eases where the deposit was for a particular purpose or where there was an agreement or contract inconsistent with the lien. Thus, if securities are deposited for safe keeping or if a particular purpose is mentioned as the object of the deposit, the banker cannot claim a lien on the securities in respect of the general balance that may be due.... When monies are held in one account and the payer in respect of these moneys owes the bank on another account, the banker's lien gives the bank a charge on all the monies of the payer in the hands, so that they may be transferred to whatever account the bank chooses, to set off or liquidate the debt.' This is what is stated in (1934) ILR 12 Rang 25 and AIR 1926 Sind 225 though on account of the peculiar circumstances of these cases a lien was not permitted; but the law has been enunciated very clearly in both these cases following the principle laid down in the English case in (1876) 1 AC 554. Relying on the case law referred to above I am of the opinion that the plaintiff in this case was entitled to a banker's Hen on all the moneys of the defendant in his hands and had even the right to combine the two accounts and transfer one from the other if he so chose..." (p.116)
"...The above passages go to show that by mercantile system the Bank 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 recognised and in the absence of an agreement to the contrary, a Banker has a general Hen 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. There is no gain saying that such a lien extends to FDRs also which are deposited by the customer." (p. 1069)

28. In view of the discussion above, I am of the opinion that the applicant Bank has general lien over the money realized on account of sale of sugar and molasses etc. which was secured under one agreement. The applicant-bank has a right to appropriate the surplus out of such sale proceeds towards the money due to the bank in the other account. In fact, such was the terms of agreement apart from the fact that such right is recognized under the law as well. Learned counsel for the official liquidator could not show any term of the agreement wherein the general lien of the applicant-bank has been curtailed in any manner. Consequently, the consortium of banks are entitled to first appropriate the sale proceeds in the agreed ratio in respect of the outstanding against Cash Credit Pledge Account. The balance, if any, can be appropriated by the consortium of banks in the same ratio in respect of the amount due to them in other accounts.