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1. This Court issued Rule nisi on 19.06.2007.

2. Respondent filed the counter affidavit.

3. Heard Sri S.R.Sanku, the learned Counsel representing the writ petitioner and Sri Ch.Siva Reddy, the learned Counsel representing the respondent.

4. M/s.Mohan Enterprises represented by its Managing Partner filed the present writ petition as against the respondent-Andhra Bank, Narsapur Branch, Narsapur represented by its Branch Manager for a Writ of Mandamus declaring the action of the respondent bank in not returning its title deeds/documents furnished by the petitioner as security in respect of the open cash credit account, despite it's settlement and the satisfaction of the bank, as illegal and arbitrary, and consequently to direct the respondent-bank to forthwith return to the petitioner all its title deeds/documents furnished by the petitioner as security in respect of the said open cash credit account.

7. Heard the Counsel.

8. The writ petitioner had availed open cash credit limit of Rs. 3,00,000/- and also availed agricultural term loan from the respondent-Andhra Bank, Narsapur Branch, Narsapur, represented by its Branch Manager. It is also stated that as per the open cash credit account, the respondent bank filed O.S. No. 193 of 2004 against the petitioner for recovery of amount, since there arose certain disputes. However, the said suit was settled before the Lok Adalat and the petitioner paid the amount as settled before the Lok Adalat. Therefore, the petitioner requested for return of the title deeds. However, the bank refused to return the title deeds covered by O.S.NO.193 of 2004, on the ground that the writ petitioner owes another sum of Rs. 23,491/- as on 31.12.2005. Further it is stated that the action of the respondent bank in retaining the title deeds of the petitioner is illegal and arbitrary. If the bank has any claims against the petitioner, the same can be resolved as it had resolved the earlier transactions, but the bank cannot retain the title deeds of the earlier account, despite its settlement, just on the ground that another account is yet to be settled. It is also stated that the matter was referred to Lok Adalat and the Lok Adalat vide its order, dated 04.03.2006, closed the issue on the ground that bank has lien on the property as the other loan has not been cleared. Therefore, even in the Lok Adalat, there could not be a settlement regarding return of the documents as it is the contention of the bank that it has got lien on the property despite the settlement of the cases, on the ground that the other loan transaction is yet to be settled. It is also stated that the documents ought to have been returned to the petitioner in respect of the case which had been already settled. The specific lien in respect of the settled account came to be over and bank cannot exercise its general lien in respect of the same property, despite the fact that the dispute regarding that property had been settled and the bank can no longer exercise lien on the property as the dispute regarding that property was already over. In such circumstances, the present writ petition had been filed.

9. In the counter affidavit filed by the respondent it is averred in para 3 that the petitioner is a partnership firm represented by its Managing Partner Sri P.Sambaiah S/o.Late Suraiah, and the said firm availed cash credit facility of Rs. 3,00,000/- from the respondent bank and executed the loan documents. The Managing Partner, Sri P.Sambaiah, has created mortgage by deposit of title deeds relating to his property towards the security for repayment of the above said facility. As the said firm failed to repay the amount due, this respondent-bank filed suit in O.S. No. 193 of 2004 for recovery and the suit was settled by way of compromise before the Lok Adalat, Narsapur and the petitioner herein paid the compromise amount. As the cash credit loan account was discharged, the petitioner demanded for return of title deeds deposited with the bank. As Sri Sambaiah availed another loan from the respondent bank and failed to repay the amount due of Rs. 23,491/- as on 31.12.2005, in spite of repeated demands, the respondent bank retained the title deeds under bank's general lien and advised the petitioner to pay the loan amount due and take back the title deeds.

10. Further it is stated in para 4 that the petitioner approached Lok Adalat, Narsapur in Pre Litigation Matter No. 4 of 2006 against the decision of the bank in exercise of the banker's right of lien and the Lok Adalat, after hearing both parties, had closed the petition upholding the bank's right of general lien. It is also stated that the petitioner, instead of discharging the loan and taking back the title deeds, approached this Court by filing the present writ petition.

11. It is also stated that under Section 171 of the Indian Contract Act, 1872, the bankers have got right of lien on the goods held by the bank in the normal course of banking business unless there is contract to the contrary. The decision in SITA's case (3 supra) also had been referred to.