Dinesh Behl vs Central Bank Of India And Ors.

Ranjit Singh, J

Appellant herein had filed an application seeking release of the original perpetual lease deed executed in his favour which was lying in the possession of the respondent Bank. The Tribunal has dismissed this application by making reference to Section 171 of the Indian Contract Act holding the Bank entitled to claim general lien on the documents in its possession till the complete liability is discharged. Aggrieved against this order, the appellant has filed the present Appeal. A neat and pure question of law regarding, the right of the Bank to claim general lien over lease deed lying in its possession thus arises for consideration in this Appeal. The fact necessary to get a hang of the issue may now be noticed.

The respondent Bank had instituted Original Application No. 281/1997 for recovery of a sum of Rs. 2,95,09,400/- with interest and cost. Respondent No. 2 Hind Protective Coating Ltd. was the principal borrower and the appellant being one of the Directors of the Company had given guarantee along with some Directors. The case set up by the Bank was that the appellant had created an equitable mortgage by deposit of title deed of the property bearing No. 9/4, Sarvapriya Vihar, New Delhi as collateral security. Appellant, however, had denied that he had ever created any mortgage. The issue which thus arose before the Tribunal below while deciding the Original Application was whether the property was mortgaged only for the Bank guarantee facility of Rs. 20 lacs. The finding by the Tribunal below is that this property of the appellant-9/4, Sarvapriya Vihar, New Delhi was offered as collateral security for the Bank guarantee facility of Rs. 20 lacs only and not for any other loan or facility and the Bank guarantee liability was not existing as the same stood discharged by return of the original Bank guarantees. The Tribunal below accordingly held that the said property was not a secured asset in the hands of the respondent Bank. In this background, the appellant had prayed for giving direction to the Bank for release of the title deed in respect of the said property which was deposited to create security only in respect of the Bank guarantee facility which stood discharged.

The Tribunal, while taking note of Section 171 of the Indian Contract Act, has held that the respondent borrowers are yet to discharge huge liability and so the Bank is held justified in exercising lien by retaining the title deeds. The Tribunal, therefore, has declined to direct the Bank to return the title documents of the property of the appellant. This order is now under challenge in the present Appeal.

The Counsel appearing for the appellant would contend that the Bank cannot claim general lien over the title document of the property once the said document was found to be offered as collateral security only for the Bank guarantee facility of Rs. 20 lacs. As per the Counsel, the claim of the Bank was that this property was offered as security for all the facilities for which the Original Application had been allowed and this in itself would be a contract contrary to the right of the Bank to claim general lien over the title document of this property. In support of his plea, the Counsel has placed reliance on the judgments in the cases of Krishna Kishore Kar v. United Commercial Bank, AIR 1982 Cal. 62 and Sree Vadivambigai Ginning Industries Pvt. Ltd. v. Tamil Nadu Mercantile Bank Ltd. through its Manager Pollachi, IV (2015) BC 110 : 2015 (4) MLJ 431.

On the other hand, the Counsel appearing for the Bank would state that Section 171 of the Indian Contract Act is clear and would entitle the Bank to claim a general lien over the title document of this property to ensure recovery of the amount which had been allowed in the Original Application. Counsel would refer to the order passed in the Original Application, where the Tribunal, while recording the finding that this property was offered as collateral security only for the Bank guarantee facility of Rs. 20 lacs, had also observed that this property was a personal asset of the appellant and the Bank could lay claim on the personal assets of the appellant also if law permitted as the appellant was also found personally liable for the dues of respondent No. 2 as one of the guarantors. Otherwise, in support of his stance, the Counsel for the Bank has relied on the judgment in the case of Syndicate Bank v. Vijay Kumar, 1991 (SLT Soft) 141 : AIR 1992 SC 1066 and judgment of Delhi High Court in the case of Smt. Sadhna Gupta v. Sh. R.C. Gupta, I.A. No. 8092/2001 in C.S. (O.S.) No. 1731/2001, decided on 10th August, 2009.

I have considered the submissions made before me. Section 171 of the Indian Contract Act has recognized the concept of Bankers' general lien. This section gives a statutory recognition to the said concept. This section is 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 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."

As per Halsbury's Laws of England, 4th Edition, lien, in its primary or legal sense, means a right at common law in one man to retain that which is rightfully and continuously in his possession belonging to another until present and accrued claims of the person in possession are satisfied. Section 171 of the Contract Act gives statutory recognition to the concept of "Banker's general lien". This section provides that the Bankers 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. General lien of Bankers attaches to all goods and security deposited with them as Bankers by a customer or by a third person on a customer's account provided there is no contract, express or implied, inconsistent with the said lien. Thus, the Bankers can look to general lien as a protection against loss on account, or loss on loan or overdraft where a Banker has advanced money to another, he has a lien on all securities which come into his hand for the amount of his general balance, unless there is a contrary intention. Lien is and right to retain property belonging to another until a debt due from the latter is paid.

The plea by the Counsel for the appellant is that this property being given as security for the Bank guarantee facility only would mean that there was an implied contract between the parties that Bank would not be in a position to claim general lien over this property. In other words, plea seems to be that this property being given as security for Bank guarantee is a contract inconsistent with lien. Concededly, there was no specific contract inconsistent with the Banker's lien. Section 171 of the Contract Act says that in the absence of contract to the contrary the Bank may retain as a security for a general balance of account any goods bailed to them. Thus, where there is a contract between the Bank and the party not to retain a security for general balance, in that event right to retain a security as lien in terms of Section 171 of the Act cannot be exercised. The appellant has not pleaded any specific contract between him and the respondent Bank which could act as bar for the Bank from claiming a right of general lien over this property. The plea is that the said property and document being offered as security for the Bank guarantee facility of Rs. 20 lacs would imply a contract that the parties have agreed that this property would not be liable to Bankers' general lien. The Counsel for the appellant has made an attempt to seek support for such plea canvassed by him from the judgments referred to above and relied by the Counsel.

In the case of Sree Vadivambigai Ginning (supra), the plaintiff Private Company had filed a Suit for mandatory injunction directing the defendant Tamil Nadu Mercantile Bank Ltd. to return them the documents mentioned in schedule within a stipulated period. The Company which had obtained Rs. 37,27,000/- from the Bank by deposit of title deed claimed to have repaid the loan and had closed the account. The Bank had issued no-dues certificate to them. The Bank, however, was delaying the return of the documents despite assurance when the plaintiff Company served a legal notice. In the reply, the Bank stated that the said documents could not be returned as another Company which was alleged to be a sister concern of the plaintiff had obtained a loan from Madurai branch of the Bank and had not paid the outstanding and, therefore, the documents deposited with the Pollachi branch of the Bank by the plaintiff were held as general lien over the documents. Aggrieved against the non-delivery of title documents despite having made payment, the plaintiff preferred this Suit. The Bank had contested the Suit pleading that the documents could not be returned as the same were held as general lien towards the liability of the sister concern of the plaintiff Company

The Trial Court on consideration of the documents and arguments, decreed the Suit in part directing the defendant Bank to return four of the ten documents. The Trial Court upheld the right of the Bank to claim general lien on the remaining six documents till the termination of the loan obtained by the sister concern or the plaintiff. The plaintiff and the Bank preferred Appeals. The Appellate Court while confirming the finding of the Trial Court with regard to the return of three documents set aside the order of the Trial Court in respect of direction to return one document. The lower Appellate Court also confirmed the order of the Trial Court in regard to the remaining seven documents, holding the Bank entitled to have general lien over those documents deposited by the plaintiff. Aggrieved against this order, the Appeals were preferred before the High Court.

As per the High Court, rule of law with regard to general lien is clearly laid down in Section 171 of the Contract Act and that the Bankers have such a lien on things bailed with them unless there is a contract to the contrary. Finding that the Bank had already issued a no-dues certificate, the Court has held that the question of extending general lien would be unacceptable. The Court has also observed that in case the Bank had lent money to a particular customer for a specific purpose and specific amount, the lien of Bank over the money and its customer does not extend to amounts which have been borrowed by the customer on any other name or different head. What seems to have weighed with the Court is that the general lien was claimed in respect of a liability which was of a sister concern and not of the borrower who has given this title deed as security.

Another important aspect noticed by the Court in this case is that the Bank was not clear whether the documents were being retained as general lien or as collateral security. The Court has noticed that if the Bank was retaining as a general lien, then there has to be a relationship of Banker and customer between the Bank and the person depositing security, and such deposit should be one that has been received by the Bank in its ordinary course of Banking. The Court has then noticed that the once the loan accounts are liquidated and on issuance of "No Due Certificate", the relationship of Banker and customer ceased. As per the High Court, as a corollary, the right of Banker's lien will come to an end. In this context, it is observed that in the absence of any outstanding for the purpose for which the documents were deposited, the documents cannot be held as general lien. If it is to be treated as collateral security, then the intention and offer of the title deeds for the said purpose have to be established. This can be made out from the following part of the judgment:

"23. The other important aspect that has to be seen is, the defendant Bank has not made it clear whether the documents are retained for general lien or as collateral security. Once again, if it is general lien, there has to be a relationship of Banker and customer between the Bank and the person depositing security, which should be one that has been received by the Bank in its ordinary course of Banking. It can be stated that once the loan accounts are liquidated and on issuance of "No Due Certificate", the relationship of Banker and customer ceases. As a corollary, the right of "Banker's lien" will come to an end. Therefore, in the absence of any outstanding for the purpose for which the documents were deposited, the documents cannot be held as general lien. If it is to be treated as collateral security, then, the intention and offer of the title deeds for the said purpose have to be established. Though as per Exts. A-12 and B2, there was a correspondence with respect to the same, viz., collateral security, admittedly, it was not acted upon as the defendant Bank had not lent the money sought for by the sister concern of the plaintiffs. In such circumstances, the retention of the documents by the defendant Bank is not legal."

To me it appears that the right of the Bank to have a claim of general lien was primarily declined on the ground that the loan availed was by a sister concern of the plaintiff. Therefore, it was held not open to the Bank to claim general lien over the title deed deposited by the plaintiff. The following finding recorded by the Court may indicate so:

"26. Considered from the above perspective, I have no hesitation to conclude that by operation of Section 171 of the Contract Act, unless there is an intention expressed contrary to the contract, the Bank has a general lien over the securities belonging to the debtor that come into its hands, and if the money is in its hands as the general account, it has a right to set-off; but when any deposit has been made for a special purpose, in a given circumstance, unless there is any contract to the contrary, it cannot be implied that the Bank has a general lien over the specified security deposit for a specified purpose. Indisputably, there is no contract offering to take the title deeds deposited by the plaintiffs as security to the loan availed by the sister concern of the plaintiffs. Therefore, it is not open to the Bank to claim general lien over the title deeds deposited by the plaintiffs. The express contract was for discharge of the loan availed for plaintiffs against which a "No Due Certificate" has also been issued. In such circumstances, the action of the defendant Bank in refusing to release the title deeds is clearly illegal. Therefore, this point is answered in favour of the plaintiffs."

In the present case, the Bank is not claiming any general lien in respect of liability of any sister concern. Here, the Bank is claiming lien over the document in respect of a liability for part of it this property was offered as security and this liability has been determined against the appellant and others where the appellant has also given a personal guarantee.

In the cast of Krishna Kishore Kar (supra), the plaintiff had opened a Cash Credit account with the defendant Bank. The Bank at the request of the plaintiff had executed a bond for Rs. 2 lacs in favour of defendant No. 2 guaranteeing payment for coal supplied and to be supplied to the plaintiff by defendant No. 2. Plaintiff executed a counter guarantee in favour of defendant No. 1 as against the bond on certain terms and conditions. The period of guarantee was from 27th August, 1962 to 1st August, 1963. In respect of the Bank guarantee, defendant No. 2 had demanded margin money from the plaintiff and pursuant to the same, the plaintiff from time-to-time had paid an aggregate sum of Rs. 1,83,500/-.

Plaintiff alleged that the guarantee period in favour of defendant No. 2 had expired and he had paid the entire dues of defendant No. 2. Plaintiff accordingly demanded margin money of Rs. 1,83,500/- from the Bank. The Bank failed and neglected to pay the same. As per the plaintiff, the Bank was holding the said sum by way of Trust or money it had and received and was bound to refund the same with interest. The plaintiff had filed a Suit accordingly.

The Bank filed Written Statement disputing the fact that the plaintiff had paid the full amount to defendant No. 2 as the bond had not been returned duly discharged. As per the Bank, a sum of Rs. 19,787.32 was due to the Bank by the plaintiff in Cash Credit account and the Bank is entitled to recover the same. The Bank had further pointed out that at the request of the plaintiff the Bank had executed another guarantee bond for Rs. 1 lac in favour of the President of India guaranteeing payment for plaintiff's transactions with the Eastern Railway. As against this guarantee, the plaintiff also executed a counter guarantee in favour of the Bank. In terms of these two bonds, the Bank was unconditionally authorized to pay to the President of India and/or the Eastern Railway on demand without any reference to the plaintiff. The plaintiff had agreed that he would reimburse the Bank on demand and default Bank was entitled to recover the same from the accounts or securities held or to be held by the Bank. Alleging that the Bank had paid Rs. 56,740/- to the Eastern Railway on demand and as such it was entitled to recovery the same from the plaintiff, an aggregate sum of Rs. 76,527.32 was adjusted by the Bank against the sum of Rs. 1,83,500/- in exercise of its lien and/or general lien. The Bank in the alternative also pleaded that it was entitled to appropriate and set off its said claims against Rs. 1,83,500/-. and had already appropriated the said sum of Rs. 76,527.32 against the sum of Rs. 1,83,500/-. It may be noticed here that defendant No. 2 had made a demand of Rs. 2 lacs (approx.) under guarantee but the plaintiff disputed the said claim. Plaintiff had instituted a Suit for restraining the Bank from paying the said amount out of margin money. Order was passed that the Bank shall not pay to any parties to the Suit, the amount lying with the Bank without leaving Rs. 90,000. Thus, a balance amount of Rs. 93,500/- became free out of Rs. 1,83,500/- for payment.

The plea of the Counsel for the plaintiff was that the entire sum of Rs. 1,83,500/- was deposited in the Bank by way of margin money and since the Bank failed and neglected to refund the same holding the said sum by way of Trust or money it had and received and the Bank is bound to refund the same with interest. The plea by the Bank was that it did not appropriate or adjust on the basis of counter guarantee but did so in exercise of its general lien under Section 171 of the Contract Act. The Court in this case has found that there was an express contract between the parties creating lien or security which would exclude operation of the statutory general lien under Section 171 of the Contract Act. The Court has found that the plaintiff and the Bank had an express contract by way of counter guarantee providing the method of reimbursement. This contract was held to exclude the application of Section 171 of the Contract Act. Thus, the counter guarantee dated 27th November, 1962 was held to be a contract and so right of the Bank under Section 171 of the Contract Act was held unacceptable. It was the reason for which the Bank was held not entitled to exercise a general lien under Section 171 of the Contract Act. This can be made out from the following:

"20. For this principle, we need not look into the English cases as Section 171 of the Contract Act itself clearly lays down that the provisions of this section will apply only in absence of the express contract to the contrary. Therefore, in the present case the defendant Bank cannot exercise any general lien under Section 171 of the Contract Act in view of the existence of the counter guarantee dated 27th November, 1962. I accept this submission on behalf of the plaintiff and hold that the Bank was not entitled to appropriate or adjust its claims under Section 171 of the Contract Act."

In fact, in this judgment only the Court has considered the plaintiff's alleged liability in Cash Credit account which the Bank had also adjusted by crediting the fixed deposit proceeds as well as setting of the balance outstanding against Rs. 93,500/-. On the basis of this fact, the Court has held that it has no hesitation to accept the testimony of the Bank's witness that the entries in the cash credit ledger, security ledger are all correct. The Court then considered whether the Bank could adjust balance of Rs. 19,783/- in Cash Credit account by appropriating the same amount from Rs. 93,500/- which was lying in a separate account. Finding that there was no express contract between the plaintiff and the defendant Bank regarding manner of adjustment of this outstanding amount in the Cash Credit account, the Court has held that all the proceeds of the fixed deposits had been duly credited in this account and the Bank could exercise its general lien under Section 171 of the Contract Act for making up the loss caused by the plaintiff and the Bank had rightly adjusted this claim against Rs. 93,500/- set free by order dated 1st July, 1963.

What would emerge from this judgment is that when there is express contract to the contrary, general lien under Section 171 of the Contract Act cannot be claimed but in the absence of a contract to the contrary the Bank's right to claim general lien would always remain.

The Hon'ble Supreme Court has considered the meaning of "Banker's Lien" in the legal terminology and how it is understood and is exercised in Banking system in the case of Syndicate Bank (supra). The issue arose in the background of the fact where the Bank had agreed to furnish the Bank guarantee on behalf of the judgment-debtor on the condition that judgment-debtor should deposit entire sum of Rs. 90,000/- with the Bank as a security for guarantee. On 17th September, 1980, partner of the judgment-debtor (respondent No. 3) deposited by way of two FDRs Rs. 65,000/- and Rs. 25,000/- after duly discharging them by signing on the reverse of each FDR. As per the recital in the letter, the judgment-debtor agreed to deposit and further agreed that renewals shall remain with the Bank so long as any amount on any account was due to the Bank from the judgment-debtor. Thereafter, Bank had issued guarantee of Rs. 90,000/- in favour of Registrar, High Court. Division Bench of the High Court had discharged the Bank guarantee by an order passed in an Appeal preferred by the judgment-debtor. Bank guarantee was returned to the Bank. The decree-holder made an application in pending execution petition for attachment of Rs. 35,000/- out of Rs. 90,000/- deposited as security for the Bank guarantee. Single Judge of the High Court made an order of attachment on 21st November, 1980. Bank appeared and raised objection against the attachment. High Court rejected the objection. Against this order, the Bank had filed the Appeal before the Hon'ble Supreme Court contending that the Bank had a Banker's lien over the amount deposited by the judgment-debtor and the Bank had a right to hold security in respect of the overdraft amount and therefore attachment cannot be sustained.

While dealing with similar contention as noted above raised before it, the High Court had held that these two FDRs were deposited with the Bank as security for the Bank guarantee and when it was discharged the sum covered by the two FDRs belonged to the judgment-debtor and Bank cannot have general lien on the security given for the Bank guarantee and in such cases it is only a case of particular lien and not a case of general lien and therefore, the amount covered by two FDRs could be attached.

Besides other pleas, the Counsel for the Bank had canvassed the issue of Banker's lien which is legally recognized and which is held to be of great importance to the entire Banking community and that such lien cannot be interfered with unless the liability in respect of which the lien is created is fully discharged. The Hon'ble Supreme Court has examined the meaning and scope of expressions 'Banker's Lien" and the 'Bank guarantee' in the light of settled principles. After taking notice of the recital in the letter, the Hon'ble Supreme Court has held that it clearly showed that the general lien was created in favour of the appellant-Bank in respect of those two FDRs. In this context, the Court has made reference to some passages in the text books on the scope and meaning of expression "Banker's Lien".

"Banker's Lien" in Chalmers on Bills of Exchange, Thirteenth Edition, Page 91, is given as follows:

"A Banker's lien on negotiable securities has been judicially defined as "an implied pledge". A Banker has, in the absence of agreement to the contrary, a lien on all bills received from a customer in the ordinary course of Banking business in respect of any balance that may be due from such customer."

The Hon'ble Supreme Court has then referred to Chitty on Contract where Banker's lien is explained as follows:

"By mercantile custom the Banker has a general lien over all forms of commercial paper deposited by or on behalf of a customer in the ordinary course of Banking business. The custom does not extend to valuable lodged for the purpose of safe custody and may in any event be displaced by either an express contract or circumstances which show an implied agreement inconsistent with the lien.....the lien is applicable to negotiable instruments which are remitted to the Banker from the customer for the purpose of collection. When collection has been made the proceeds may be used by the Banker in reduction of the customer's debit balance unless otherwise earmarked."

The Court has taken note of the following passage from Paget's Law of Banking, Eighth Edition:

"Apart from any specific security, the Banker can look to his general lien as a protection against loss on loan or overdraft or other credit facility. The general lien of Bankers is part of law merchant and judicially recognized as such."

Reference is made to the judgment in the case of Brandao v. Barnett, (1846) 12 CI & Fin. 787, where it is stated as under:

"Bankers most undoubtedly have a general lien on all securities deposited with them as Bankers by a customer, unless there be an express contract, or circumstances that show an implied contract, inconsistent with lien."

As per the Hon'ble Supreme Court, the above passage would 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 recognized and in the absence of an agreement to the contrary, a Banker has a general lien 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.

In Syndicate Bank's case (supra), the Hon'ble Supreme Court has laid down a law on "Banker's lien". It has been held after a detailed survey of various authorities on English Law on the subject 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 recognized and in the absence of an agreement to the contrary, a Banker has a general lien 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. Lien is held to be a right of defence and not a right of action. 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. In the case of Syndicate Bank (supra), the Hon'ble Supreme Court did not agree with the reasoning given by the High Court that the Bank had no right to hold the security in their own favour after the Bank guarantee had been released and they were bound to return it to the customer namely the judgment-debtor when he made a demand on the Bank. The Supreme Court further did not approve or accept the observation of the Delhi High Court that the terms of the contract namely furnishing FDRs, as security for the Bank guarantee are inconsistent with the general lien that the Bank could claim only a particular lien for the Bank guarantee. The Hon'ble Supreme Court has held that it clearly established that a general lien was created in favour of the Bank on the two FDRs. The following finding returned by the Hon'ble Supreme Court may call for notice:

"8. The High Court, however, found that the two FDRs were given only by way of securities for the Bank guarantee and when once the guarantee is discharged, the amounts covered by the said two FDRs would belong to the judgment-debtor since the charge is limited to the amount of the Bank guarantee. The High Court, in this context relied on the words "Lien to BG 11/80" which are found on the back of each FDRs and according to the High Court in view of this endorsement, the Bank has no right to hold the security in their own favour after The Bank guarantee has been released and they are bound to return it to the customer namely the judgment-debtor when he makes a demand on the Bank. The High Court also observed that the terms of the contract namely furnishing FDRs as security for the Bank Guarantee are inconsistent with the general lien that the Bank claims and the Bank can claim only a particular lien for the Bank guarantee. It also observed that since the Bank guarantee has been discharged, the Bank has no right to hold the security for something more than what was agreed upon. We are unable to agree with the reasoning. As already noticed, the recital in the covering letters as extracted above clearly established that a general lien was created in favour of the Bank on the two FDRs. Merely because the two FDRs were also furnished as security for the issuance of the Bank guarantee, the general lien thus created cannot come to an end when the Bank guarantee is discharged. The words "Lien to BG 11/80" do not make any difference."

Almost identical is the plea raised by the appellant in the present case. The plea here is that the title documents in this case was given by way of security for the Bank guarantee of Rs. 20 lacs. Delhi High Court had upheld the plea that furnishing of FDRs as security of the Bank guarantee are inconsistent with the general lien and that the Bank could claim only a particular lien for the Bank guarantee. In the case before the High Court, the Bank guarantee had been discharged. Similar are the pleas raised by the Counsel in the present case. The Hon'ble Supreme Court has not agreed with the reasoning and the finding returned by the High Court. Even if the Bank guarantees are discharged, the amount of the FDRs was not held to be belonging to the judgment-debtor.

In R.D. Harbottle (Mercantile) Ltd. v. National Westminster Bank Ltd., (1977) 2 All. E.R. 862, it is observed that only in exceptional cases would the Courts interfere with the machinery of irrevocable obligations assumed by the Bank. In the case of a confirmed performance guarantee, just as in the case of a confirmed letter of credit, the Bank was only concerned to ensure that the terms of its mandate and confirmation had been complied with and was in no way concerned with any contractual disputes which might have arisen between the buyer and seller.

This shows that under mercantile system the Bank has 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. In my view, this judgment seems to be a complete answer to the submission made before me.

Even in the case of Smt. Sadhna Gupta (supra), the Court has considered the provisions of Section 171 of the Indian Contract Act. It is observed that this section creates a general as distinguished from a particular lien of Bankers. The Court has held that this general lien can be excluded by special agreement whether expressed or implied from the circumstances but such agreement must be clearly inconsistent with the existence of general lien. As observed by the Court, when a person has a number of accounts kept in the books of the Bank, the customer cannot take the plea in the absence of any special contract to say that securities which he deposited are only applicable to one particular account and not subject to a general lien. The Court has accordingly held that Section 171 of the Contract Act is clear and categoric that unless a contract to the contrary is established by the plaintiff, the Bank's right of lien has to be accepted.

What would emerge from the judgments noticed above is that Section 171 of the Indian Contract Act provides for a general Bankers lien and Bank can look to its general lien as a protection against loss on loan or overdraft or other credit facility. Lien is a right to retain property belonging to another until a debt due from the latter is paid. This is a possessory lien. It has judicially been defined as an "implied pledge". An express contract between the parties creating a lien or security would exclude operation of the statutory general lien under Section 171 of the Contract Act. This section clearly lays down that the provisions of this section would apply only in the absence of an express contract to the contrary. The appellant has not been able to show any express contract to the contrary to the right of the Bank to claim general lien. The plea of implied contract advanced by the Counsel for the appellant on the ground that this property was given as security for a limited purpose of Bank guarantee and this would impliedly create a contract against the right of the Bank to claim a general lien is far-fetched. Similar plea in the case of Syndicate Bank (supra) raised before the Hon'ble Supreme Court was not accepted. It was pleaded that lien over the FDRs given by way of security against Bank guarantee cannot be claimed once the Bank guarantee was discharged, the amount covered by the FDRs would belong to the judgment-debtor. The Supreme Court did not accept this reasoning. Thus, even if these title documents of the property were given to secure Bank guarantee, it cannot be stated that the Bank would be unable to claim general lien over these documents.

The judgment relied upon by the Counsel for the appellants are distinguishable having regard to the facts in the present case. In the case of Sree Vadivambigai Ginning (supra) what weighed with the Court was that the general lien was claimed for dues which were against a sister concern of the plaintiff, which is not so in the present case. As already noticed, in Krishna Kishore Kar (supra), the existence of counter-guarantee was the reason for which the right of the Bank to claim general lien was not accepted. In this judgment only the Court recognized the right of the Bank to adjust some amount where there was no express contract between the plaintiff and the defendant Bank regarding manner of adjustment. The judgment in the case of Smt. Sudha Gupta (supra) is clear and categoric where the Court has held that the right of general lien can be excluded by special agreement which may be expressed or implied from the circumstances but such agreement must be inconsistent with the extent of general lien. Thus, where a Banker has advanced money to another, the Bank has a lien on all securities which come into its hands for the amount of general balance, unless there is an express contract or circumstance to the contrary. My attention has not been drawn to any agreement or circumstances showing that this was inconsistent with the existing of general lien.

The submission by the Counsel for the appellant that the Bank has not made any claim of general lien even in response to the application filed is not very material. For exercising Banker's lien under Section 171 of the Act, no permission or consent is required of the account-holder. It is the sole prerogative of the Bank and it is statutory right which the Bank legitimately exercises. By declining to release the documents, the Bank has exercised its statutory right of general lien. Obviously, the Bank could not have come up with this plea at the time of decision in the Original Application as this security was being claimed as security for total liability. It is only after the finding returned by the Tribunal that this security was only qua the Bank guarantee of Rs. 20 lacs that the issue of right of the Bank to claim general lien arose. Incidentally, the appellant has furnished a personal guarantee as well for which the Bank certainly would be entitled to make a claim. I, therefore, do not find any reason to interfere with the impugned order. The Tribunal below while deciding the Original Application has itself held that this asset is a personal property of the appellant and the Bank can lay claim on the personal asset if the law permitted. The appellant has also been held personally liable for the dues. In this background, the Bank has rightly claimed general lien over this property. There is no merit in the Appeal, the same is dismissed.