TMI Blog2003 (2) TMI 347X X X X Extracts X X X X X X X X Extracts X X X X ..... w any amount from the plaintiff. The defendant has not participated in any transactions with the plaintiff, regarding the borrowing of the amount and payment of dues to the Bank. 4. The 3rd defendant, viz. C. Thangaraj, filed a suit in OS No. 193/1986, before the District Munsif Court, Thiruvaiyaru, against the City Union Bank, for the recovery of Rs. 11,053, together with interest thereon, being the amount due under the Fixed Deposit Receipt No. 127288, dated 3-8-1985 and also for Rs. 10,000, towards damages and compensation for the loss of reputation in public and humiliation done to the plaintiff. That in the said suit, the plaintiff has stated that he was a senior Tamil Pandit in the Government High School and also a Mirasdar of having 4 acres of land. He claimed that he is a respectable citizen with an unblemished character in his life. He was having a savings bank account in the City Union Bank Limited in SB. No. 1152 from the year 1973 and the 2nd defendant, requested him on several occasions to deposit amounts in his Bank and he obliged him, by making a deposit of Rs. 10,000 on 15-3-1985 in fixed deposit account for one year. The plaintiff also deposited another sum o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over the amount covered by the fixed deposit of the plaintiff. The Bank is also entitled to hold the deposit, until the debt due from the plaintiff is discharged. The bankers lien is in the form of general lien and the Bank has got a general lien, on all securities deposited with them by a customer, unless there is an express contract or circumstance that shows an implied contract inconsistent with the general lien. The Bank admits the presentation of the fixed deposit receipt with the Vijaya Bank, for collection, and as the plaintiff has not paid the amount due to the Bank, the amount payable under the fixed deposit account was withheld as a lien and the communication sent to the Vijaya Bank would not amount to dishonouring of the fixed deposit. The Bank had expressed its willingness to pay the balance amount due after the settlement of lien account of the plaintiff. But, however, the plaintiff went to the extent of denying his liability to the lien of the Bank. The Bank also denied its liability in respect of the damages claimed by the plaintiff and prayed for dismissal of the suit. 6. The suit filed by the Bank, before the District Munsif Court, Thiruvaiyaru, was transferre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the extent of Rs. 13,055 together with interest at the rate of 8.5 per cent per annum and Rs. 11,055 from the date of the plaint and also granted a decree for damages of Rs. 2,000 payable together with interest at the rate of 6 per cent per annum from the date of the plaint. 8. Both the Bank and the individual preferred an appeal, against the judgment and decree of the trial Court, before the District Court, Thanjavur in AS. No. 11/1989 and AS. No. 75/1989 respectively and the Appellate Court confirmed the judgment and decree of the trial Court. The Appellate Court took a view that the Bank had not obtained consent or authorisation letter from Thangaraj to have set off the amount due to the Bank in and out of the fixed deposit account of Thangaraj and in the absence of the same, the Bank cannot exercise a general lien against the defendant. The Appellate Court also confirmed the view taken by the trial Court that the name and reputation of Thangaraj in the public were damaged and the amount awarded towards damages was confirmed. Ultimately, both the appeals came to be dismissed by judgment and decree dated 26-6-1990. Aggrieved by the same, the Bank has preferred this appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the debtors available to their credit in the Bank, even in the absence of any specific or special contract between the parties. 13. To support the general lien of Bankers, the learned advocate for the appellant relied upon section 171 of the Contract Act, which states, " General lien of bankers. - 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." 14. It is submitted that the relationship of banker and customer arises as the result of a contract, express or implied, according to which the customer delivers to the bank money, funds or credits constituting the deposit and the bank assumes obligation to pay out on his demand or order a sum equal to the amount deposited. This arrangement is to the advantage of both the parties, for the customer receives the benefit of banking facilities and the bank the benefit of the use of the customer s money with or without interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the deposit amount of the respondent. 17. Now, the question is, whether the appellant/bank can exercise such a lien, in the absence of any contract or mutual agreement? 18. In Syndicate Bank v. Vijaya Kumar AIR 1992 SC 1066, the Supreme Court considered the banker s lien. "Lien is in its primary sense is a right in one man to retain that which is in his possession belonging to another until certain demands of the person in possession are satisfied. In this primary sense it is given by law and not by contract." (Halsbury s Laws of England - Vol. 20-II Edition-Page 552, para 695) 19. In Chalmers on Bills of Exchange, the meaning of Banker s lien 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." By referring to various other matters, the Supreme Court opined, "The above passages go to show that by mercantile system the Bank has a general lien overall forms of securities or negotiable instrume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is lying in the appellant/bank and as per the mercantile practice, the Bank is entitled to exercise a general lien over the FDRs also. 22. The next question that arises for the consideration of this Court in this case is that the respondent stood surety for the amount borrowed by Kumaraswamy, for which, the appellant/bank filed a suit for the recovery of a sum of Rs. 2,568.15, but, whereas the amount of the respondent available with the appellant/bank was Rs. 10,000. That in the said circumstances, whether the bank is justified in withholding the entire amount is another question to be answered. 23. It is not in dispute that the respondent s fixed deposit amount was Rs. 10,000 and the amount payable by the respondent to the bank in OS. No. 205/1987 was only to the extent of Rs. 2,568.15. It has been held in the case of Brahmayya Co. v. K.P. Thangavelu Nadar AIR 1956 Mad. 570 that "The lien under section 171 can be exercised only over property of some one else and not his own property. Thus when goods are deposited with or securities are placed in the custody of a bank it would be correct to speak of the rights of the bank over the security or the goods as a lien bec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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