CWP No.5043 of 1987 : 1 : In the High Court of Punjab and Haryana at Chandigarh. Date of decision:23.10.2008. Vijay Nagpal .. Petitioner Versus The State Bank of India and others .. Respondents. CORAM HON'BLE MR. JUSTICE PERMOD KOHLI Present: Mr. Gopi Chand, Advocate, for the petitioner. None for the respondents. PERMOD KOHLI, J. (Oral): This petition proceeds on the following admitted facts:- Petitioner along with other co-sharers named in paragraph 2 of the petition, secured loan from the State Bank of India-respondent No.1 from its Fazilka Branch-respondent No.3, for construction of a godown over the land jointly owned by them. The godown was to be leased out to the Food Corporation of India. Besides executing the promissory note and other requisite documents to secure the loan, one of the conditions for grant of advancement of loan was that the rent to be paid by the Food Corporation of India, will be deposited with the State Bank of India, Fazilka Branch towards repayment of the loan and the interest accrued thereon. After the construction of the godown, the same was leased out to the Food Corporation of India, for a period of five years at the rate of 40 Paisa sq. ft. The monthly rent of the godown was Rs.11914/-. The storage capacity of the godown was 5000 tonnes. The godown was leased out for a period of five years which commenced from 01.08.1977, though the lease could be CWP No.5043 of 1987 : 2 : mutually extended for another period of three years. However, it appears that the lease was not extended beyond five years. During the period of lease, the Food Corporation of India used to deposit the monthly rent with the State Bank of India for adjustment against the loan account. However, again the godown was leased out on 08.12.1982 on a lessor amount of Rs.9829.05 P.M. It is the petitioner's admitted case that the petitioner executed a Power of Attorney in favour of the bank to enable the bank to recover the amount from the rent payable by the Food Corporation of India. It is alleged that the entire loan amount was liquidated from the rental and somewhere in the year 1986, the petitioner filed a suit for rendition of accounts against the bank. The bank in the said suit filed written statement and claimed an amount of Rs.51475/- as outstanding against the petitioner and other loanees. This suit was, however, dismissed, both on the question of lack of jurisdiction and on merits. However, in the appeal preferred by the petitioner and others, the plaint was ordered to be returned for presentation before the appropriate Court. It is stated that the petitioner was maintaining an individual account being Account No.SIB 671, a current account at Ferozepur and an amount of Rs.69258.90 P. was lying in his credit in the said account. The respondent-bank on the basis of a communication dated 04.06.1987 from the Ferozepur Branch of the Bank, marked a lien on the bank account of the petitioner bearing No.SIB-671. The petitioner presented some cheques for encashment, but the same were dis-honoured except one and the amounts were not released on the basis of the marking of the lien. The petitioner was communicated by the Bank vide its letter dated 10.08.1987 with the following endorsement:- CWP No.5043 of 1987 : 3 : “Vide our SBI Fazilka Branch letter No.Gen./30/235 dated 4.6.87.” It is stated that the bank has withheld a sum of Rs.58,000/- from the individual account of the petitioner. Accordingly, this petition has been filed by the petitioner seeking a direction for removal of the lien from the bank account of the petitioner being Account No.SIB 671 with respondent No.4, State Bank of India,Ferozepur Cantt. Branch, Distt. Ferozepur and also sought a direction for release of the amount of Rs.53461/-. The respondent-bank in its written statement has stated that the petitioner and other land owners have failed to liquidate their loan and the bank created a lien on the account of the petitioner who is one of the loanees for adjustment of the loan amount and ultimately an amount of Rs.53461/- has been adjusted on 14.08.1987 towards the repayment of the entire bank loan outstanding against the petitioner and other loanees. Learned counsel appearing for the petitioner has relied upon judgment of this Court reported as Punjab National Bank Ltd. Vs. Arura Mal Durga Das and another, AIR 1960, Punjab, 632, wherein the following observations have been made:- “15. In order to create Banker's lien on several accounts it is necessary that they must belong to the payer in one and in the same capacity. Where the person has two accounts, one a trustee account and another private account at a Bank, deposits in the two accounts cannot be set off, the one against CWP No.5043 of 1987 : 4 : the other. 16. Bankers have a right to combine one or more accounts of the same customer. But it cannot combine the account belonging to another or to himself alone with another account which is the joint account with another and third person, vide Radha Raman V. Chota Nagpur Banking Association Ltd., AIR 1944 Pat.368 and Punjab National Bank Ltd. V. Satyapal Virmani, AIR 1956 Punj.118.” To same affect is the judgment in the case of Firm Jaikishen Dass Jinda Ram and others V. Central Bank of India through, Manager, AIR 1960, Punjab, 01. I have carefully considered the aforesaid arguments. In both the cases, the ratio is that the banker has a right to mark lien if mutual demand exists between the banker and the customer. It is, however, observed that the person should have the same capacity. In the Arura Mal's case (supra), the customer had a separate account in his capacity as a trustee. This Court observed that where a person had a different capacity as a trustee or joint account holder, no lien can be marked on such account if the demand is against an individual. Similar is the view taken in the other judgment referred to here-in-above. There is no dispute with the above propositions. In the present CWP No.5043 of 1987 : 5 : case, the petitioner in his individual name was joint owner along with others individuals and all of them have secured loan from the bank for construction of the godown. The petitioner definitely had has the liability towards the repayment of the loan. The bank account which was opened by the petitioner at Ferozepur Branch of the concerned bank, was in his individual capacity in the name of his concern of which he was the sole proprietor. It was not in a different capacity but as an individual. Since the petitioner had the privity of contract with the bank and was liable to pay the loan amount, at least, to the extent of his share of loan, the bank has the authority to create a lien on the account held by the petitioner at Ferozepur Branch. The respondents have recovered a sum of Rs.53461/- from the bank account of the petitioner in which a sum of Rs.69258/- was lying deposited. No details are given as to how much was the outstanding amount at that time when the amount was adjusted on 14.08.1987. The bank will determine the share of the petitioner for the repayment of the loan and to the extent of his share, the bank will adjust the amount. After adjustment of the share of the petitioner from the amount withheld, if any amount is still available, the same shall be refunded to him with interest which shall be at the prevalent rate at the relevant time. Refund, if any, shall be made within a period of two months from the date a copy of this judgment is made available to the respondents-bank. With these observations, present writ petition is disposed of. 23.10.2008. (PERMOD KOHLI) BLS JUDGE Note: Whether to be referred to the Reporter? NO