THE HON’BLE SRI JUSTICE P.S.NARAYANA WRIT PETITION No.16399 OF 2006 DATE:22.11.2007. Between: M/s. Mohan Enterprises, rep. by its Managing Partner Mr.Peetani Sambaiah …Petitioner. AND Andhra Bank, Narsapur Branch, Narsapur rep. by its Branch Manager. …Respondent. THE HON’BLE SRI JUSTICE P.S.NARAYANA WRIT PETITION No.16399 OF 2006 ORDER: 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. 5. Sri S.R.Sanku, the learned Counsel representing the petitioner had taken this Court through the contents of the affidavit filed in support of the writ petition and also the stand taken by the respondent, banking institution, in the counter affidavit and would maintain that the said stand cannot be said to be s sustainable stand. The learned Counsel also placed strong reliance K.JAGDISHWAR REDDY v. THE MANAGER, ANDHRA BANK, BADA BAZAR BRANCH, NIZAMABAD[1] and KRISHNA KISHORE KAR v. UNITED COMMERCIAL BANK AND ANOTHER[2] and would maintain that in the facts and circumstances of the present case, it cannot be said that Section 171 of the Indian Contract Act, 1872 would be attracted. Ultimately, the learned Counsel would conclude that this stand taken by the banking institution is unsustainable stand and the writ petition to be allowed. 6. Per contra, Sri Ch.Siva Reddy, the learned Standing Counsel representing the respondent banking institution had placed strong reliance on the decision of this Court in K.SITA v. THE CORPORATION BANK[3]. The learned Counsel also would contend that the decision JAGDISHWAR REDDY’s case (1 supra) had been referred to by the learned Judge in K.SITA’s case (3 supra). The learned Standing Counsel also pointed out that the bank’s lien contemplated by Section 171 of the Indian contract Act, 1872 would be applicable. The Counsel also pointed out that the learned Judge in SITA’s case (3 supra) in fact, had referred to the decision in SYNDICATE BANK v. VIJAY KUMAR[4] and in the light of the subsequent decision, unless this Court is satisfied that two different learned Judges of this Court had expressed conflicting opinions, the matter need not be referred to a Division Bench, especially, in the light of the fact that in the subsequent decision, the learned Judge of this Court not only referred to JAGDISHWAR REDDY’s case (1 supra), but further followed the view of the Apex Court in SYNDICATE BANK’s case (4 supra). 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. 12. Certain submissions were made relating to the applicability of Section 171 of the Indian Contract Act, 1872 in relation to monetary transactions on the ground that such monetary transactions would not fall within the meaning of goods. 13. Section 174 of the Indian Contract Act, 1872 reads as under: “In the absence of a contract to that effect, the pawnee shall not retain the goods pledged for any debt or promise other than the debt or promise for which they are pledged” 14. Section 171 of the Indian Contract Act, 1872 reads as hereunder: “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 failed to them, unless there is an express contract to that effect.” 15. In SITA’s case (3 supra), the learned Judge of this Court at pars 3 to 9 observed: The petitioner contends that when the ornaments have been pledged with the Bank against a specific loan the Bank cannot have a general lien so as to cover the other debts in view of Section 174 of the Indian Contract Act (for short ‘the Act’). In support of the said contention, strong reliance is placed by the learned Counsel for the petitioner on a decision of this Court in Jagdishwar Reddy v. Manager, Andhra Bank, 1988 (1) ALT 605. On the other hand, it is the contention of the respondent Bank that it has a general lien under Section 171 of the Act and the fact that the jewels were pledged for raising a specific loan does not amount to a contract to the contrary. It is further contended that under Section 174 of the Act also, there is presumption in favour of the pawnee in respect of subsequent advances. It is finally contended that, in any case, the writ petition is not maintainable and the remedy of the petitioner, if at all, is to approach the Civil Court. In support of the above contentions, the learned Counsel for the respondent has placed reliance on the judgments reported in Syndicate Bank v. Vijay Kumar, A.I.R. 1992 S.C. 1066=I (1992) BC 324(SC), Kunhan Mayan and Others v. The Bank of Madras, (1986) I.L.R. (19) Madras 234. N.T.P.C.Ltd. v. Bhanu Construction Co.P.Ltd., A.I.R. 1989 A.P. 140, and Canara Bank v. Taraka Prabhu Publishers Pvt.Ltd., A.I.R.1991 A.P. 258. It is also submitted that the judgment in Jagdishwar Reddy v. Manager, Andhra Bank, (supra) must be deemed to be impliedly overruled by the judgment of the supreme Court in Syndicate Bank v. Vijay Kumar, (supra). Section 171 of the Indian Contract Act deals with general lien of Bankers, Factors, Wharfingers, Attorneys and Policy-brokers. It provides that Bankers, Factors, Wharfingers, Attorney 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 the effect. Sections 173 and 174 of the Act deal with the pawnee’s right of retainer of the goods pledged. Section 173 provides that the pawnee may retain the goods pledged, not only for payment of the debt or the performance of the promise but for interest of the debt, and all necessary expenses incurred by him in respect of the possession or for the preservation of the goods pledged. Section 174 provides that the pawnee shall not, in the absence of a contract to that effect, retain the goods pledged for any debt or promise other than the debt or promise for which they are pledged, but such contract, in the absence of anything to the contrary, shall be presumed in regard to subsequent advances made by the pawnee. It is the contention of the petitioner that the general lien under Section 171 is not available when there is a specific pledge which implies a contract to the contrary. This contention, no doubt, finds support from the decision in Jagdishwar Reddy v. Manager, Andhra Bank, (supra). The petitioner in that case obtained a loan of Rs,6,000/- pledging his gold ornaments with the respondent-Bank. He also stood surety along with another person for the loan obtained by a third party from the same Bank. When the petitioner sought to repay the loan taken by him and demanded return of the gold ornaments pledged, the respondent-Bank refused to return the gold ornaments unless and until the other loan for which he figures as a guarantor was also discharged. It was held that on payment of the loan contracted by the petitioner, the contract of bailment/pawn extinguishes and the bailee/pledgee/pawnee is divested of his special property in the goods and he has to return the goods to the bailor/pledger/pawner unless he has any other right to retain the goods under law. It was also held that when any deposit has been made for a special purpose, in a given circumstances, unless there is any contract to the contrary, it cannot be implied that the Bank has a general lien over the property deposited for a specific purpose and it was not open to the Bank to claim general lien over the gold ornaments pledged by the petitioner. The express contract was for discharge of personal debt of the petitioner alone. The action of the respondent-Bank in refusing to release the gold ornaments on the petitioner’s offer to pay his personal debt is clearly illegal. The petitioner was, therefore, held entitled to repay the said debt and claim return of the pledged gold ornaments. For reaching the said conclusion, the Court placed reliance on the judgment of the Delhi High Court in Vijay Kumar v. Jullunder Body Builders, A.I.R. 1981 Delhi 126. In the Delhi High Court case, a judgment-debtor deposited two fixed deposit receipts with the Bank for issuing a Bank-guarantee on his behalf in a pending execution proceeding. Subsequently the Bank-guarantee was, however, discharged. When the decree-holder sought to attach the fixed deposit receipts, which were in the hands of the Bank, the Bank raised objection for attachment contending that the Bank has a lien on the deposited receipts for the amounts due to it from the judgment-debtor and so the F.D.Rs. are not liable to attachment. The Delhi High Court negatived the contention of the Bank holding that as the fixed deposit receipts were given in connection with the Bank- guarantee only, the covering letter and the endorsement thereon relating to the Bank-guarantee would constitute a contract contrary to the general lien of the Bank and consequently the Bank has no lien over it and the decree-holder is not entitled to attach the fixed deposit receipts which belong to the judgment-debtor. The judgment of the Delhi High Court, was, however, reversed by the Supreme Court in Syndicate Bank v. Vijay Kumar, (supra). The Supreme Court, on a perusal of the covering letters accompanying the F.D.Rs. in question, came to the conclusion that a general lien is created in favour of the appellant-Bank in respect of those two F.D.Rs. and the Bank is given the authority to retain the F.D.Rs. so long as any amount on any account is due to it from the judgment- debtor. The Supreme Court further held that merely because the two F.D.Rs. 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. It was also held that merely because on the basis of the security of the two F.D.Rs., the appellant-Bank gave a guarantee, it cannot be said that the Banker had only a limited particular lien and not a general lien on the two F.D.Rs. In its judgment, the Supreme Court, after referring to several treatises like Halsbury’s Laws of England, Chitty on Contract, Paget’s Law of Banking, etc., explained the meaning and scope of the expression “Banker’s lien.” The Supreme Court also quoted with approval the following extract from Brandao v. Barnett, (1846) 12 CI & Fin.787: “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 circumstance that shows an implied contract, inconsistent with lien.” I n Kunhan Mayan and Others v. The Bank of Madras, (supra), a Division Bench of the Madras High Court had to deal with a case where the plaintiff deposited certain jewel with the defendant-Bank to secure certain debts. Afterwards he paid the secured debts and demanded the return of the jewels while being otherwise indebted to the Bank. It was held that the plaintiff was not entitled to recover the jewels without discharging the other debts unless he proved that the defendant agreed to give up the general lien. The Court held as follows: “The rule of law with regard to general liens is clearly laid down in the 171st Section of the Contract Act. Bankers have such a lien on things bailed with them unless there is a contract to the contrary. It was for the plaintiff in this case to prove the existence of such contract……..It being incumbent of the plaintiff to show that the Bank had agreed to give up the general lien to which by law a Bank is prima facie entitled, I must say that in my opinion the plaintiff has failed in his proof.” Another decision of the Madras High Court in Official Agency, Madras v. Ramaswamy, ILR (43) Mad.147=A.I.R.1920 Mad.64, is also to the same effect. These judgments of the Madras High Court, which are binding precedents, have not been noticed by the learned single Judge in Jagdishwar Reddy v. Manager, Andhra Bank, (supra). That apart, the learned Judge failed to note or consider the effect of the latter part of Section 174 of the Contract Act which contains the following crucial words: “But such contract, in the absence of anything to the contrary, shall presumed in regard to subsequent advances made by the pawnee.” These words clearly mean that in the absence of anything to the contrary, it must be presumed that the pawnee has a right to retain the goods pledged with him to recover the subsequent advances made by him to the pawner. It is not the case of the petitioner in the instant case that there was any such contract to the contrary displacing the presumption available under latter part of Section 174 or the right of general lien available under Section 171 of the Contract Act. It must, therefore, be held that the decision in Jagadishwar Reddy’s case (supra) does not lay down the law correctly and it must be deemed impliedly overruled. It may also be mentioned that this decision was not approved and was specifically dissented from by a Division Bench on another point (with regard to the maintainability of the writ petition). In N.T.P.C.Ltd. v. Bhanu Construction Co.B.Ltd. (supra), the Division Bench held that the observations made by the learned Judge on the said point must be treated as obiter. In State Bank of India, Kanpur v. Deepak Malviya, A.I.R. 1996 All.165, learned Single Judge of the Allahabad High Court, after considering various precedents including the decision of the Supreme Court in Syndicate Bank v. Vijay Kumar, (supra), Kundan v. Bank of Madras, (1986) ILR 19 234, and also the decision in Jagdishwar Reddy v. Manager, Andhra Bank, (supra), held that pledge is only a form of bailment and all pledges are bailment. The Banker’s lien contemplated by Section 171 as such is specific provision relating to Banker’s lien and has an overriding effect on general provisions of Section 174 which provide for relationship of pawnee and pawner in respect of pledged goods. The Banker’s lien will carry over to such pledges and Bank can retain pledged goods, if the debtor had not cleared his amount in connection with another loan. 16. In the above decision, the decision of the learned Judge of this Court in JAGDISHWAR REDDY’s case (1 supra) also had been referred to, wherein the learned Judge of this Court also had referred to TRUSTEES, PORT OF BOMBAY v. PREMIER AUTOMOBILES LTD[5], LALAN PRASAD v. RAHMAT ALI[6], ELLIS & Co’s TRUSTEE v. DIXON JOHNSON[7], VIJAY KUMAR v. JULLUNDER BODY BUILDERS[8], and RADHA RAMAN v. CHOTA NAGPUR BANKING ASSOCIATION[9] and also relevant passages from the authoritative texts and ultimately observed at para 18: Considered from the above perspective, I have no hesitation to conclude that by operation of Sec.171, 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 gold ornaments pawned by the petitioner as a pawn for the debt due and payable by the petitioner as a surety of Mr. Santosh Reddy. Therefore, it is not open to the bank to claim general lien over the gold ornaments pawned by the petitioner. The express contract was for discharge of personal debt of the petitioner alone. Thus, the action of the respondent in refusing to release the gold ornaments on petitioner’s offer to pay the personal principal debt of Rs.6,000/- and interest accrued thereon, is clearly illegal. The respondents are directed to release from the pawn of the gold ornaments on the petitioner’s redeeming the debt of Rs.6,000/- and interest accrued thereon…..” 17. Strong reliance was placed on the decision of Calcutta High Court in KRISHNA KISHORE KAR’s case (2 supra), wherein at paras 20 and 21, the learned Judge of Calcutta High Court observed: “For this principle, we need not look into the English cases as S.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 S.171 of the Contract Act in view of the existence of the Counter guarantee dated 27-11-1962. 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. The Bank further alleged that there was a balance amount of Rs.34,523.63 p. outstanding in the plaintiff’s cash credit account with the defendant Bank. The plaintiff had pledged fix deposit receipts by way of security against overdraft and had agreed that on maturity, the proceeds of the fixed deposits would be credited in the overdraft account to liquidate plaintiff’s liability. In the written statement the defendant Bank alleged that after crediting the proceeds of the fixed deposits, a sum of Rs.19,787.32 remained due and payable by the plaintiff in the overdraft account which amount was also adjusted against Rs.93,500/- and the account was closed on 1-2-1964. A statement of account was annexed to the written statement which is Ext.I in the suit. The plaintiff disputed the correctness of this account in his testimony. Bank’s witness Suresh Chandra Roy Chowdhury proved the security ledger entries relating to the fixed deposits of the plaintiff as well as the cash credit ledger entries relating to the account of Isis Coal Company. He also proved the correctness of the contents of Ext.I. This witness stated that these books were kept under his supervision and he had personal knowledge regarding the entries. This witness was not at all cross- examined on his evidence of correctness of the entries in the cash credit ledger or Ext.I. It was suggested to him in cross-examination that entries at page 80 of the security ledger were not correct but plaintiff failed to prove incorrectness of any entry at page 80 of the security ledger either in cross- examination of Roy Chowdhury or through his own witness. It is the case of the plaintiff that he never received statement of account from the defendant Bank. But the two branch managers of the new Market Branch. Mr.N.K.Bhatacharjee and Mr.D.Ghosh as well as two of its employees