IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN FRIDAY, THE 12TH DECEMBER 2008 / 21ST AGRAHAYANA 1930 OP.No. 38392 of 2002(U) ---------------------------------- PETITIONER: ------------------- P.S.PAREED KHAN, 40/2561, CRESCENT HOUSE PALARIVATTOM, COCHIN - 682 025. BY ADV. SRI.P.M.M.NAJEEB KHAN. RESPONDENTS: ----------------------- 1. THE DEPUTY GENERAL MANAGER, STATE BANK OF INDIA, ZONAL OFFICE, SHANMUGHAM ROAD, ERNAKULAM. 2. THE BRANCH MANAGER, STATE BANK OF INDIA, THIRUNAKKARA BRANCH, KOTTAYAM 3. THE BANKING OMBUDSMAN, OFFICE OF THE BANKING OMBUDSMAN, RESERVE BANK OF INDIA BUILDING, THIRUVANANTHAPURAM- 695 033. R1 & R2 BY ADV. SRI.GEORGE THOMAS(MEVADA), SC, SBI, ADV. SRI.JOSEPH J.THAYAMKERIL, ADV. SMT.K.V.LAKSHMI, ADV. SRI.JERIN JACOB, ADV. SRI.JITHESH MENON. THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 12/12/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: O.P. NO. 38392/2002-U: APPENDIX PETITIONERS' EXHIBITS: EXT.P.1: COPY OF THE LETTER DTD. 13/05/2002 ISSUED BY THE R.1. EXT.P.2: COPY OF THE SECURITY DEPOSIT RECEIPT SDR.NO.1740/79 DTD. 11/05/1979 ISSUED BY THE R.2. TO THE PETITIONER. EXT.P.3: COPY OF THE LETTER NO. MISC.109/92-93 DTD. 10/03/1993 ISSUED BY THE R.2. IN FAVOUR OF THE PETITIONER. EXT.P.4: COPY OF THE COMPLAINT FILED BY THE PETITIONER BEFORE THE R.3. ON 03/10/2001. EXT.P.5: COPY OF THE LETTER NO. 1184/2001-02 DTD. 22/11/2002 ISSUED BY THE R.3. TO THE PETITIONER. EXT.P.6: COPY OF THE LETTER DTD. 30/08/2002 ISSUED BY THE R.1. TO THE PETITIONER. EXT.P.7: COPY OF THE EXECUTION PETITION IN O.S. 195/ 1985 FILED BY THE R.1. AGAINST THE PETITIONER BEFORE THE SUB COURT, ERNAKULAM. EXT.P.8: COPY OF THE EXECUTION PETITION IN O.S.93/84 FILED BY THE R.1. AGAINST ONE ABDUL KHADER AND THE PETITIONER BEFORE THE SUB COURT, ERNAKULAM. RESPONDENTS' EXHIBITS: EXT.R1.A: COPY OF THE RELEVANT PAGES IN THE SUITS FILED REGISTER. EXT.R1.(1): COPY OF THE RECOVERY CERTIFICATE WITH SCHEDULES ISSUED BY DRT CHENNAI & KERALA DTD. 24/06/99. EXT.R1.(2): COPY OF THE COMPROMISE PROPOSAL SUBMITTED BY THE PETITIONER DTD. 01/07/1996. EXT.R1.(3): COPY OF THE APPROVAL BY RESERVE BANK OF INDIA OF THE PETITIONER'S COMPROMISE PROPOSAL DTD.07/12/2001. //TRUE COPY// P.S. TO JUDGE. prv. S. Siri Jagan, J. =-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-=-= O.P. No. 38392 of 2002 =-=-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-= Dated this, the 12th December, 2008. J U D G M E N T The petitioner was a contractor who undertook certain works on behalf of the Kerala State Electricity Board. In respect of that work, the petitioner had to give security for satisfactory performance of the work to the Kerala State Electricity Board in the form of a security deposit receipt for an amount of Rs. 20,000/-. The petitioner approached the erstwhile Bank of Cochin, which was later amalgamated with the State Bank of India, the officers of whom are the respondents 1 and 2 herein. They agreed to furnish the security and accordingly Ext. P2 security deposit receipt was issued for an amount of Rs. 20,000/- deposited by the petitioner on 11-5-1979, the maturity period for which was over by 11-5-1980. But the deposit could be released to the petitioner only on authorisation by the Deputy Chief Engineer of the Transmission Circle, Poovarthuruthu of Kerala State Electricity Board. That authorisation for release of the security after completion of the work was issued by the Kerala State Electricity Board only on 18-8-1992. Thereafter, the petitioner approached respondents 1 and 2 for payment of the amounts covered by the security deposit receipt. The petitioner was not paid the same. The petitioner therefore approached the 3rd respondent Banking Ombudsman by filing Ext. P4. By Ext. P5, the Ombudsman informed the petitioner that since the 2nd respondent has informed the Ombudsman as follows, the petitioner's petition cannot be entertained: “The bank has stated that your deposit for Rs.20000/- (SDR 1740/79) dated 11-5-79 which was made by way of a security deposit in favour of the Supt. Engineer, Transmission Circle (Pakkil P.O), Kottayam in Thrunakkara branch of the erstwhile Bank of Cochin Ltd. fell for payment on 11-5-1980. The deposit had no provision for automatic renewal. After getting the deposit O.P. No. 38392/2002 -: 2 :- released by the Supt. Engineer, SBI, Thrunakkara branch transferred the proceeds to SBI, Broadway, Ernakulam by means of demand draft No. 7773/2 dated 28-6-93 for Rs.21200/-. The proceeds of this draft were credited to your loan account with SBI, Broadway, Ernakulam branch on 5-7-1993.” The petitioner has filed this original petition challenging Ext. P5 order of the Banking Ombudsman. 2. The main contention of the petitioner is that although the petitioner was indebted to the Bank for repayment of the loan amounts as claimed by them, the amount covered by Ext. P2 receipt was never adjusted against the loan amounts due from him as is evident from Exts.P7 and P8 execution petitions filed by the Bank in two suits, in which the Bank had obtained decrees for the recovery of the loan amounts. The petitioner therefore seeks the following reliefs: “i. To call for the records leading to Exhibits P1 to P8 and issue a writ of mandamus or any other appropriate writ, order or direction, directing the respondents 1 and 2 to release the fixed deposit amount of Rs.21,200/- with the prevailing rate of interest as per RBI guidelines from 11.5.1980 onwards till return of the amount to the petitioner as evidenced by Exhibit P2. ii. to grant a declaration that the petitioner is entitled to get his deposit amount with the prevailing rate of interest till realization of the same and the respondents 1 and 2 are legally bound to pay the same to the petitioner.” 3. The petitioner also contends that the petitioner was never informed about the adjustment and without informing the petitioner about such adjustment, the Bank cannot exercise the Banker's lien. Further, the petitioner would point out that the money covered by the security deposit was in the hands of the Bank for the period from 11- 5-1979 to 18-8-1992 during the whole of which time the petitioner is entitled to interest, but the interest was credited only for the period from 11-5-1979 to 11-5-1980. O.P. No. 38392/2002 -: 3 :- 4. A counter affidavit has been filed on behalf of respondents 1 and 2. Relying on Ext. R1(a) produced along with the counter affidavit, they would submit that the amount was actually credited to the suit account of the petitioner in O.S.No. 195/1985 as shown in the suit file register. They would submit that under Section 171 of the Indian Contract Act, the Bank is entitled to exercise the Banker's lien in respect of the said deposit also. According to them, the question of paying further interest does not arise in so far as the amount was due to be repaid at any time when the Electricity Board authorises payment and therefore the interest as contemplated for a fixed deposit cannot be paid for that deposit. They would further submit that the loan account of the petitioner was ultimately settled for Rs. 7 lakhs granting a waiver of Rs. 27 lakhs. That waiver was granted taking into account the adjustment of the amount of Rs. 21,200/- covered by the security deposit receipt also and therefore the petitioner cannot, in equity also, claim any relief in this original petition. 5. I have considered the rival contentions in detail. 6. Notwithstanding the contention of respondents 1 and 2 that they are entitled to exercise the Banker's lien in this case, I do not think that a Banker's lien can be exercised without informing the party about the same. Respondents 1 and 2 have not been able to produce any documents to show that the petitioner has been informed about such exercise of the Banker's lien. In fact, the petitioner's specific contention is that the petitioner has never been informed about the adjustment of the amount covered by Ext. P2 against the loan account. Apart from that, the Bank had used the petitioner's money for the period from 11-5-1979 to 18-8-1992. Even assuming that the contention regarding non-payment of rate of interest O.P. No. 38392/2002 -: 4 :- applicable to security deposit is accepted, I am of opinion that that would not prevent the Bank from paying interest on that amount at the rate applicable to Savings Bank Accounts. 7. All the same, in so far as respondents 1 and 2 have proved that the fixed deposit amount with interest for one year has been adjusted against the loan account due from the petitioner, I am not inclined to direct that the amount covered by the security deposit receipt be refunded to the petitioner. Even in respect of interest, I am not inclined to exercise my discretionary jurisdiction in favour of the petitioner since, admittedly, the petitioner had received a benefit of Rs. 27 lakhs by waiver of the loan amount due from the petitioner to the Bank. Compared to that, the interest payable on the amount would be a paltry sum. However, in view of the lapse on the part of the Bank in not informing the petitioner about the exercise of Banker's lien and refusal to credit interest at the rate applicable to S.B Account in respect of the fixed deposit receipt, I direct respondents 1 and 2 to pay a sum of Rs.5000/- as cost to the petitioner. The cost shall be paid within two weeks from the date of receipt of a copy of this judgment. The original petition is disposed of as above. Sd/- S. Siri Jagan, Judge. Tds/