Case: Mr. Sunil s/o Ratnakar Gutte Vs. Union Bank of India

moved an application before the Debt Recovery Tribunal, New Delhi bearing Original Application No.491/2019 against the petitioner and others for recovery of loan amount which is due against the Company and said application is pending for the hearing. It is further submitted by the respondent-Bank that till the out come of the order of the Debt Recovery Tribunal the respondent is unable to release the said documents. Thus, the material on record shows that the petitioner has cleared the entire dues in respect of loan which was obtained by him in his individual capacity to purchase the flat. The said loan transaction came to an end, therefore, the relationship of the banker and customer between the petitioner and the respondent in respect of the concerned loan account came to an end as he has repaid the amount. The relationship of banker and customer could not have been continued when the petitioner has repaid the amount on 31/05/2021 as the entire loan account is satisfied. The said transaction has been completed and there is no further relationship between the petitioner and the Bank as a banker and customer. 13. In such circumstances, the contention of the respondent-Bank that it was exercising the right of general lien under Section 171 of the said Act is not sustainable. Bank has also raised the issue that other alternate efficacious remedy is available to the petitioner before Debt Recovery Tribunal and, therefore, the writ petition needs to be dismissed. In other words, it is the contention of the respondent-Bank that writ jurisdiction is not available to the petitioner as other remedy is available. 14. Learned counsel for the petitioner submitted that the writ jurisdiction is rightly available to the petitioner. In support of this contention, he invited our attention towards the observation made by the Honble Apex Court in the case of Zonal Manager,Central Bank of India Vs. Devi Ispat Limited and others (supra) wherein it is observed that where public sector bank, discharging public functions and having status of State, despite clearance of its outstanding dues in entirely by a borrower, failed to return latters title deeds held, High Court, rightly issued writ of mandamus for returning said deeds. Honble Apex Court further held that it is not in dispute that the appellant-Bank being a public Sector Bank discharging public functions is a State under Article 12. 15. In view of the settlement of the dues on the date of filing of the writ petition by arrangement made through another nationalized bank, namely, State Bank of India and the statement of accounts furnished by the appellant Bank subsequent to the same was 0.00 (nil) outstanding. The High Court was fully justified in issuing a writ of mandamus for return of the Title Deeds. 16. The Honble Bombay High Court in the case of DB (BKC) Realtors Pvt. Ltd. and anr. vs. Punjab National Bank 2017 SCC Online Bom 957 held that the writ petition filed under Section 226 of the Constitution of India is maintainable against the respondent-Bank which is a nationalised bank. 17. Admittedly, there was a relationship between the petitioner and the respondent as banker and customer. It is further clear from the pleadings that the Title Deed of the property in question was handed over to the respondent-Bank as a security. Admittedly, said loan amount is repaid by the petitioner. Though the respondent-Bank has submitted that there is another loan account against the petitioner and Bank has already moved an application to the Debt Recovery Tribunal for obtaining necessary orders, Bank is at liberty to move against the petitioner and other Directors to recover the said loan amount. Admittedly, said security was given against the loan amount which was already satisfied by the petitioner. In such a situation, it is not open for the respondent- Bank to continue to exercise its general lien for the security deposited with it especially when the entire amount was repaid. Such a general lien is not being exercised for a general balance of account as required under Section 171 of the said Act. Moreover, it would not be open for the Bank to exercise its right of general lien for the securities on the pretext of the banker and customer relationship. It cannot exercise such general lien under Section 171 of the said Act thus, there is no justification on the part of the respondent-Bank to retain the said documents by relying upon the provisions of Section 171 of the said Act. 18. In view of observation of the Honble Apex Court in the case of Zonal Manager, Central Bank of India Vs. Devi Ispat Limited and others (supra) relied upon by the petitioner it was held that Central Bank of India being a nationalised bank was amenable to writ jurisdiction. In the present case also respondent-Union Bank of India is a nationalised bank and, therefore, is amenable to writ jurisdiction. According to the Bank another loan account is yet to be cleared by the petitioner and, therefore, its security documents were not returned. On the basis of the same the bank sought to exercise its right under Section 171 of the said Act and not remitted the said documents to the respondent. Admittedly, said documents were kept with the bank as a security towards the loan amount which is obtained by the petitioner in his individual capacity for purchase of the flat. The said amount is duly paid and, therefore, bank was not justified in retaining the said documents by exercising right of lien on the said documents. Admittedly, bank has right to recover the loan amount regarding the loan advanced to the Company wherein the petitioner and other Directors are borrowers and guarantors. Bank is at liberty to recover the said loan amount and also at liberty to take the legal recourse but merely because another loan account is there, wherein the petitioner and other Directors are borrowers, bank has no right to retain the said documents by exercising the right of lien.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]8. Admittedly, the petitioner has approached to the Bank and obtained the loan of Rs.21,00,000/-(Rs. Twenty one lacs) to purchase the flat. The bank has sanctioned the loan vide its sanction letter on condition that loan is repayable in 300 monthly installments. It is also an admitted position that the petitioner is also a Director in the Company under the name and style as Sunil Hitech Limited. It is further not disputed that as the Company was in debt, Liquidator was appointed by the order of NCLT. It is also an admitted position that as the petitioner could not pay monthly installments, he approached to the respondent-Bank for seeking permission to sell the flat. Accordingly, the respondent-Bank has given no objection by reply to sell out the said flat. Accordingly, the petitioner has sold out the said flat to one Shri Ishwar Narsing Phunde and the amount was deposited in the Bank thus, the loan account of the petitioner against the purchase of the flat appears to be satisfied. Admittedly, it is not in dispute that the respondent- Bank has initiated action against the petitioner and other Directors of the Company by filing an application bearing No.491/2019 before the Debt Recovery Tribunal against the petitioner and others for recovery of loan amount.Thus, from the expression bankers lien it is cleared that Bank overall forms of security that are deposited by the borrower in the ordinary course of business, there has to be a relationship of banker and customer between them. In Brandao vs. Barnett, it was stated as under (All ER page 722-H) 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. It was held 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 recognised 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 the reduction of customers debit balance. Lien contemplated under Section 171 of the said Act relates to goods bailed to bank. Strictly, it is confined to securities and properties in the custody of a banker. Section 171 of the said Act expresses goods bailed to them. The provision, therefore, indicates that the right to retain goods bailed is based on contract and retaining the same in absence of contract is not permissible. A Division Bench of this Court in the case of Surendra s/o Laxman Nikose vs. Chief Manager and Authorised Officer, State Bank of India, Nagpur 2013(5) Mh.L.J. 283 held that Bank cannot exercise its right of general lien over the Title Deeds deposited by the petitioner after the entire loan amount was fully repaid by the petitioner. It is further held in para 10 of the judgment by the Division Bench of this Court which reads thus :10. Section 171 of the said Act employs the expression goods bailed to them. The word bailment has been defined in section 148 of the said Act to mean delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. Section 160 of the said Act stipulates that it is the duty of the bailee to return the goods bailed, without demand, or the purpose for which they were bailed having been accomplished. Similarly, under section 172 of the said Act, pledge has been defined as bailment of goods as security for payment of a debt or performance of a promise. Under section 174 of the said Act, the pawnee cannot in absence of a contract to that effect, retain the goods pledged for any debt or promise other than the debt or promise over which they are pledged.These provisions, therefore, indicate that the right to retain goods bailed is based on a contract and retaining the same in absence of any contract is not permissible. The only right that has been recognized with regard to goods bailed is the right of general lien of a banker to retain as security for a general balance of account any goods bailed to them. It is, therefore, clear that such right of general lien cannot be extended by a Banker for any other purpose after the general balance of account has been cleared by the person bailing the goods. Permitting a Banker to extend its right of general lien even after clearance of the debt would result in negating the effects of the words as a security for a general balance of account. In any event, exercise of such general lien after determination of the relationship of Banker and customer does not arise at all.12. In the present case also the petitioner has repaid the entire amount of loan regarding the loan obtained to purchase the flat. The petitioner has produced on record Annexure-K the account extract which shows that no balance amount remains to be paid in respect of loan account of the petitioner. It is also admitted by the respondent-Bank that the petitioner has paid the entire amount against the loan which was obtained to purchase the flat. Only contention of the respondent-Bank is that the petitioner is also borrower of Sunil Hitech Company. The petitioner as well as other Directors have obtained the loan but the said Company went in liquidation and Liquidator is appointed. The amount is due from the Company. The petitioner being the Director of the said Company is liable to pay the loan amount and, therefore, the documents regarding the title of the property is not remitted by the Company. It is further submitted by the Bank that Bank has already moved an application before the Debt Recovery Tribunal, New Delhi bearing Original Application No.491/2019 against the petitioner and others for recovery of loan amount which is due against the Company and said application is pending for the hearing. It is further submitted by the respondent-Bank that till the out come of the order of the Debt Recovery Tribunal the respondent is unable to release the said documents. Thus, the material on record shows that the petitioner has cleared the entire dues in respect of loan which was obtained by him in his individual capacity to purchase the flat. The said loan transaction came to an end, therefore, the relationship of the banker and customer between the petitioner and the respondent in respect of the concerned loan account came to an end as he has repaid the amount. The relationship of banker and customer could not have been continued when the petitioner has repaid the amount on 31/05/2021 as the entire loan account is satisfied. The said transaction has been completed and there is no further relationship between the petitioner and the Bank as a banker and customer.13. In such circumstances, the contention of the respondent-Bank that it was exercising the right of general lien under Section 171 of the said Act is not sustainable.15. In view of the settlement of the dues on the date of filing of the writ petition by arrangement made through another nationalized bank, namely, State Bank of India and the statement of accounts furnished by the appellant Bank subsequent to the same was 0.00 (nil) outstanding. The High Court was fully justified in issuing a writ of mandamus for return of the Title Deeds.16. The Honble Bombay High Court in the case of DB (BKC) Realtors Pvt. Ltd. and anr. vs. Punjab National Bank 2017 SCC Online Bom 957 held that the writ petition filed under Section 226 of the Constitution of India is maintainable against the respondent-Bank which is a nationalised bank.17. Admittedly, there was a relationship between the petitioner and the respondent as banker and customer. It is further clear from the pleadings that the Title Deed of the property in question was handed over to the respondent-Bank as a security. Admittedly, said loan amount is repaid by the petitioner. Though the respondent-Bank has submitted that there is another loan account against the petitioner and Bank has already moved an application to the Debt Recovery Tribunal for obtaining necessary orders, Bank is at liberty to move against the petitioner and other Directors to recover the said loan amount. Admittedly, said security was given against the loan amount which was already satisfied by the petitioner. In such a situation, it is not open for the respondent- Bank to continue to exercise its general lien for the security deposited with it especially when the entire amount was repaid. Such a general lien is not being exercised for a general balance of account as required under Section 171 of the said Act. Moreover, it would not be open for the Bank to exercise its right of general lien for the securities on the pretext of the banker and customer relationship. It cannot exercise such general lien under Section 171 of the said Act thus, there is no justification on the part of the respondent-Bank to retain the said documents by relying upon the provisions of Section 171 of the said Act.18. In view of observation of the Honble Apex Court in the case of Zonal Manager, Central Bank of India Vs. Devi Ispat Limited and others (supra) relied upon by the petitioner it was held that Central Bank of India being a nationalised bank was amenable to writ jurisdiction. In the present case also respondent-Union Bank of India is a nationalised bank and, therefore, is amenable to writ jurisdiction. According to the Bank another loan account is yet to be cleared by the petitioner and, therefore, its security documents were not returned. On the basis of the same the bank sought to exercise its right under Section 171 of the said Act and not remitted the said documents to the respondent. Admittedly, said documents were kept with the bank as a security towards the loan amount which is obtained by the petitioner in his individual capacity for purchase of the flat. The said amount is duly paid and, therefore, bank was not justified in retaining the said documents by exercising right of lien on the said documents. Admittedly, bank has right to recover the loan amount regarding the loan advanced to the Company wherein the petitioner and other Directors are borrowers and guarantors. Bank is at liberty to recover the said loan amount and also at liberty to take the legal recourse but merely because another loan account is there, wherein the petitioner and other Directors are borrowers, bank has no right to retain the said documents by exercising the right of lien.