Mr. Justice S.A. Shah, President—The complainant is having his account with State Bank of India, the opposite party. According to the opposite party he was granted cash credit facility. The complainant required a bank guarantee in Supreme Court appeal and on payment of commission and advance margin money the Bank has given a guarantee dated 24.1.84. The said guarantee was for the period of 3 years and there is a provision that the same can be renewed till the final disposal of the appeal before the Supreme Court of India.

2. It appears that the guarantee period expired on 23.1.87 and according to the complainant, he approached the opposite party No. 2, Bank for extending/or renewing the guarantee for a further period of 3 years. The margin amount of Rs. 60,000/- was already with the Bank in the form of Fixed Deposit and some interest had also accrued thereon. So there was no need for the complainant to pay further margin money.

3. It appears that considering the financial position of the complainant the Bank did not agree to extend/renew the bank guarantee for a further period of 3 years and in fact there is no bank guarantee either with the High Court or in the file of the Bank which was extended from 23.1.87 to 22.1.90. However, Mr. Bhatt, learned advocate appearing on behalf of the complainant has relied upon one report and the Bank register to show that the guarantee was renewed to which we will refer subsequently.

4. The Bank by letter dated February 9,1987 informed the complainant that the Bank will renew the guarantee only if 100% cash margin against such guarantee is deposited with the Bank and according to the Bank the guarantee has not been renewed or extended after 23.1.87.

5. The F.D.R. being matured on 19.4.87, the complainant appears to have renewed the same including the interest i.e. a second F.D.R. for the amount of Rs. 63,000/- was issued by the Bank in the name of the complainant for a period of 3 years. Mr. Desai, learned Counsel appearing on behalf of the opposite party states that the complainant renewed this F.D.R. in the hope that the Bank might consider his request and renew the guarantee. But according to Mr. Desai the Bank had never agreed to renew the guarantee unless the complainant deposits 100% margin money. In these circumstances the F.D.R. for Rs. 63,000/- remained in the custody of the Bank and there is no evidence to show that a renewed bank guarantee has been actually issued by the Bank as desired by the complainant

6. The F.D.R. became mature for payment on 20.4.90 on expiry of the term of 3 years for which it was renewed and it appears that the Bank unilaterally realised that amount of the fixed deposit and credited the said amount in the cash credit account of the complainant.

7. The complainant has, therefore, raised the contention that the Bank had no power or authority to adjust this amount of Rs. 63,000/- in his general cash credit account because according to the learned advocate of the complainant Mr. Bhatt’s submission the said amount was impress with special characteristic of deposit which cannot be unilaterally adjusted by the Bank in another account of the complainant. Mr. Desai appearing on behalf of the Bank refuted this submission of Mr. Bhatt and stated that the Bank has a general lien as well as a lien over the security under provisions of Section 171 of the Contract Act and the Bank in exercise of that general lien and the powers under the provisions of Section 171 of the Contract Act withdrew this amount from the fixed deposit account and credited the same in the cash credit account of the complainant

8. The dispute that arises in this case is whether the action of the Bank in realising the amount of fixed deposit and crediting that amount of Rs. 63,000/- in the cash credit account of the complainant is legal and binding to the complainant or not. I have heard the learned advocates of both the parties at length. Mr. Bhatt has heavily relied upon the decision of Delhi High C