The main legal point established in the judgment is that money deposited in Fixed Deposits cannot be considered as goods for bailment with the bank, and the banker's lien is subject to a contract to the contrary.

Mr. Justice M.B. Shah, President—The question requiring consideration in this revision is ‘Whether a banker in exercise of its lien under Section 171 of the Contract Act, straightaway appropriate the money deposited by a guarantor in FDR without any bailment and without informing the guarantor’?

Obvious answer is —‘No’.

2. For this purpose we would refer to Section 171 of the Indian Contract Act, 1972 which provides for general lien of bankers, factors, wharfingers, attorneys and policy-brokers, which reads thus:

“171. General lien of bankers, factors, wharfingers, attorneys, and policy-brokers.—Bankers, factors, whar-fingers, 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 bailed to them, unless there is an express contract to that effect.”

The aforequoted section, inter alia, provides that bankers may retain as security for a general balance of account, any goods bailed to them. However, this is subject to a contract to the contrary. Therefore, the aforesaid part of the section can be divided in three parts: (i) bankers may retain a security for general balance of account; (ii) any goods; (iii) bailed to them.

3. The word ‘goods’ is defined in Section 2(7) of the Sale of Goods Act, 1930 which reads as under:

“goods” means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.”

This would mean that money is excluded from the word “goods”.

The next part is bailed; whether money which is deposited in Fixed Deposits, can be considered to be goods for bailment with the Bank. Bailment is defined under Section 148 of the Contract Act, which reads thus:

“A ‘bailment’ is the 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. The person delivering the goods is called the ‘bailor’. The person to whom they are delivered is called the ‘bailee’.”

4. This section also requires delivery of goods, for some purpose, upon a contract, and that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. In the case of deposit of money with the Bank, it cannot be equated or construed as delivery of goods to the Bank. Secondly, it cannot be said that moneys were deposited upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the persons delivering them.

5. In this connection we would refer to some pronouncements by the Apex Court. While dealing with the Advocate’s lien on the case papers under Section 171 of the Indian Contract Act, Apex Court in R.D. Saxena v. Balram Prasad Sharma, (2000) 7 SCC 264, has analyzed Section 171 and observed thus:

“8. Files containing copies of the records (perhaps some original documents also) cannot be equated with the “goods” referred to in the section. The Advocate keeping the files cannot amount to “goods bailed”. The word “bailment” is defined in Section 148 of the Contract Act as the delivery of goods by one person to another for some purpose, upon a contract that they shall be returned or otherwise disposed of according to the directions of the person delivering them, when the purpose is accomplished. In the case of litigation papers in the hands of the Advocate there is neither delivery of goods nor any contract that they shall be returned or otherwise disposed of. That apart, the word “goods” mentioned in Section 171 is to be understood in the sense in which that word is defined in the