1. The question involved in this revision is whether the second petitioner Bank could exercise its general lien and adjust the amount payable to the respondent under a cheque, towards an amount which was due to the bank from the respondent and in respect of which the suit filed by the Bank was dismissed as time barred.

2. An amount of Rs.19,588.50 was due from the respondent to Syndicate Bank, Kilthan Branch. The respondent is a native of Kilthan Island and is a contractor undertaking minor contract work of Lakshadweep administration under the PWD. For realisation of amount due from the respondent, the bank filed a suit. The suit was decreed by the trial court. On appeal by the respondent, the appellate court set aside the decree of the trial court and dismissed the suit on the ground that the suit was barred by limitation.

3. After dismissal of the suit, an account payee cheque for Rs.14,635/- dated 31.03.98, issued in favour of the respondent, was presented by him before the Syndicate Bank, Kilthan Branch. The Bank collected the cheque and adjusted the amount towards the debt which was barred and in respect of which the suit was dismissed. Intimation was given to the respondent. Still, according to the bank, a sum of Rs.4,953.50 was due to it as on 31.12.98.

4. The respondent filed the present suit for realisation of Rs.14,635/- from the Bank, the amount which is covered by the cheque and for a further sum of Rs.10,000/- as compensation. Originally, the manager of the Bank alone was made a party and later, the Bank was impleaded as additional defendant. The trial court decreed the suit for Rs.14,635/-. The claim for compensation was negatived. On appeal by the Bank, the decree of the trial court was confirmed. The bank as well as its manager challenge the concurrent decisions of the courts below.

5. The courts below held that the bank could not exercise their general lien as the debt due from the respondent/plaintiff was barred by limitation. The courts below held that the banker's lien cannot be exercised so as to recover a debt which was barred by limitation.

6. The learned counsel for the petitioner submitted that the Bank has general lien over securities and that it could be exercised even for realising a barred debt. He referred to Section 171 of the Indian Contract Act, which states that bankers 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. The learned counsel submitted that the right of general lien of the banker is statutorily recognised in Section 171 of the Contract Act and money is a species of goods over which lien may be exercised. Dismissal of the suit filed by the Bank on the ground of limitation is not a bar for the Bank in exercising its general lien, the counsel submits. The learned counsel for the respondent submitted that, to exercise the general lien, there must be an offer of security and unless the cheque in question was offered as security in any debt, the bank could not exercise its general lien. He also contended that the bank had filed a suit for recovering the amount and the suit having been dismissed, the bank is not entitled to exercise its general lien, even assuming it had such a general lien otherwise.

7. In Syndicate Bank v. Vijay Kumar & others [AIR 1992 SC 1066], the Supreme Court considered the extent of banker's lien. It was held as follows:

"6. In Halsbury's Laws of England, Vol.20 2nd Edn. P.552, para 695, lien is defined as follows:

'Lien is in its primary sense is a right in one man to retain that which is in his possession belonging to another until certain demands of the person in possession are satisfied. In this primary sense it is given by law and not by contract.'

In Chalmers on Bills of Exchange, Thirteenth Edition page 91 the meaning of "Banker's lien" is given as follows:

"A banker's lien on negotiable securities has been judicially defined as "an implied pledge." A bank