The bank's right to attach a guarantor's salary account is limited by statutory provisions, emphasizing the need to respect fundamental rights while enforcing liens under the Indian Contract Act.

JUDGMENT :

M.A. ABDUL HAKHIM, J.

1. There are three Petitioners in this Writ Petition. Petitioner Nos.2 and 3 are the daughter and the wife of Petitioner No.1. The Respondent No.1 is the Palakkad Divisional Manager & Assistant General Manager, Respondent No.2 is the Senior Manager of the Kanjikode Specialised SME Branch, and Respondent No.3 is the Palakkad Sultanpet Branch Manager of Canara Bank. The Respondent No.4 is the Banking Ombudsman.

2. Petitioner No.1 has been working as a Senior Technical Assistant with Fluid Control Research Institute, which is a Central Government undertaking. The Petitioner No.2 has been running a proprietorship by the name ‘A & A Cartons’ which is engaged in the manufacturing of corrugated carton boxes. The Petitioner No.1 has been maintaining his Salary Account with the Respondent No.3 Branch of Canara Bank. The Petitioner No.2 availed a loan of Rs.40.54 Lakhs under Prime Minister’s Employment Generation Scheme (PMEG Scheme) from the Respondent No.2 Branch of Canara Bank on 19.08.2023, which is repayable in 84 months. The Petitioner Nos.1 and 3 stood as guarantors to the said loan. Petitioner No.1 furnished his property, in which the Unit of Petitioner No.2 has been functioning, as collateral security for the loan.

3. The case of the Petitioners is that the Petitioners were compelled to default on the loan repayments on account of the delay on the part of the Respondent No.2 to apply for Margin Money subsidy of 35% of the project cost from the Khadi and Village Industries Commission. The Respondents initiated SARFAESI proceedings against the Petitioners and the Petitioner No.2 has challenged the same before the Debt Recovery Tribunal, Ernakulam, by filing S.A. No.484/2025, and the same has been pending. The Respondent/Bank attached the Salary Account of the Petitioner No.1, when the loan amount was sufficiently secured by collateral security. The prayer in this writ petition is for a direction to the Respondent No.1 to release the attachment/lien over the Salary Account No.116701017447 of the Petitioner No.1 maintained with the Respondent No.3.

The Respondent Nos.1 to 3 have filed Counter Affidavit opposing the prayers in the Writ Petition, mainly contending that the Respondents are entitled to attach the account of the Petitioner No.1, who is a guarantor to the loan availed by Petitioner No.2, who undertook to indemnify the Respondent No.1 against all losses and further covenanted to pay and satisfy on demand the general balance due from the Petitioner No.2/Borrower and that the Respondent No.1 is having a general lien for the general balance of account under Section 171 of the Indian Contract Act, 1872 and the Respondents have only invoked the said general lien by attaching the Salary Account of the Petitioner No.1.

I heard the learned Counsel for the Petitioners, Sri. M.P. Shameem Ahamed, and the learned Standing Counsel for the Respondents, Sri. Poulochan Antony.

4. Learned Counsel for the Petitioner contended that Section 171 of the Contract Act provides a general lien only over any goods bailed to the banker for a general balance of account. Section 2 (7) of the Sale of Goods Act, 1930, defines ‘goods’ as every kind of movable property other than actionable claims and money. Hence, the Respondent/Bank does not have the right to exercise its lien over the money lying in the Salary Account of the Petitioner No.1. The loan availed by the Petitioner