Back
2020 Supreme(Mad) 19
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Abdul Quddhose, J.
Shyamala Devi - Petitioner
Versus
The Regional Manager, Regional Office, State Bank of India, Region – IV, Coimbatore & Another - Respondent
W.P. No. 22732 of 2017
Decided On : 03-01-2020
For the Petitioner: P.M. Duraiswamy, Adv.
For the Respondents: S.R. Sumathy, Adv.
The main legal point established is that a bank cannot exercise general lien under Section 171 of the Contract Act against a person who is not a party to the loan transaction.
Headnote:
Mandamus - Release of Title Deeds - Section 171 of the Contract Act
Fact of the Case:
The petitioner sought a Writ of Mandamus to direct the bank to release her title deeds deposited as security for crop and housing term loans. The bank refused to release the deeds citing the petitioner's husband's default on a car loan.
Finding of the Court:
The court held that the bank cannot exercise general lien under Section 171 of the Contract Act against third parties who are not parties to the loan transaction. The petitioner, having paid the entire dues, was entitled to the return of the title deeds.
Issues: The main issue was whether the bank had the authority to exercise general lien under Section 171 of the Contract Act against the petitioner for her husband's default on a car loan.
Ratio Decidendi: The court relied on the interpretation of Section 171 of the Contract Act and the precedent set by the Kerala High Court, emphasizing that unless a person is a party to a loan transaction, the bank cannot exercise general lien against their property.
Final Decision: The court directed the bank to release the petitioner's title deeds deposited as security for the crop and housing term loans within four weeks.
JUDGMENT :
Prayer: Writ Petition filed under Article 226 of the Constitution of India to issue a Writ of Mandamus to direct the second respondent Bank to release the Petitioner's title deed deposited as a security to avail both the Crop loan in A/c. No.31231740259 and the Housing term loan in A/c. No.11420743549 from the second respondent Bank, as requested through the petitioner's representation dated 16.08.2016.
1. This writ petition has been filed for a Mandamus seeking for a direction to the second respondent Bank to release the Petitioner's title deeds deposited as a security to avail both the Crop loan in A/c. No.31231740259 and the Housing term loan in A/c. No.11420743549 from the second respondent Bank, as requested by the petitioner in her representation dated 16.08.2016.
2. It is the case of the petitioner that she availed Crop loan in A/c. No.31231740259 and Housing term loan in A/c. No.11420743549 from the second respondent Bank by pledging her title deeds pertaining to her agricultural lands as a security to avail both the aforesaid loans. According to the petitioner, her husband stood as a Guarantor for availing both the crop loan and the Housing term loan.
3. According to the petitioner, the second respondent agreed to receive Rs.4,80,000/- from the petitioner towards full and final settlement of the crop loan as well as the Housing term loan. According to the petitioner in terms of the settlement offer made by the second respondent Bank, she has also paid the sum of Rs.4,80,000/- to the second respondent Bank and closed the aforesaid loan accounts. It is the case of the petitioner that the second respondent Bank expressed their inability to release the security documents dated 06.10.2015, which were given for availing the crop loan and the Housing term loan on the ground that the petitioner's husband has availed a car loan, where he was a defaulter and has not discharged the loan. Since the second respondent Bank failed to return the original title deeds to the petitioner, despite closing of the crop loan and the housing term loan, the petitioner has filed this writ petition seeking for a Mandamus for return of title deeds.
4. A counter affidavit has been filed by the second respondent wherein, they have stated that they have got the power to exercise a general lien under Section 171 of the Contract Act. According to them, exercising the power of general lien, they have not returned the original title deeds to the petitioner for non-repayment of the car loan by the petitioner's husband. However, they have admitted in the counter affidavit that the petitioner has discharged the Crop loan as well as the Housing loan, which she has availed from the second respondent Bank by paying a sum of Rs.4,80,000/- towards full and final settlement of both the loans.
5. Heard Mr.P.M.Duraiswamy, learned counsel for the petitioner and Ms. S.R. Sumathy, learned counsel for the second respondent.
6. The learned counsel for the petitioner submitted that general lien cannot be exercised by the Bank under Section 171 of the Contract Act, 1872 for non repayment of a loan by a third party, who may be the petitioner's husband. According to him, the exercise of general lien under Section 171 of the Contract Act is permissible only in respect of the loans in which the petitioner either stood as a borrower or a guarantor. The learned counsel for the petitioner also drew the attention of this Court to a single bench judgment of the Kerala High Court in the case of Lonankutty Antony @ T.L.Antony versus The Joint Registrar of Co-operative Societies and others reported in CDJ 2016 Ker HC 404, wherein in an identical matter, the Kerala High Court has held that Section 171 of the Contract Act cannot be applied against the wife as the husband who has availed a separate loan in which the wife was either a co-borrower or a guarantor. He also pointed out that the Kerala High Court in the same judgment has held that unless a person is a party to the loan t
