The main legal point established in the judgment is that in the absence of an express contract, a bank cannot exercise its right of general lien, as per Section 171 of the Indian Contract Act, 1872, and the Bank's actions must be in accordance with the relevant scheme provisions.

JUDGMENT :

Pushpa Sathyanarayana, J.

[Prayer : Writ Appeal filed under Clause 15 of the Letter Patent against the order dated 05.06.2017 in W.P.(MD) No.12532 of 2010 on the file this Court.]

The respondent before the Writ Court filed this Writ Appeal questioning the order dated 05.06.2017 passed by a learned Single Judge of this Court allowing the writ petition in W.P.(MD) No.12532 of 2010 filed by the respondent herein.

2. The prayer made by the respondent herein in the writ petition was to direct the appellant herein/respondent therein, to repay the sum of Rs.48,80,164/- with accrued interest.

2.1. For the sake of convenience, the parties are referred to as per their status in this writ appeal.

3. The case of the respondent, as has been pleaded before the learned Single Judge, which is necessary for a just decision of the appeal, in a nutshell, reads as follows :

3.1. The respondent is a registered Society doing several service activities. The appellant Bank, to extend loans to a number of individuals under the Differential Interest Rates Scheme (in short, "DIR Scheme") availed the assistance of the respondent on account of its experience in the service sector, so as to identify the beneficiaries and also extended loans to those individuals as well as Self-Help Groups under the said scheme.

3.2. The respondent deposited funds received from various agencies, both Governmental and Non-Governmental, in seven different Fixed Deposits (FDs) during the year 1995 with the appellant Bank, which was at Rs.62,08,745/-. The FDs were for a period of five years and thus, due to mature in the year 2000.

3.3. Alleging that there were defaults, the appellant Bank exercised the right of general lien on the FDs and sent a communication on 05.02.1996 to the respondent, which was replied to by the respondent on 15.02.1996 stating that they were neither co-applicant nor Guarantor of the loans and the Bank has no right to mark general lien over their FDs. The respondent also issued a legal notice on 16.05.1996, which was replied to by the appellant on 28.05.1996. Though negotiation meetings were held between the parties, it served no purpose.

3.4. In such circumstances, the respondent sought the appellant to foreclose one of the FDs in vain, but the appellant issued another notice on 10.09.1996 calling upon the respondent to pay all the dues indebted by 1540 individual loanees under the DIR Scheme. Thereafter, on 27.09.1996, the appellant adjusted a sum of Rs.48,80,164/- out of the six FDs of the respondent towards the unpaid loans of those 1540 individuals.

3.5. The respondent filed O.P.No.131 of 1997 on the file of the National Consumer Disputes Redressal Commission, New Delhi, but the same was dismissed on 07.05.2004 holding that the respondent Society was not a consumer under the Consumer Protection Act and giving liberty to approach the Civil Court or to take recourse to any other alternative remedy. The challenge laid by the respondent before the Hon'ble Supreme Court in Civil Appeal No.7001 of 2004 also met with the same fate on 30.07.2009. The action of the respondent in approaching the Banking Ombudsman also failed to yield any result, as its complaint was rejected for want of jurisdiction.

3.6. In the above-said backdrop, the respondent filed W.P.(MD) No. 12532 of 2010 and the order passed thereon in its favour is put to challenge by the appellant.

4. The learned Senior Counsel for the appellant submitted that the appellant filed a detailed counter-affidavit before the Writ Court, but the learned Single Judge did not consider the merits stated therein, but passed the impugned order allowing the writ petition. According to the learned Senior Counsel for the appellant, the respondent not only recommended the persons/beneficiaries for the loans, but also assured to co-operate and collaborate/joint venture the implementation of the credit programme and also guaranteed for the recovery. The appellant filed those letters given by the respondent before the