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IN THE HIGH COURT OF JUDICATURE AT MADRAS
Honourable Mr Justice D.BHARATHA CHAKRAVARTHY
Balaji .S – Appellant
Versus
Banking Ombudsman, C/o Reserve Bank of India, Fort Glacis, Chennai – Respondent
ORDER :
A. The Writ Petition:
The prayer in this Writ Petition is to quash the order of the 1st respondent, the Banking Ombudsman and to direct the 2nd respondent, IndusInd Bank Limited to issue No Objection Certificate, in respect of the loan account cleared by the petitioner. By the impugned order, the complaint that is preferred by the Writ Petitioner against the 2nd respondent – Bank was rejected by the 1st respondent.
B. Case of the Petitioner:
2. The brief facts are that the petitioner – S.Balaji, availed a loan for purchase of LPG tanker lorry with Registration No.KL 09 AG 6814 with the 2nd respondent - Bank, vide loan account bearing reference No.TAN03010D dated 27.03.2018. The petitioner fully repaid the loan and the account was closed on 27.10.2021. However, the Bank is refusing to issue No Objection Certificate (NOC) and to release the title documents.
C. Case of the 2nd respondent:
3. The case of the Bank is that, apart from the above loan account, there was another loan in Account No.TAN02932D where one K.Leelavathi is the principal borrower and the petitioner is a co-borrower. The said loan remained outstanding and the Bank therefore, invoked arbitration proceedings in ACP
A bank cannot exercise its general lien over documents against a co-borrower for debts related to a different loan. The right to redeem property arises upon repayment of loans secured against it.
The main legal point established in the judgment is the limitation on a bank's power to retain pledged goods, emphasizing the need for adherence to higher standards of transparency and reasonableness....
A bank cannot exercise a general lien to retain title deeds for debts where the mortgagor is not a borrower and has cleared the outstanding loan.
A general lien under Section 171 of the Indian Contract Act is not applicable to title deeds of immovable property; they must be returned upon loan settlement unless an express agreement allows other....
A bank cannot assert a general lien over title deeds related to a home loan to secure unrelated debts; repayment of the home loan extinguishes the lien.
Home loan – No law for time being in force, permits bank to retain title deeds alleging dues in respect of any other transaction, under Section 171 of Contract Act.
The court affirmed the validity of a bank's general lien over fixed deposits as collateral for a loan, based on prior agreements executed by the depositors.
The bank holds a valid lien over the salary account to secure repayment of loans, and the statutory protections under Section 60 CPC do not apply to non-attachment actions by the bank.
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