The central legal point established in the judgment is that the Bank had no legal authority to exercise Banker's lien over the petitioner's gold ornaments as additional security for another party's loan.

M. M. DAS, J.

( 1 ) PETITIONER has filed this writ application for quashing the letter under Annexure-3, by which the opp. party, i. e. Puri Urban Co-operative Bank Ltd. (hereinafter referred to as 'bank') has marked a lien on the gold ornaments of the petitioner, now lying with the Bank and for issue of a writ of mandamus directing the opp. party-Bank to release the said gold ornaments in favour of the petitioner,

( 2 ) BEREFT of the details, the facts giving rise to the present writ application are as follows : the petitioner availed two gold loans of rs. 12,000/- each on 20-8-2001 from the opp. party Bank on pledge of gold ornaments and has cleared up the said gold loans on 22-7-2003. As the Bank did not return the ornaments so pledged for availing the gold loans to the petitioner, but issued the letter under Annexure-3 dated 30-7-2003 to the petitioner, stating that the Bank has marked a 'lien' on the said gold ornaments, the petitioner issued a notice /demand letter vide annexure-4 through his lawyer, demanding return of the gold ornaments. Failing in such attempt, the petitioner has filed this writ application.

( 3 ) THE opp party-Bank in its counter has stated that before availing the gold loans the petitioner stood as a guarantor for the cash credit loan advanced to M/s. Bimal bhandar for a limit of Rs. 4,50,000/- on 25-6-2001 and the outstanding amount in the said cash credit account has gone upto rs. 5,33,846. 75 as on 31-12-2003. It is further averred that though admittedly the outstanding amount for the two gold loan accounts have been repaid by the petitioner, but as he is not free from liability as a guarantor to the cash credit loan advanced to m/s. Bimal Bhandar and is jointly and severally liable for the said outstanding amount, he cannot object to the action of the Bank in marking a lien on the gold ornaments pledged by him for availing the gold loans and there is no contract to the contrary prohibiting the Bank from exercising its right of Banker's lien under the Mercantile Law as well as under Section 171 of the Contract Act.

( 4 ) MR. Patnaik, learned counsel for the petitioner contended that, in the 'facts of the present case the Bank has no right to exercise Banker's lien on the gold ornaments of the petitioner which were pledged to the bank under the pledge letters and gold loan bond under Annexure-R/1 series and that the gold ornaments having been pledged to the Bank on separate and specific contracts executed for the gold loans, the said contracts are impliedly contrary to the right of the Bank under Section 171 of the Contract act. It was further submitted by him that none of the requirements of Section 171 of the Contract Act are fulfilled so as to permit the Bank to exercise its right of general lien as envisaged therein and the Bank was under an obligation to return the pledged ornaments under the provisions of Section 174 of the Contract Act. He relied on decisions reported in Sri Ram Krishna Sharma v. State Bank of India, 1997 (II) OLR 319, vijaya Kumar v. Jullundar Body Builders, air 1981 Delhi 126, Gurbax Rai v. Punjab national Bank, AIR 1984 Supreme Court 1012, and Krishna Kishore Kar v. United commercial Bank, AIR 1982 Calcutta 62. Mr. Patnaik further submitted that in this case no notice has been served on the petitioner as the guarantor to pay the dues of the principal debtor M/s. Bimla Bhandar and therefore the Bank acted arbitrarily in exercising its right of lien over the gold of the petitioner. He cited the decision of the calcutta High Court reported in Lachman singh v. Sm. Has! Rani Singh; AIR 1979 calcutta 197, for the proposition that the liability of the guarantor is conditional upon the default committed by the principal debtor.

( 5 ) MR. Kanungo, learned counsel for the opp. party-Bank, on the other hand, submitted that law is well settled that the liability of guarantor is coextensive with that of the principal debtor. He cited the decision of the Supreme Court in Industria