JUDGMENT

Dated this the 14th day of September, 2022 Shaji P.Chaly, J.

Petitioner in W.P.(C)No.5331 of 2019 has preferred this appeal challenging the judgment of the learned single Judge dated 03.01.2022 whereby the following relief sought for in the writ petition was declined and the writ petition was dismissed.

“(1) Issue a Writ of Mandamus or appropriate Writs directions or orders directing the Respondent to consider Ext.P-5 and Ext.P-6 and to release the ornaments pledged vide Ext.P-1 and Ext.P-6, upon closure of loan.”

2. Brief material facts for the disposal of the appeal are as follows:

Appellant has availed two agricultural gold loans from the respondent Bank in the year 2017. But, due to crop failure and fall in the market price for agricultural produce, the appellant could not renew the gold loan accounts. Thereupon, the Bank issued Exhibits P3 and P4 demand notices intimating the appellant that the gold will be auctioned on 15.02.2019 if the account is not closed within 15 days from the date of receipt of the notices. When the appellant approached the respondent Bank for closing the gold loan accounts, they informed him that even if the loan accounts are closed, they will not release the gold as he is having another agricultural loan with another branch of the Bank. The said stand taken by the Bank persuaded the appellant to approach this court by filing the writ petition.

3. The respondent Bank has filed a statement in which it is specifically stated that unless the appellant settles the entire loans, the Bank is not in a position to release gold ornaments since it is entitled to exercise its general lien in accordance with section 171 of the Indian Contract Act, 1872 on all the securities.

4. The learned single Judge, after considering the contentions raised by the rival parties and referring to clause No.4 of the loan agreement executed by the appellant with the Bank, has arrived at the conclusion that the appellant is not entitled to any relief and thus dismissed the writ petition.

Operative portion of the judgment reads thus: “5. After considering the contentions of the petitioner and the respondent, according to me, there is some substance in the argument of the learned counsel for the respondent. I perused the judgment dated 18.12.2013 in WP(C)No.30600/2013. It will be better to extract the relevant portion of the judgment.

“5. Section 171 of the Act is as follows:- 171. General lien of bankers, factors, wharfingers, attorneys and policy brokers - Bankers, factors, wharfingers, attorneys of a High Court and policy-brokers may, in the absence of a contract to the contrary, retain as a security for a general balance of account, any goods bailed to them; but no other persons have a right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to that effect.

(emphasis supplied).

The following excerpt from Syndicate Bank v. Vijay Kumar and others [(1992) 2 SCC 330] which is the oft quoted decision of the Supreme Court on this point is apposite and sets at rest the controversy:

In Halsbury's Law of England, 2nd Edn., Vol.20, p.552, para 695, lien is defined as follows:- “Lien in its primary sense is a right in one man to retain that which is in his possession belonging to another until certain demands of the person in possession are satisfied. In this primary sense it is given by law and not by contract.”

In Chalmers on Bills of Exchange, 13th Edn., p.91 the meaning of “Banker's lien” is given as follows:

“A banker's lien on negotiable securities has been judicially defined as 'an implied pledge'. A banker has, in the absence of agreement to the contract, a lien on all bills received from a customer in the ordinary course of banking business in respect of any balance that may be due from such customer.”

In Chitty on Contract, 26th Edn., p.389, para 3032 the Banker's lien is explained as under:

“Extent of lien - By mercantile custom the banker has a general lien over all forms of comm