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MADRAS HIGH COURT
Honourable Mr Justice K.KUMARESH BABU
N. RAJATHI, – Appellant
Versus
THE MANAGER - CANARA BANK, – Respondent
WP(MD)/506/2014
BANKING - LIEN - GENERAL LIEN - SECTION 171 OF THE CONTRACT ACT - APPLICABILITY - BANK'S RIGHT TO RETAIN PROPERTY PLEDGED/MORTGAGED TILL ALL LOANS ARE FULLY DISCHARGED - CONDITIONS - MISTAKE COMMITTED BY BANK MANAGER - BANK'S FAILURE TO INITIATE ACTION AGAINST MANAGER OR PETITIONER - BANK'S CLAIM THAT PETITIONER HAS NOT PAID AMOUNT DUE UNDER FIRST JEWEL LOAN - UNJUSTIFIED - PETITIONER ENTITLED TO RELEASE OF JEWELS PLEDGED UNDER SECOND LOAN ACCOUNT - WRIT PETITION ALLOWED.
Fact of the Case:
Petitioner availed a jewel loan on 04.10.2011, which according to her, has been redeemed and the jewels under the said loan were returned to her by closing the same. This was countered by the first respondent claiming that the petitioner had not paid the amount under the said jewel loan and the same has been closed due to the mistake committed by the then Manager of the first respondent Bank. The reason attributed to the mistake was that the Branch was crowded. When the petitioner went to redeem the second jewel loan, the first respondent has accepted the payment towards redemption of the same of the said jewel loan and that refused to release the jewels stating that there is a lien on the jewels, as the petitioner has not paid the amount due under the first jewel loan.
Finding of the Court:
The first respondent Bank had not initiated any action whatsoever calling upon the petitioner to make payment on the alleged allegation that the amount has not been paid. As it is admitted even in the counter affidavit that there has been a mistake on the part of the then Manager, this Court queried upon the counsel for the first respondent as to what action has been initiated against the then Bank Manager for the mistake committed by him. The reply was in negative. Not having taken any action either against the then Manager for committing the mistake or against the petitioner, the first respondent cannot out of the blue claim that the petitioner has not paid the amount due under the first loan.
Issues: Whether the Bank has a general lien over the property pledged/mortgaged with it, and has a right to hold back the property pledged/mortgaged with it till all the loans are fully discharged?
Ratio Decidendi: Section 171 of the Contract Act could not be available to the first respondent Bank, in view that the first jewel loan has been closed and that no action has been initiated to reopen the closed jewel loan. When the first respondent is not entitled to claim the benefit of Section 171 of the Contract Act, there can be no reason to retain the jewels belonging to the petitioner.
Final Decision: Writ Petition is allowed. However, there shall be no order as to costs.
W.P.(MD) No.506 of 2014
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
RESERVED ON
: 20.12.2022
PRONOUNCED ON
: 06.01.2023
CORAM
THE HONOURABLE MR.JUSTICE K.KUMARESH BABU
W.P.(MD) No.506 of 2014
and
M.P.(MD) No.1 of 2014
N.Rajathi
... Petitioner
/vs./
1.The Manager – Canara Bank,
Kombai Branch,
South Car Street,
Uthamapalayam Taluk,
Theni District 625 522.
2.The Chairman and Managing Director,
Canara Bank – Head Office,
112, J.C.Road,
Bangalore.
3.The Asst. General Manager,
Canara Bank – Circle Office,
St. Marys Campus,
East Veli Street,
Madurai 625 001.
... Respondents
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W.P.(MD) No.506 of 2014
PRAYER: Writ Petition filed under Article 226 of the Constitution of India for
issuance of Writ of Certiorarified Mandamus, calling for the records pertaining to
the Impugned Letter dated 19.04.2013 issued to the petitioner vide reference No.
MSBR AGL 1059842014424 13 APP by the first respondent and quash the same
as illegal with the direction to the first respondent to lift the lien on all petitioner's
loan accounts and release Petitioner's jewels pledged in Agricultural Gold
Account No.1059842014424.
For Petitioner
: M/s.P.Jessi Jeeva Priya
For R1
: Mr.C.Jawahar Ravindran
ORDER
The instant writ petition has been filed seeking to quash the impugned
letter dated 19.04.2013 issued by the first respondent and to consequently direct
the first respondent to lift the lien on all the petitioner's loan accounts and release
the petitioner's jewels pledged in agricultural gold loan Ac.No.1059842014424.
2.Heard M/s.P.Jessi Jeeva Priya learned counsel for the petitioner and
Mr.C.Jawahar Ravindran, learned counsel for the first respondent.
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W.P.(MD) No.506 of 2014
3.The learned counsel for the petitioner would submit that the petitioner
hails from an agricultural family and in order to carry on the the agricultural
activities, she had pledged the gold jewelry with the first respondent Bank on
04.10.2011 for a sum of Rs.68,000/- and that on 11.09.2012, she had paid the
entire gold loan amount together with interest, totally a sum of Rs.73,060/-. On
receipt of payment, the first respondent had released the jewels in the gold loan
account dated 04.10.2011.
4.The petitioner has also availed three other gold jewel loans on
10.04.2012, 17.07.2012 and 14.09.2012 respectively. As the gold loan availed on
10.04.2012 had to be redeemed before one year, the petitioner had approached the
first respondent Bank and had paid the principal amount along with accrued
interest towards the said gold loan. Acknowledging the said payment, the
petitioner was also issued with a token, which should be handed over at the time
of return of the pledged jewelry. However, the first respondent has refused to
release the jewels claiming that the gold loan account dated 04.10.2011 had been
mistakenly closed. Therefore, the petitioner was informed by the first respondent
that unless the amount due under the gold loan dated 04.10.2011 is paid, the
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W.P.(MD) No.506 of 2014
jewels in the gold loan dated 04.10.2011 would not be released. Being aggrieved
by the same, the petitioner had approached the police. But however, the Bank
claimed that they are holding the jewels as a lien for payment of the amount due
under the gold loan dated 04.10.2011. Thereafter, the petitioner had approached
the Banking Ombudsman. The claim of the petitioner before the Banking
Ombudsman was also rejected. Hence, the petitioner had approached this Court
seeking the above relief.
5.M/s.P.Jessi Jeeva Priya, learned counsel for the petitioner would
vehemently contend that the gold loan account dated 04.10.2011 was discharged
by the petitioner validly and only after taking into consideration of the said
discharge, the jewels were released to the petitioner. But now, the
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