The judgment established that a bank's right to exercise a general lien under Section 171 of the Indian Contract Act is subject to the existence of a contract to the contrary, and the specific purpose for which documents were deposited can limit the bank's right to claim a general lien.

1. This Appeal is directed against the judgment and order dated 7th June, 2010, passed in W.P.No.25277/2010, whereby learned Single Judge allowed the Writ Petition filed by the Respondents/Writ Petitioners and a Mandamus was issued directing the Appellant-Bank to return the title deeds to the Writ Petitioners, which was deposited by the late husband of the 1st Respondent by way of security as against the loan availed by him.

2. The facts of the case lie in a narrow compass. One Late N.P.S. Mahendran, husband of the 1st Respondent and father of Respondents 2 and 3 was running two establishments under the name of M/s. Aarthi Bala Tea Plantations and M/s. Sanjay Bala Tea Plantations. The deceased availed loan from the Appellant-Bank and deposited the Title Deeds by way of collateral security and also executed various documents in order to secure due payment of loan. After the death of the said N.P.S. Mahendran, the Respondents/Writ Petitioners became liable to pay Rs.1,14,86,428.32, which was outstanding in several loan accounts. The 1st Respondent, window, liquidated the entire outstanding dues lying in the account and the Bank, after acknowledging the same, issued ‘No Due’ Certificate in her favour. The Respondents, then, requested the Appellant Bank to return the Title Deeds relating to the properties, which were deposited with the Bank by Late N.P.S. Mahendran. Firstly, the Appellant Bank informed the Respondents that after necessary approval from the controlling office, the documents will be returned, but in spite of repeated requests, the documents have not been returned. It appears that one of the Guarantors filed an Application before the Debts Recovery Tribunal, Chennai, seeking for return of documents, which was allowed by the Tribunal by order dated 31st Oct., 2007 directing the Bank to return the documents. Aggrieved by the said order, the Appellant-Bank preferred an Appeal before the Debts Recovery Appellate Tribunal, Chennai, and the same was allowed by the Appellate Tribunal holding that such a Petition to return the documents was not maintainable before the Debts Recovery Tribunal. The Appellate Tribunal, therefore, directed the borrowers to approach the Bank for appropriate relief. The Respondents/Writ Petitioners again approached the Bank on many occasions requesting for return of documents, but the same was not returned. The Appellant-Bank, by letter dated 14th February, 2008, informed the Respondents that a sum of Rs.230.03 lakhs is outstanding in the loan account of M/s. Somerset Tea Plantation. The Writ Petitioners, left with on other alternative, moved this Court by filing the aforementioned Writ Petition seeking a Mandamus directing the Appellant-Bank to return the documents of title standing the name of Late N.P.S. Mahendran on the ground that the entire loan outstanding has been paid to the Appellant-Bank.

3. The Appellant-Bank contested the Writ Petition on the ground inter alia that the Bank is exercising a general lien on the title documents standing in the name of Late N.P.S. Mahendran, who stood as a Guarantor for other facilities and liabilities outstanding against M/s. Somerset Tea Plantation. It was contended by the Bank that such cash-credit facilities were availed from another Branch, namely, Udhagamandalam Branch of the Bank, by one M/s. Somerset Tea Plantation and the deceased, husband of the 1st Respondent, stood as a Guarantor for the said facilities. The said firm committed default and more than Rs.2.03 Crores is due from the said firm. Hence, the Bank has initiated a proceeding against the firm and the Guarantor and after the death of N.P.S. Mahendran, the present Respondents have been impleaded as Legal Representatives.

4. Learned Single Judge found that the entire loan obtained by the deceased, husband of the 1st Respondent was cleared by the 1st Respondent and the Bank has issued a letter dated 24th October, 2007, confirming that the loan account has been closed and the dues