Deepak (law) 19 January 2014

Banker lien on gurantor title deed

Ques: A is having a Car loan account in bank in which his brother 'B' is guarantor giving only personal guaranty. 'B' brother of 'A' is also having an agricultural CC limit in same bank. Now he want to discharge his CC limit account in which he has deposited title deed. B is claiming title deed, Can bank exercise right of lien by holding title deed for recovering amount for car loan account of his brother A which is declared NPA. Plz reply with relevant Judgments?

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4 Replies

narendra.s.p (Chief Manager(Law)) 19 January 2014

Please examine implications under section 60(a) of Transfer of Property Act. Implied exercise of lien under section 171 of Contract Act is not permissible when there is a specific statutory right [in absence of any contract to the contrary]

Deepak (law) 19 January 2014

sir can you quote any judgment

narendra.s.p (Chief Manager(Law)) 19 January 2014

171. General lien of bankers, factors, wharfingers, attorneys and policy brokers-Bankers, factors, wharfingers, attorneys of a Hiqh 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.

However, National Commission judgment dated 27/07/2006 in M.Mallik Vs SBI reported in IV [2006] CPJ 1 NC has expressed contrary view

Deepak (law) 19 January 2014

sir can you post link to judgment or mail me judgment at advdeepakmehta@gmail.com.

Sir in this case B has given only personal gurantee to car loan which account is npa and he is discharging account of CC loan borrowed by himself. General lien is right of bank to recover loan acc. to Sec 171