Lien and Set off
Querist :
Anonymous
(Querist) 10 January 2011
This query is : Resolved
My current account has been marked as ON HOLD for a fund of Rs.2,89,000/- by HDFC BANK.I am sole proprietor of the company which holds current account with bank.The bnk claims thay I have not fully paid the loan taken for the purchase of car in 2002 with last installment due in october 2004.
The said loan of Rs.2 Lakh was directly disbursed to Car Dealer however I was asked to sign blank agrrement and 24 PDCs were issued to them from me.
The Car dealer lost his dealership and also liquidated his company and vanished without giving me delivery of car.
The Hon Consumer Forum of Mumbai-Bandra has made an order in year Nov 2008 asking me to recover the money from dealer.However I find it difficult to locate the person and company on my own.
I had paid 9 out of 24 installments to bank .Bank also adjusted some amount lying with them on dealer's account against the said loan.Consumer court has clearly said that the dealer has misused the loan.
Bank never made any communiction or filed any suit against me till date.
Surprisingly after almost after 7 years they are holding the current account money meant purely for business purpose of my company. I opened this account in year 2007 and it was not in operation when when the said loan was disbursed.
The bank sent me notice on 31st and the cheques were deposited by me in bnk to a tune of RS.4 lakkh on 29 nd 30 DEC.It clearly shows that they were tracking the account and wanted to hold the fund first and then send notice to me.
I have sent them an iterim reply asking for inspection of loan and current account documents to make a final reply however the funda are still ON HOLD and no reply from bank yet.
I need to know that for how long bank can hold funds without replying?
Is bank correct in using Lien Act without filing any civil case for recovery?
Is it allowed to hold the funds in Current account which was not even in existance at the time of a loan agrreement or has got no connection with personal car loan account?
Can bank hold any amount of money that it claims as a due amount without any acceptnce from me?
Is there any procedure or guideline from RBI to use this act and has bank followed it in my case?
Which are the immediate legal actions i should take agaianst Bank?
And most importantly what happens to the cheques which were returned due to this act of bank?Am I guilty for dishonoured cheques issued before the notice date?
Thanking You
Amit Minocha
(Expert) 10 January 2011
Precisely, file a case agaisnt the bank immediately both civil for release / recovery of your amount and criminal for misue of cheque. You are not guilty of dishonour as debt against you is time barred. amitminocha@yahoo.com
malipeddi jaggarao
(Expert) 11 January 2011
After signing the initial documents for car loan, if you have not signed acknowledgement of debt, the documents are time barred and bank can not take any action. Suppose presuming that you have signed the acknowledgement of debt then the answers will be as follows:
i) Bank can exercise its right of lien and set-off and appropriation against the debts due to the Bank provided the securities and the liabilities are of the same person and in the same capacity. Since your current account is proprietorship concern, you stand in the same capacity and Bank has the right.
ii)Yes, it is not necessary that the securities should come into the hands of the Bank prior to creation of liability.
iii) RBI has no role in this matter.
iv) You can address a letter to the Bank to release the lien on your current account, as the car loan is time-barred (if you have not signed the acknowledgement within the last 3 years) and and exercising the lien on the securities of deposit account against a time barred debt is not legal. Also verify whether there is any request letter to the Bank to directly disburse the car loan amount to the dealer. If the Bank does on its own, since no agreed consideration is passed on you (car), you are not liable for the dues. You have to make sure two things:
1) whether there is any acknowledgement of debt (of car loan) within the previous three years?
2) Whether you have requested the bank to disburse the car loan directly to the dealer?
For this you require to examine the security documents. You ask the bank to supply xerox copies of all the security documents including application for car loan.
For releasing the hold-on (lien) if the Bank does not agree with your oral and written representations, you may have to serve a leal notice after verifying the above points.
