Lien on demat account in case credit card default
Querist :
Anonymous
(Querist) 20 October 2011
This query is : Resolved
My Father has Saving account and Demat account in HDFC Bank. He also taken credit card from the HDFC bank. He has also FD in the same bank for Rs. 100000.00 in which No nomination is Registered. But In Demat account My sister is Regiterd as nominee. Unfortunatly My Father Passed away in September. at that the Outsatanding in the credit card is about 2.36 Lacs.We have not paid anything to credit card.
Now I want to transfer the Stock in Demat account in which Nominee is registerd to Nominee account.
Let me know whtether the Bank has lien over the Demat account stock for credit card outsatnding.Can the bank recover the amount form after sale of share. After Intimatio bank has blocked the Saving account.
Arun Kumar Bhagat
(Expert) 20 October 2011
I do not think there shall be lien on Demat account for Credit card facility. From the demat holding statement you can ascertain whether it is written or not.
ajay sethi
(Expert) 20 October 2011
yes bank can exercise lien .
A single bank approach may work well till the time you do not have any dispute with the bank. The Contract Act, 1872, gives banks the right to lien the borrower’s savings against any debt taken from the bank. The right to lien empowers banks to keep the assets of a borrower till the time the debt is settled, and even sell the assets in case the borrower is unable to pay.
the bank has the power to freeze an equivalent amount of savings that the customer may be having with the bank,”
Raj Kumar Makkad
(Expert) 20 October 2011
I do agree with sethi. I advise you to personally visit the relevant bank branch and negotiate with officials and your matter of outstanding dues should be got settled therein.
prabhakar singh
(Expert) 21 October 2011
Mr. Sethi is right.In addition your sister has become owner of all shares alone in demat a/c,none of you now can claim against her unless she agrees.[section 109a,companies act] What is the general lien of a banker against the Customer you may go with AIR 1992 SC 1066, 1992 (2) ARBLR 1 SC;or it equivalent http://www.lawyersclubindia.com/experts/Lien-on-demat-account-in-case-credit-card-default-241361.asp
malipeddi jaggarao
(Expert) 22 October 2011
No more additions required. Banker's lien is a general lien and it can hold/appropriate the securities in its hand by giving due notice to the persons otherwise entitled. YOu will have to initiate dialogue with the Bank and settle the matter to get the securities released.
Guest
(Expert) 22 October 2011
There is a difference of banker's lien on demat account and lien on demat stock appearing in demat account, i.e., shares of the deceased by the bank where nomination in stocks exist. A banker is nerelt an intermediary of the depository, as a depository participant.
The Depository Participant has the right only to suspend a demat account, and not to establish its lien, in case it receives an order to the effect from the Depository, Income Tax Dept., Court of law, any other regulatory body or for non payment of charges to the Depository Participant.
Non payment of charges to the depository does not include any loan outstanding on account of credit card of the deceased. Bank cannot sell the shares of the deceased at its own unless attachment orders are take from a competent court of law for attachment of any part of the holding that appears in the demat account.
However, once the account is suspended on account of any of the aforesaid reasons, no transactions are allowed in the account, BUT benefits arising due to any Corporate Action are credited to the suspended account.
The DP has to intimate the client, here the nominee of the depository account, of suspension of its account quoting reason. So, if the bank has
Sailesh Kumar Shah
(Expert) 22 October 2011
Shri PS Dhingra is rightly answered the query.
Guest
(Expert) 22 October 2011
Since your sister is nominee of the depository account, she should issue notice through an advocate not to illegally suspend the demat account of the decesed holder and cause transmission the stockes in to the nominee's demat account, the processess of which is as follows:
1) The nominee should have a demat account in sole name
2) Submit the following documents:
(a) Duly filled transmission form.
(b) Death certificate in original or a notarised copy of the same
(c) Affidavit (in the prescribed format) on Rs 100/- stamp paper
(d) Indemnity (in the prescribed format) on Rs 300/- stamp paper
(e) Identity documents of Nominee.These could be - copy of the PAN card, Voter's Identity card, Driving license, passport. After verifying these documents, DP is required to transmit the securities to the account of the nominee.
Guest
(Expert) 22 October 2011
Even if any of the accounts, i.e., the Savings account or the FD does not have any nomination, the banker does not even have the right to automatically transfer the funds to its own accounts just to clear the credit card dues and has to take a legal recourse. The banker would need to take attchment orders from the competent court of law.
Querist :
Anonymous
(Querist) 22 October 2011
Thanks a lot To Mr. PS Dhingra for his logical, clear advice.
Guest
(Expert) 22 October 2011
You are welcome dear.
