BANK OF INDIA vs SUDERSHAN KUMAR MITTAL

Learned counsel for the parties present. Arguments heard.

Shri Sudershan Kumar Mittal, the complainant/respondent stood guarantor in the loan account of M/s M. G. Metal Linkers Pvt. Ltd. and mortgaged his two residential properties against the said loan. The complainant, Shri Sudershan Kumar Mittal also stood guarantor of M/s Shri Balaji Educational and Charitbale Trust, which had obtained another loan. It is pointed out that he is the Chairman of Shri Balaji Educational and Charitable Trust. So far as loan of M/s M.G. Metal Linkers Pvt. Ltd. is concerned, it was loan to the tune of Rs.241.60 lakhs. In one time settlement it was agreed that the complainant/guarantor shall pay a sum of Rs.140.00 lakhs to the Bank. He was assured that his title deeds would be returned. However, the needful was not done.

On the contrary, the bank demanded another sum of Rs.7,03,467.00, which according to the Bank was due towards interest. The said amount was also paid. It is also admitted that so far as loan of M/s Shri Balaji Educational and Charitable Trust was concerned, that became NPA and the bank released one title deed in the name of Smt. Raj Mittal but the bank did not release the second sale deed and contended that they have lien over all the securities furnished by the respondent/complainant.

Both the fora below have come to the conclusion that the bank had given undertaking that they would return the documents but the needful was not done, therefore, they were estopped form withholding the documents of the complainant. The State Commission also mentioned the Supreme Court authority in Ravinder Kaur vs. Ashok Kumar AIR 2004 SC 904.

We have heard the learned counsel for the parties. Learned counsel for the respondent/complainant vehemently argued that the amount of Rs. 140.00 lakhs was given in the hope and undertaking that the opposite party would return the title deeds. They have been cheated and they are estopped from raising this point again and again. It is also argued that their house cannot be auctioned/sold in view of Section 60 of C.P.C.

This must be borne in mind that this is a case under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act, 2002). Section 60 is not applicable to the provisions under the SARFAESI Act. It is surprising to note that the State Commission has applied the law of estoppel. However, it must be borne in mind that there is no estoppel against the Act. Section 171 of the Contract Act, 1872 runs as follows: "171. General lien of bankers, factors, wharfingers, attorneys and policy-brokers.- Bankers, factors wharfingers, attorneys of a High 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.

The Hon''ble Supreme Court in the case of Syndicate Bank vs. Vijay Kumar and Others AIR 1992 SUPREME COURT 1066 was pleased to hold that "in mercantile system the bank has a general lien over all forms of securities or negotiable instruments deposited by or on behalf of the customers in the ordinary course of banking business. The Bank has the liberty to adjust from the proceeds of the two FDR''s towards the dues to the Bank and if there is any balance left that would belong to the depositor."

The deed of guarantee in Shri Balaji Educational and Charitable Trust has been produced before us. Its para 6 is relevant and is reproduced as hereunder "6. Bank may hold all securities, goods, negotiable instruments, documents of title to goods or other properties belonging to Guarantor/s which are in Bank''s possession or which may at any time hereafter come into Bank''s possession and Bank may also liquidate any or all of these securities, goods, negotiable instruments, title to goods or properties and other properties etc. without notice to Guarantor''s and apply the proceeds thereof towards repayment of the liabilities of the Guarantor''s under this agreement and also towards liquidation of any of Guarantor''s liabilities to any one or more of Bank''s branches whether as borrower or guarantor, without prejudice to the right of the Bank to proceed against the Guarantor/s for the balance.

The Hon''ble Supreme Court vide the order of this Bench in Yashwant G. Ghaisas & Ors. Vs. Bank of Maharashtra, civil appeal No. 1359 of 2013, decided on 1.3.2013 was pleased to approve the following observations of this Bench: "The appellants challenged the action of the bank by filing a complaint under Section 21 of the Consumer Protection Act, 1986 (for short, ''the 1986 Act''). The National Commission referred to Section 34 of the 2002 Act whereby jurisdiction of all Courts and authorities to entertain challenge to the action taken by the bank has been ousted and dismissed the complaint by recording the following observations:

"19. The National Commission is not empowered to arrogate to itself the powers which come within the jurisdiction of debt recovery tribunals. This matter is purely covered within the jurisdiction of DRT or DRAT. If there is any grievance against the notice under Section 13(2) of the SARFAESI ACT that should be brought to the notice of the concerned authority. It is well settled that main creditor and the guarantors are equally responsible. There lies no rub for the bank to take action against the guarantor directly. It cannot be alleged that he is adopting the policy of pick and choose. From the allegations stated above, there appears to be no deficiency on the part of the opposite party. In case the bankers are working within the ambit of SARFAESI Act, it cannot be said to be deficiency on the part of the bank. It must be established that there is deficiency on the part of the Bank. In that case this Commission can take action. For the reasons stated above, the complaint is dismissed at the stage of its admission. Nothing will preclude the complainants from approaching appropriate Forum as per law."

(reproduced form the SLP paper book)."

Consequently, we are of the considered view that the bank did not commit any deficiency in applying the principle of lien over all assets of the complainant coming within the purview of the Security documents.

Accordingly, we set aside the orders passed by the fora below, accept the revision petition and dismiss the complaint filed by the complainant/respondent. However, there lies no rub for the complainant/respondent to get redressal of his grievances if any before the DRT/DRAT, where the case after service of notice under Section 13(2) SARFAESI Act is admittedly still pending.