KULDEEP SINGH vs SYNDICATE BANK

The petitioner, who has an account with the respondent Syndicate Bank, Civil Lines, Roorkee had a credit balance of Rs. 4,51,177.69/- for the aforesaid account as on 31.03.2009. The petitioner had also stood as guarantor for a loan which the aforesaid bank had granted to M/s. Hamara Enterprises through one Mr. Sanjeev Kumar Sharma bearing cash credit account no. 87361250000269. Since M/s. Hamara Enterprises did not repay the loan taken from the bank, it turned into a Non Performing Asset and the petitioner being guarantor for the aforesaid loan, a sum of Rs. 4,43,000/- was transferred from his bank account to the loan account of M/s. Hamara Enterprises. Being aggrieved from the aforesaid transfer of money from his account, the petitioner approached the concerned District Forum by way of a complaint.

The complaint was resisted by the bank primarily on the ground that since M/s. Hamara Enterprises did not repay the loan taken from the bank and the petitioner/complainant had stood as a guarantor in respect of the aforesaid loan, they sent registered notices dated 18.07.2008 and 20.03.2009 to him, requiring him to close the loan account of M/s. Hamara Enterprises, within 15 days by depositing the amount payable in the aforesaid loan account. He was also informed that on his failure to do so, the loan amount would be adjusted through his personal account. The bank also received a certificate from the Post Office, certifying that the aforesaid letter/notice has been served upon the petitioner/complainant. Since the petitioner/complainant did not discharge obligation qua the loan granted to M/s. Hamara Enterprises even on receipt of the aforesaid notices, the bank transferred the amount of Rs. 4,43,000/- from his account to the loan account of M/s. Hamara Enterprises.

Vide its order dated 06.02.2012, the concerned District Forum directed the bank to deposit Rs. 5 lakhs in the account of the complainant within one month from the date of the order.

Being aggrieved from the order passed by the District Forum, the bank approached the concerned State Commission by way of an appeal. Vide impugned order dated 17.12.2014, the State Commission allowed the appeal filed by the bank and dismissed the complaint. Being aggrieved, the petitioner/complainant is before us by way of this revision petition.

A perusal of the order passed by the State Commission would show that the bank had sent a letter dated 20.03.2009 to the complainant by registered post, referring to its earlier letter dated 18.07.2008. It was further stated in the aforesaid letter that if the complainant does not clear the liabilities within seven days of receipt of the letter, the bank shall be compelled to set off the credit in his account. Though the complainant denied the receipt of the aforesaid letter dated 20.03.2009, the bank relied upon a letter received from the Post Master, Head Office, Civil Lines, Roorkee, certifying therein that the aforesaid letter was served upon the complainant on 23.03.2009, though no acknowledgement was signed by him. On the basis of the aforesaid certificate issued by the Post Office, the State Commission concluded that the letter dated 20.03.2009 was duly received by the complainant. We are in agreement with the State Commission as far as the service of the aforesaid letter on the complainant/petitioner is concerned. The certificate issued by the Post Office left no doubt as regards the receipt of the aforesaid letter by the complainant/petitioner from the bank. Therefore, it cannot be said that the complainant/petitioner did not get due intimation from the bank before the amount of Rs. 4,43,000/- was transferred from his account to the loan account of M/s. Hamara Enterprises on 04.05.2009 i.e. more than one month after the aforesaid letter dated 20.03.2009 was received by the complainant/petitioner.

The letter dated 20.03.2009 sent by the bank to the complainant to the extent it is relevant reads as under:- "Reg: Accounts of M/s. Hamara Enterprises ? SOD 8736/125/269 for Rs. 10.00 lacs and OSL No. 8736.722.47 of Rs. 2.50 lacs in the name of Sri Sanjeev Sharma. We wish to inform you that the captioned borrower had availed the aforesaid loans on your personal guarantee. The said loan have become highly overdue in our books of accounts and the same has been informed to you by the bank personally as well as by notices.

The bank had also issued a letter No. RKE/8736/L-36/2008/136 dated 18.07.2008 requesting you to close the liabilities otherwise bank shall be compelled to adjust a credit balance in your SB Account No. 8736221 10980 towards the liabilities outstanding in the loan accounts. But till date you have neither responded and performed the request of the bank nor closed the liabilities. Since the borrower is absconding and not traceable, we once again request you to close the liabilities within 7 days of receipt of this Regd. Letter. Kindly note that if you will not respond by 30/03/2009, we shall be compelled to appropriate (set off) the credit to you said account wherein you are one of the guarantors and you shall be responsible for this act.

It would thus be seen that the petitioner/complainant received due intimation from the bank informing it that M/s. Hamara Enterprises had defaulted in servicing the loan for which he had stood as a guarantor. He was also given an opportunity to clear the amount outstanding in the loan account of M/s. Hamara Enterprises within one week of the receipt of the said letter. Admittedly, the petitioner/complainant did not pay the amount which was overdue in the account of M/s. Hamara Enterprises by 30.03.2009. Therefore the bank was fully justified in transferring the amount available in the account of the complainant to the loan account of M/s. Hamara Enterprises.

The learned counsel for the petitioner/complainant submits that the bank did not quantify the amount outstanding in the loan account of M/s. Hamara Enterprises either in the letter dated 20.03.2009 or in the earlier letter dated 18.07.2008. He also submits that no certificate from the bank manager in terms of clause 11 of the Gurantee Agreement was sent by the bank to the complainant/petitioner. We, however, are not impressed with the aforesaid contention. Nothing prevented the petitioner either from approaching the bank to verify the amount outstanding in the loan account of M/s. Hamara Enterprises or from contacting the borrower directly and ascertaining the amount payable by him to the bank. The opposite party in our view cannot be said to be deficient in rendering services. Even if we proceed on the assumption that a certificate in terms of clause 11 of the Guarantee Agreement was not sent to the complainant, no prejudice was caused to the complainant/petitioner on account of such a certificate having not been sent to

him since he was very much in a position to verify the amount payable by M/s. Hamara Enterprises from the borrower, who must be quite close to him, he being his guarantor or from the bank, where he also had an individual account. This is not the case of the complainant that he approached the bank to ascertain the amount payable by M/s. Hamara Enterprises to the bank, but no such information was given to him.

Section 171 of the Indian Contract Act to the extent it is relevant provides that the bankers 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. The aforesaid section came up for consideration of the Hon''ble Supreme Court in Syndicate Bank vs. Vijay Kumar & Ors., AIR 1992 SC 1066. In the aforesaid case, the respondent no. 3 before the Hon''ble Supreme Court deposited two sums, one of Rs. 65,000/- and the other of Rs. 25,000/-, by way of two separate fixed deposits receipts, so as to enable the Bank to furnish a bank guarantee on behalf of judgment debtor firm in favour of the Registrar, High Court of Delhi. The fixed deposits receipts were duly discharged by signing on their reverse. Later, the Bank guarantee issued in favour of the Registrar of the High Court was discharged by the Court. The decree holder got a sum of Rs. 35,000/-, out of the amount of Rs. 90,000/-, which respondent no. 3 had deposited with the Bank by way of FDR, attached on the ground that the said amount belonged to the judgment debtor firm of which respondent no. 3 was a partner. The High Court rejected the plea of the Bank that the aforesaid amount could not be attached, since the Bank had a lien on the FDRs against dues in an overdraft account. It was contended on behalf of the Bank that it had a lien over the amount deposited by the judgment debtor and as banker they had a right to hold the security, in respect of overdraft amount. Accepting the contention, the Hon''ble Supreme Court, inter-alia, held that 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 and such a general lien is a valuable right of the banker, judicially recognised, and in the absence of a contract to the contrary, the banker has a general lien over such security received from the customer in the ordinary course of banking business and has a right to use the proceeds in respect of any balance that may be due from the customer by way of reduction of the customer''s debit balance. This issue also came up for consideration of the Karnataka High Court in Smt. K. S. Nagalambika vs. Corporation Bank & Anr., AIR 2000 Kant 201 . In the aforesaid case, the plaintiff had deposited money with the bank and obtained fixed deposits receipts in their name. On maturity, the said deposits were not paid by the Bank on the ground that the plaintiff was a surety for a loan taken by his wife and the amount of the FDR was accordingly adjusted by the Bank towards the loan account of the wife. Claiming the adjustment to be illegal, a suit was filed for recovery of the adjusted amount alongwith interest. The Bank contended that it had general lien and therefore, was entitled to adjust the amount towards the loan account. Relying upon the decision of the Hon''ble Apex Court in Vijay Kumar & Ors. (supra), it was held that undoubtedly the Bank had a lien over the FDRs.

Therefore, the respondent bank was entitled in law, to utilize the balance in the personal account of the petitioner, to liquidate the amount outstanding in the loan account of M/s. Hamara Enterprises, for repayment of which the petitioner had stood as a guarantor.

For the reasons stated hereinabove, we find no merit in the revision petition. The State Commission in our view has done substantial justice by upholding the transfer of money from the account of the complainant to the loan account of M/s. Hamara Enterprises. Though there is a delay of 19 days in filing the revision petition, an application for condonation of delay has been filed. We need not take a view on the said application, since on merits we are not inclined to interfere with the orders passed by the State Commission. Since, the order does not call for any interference in exercise of our revisional jurisdiction, the revision petition as well as the accompanying application are dismissed.