PUTLIBAI vs STATE BANK OF INDORE

THIS is a complaint filed before this Commission on 4.3.1992 by the complainants- Smt. Putlibai, aged 75 years and her husband Shri Mangilal Jain, aged 85 years, residents of Shahjahanabad, Bhopal against State Bank of Indore, Shahjahanabad Branch, Bhopal. The complainants were originally residents of Sironj in Vidisha District of Madhya Pradesh. Having grown old, they decided to dispose of their family house at Sironj to shift their residence at Bhopal where their son Santosh Kumar Jain resides. After selling their house at Sironj they purchased in their joint names on 24.11.1990 two fixed deposit receipts (FDRs) from State Bank of Indore, Murwas Branch for the value of Rs. 50,000/- and Rs. 40,000/- respectively, which were to mature after a period of 36 months and carried interest @ 11% per annum during the term of deposit from State Bank of Indore, Shahjahanabad Branch.

THE complainants made a contract on 31.3.1991 with one Shri Anil Kumar Jain, resident of Shahjahanabad, Bhopal for purchase of his house located at Teela Jamal Pura, Bhopal for a price of Rs. 1,30,000/- and made an advance payment of Rs. 30,000/- towards the price and it was agreed that the balance amount of Rs. 1,00,000/- shall be paid to the seller-owner Mr. Anil Kumar by the end of August, 1991 when the sale deed shall be registered in favour of the complainants. THE complainants also agreed that on their failure to make the payment of balance amount by end of August, 1991 as agreed, the seller shall appropriate the advance of Rs. 30,000/- as damages. After shifting their residence from Sironj to Bhopal the complainants got their FDRs of State Bank of Indore from Murwas Branch transferred to Shahjahanabad Branch of the State Bank of Indore. For the purpose of arranging the balance payment of Rs. 1 lac for completing the purchase of the house belonging to the sellerAnil Kumar Jain, the complainants approached the Shahjahanabad Branch of the State Bank of Indore-Opposite Party on 18.8.1991 for obtaining their money in deposit under the two FDRs aforesaid. But the Opposite Party refused to pay the amount of deposit of the FDRs belonging to the complainants.

On 21.8.91 the complainant again visited the Bank-Opposite Party and made a demand in writing for repayment of the amount of deposit under the FDRs. The Opposite Party in reply informed by letter dated 29.8.1991 to the complainant No. 2 that Sironj Branch of the Opposite Party-Bank had informed that there was a lien noted on the FDRs of the complainants and directed the complainant to contact the Sironj Branch of the Bank. According to the Opposite Part, the complainant No. 2 had as an additional security furnished on 2.7.1983 to the extent of Rs. 30,000/in respect of cash credit facility of one account holder M/s. Gorelal Sukhalal and that the Opposite Party-Bank had proposed legal action for recovery against the complainant No. 2 on the basis of the security given by him in respect of Gorelal Sukhalal.

THE complainants have averred that the party Gorelal Sukhalal was solvent having movable and immovable properties and having good business and the Opposite Party could easily recover the dues of the Bank from Gorelal Sukhalal. It has been averred in the complaint that the complainants never agreed for any charge for being pledged on their jointly owned FDRs in question and the actual PDRs were with complainants on which the Opposite Party-Bank have not made any note of any lien. THE FDRs were purchased in November, 1990 whereas the security furnished by the complainant No. 2 as alleged by the Opposite Party was in the year 1983. In the context of the aforesaid facts the complainants have alleged serious deficiency in service on the part of the Opposite Party-Bank inasmuch as the Opposite Party has illegally withheld the amount of the complainants in deposit with the Opposite Party-Bank in the shape of two FDRs in respect of which the Opposite Party has alleged unilateral creation of lien without jurisdiction which has resulted the complainants'' inability to make timely payment of the balance of Rs. 1 lac to the seller-Anil Kumar Jain who forfeited the earlier advance of Rs. 30,000/- made to him by the complainants for purchase of the house, as per terms of the agreement aforesaid.

THE complainants have prayed for the following reliefs: 1. Immediate payment of the amount of the two FDRs of Rs. 90.000/-; 2. Compensation for loss of Rs. 30,000/- forfeited in account of not completing the purchase of the house by 31.8.1991 as per the agreement of the sale for want of funds due to nonpayment of the amount of FDRs by the Opposite Party. The complainants have prayed for payment of the amount of the FDRs for Rs. 90,000/- compensation for loss of Rs. 30,000/- forfeited on account of not completing the purchase of the house by 31.8.1991 as per the agreement of sale for want of funds due to non-payment of the amount of FDRs by the Opposite Party. Rs. 20,000/- as compensation for physical and mental agony together with interest @ 24% per annum. The question which calls for decision, in this case, is whether the Opposite Party-Bank could legally withhold payment of the FDRs standing in the joint names of the two complainants - being husband and wife on the plea of general lien of the Bankers in the facts and circumstances of the present case. The provisions for general lien of Bankers are contained under Section 171 of the Contract Act which reads as under: "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."

It has been submitted on behalf of the complainants that lien can be exercised by a Bank only in respect of any goods bailed to them. In the instant case, the complainants have bailed nothing to the Bank, even the FDRs are with the complainants. The complainants have only lent money to the Bank for which they purchased two FDRs for a term of three years. The Bank having borrowed the money from the complainants under FDRs now became its owners and owner cannot exercise lien on his own property.

THE complainants obtained the FDRs for the value of Rs. 90,000/- and at no point of time they delivered the FDRs so as to enable the Bank to exercise the lien. THE assertion of the Opposite Party-Bank of unilateral creation of lien is illegal and highhanded. In support of their submissions, the complainants have cited a decision of the Kerala High Court in case of Union Bank of India v. Venugopalan, AIR 1990 Ker. 223. THE following observations in the said citation are relevant: "THE fixed deposit is one of the three Bank deposits, the other two being saving deposits and current deposits. One should in this connection remember that money lodged with the Banks as fixed deposits stricto jure is a loan to the Bank. THE Banker in connection with the ''fixed deposit'', therefore, is a debtor. THE depositor accordingly would cease to be the owner of money in fixed deposit. THE said becomes money of the Bank, enabling the Bank to do as the Bank likes, that however with the obligation to repay the debt on maturity."

It was further observed that: "THE Bank being a debtor, in respect of the money in fixed deposit, had no right to press into service the doctrine of ''Bankers lien'' and the money in fixed deposit."

It is also held in the said ruling that: "THEre will not be a bailment if the thing delivered is not to be specifically returned or accounted for. That money when once put in the fixed deposit ceases to be the property of the customer and constitutes a debt of the Banker to the customer is a proposition well established. Such a transaction, namely, the transaction evidenced by a fixed deposit would not constitute bailment within the meaning of Section 171 of the Contract Act, even assuming that, money is a species of goods over which lien may be exercised."

IT has further been submitted on behalf of the complainants that due to the unilateral and high-handed action on the part of the Opposite Party-Bank in refusing payment of FDR when demanded on 18.8.1991, the agreement to purchase house fell through. Consequently, the initial payment of Rs. 30,000/- advanced by the complainants was forfeited by the prospective seller, Shri Anil Kumar Jain due to non-payment of the balance amount of Rs. 1 lac by the complainants before the appointed date as per the agreement of sale. This caused grave loss to the complainants. Besides this, the complainants in their old age suffered great inconvenience, having lost opportunity to purchase a house. The complainant No. 2 also died a disheartened person on 16.8.1994. The proceeds of the two FDRs standing in the joint names of the two complainants are payable to either or survivor and as such after the death of complainant No. 2 the proceeds are payable to the survivor owner - the complainant No. 1 Smt. Putlibai. The Opposite Party in the instant case withheld payment of money on the FDRs which the complainant purchased in November, 1990. Proposing to exercise lien in respect of their dues recoverable from one Gorelal Sukhalal who was an account-holder in Sironj branch of the Opposite Party-Bank, in respect of whom complainant No. 2 was said to have given guarantee for a sum of Rs. 30,000/as far back as July, 1983.

It is not the case of the Opposite Party that there was any liability of the complainants as judgment-debtors due to the Bank. The FDRs which were jointly owned by the two complainants could not have been alienated legally for the purpose of enforcing guarantee against one of the complainants. In support of this submission a reliance has been placed by the complainants on a decision of the Bombay High Court in the State Bank of India v. Javed Akhatar Hussain & Ors., AIR 1993 Bom. 87.

HAVING heard learned Counsel for the Opposite Party and having heard son of the complainants, we are of the opinion that the Opposite Party-Bank was legally not justified in creating a lien unilaterally on the FDRs which were jointly purchased by the complainants, for the purpose of proposed enforcement of guarantee given by one of the complainants in favour of one Gorelal Sukhalal was back in the past. Accordingly, we hold that there has been serious deficiency in service on the part of the Opposite Party-Bank in the facts and circumstances of this case in withholding payment of FDRs in purported exercise of lien and the Bank-Opposite Party is liable to pay compensation to the surviving-complainant No. 1 and is directed to make payments as follows: (a) The Opposite Party-Bank shall pay the maturity amount of the two FDRs together with interest @ 18% per annum with effect from the date of maturity till payment. (b) The Opposite Party-Bank shall also pay Rs. 30,000/- lost by the complainants on account of non-availability of payment when demanded by the complainants before 31.8.1991 together with interest @ 18% per annum with effect from 31.8.1991 till payment. (c) The Bank shall also pay Rs. 10,000/- as compensation for mental tension and agony caused to the complainants on account of arbitrary dealing of the Bank.

We accordingly order that the aforesaid sums of money shall be paid by the Opposite Party-Bank to the complainant No. 1 within a period of one month from the date of receipt of this order. The Opposite Party-Bank shall also pay to the complainant cost of this complaint, which is fixed as Rs. 1000/-. Complaint allowed with costs.