Vysya Bank Ltd. vs AKKEM MALIIKARJUNA REDDY

THE complainant pledged the gold ornaments on two occasions, that is, on 7-10-1985 and 15-12-1987 with the Vysya Bank Limited and borrowed Rs. 2,700-00 and Rs. 4,500-00 respectively. In addition to those loans, the complainant also borrowed a sum of Rs. 5,000-00 towards crop loan on 3-11-1988 from the same Bank and on the hypothecation of paddy crop. THE complainant discharged the amount due under the two gold loans. But the amount due and outstanding under the crop loan is still pending. Since the complainant has paid of the amount under the two gold loans, he applied to the bank for the return of the jewellery pledged. Since the bank did not return he filed the complaint C.D. No. 1289 of ''91 before the District Forum, Nellore for issuing an order to the respondent to stop the gold auction, which is to take place on 28-8-1991; to release the gold ornaments, which were pledged by the father of the complainant at the time of availing gold loan; and to direct the respondent to pay damages for the mental agony and costs. In the complaint it was stated that Tatiparthi area was declared as a drought area and the crop loan taken by the agriculturist farmers on or before 2-10-1989 upto Rs. 10,000/- was relied on by the Government and hence the credit loan taken by the complainant''s father was also waived off and as such, no question of repayment of the crop loan arises. Since the outstanding amount due under gold loan was paid, the bank is bound to return the ornaments.

IN the counter filed by the opposite party, it was stated that the police mentioned with regard to the waiver of crop loans upto the extent of Rs. 10,000-00 does not apply to the opposite party, as it is a private sector bank and since the said loan is outstanding, the bank is entitled to retain the jewels in exercise of general lien and also in view of the specific agreement in the acknowledgement whereunder, the complainant''s father agreed that the bank can retain in jewels for payment of all the amounts outstanding and also for any amount due payable in future. On the basis of the aforesaid pleadings, the District Forum relying on a decision of Justice K. Ramawamy, as he was then, in K. Jagadeeshwar Reddy v. Manager, Andhra Bank, Nizamabad reported in 1988 (1) ALT 605, held that in the absence of any agreement to the contrary, the bank has no general lien in respect of those securities, which were given specifically for a particular loan. Since the loan advanced was on the basis of pledge of gold, for a particular purpose, the bank has no general lien and accordingly allowed the complaint.

Aggrieved by the same, the Opposite Party preferred this appeal. It is contended by the learned Counsel for the appellant Mr. G. Ramakrishnaiah that the policy of the Government with regard to the waiving off crop loans, which were outstanding, as on 2-10-1989 to an extent of Rs. 10,000-00, has no application, to the appellant/bank. He invited our attention to the circular issued by Reserve Bank of India to all Public Sector Commercial Banks. It was mentioned in the circular, with particular reference to the Agricultural and Rural Debt Relief Scheme, 1990, that the scheme is formulated for extending debt, relief to the borrowers of public sector banks and Regional Rural Banks. Thus, it is evident that the Relief Scheme has no application to the private sector banks. The appellant/bank is a private bank and that, therefore, the basic submission that there is no outstanding amount due because it was waived due to the scheme, cannot be sustained. It, therefore, follows that there is an outstanding crop loan by the complainant to be payable to the bank. It is next submitted that apart from the general lien, there is an agreement in this case to retain the gold ornaments for the monies due in other capacity. He relied on the acknowledgements signed by the complainant''s father dated 7-10-1985 and 15-12-1987. These acknowledgements were filed before the District Forum. The relevant portions of the acknowledgement is read as follows : "The above ornaments shall in addition to their remaining as security for the loan now granted also remain as security for all monies now owing or which shall at any time hereafter be owing to the bank for me/us in any manner and capacity whatsoever and also at any of the offices of the Bank."

It is clear from the aforesaid extract from the acknowledgements that the complainant''s father agreed that the gold ornament shall remain as securities for all the monies owing at that time and also for monies, which shall at any time thereafter be owing to the bank in any capacity whatsoever. This is clearly a case where the complainant''s father agreed to keep the gold ornaments as security for payment of monies due at that point of time and to become due in future at any time. Applying the test laid down by Justice Ramaswamy in the aforesaid mentioned case, there is a special agreement in this case to keep the gold ornaments as security and that, therefore, the bank is entitled to retain the gold ornaments. The Counsel for the appellant also invited our attention to Syndicate Bank v. Vijay Kumar and others reported in AIR 1992 Supreme Court Page-1066, wherein their Lordships were concerned with the deposit of F.D.Rs. After referring to the working in the letters taken at the time of obtaining the guarantee, which are in the following terms : "The Bank is at liberty to adjust from the proceeds covered by the aforesaid Deposit Receipt/Certificate or from proceeds of other receipts/certificates issued in renewal thereof at any time without any reference to us, to the said loan/OD account, that the recital in the letter clearly goes to show that a general lien is created in favour of the Bank in respect of those two F.D.Rs. and it was also further held that the letters will amount to special agreement."

In view of the aforesaid decision, we are of the view that apart having general lien, in the instant case, there is also agreement between the parties to retain the gold jewellery as security for the monies outstanding in respect of other accounts also. In the instant case, the amounts are outstanding on crop loan account. Therefore, the appellant/bank is justified in retaining the gold jewellery because of the outstanding loan amount on crop loan account. We accordingly allow the appeal and set aside the order of the District Forum.

IN the result, the appeal is allowed. No order as to costs. Appeal allowed.