Raj Kumar & Anr v. Syndicate Bank

RAJIV SAHAI ENDLAW, J. FEBRUARY 01, 2016 "pp/gsr" (corrected & released on 29th February, 2016)

*IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of decision: 1st February, 2016 + W.P.(C) No.886/2014 & CM No.1780/2014 (for stay) RAJ KUMAR & ANR ..... Petitioners Through: Mr. Arvind Nayar and Mr. Shashi Mohan, Advs. versus SYNDICATE BANK ..... Respondent Through: Mr. V. Sudeer, Ms. Vandana Bakshi, Advs. and Mr. Devender Kumar on behalf of Bank. CORAM:- HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW 1. The petition seeks a mandamus to the respondent Syndicate Bank (Bank) to release the title documents of property bearing plot no.3490, Block-C, Green Field Colony, Faridabad deposited by the petitioner to secure re-payment by the petitioners of the dues of the cash credit limit availed of by the petitioners in the name of petitioner no.2 M/s. ACE Exports of which petitioner no.1 is the sole proprietor. 2. It is the admitted position that the petitioner no.1 is also a guarantor of the advances made by the respondent Bank to one M/s. K.B. International and Sh. Dayanand Basoya and which advances according to the respondent Bank are still outstanding. It has also come on record that the respondent Bank had invoked the guarantee admittedly given by the petitioner for the dues of M/s K.B. International and Shri Dayanand Basoya and instituted proceedings before the Debt Recovery Tribunal (DRT) for recovery and in which though a settlement was arrived at, but has not been honoured. 3. The contention of the counsel for the petitioners is that the petitioners had deposited the aforesaid title deeds to create equitable mortgage of the property only to secure the dues in the account of M/s. Ace Exports and not as a guarantor for the dues of M/s K.B. International. It is argued that the security given for dues in one account cannot be utilised for dues of another account. 4. The counsel for the petitioners does not dispute that the respondent as a banker has a right of general lien, as held by the Supreme Court in Syndicate Bank Vs. Vijay Kumar (1992) 2 SCC 330. Reliance however is placed on the judgment of the Division Bench of the Orissa High Court in Alekha Sahoo Vs. Puri Urban Co-operative Bank Ltd. AIR 2004 Ori 142. 5. The Division Bench of the High Court of Orissa was concerned with a challenge to the general lien exercised by the bank qua the gold ornaments deposited by the petitioner therein for the gold loan availed by her and which gold loan had been repaid. The bank refused to return the ornaments exercising general lien for securing the dues of another customer of the bank for whom the petitioner had stood guarantee. It was held i) that the bank had not placed the bye-laws / rules of grant of gold loan to show that the gold pledged for gold loan could be retained as additional security for loan granted to another customer for whom the petitioner was the guarantor and even when the petitioner had repaid the gold loan; ii) there is no provision in the Indian Contract Act, 1872 to the effect that the properties of a surety can be retained by the creditor as security for the dues from the principal debtor; iii) a bank can exercise general lien over the properties of a customer for the general balance in such customer"s account and not for the general balance of some other customer"s account unless the customer has expressly agreed that his property can be retained as security for the outstanding balance in the account of some other customers; iv) that even in the guarantee agreement executed by the petitioner there was no provision that the bank could retain the properties of the petitioner as security for the outstanding balance in the loan account of the principal debtor. 6. It is not as if the dicta of the Supreme Court in Vijay Kumar supra was not noticed by the Division Bench of the High Court. However notwithstanding the same, it was held as aforesaid. 7. I am afraid the High Court of Orissa appears to have misread the dicta of the Supreme Court in Vijay Kumar supra. In fact I have enquired from the counsel for the petitioner whether