ORDER
S.N. Kapoor, J. (Presiding Member)
1. By this order, we proceed to decide above three appeals arising out of similar and common questions of law and facts. The Complainants/Appellants were either partners or guarantors of loans granted to 4 other firms. By these appeals, they are claiming compensation for mental agony and harassment, caused due to non-delivery of their title deeds, despite all payments.
2. In all these three appeals, the Appellants were Complainants before the State Commission and all the three filed three separate complaints seeking similar reliefs of direction against the State Bank of India to deliver the documents/title deeds of mortgage properties for the entire amount had been paid in terms of Section 60 (a) of the Transfer of Property Act, 1882 along with compensation for mental agony of Rs. 5,00,001 in two cases and Rs. 10,00,001 in one case and cost.
3. On the other hand, the bank has contested the matter on the ground that these complainants were also partners and guarantors of loans granted to other concern and huge sums were due against them as Guarantors.
4. The bank contested FA No. 664 of 1996, inter alia, on the ground that the complainant Mrs. M. Mallika deposited the documents while taking loan on behalf of M/s. Annapoorna Agencies. She was not only the partner of M/s. Annapoorna Agencies but also partners of M/s. Venkatakrishna and Cauvery Knitting Company and she stood as guarantor for all the loan facilities sanctioned by the State Bank of India. The above said firms committed defaults in payment of dues. The bank exercised its right to lien under Section 171 of the Contract Act, against the security given by the Complainant/Appellants to usual recovery of their dues in these matters. Two suits had been filed against M/s. Venkatakrishna and Cauvery Knitting Company for recovery of Rs. 1,1 2,132.50 paise and Rs. 4,94,259.58 respectively.
5. Similarly in the case of S. Muruganandlam(FA No. 669/96),he deposited the documents while taking loan on behalf of M/s. Kamdhenu Farms. Account of Kamdhenu Farms was cleared by the Complainant and it was closed. He was partner in 4 other firms M/s. Bava Trading Corporation, M/s. Bava Enterprises, M/s. Cauvery Knitting Co. and Sri Enterprises and a suit had already been filed to recover Rs. 46.00 lakh before filing of this complaint.
6. Similarly K. Kumaresan (FA No. 668/96), he deposited the documents while taking loan on behalf of M/s. Kamdhenu Farms. He was partner in M/s. A.G. & M.K. Suppliers and Bava Trading Corporation stood as guarantor and a suit had already been filed to recover Rs. 28,02,312 against A.G. & M.K. Supplier and Rs. 7,37,887.02 against M/s. Cauvery Knitting Co. before filing of the complaint.
7. In all these three matters, notices were sent to the bank seeking return of documents/title deeds.
8. It may be mentioned that in all these three matters during the pendency of the complaint the documents had been returned and the complainants are now seeking just compensation which had not been granted despite the finding that the bank was deficient in service in not returning the documents/title deeds in time.
9. The State Commission after considering facts and circumstances just directed the opposite parties to return the documents/title deeds of the complainants within 15 days from the date of order with cost of Rs. 2,000.
10. Feeling aggrieved, the appellants have filed the present appeal for awarding compensation for harassment and mental agony.
11. We have heard the learned Counsel for the respondent and gone through the record.
12. The State Commission took the view that the bank was deficient in service on account of failure of return of the documents/title deeds in time.
13. Learned Counsel for the Respondent/Opposite Party relied upon Section 171 of the Contract Act and on the judgment in the case of Syndicate Bank v. Vijaya Kumar (1992) 2 SCC 330, in support of his contention that the Bank was not deficient in rendering service for non-return of title deeds to these complainants/appellants.
14. It is submitted that Bank was entitled to exercise its right under Section 171 of the Contract Act. There was no deficiency in service on the part of the bank
15. It would be useful to reproduce Section 60 of the Transfer of Property Act as well as Section 171 of the Contract Act. They read as under: –
60. Right of mortgagor to redeem-At any time after the principal money has become due, the mortgagor has a right, on payment or tender, at a proper time and place of the mortgage money to require the mortgagee (a) to deliver to the mortgagor the mortgage-deed and all documents relating to the mortgaged property which are in the possession or power of the mortgagee…
171. General lien of bankers, factors, wharfingers, attorneys and policy brokers-Bankers, factors, wharfingers, attorneys of a Hiqh 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.
16. In Syndicate Bank v. Vijaya Kumar (supra), Supreme Court made following observations about exercise of right of general lien of Bankers as under:
By Mercantile system the Bank has a general “lien over all forms of securities or negotiable instruments deposited by or on behalf of the customer in the ordinary course of banking business and that the general lien is a valuable right of the banker judicially recognized and in the absence of an agreement to the contrary, a Banker has a general lien over such securities or bills received from a 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 customer’s debit balance.
17. Provisions of Section 60 of the Transfer of Property Act as well as Section 171 of the Contract Act, both have their own role to play in this kind of fact situation. We need not say that the State Bank of India is one legal entity, irrespective of its hundreds of branches. Consequently, if any amount is due against a person either as borrower or as guarantor, in the account of another branch, the bank along with all its branches being one legal entity could exercise its general lien over documents/title deeds deposited in one branch in respect of loan in another branches for documents are with the bank. In this connection, Clause 17th of Agreement for Hypothecation and Guarantee is reproduced below:
17th -That the Guarantor(s) further agree(s) that the Bank shall be at liberty to take other securities for the said account or any part thereof and to release to forbear enforce all or any of its remedies upon or
under such securities and any collateral security or securities now or hereafter held by the Bank and that no such release or forbearance as aforesaid shall have the effect of releasing him/them from his/their liability or of prejudicing the Bank’s rights and remedies against him/them under the said Promissory
Notethis Agreement or otherwise and that he/they shall have no rights to the benefit of any other security that may be held by the Bank until the claims of the Bank against the Borrower in respect of the said Cash Credit and of all (if any) other claims of the Bank against the Borrower on any other account whatsoever shall have been fully satisfied and then in so far only as such security shall not have been exhausted for the purpose of releasing the amount of the Bank’s claims and rateably only with other guarantors or other persons (if any) entitled to the benefit of such securities respectively.
(Emphasis supplied)
18. Such clauses are common. In such circumstances, it was not unreasonable on the part of the Bank to feel inhibited in giving back the title deeds to these complainants, after they had cleared the concerned account, for they continued to be liable as other accounts of a different branch of the Bank had not been cleared and the Bank had to file suits for recovery of amount as has been mentioned earlier.
19. While the Complainant has right to get back the documents/title deeds given and deposited to secure concerned loan by mortgaging the property after the entire instalments have been paid in respect of the loan account which has been cleared, the Bank is also entitled to exercise its right of general lien under Section 171 of the Contract Act.
20. For the aforesaid reasons in terms of Section 171 and in the light of judgment in the case of Syndicate Bank v. Vijaya Kumar (supra), we feel that the bank was absolutely justified in feeling inhibited in returning the documents/title deeds. M/s. Bava Trading Corporation, M/s. Cauvery Knitting Co. and K.R. Krishnamurthy & Sons and suit guarantor for all the credit and loan facilities sanction to the said firms. As such, in all the three cases, notwithstanding the provisions under Section 60 of the Transfer of Property Act, the bank was entitled to exercise its right of general lien under Section 171. The mortgagors right to get back title deeds under Section 60 is right of general nature. Provisions of the Contract Act under Section 171 carves out an exception to the said general rule in order to protect the interest of the bank by ensuring right to retain the document so that other loan accounts of the bank are also cleared by borrowers or guarantor without forcing the bank to file suits.
21. Since the bank is not in appeal, we are not supposed to disturb the findings of the State Commission about deficiency. However, in the aforementioned circumstances coupled with the fact that the complaint was filed just within 15 days from giving notice, there is no room for awarding any compensation for the alleged mental agony and harassment. All the three appeal Nos. 664, 668 and 669 of 1996 for enhancement of the compensation are dismissed with cost of Rs. 1,000 to Bank in each of the three appeals.