IN THE HIGH COURT OF KERALA AT ERNAKULAM
OP.No. 38392 of 2002(U)
1. P.S.PAREED KHAN, 40/2561, CRESCENT HOUSE
... Petitioner
Vs
1. THE DEPUTY GENERAL MANAGER,
... Respondent
2. THE BRANCH MANAGER, STATE BANK OF INDIA,
3. THE BANKING OMBUDSMAN, OFFICE OF THE
For Petitioner :SRI.PMM.NAJEEB KHAN
For Respondent :SRI.JOSEPH J.THAYAMKERIL
The Hon'ble MR. Justice S.SIRI JAGAN
Dated :12/12/2008
O R D E R
S. Siri Jagan, J.
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O.P. No. 38392 of 2002
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Dated this, the 12th December, 2008.
J U D G M E N T
The petitioner was a contractor who undertook certain works on
behalf of the Kerala State Electricity Board. In respect of that work,
the petitioner had to give security for satisfactory performance of the
work to the Kerala State Electricity Board in the form of a security
deposit receipt for an amount of Rs. 20,000/-. The petitioner
approached the erstwhile Bank of Cochin, which was later
amalgamated with the State Bank of India, the officers of whom are
the respondents 1 and 2 herein. They agreed to furnish the security
and accordingly Ext. P2 security deposit receipt was issued for an
amount of Rs. 20,000/- deposited by the petitioner on 11-5-1979, the
maturity period for which was over by 11-5-1980. But the deposit
could be released to the petitioner only on authorisation by the
Deputy Chief Engineer of the Transmission Circle, Poovarthuruthu of
Kerala State Electricity Board. That authorisation for release of the
security after completion of the work was issued by the Kerala State
Electricity Board only on 18-8-1992. Thereafter, the petitioner
approached respondents 1 and 2 for payment of the amounts covered
by the security deposit receipt. The petitioner was not paid the same.
The petitioner therefore approached the 3rd respondent Banking
Ombudsman by filing Ext. P4. By Ext. P5, the Ombudsman informed
the petitioner that since the 2nd respondent has informed the
Ombudsman as follows, the petitioner’s petition cannot be
entertained:
“The bank has stated that your deposit for Rs.20000/- (SDR
1740/79) dated 11-5-79 which was made by way of a security
deposit in favour of the Supt. Engineer, Transmission Circle
(Pakkil P.O), Kottayam in Thrunakkara branch of the erstwhile
Bank of Cochin Ltd. fell for payment on 11-5-1980. The deposit
had no provision for automatic renewal. After getting the depositO.P. No. 38392/2002 -: 2 :-
released by the Supt. Engineer, SBI, Thrunakkara branch
transferred the proceeds to SBI, Broadway, Ernakulam by means
of demand draft No. 7773/2 dated 28-6-93 for Rs.21200/-. The
proceeds of this draft were credited to your loan account with
SBI, Broadway, Ernakulam branch on 5-7-1993.”
The petitioner has filed this original petition challenging Ext. P5 order
of the Banking Ombudsman.
2. The main contention of the petitioner is that although the
petitioner was indebted to the Bank for repayment of the loan
amounts as claimed by them, the amount covered by Ext. P2 receipt
was never adjusted against the loan amounts due from him as is
evident from Exts.P7 and P8 execution petitions filed by the Bank in
two suits, in which the Bank had obtained decrees for the recovery of
the loan amounts. The petitioner therefore seeks the following reliefs:
“i. To call for the records leading to Exhibits P1 to P8 and
issue a writ of mandamus or any other appropriate writ, order or
direction, directing the respondents 1 and 2 to release the fixed
deposit amount of Rs.21,200/- with the prevailing rate of interest
as per RBI guidelines from 11.5.1980 onwards till return of the
amount to the petitioner as evidenced by Exhibit P2.
ii. to grant a declaration that the petitioner is entitled to get
his deposit amount with the prevailing rate of interest till
realization of the same and the respondents 1 and 2 are legally
bound to pay the same to the petitioner.”
3. The petitioner also contends that the petitioner was never
informed about the adjustment and without informing the petitioner
about such adjustment, the Bank cannot exercise the Banker’s lien.
Further, the petitioner would point out that the money covered by the
security deposit was in the hands of the Bank for the period from 11-
5-1979 to 18-8-1992 during the whole of which time the petitioner is
entitled to interest, but the interest was credited only for the period
from 11-5-1979 to 11-5-1980.
O.P. No. 38392/2002 -: 3 :-
4. A counter affidavit has been filed on behalf of respondents 1
and 2. Relying on Ext. R1(a) produced along with the counter
affidavit, they would submit that the amount was actually credited to
the suit account of the petitioner in O.S.No. 195/1985 as shown in the
suit file register. They would submit that under Section 171 of the
Indian Contract Act, the Bank is entitled to exercise the Banker’s lien
in respect of the said deposit also. According to them, the question of
paying further interest does not arise in so far as the amount was due
to be repaid at any time when the Electricity Board authorises
payment and therefore the interest as contemplated for a fixed
deposit cannot be paid for that deposit. They would further submit
that the loan account of the petitioner was ultimately settled for Rs. 7
lakhs granting a waiver of Rs. 27 lakhs. That waiver was granted
taking into account the adjustment of the amount of Rs. 21,200/-
covered by the security deposit receipt also and therefore the
petitioner cannot, in equity also, claim any relief in this original
petition.
5. I have considered the rival contentions in detail.
6. Notwithstanding the contention of respondents 1 and 2 that
they are entitled to exercise the Banker’s lien in this case, I do not
think that a Banker’s lien can be exercised without informing the
party about the same. Respondents 1 and 2 have not been able to
produce any documents to show that the petitioner has been informed
about such exercise of the Banker’s lien. In fact, the petitioner’s
specific contention is that the petitioner has never been informed
about the adjustment of the amount covered by Ext. P2 against the
loan account. Apart from that, the Bank had used the petitioner’s
money for the period from 11-5-1979 to 18-8-1992. Even assuming
that the contention regarding non-payment of rate of interest
O.P. No. 38392/2002 -: 4 :-
applicable to security deposit is accepted, I am of opinion that that
would not prevent the Bank from paying interest on that amount at
the rate applicable to Savings Bank Accounts.
7. All the same, in so far as respondents 1 and 2 have proved
that the fixed deposit amount with interest for one year has been
adjusted against the loan account due from the petitioner, I am not
inclined to direct that the amount covered by the security deposit
receipt be refunded to the petitioner. Even in respect of interest, I
am not inclined to exercise my discretionary jurisdiction in favour of
the petitioner since, admittedly, the petitioner had received a benefit
of Rs. 27 lakhs by waiver of the loan amount due from the petitioner
to the Bank. Compared to that, the interest payable on the amount
would be a paltry sum. However, in view of the lapse on the part of
the Bank in not informing the petitioner about the exercise of
Banker’s lien and refusal to credit interest at the rate applicable to
S.B Account in respect of the fixed deposit receipt, I direct
respondents 1 and 2 to pay a sum of Rs.5000/- as cost to the
petitioner. The cost shall be paid within two weeks from the date of
receipt of a copy of this judgment. The original petition is disposed of
as above.
Sd/- S. Siri Jagan, Judge.
Tds/