CONSUMER DISPUTES REDRESSAL COMMISSION

MAHARASHTRA STATE





FIRST APPEAL NO.1168/2004 Date of Filing:- 09/07/2004

IN CONSUMER COMPLAINT NO.669/2000 Date of Order:- 17/08/2009

DISTRICT CONSUMER FORUM, MUMBAI SUBURBAN





State Bank of India

Previously having their branch at

Sagar Apartment, V.N.Purav Marg,

Chunabhatti (East),

Mumbai-400 022

Now merged with

State Bank of India

S.H.Kalani Marg, Plot No.11/A,

Sanjona Comples, Sindhi Society,

Chember- Mumbai-400 071 ... Appellant (Org. Opponent)

-Versus -



Smt.Vimal Narayan Lohane,

4/104, Ashok Nagar,

V.N.Purav Marg,

Chunabhatti (East),

Mumbai-400 022 ... Respondent (Org. Complainant)





Corum :- Mr.P.N.Kashalkar, Hon’ble Presiding Judicial Member,

Smt.S.P.Lale, Hon’ble Member.



Present :- Mr.Harihar Bhave, Adv. for the Appellant

Mr.R.P.Medhekar, Adv. for the Respondent



O R D E R

Per Mr.P.N.Kashalkar,Hon’ble Presiding Judicial Member



1) Being aggrieved by the judgment and award passed by District Consumer Forum, Mumbai Suburban in Consumer Complaint No.669/2000 decided on 28/8/2003 whereby the original O.P. has been directed to pay sum of Rs.20,000/- as compensation and Rs.2,000/- as cost to the complainant, the original O.P./State Bank of India has filed this appeal challenging the said judgment and award.



2) Facts to the extent material may be stated as under :



3) Complainant/Respondent was having saving bank account in State Bank of India, Chunabhatti Branch at Mumbai. The O.P. bank had granted credit facility to M/s.Rekha Novel Products whose sole Proprietor was Mrs.Rekha Salvi, the daughter of Complainant/Respondent. The complainant gave personal guarantee to her daughter for the loan/cash credit facility sanctioned to M/s.Rekha Novel Products. The borrower committed default. The complainant had issued cheque of Rs.15,000/- to one Shri Sandip Shah. The said cheque was dishonored despite the fact that complainant was having balance of Rs.32,568/- in her saving bank account. The complainant received letter dated 17/7/1999 from the bank that bank had exercised its right to set off balances in the complainant’s saving bank account for appropriation of dues payable by M/s. Rekha Novel Products for whom complainant had stood personal guarantor. The complainant filed consumer complaint alleging deficiency in service on the part of the bank. She alleged without issuing any notice, the bank had appropriated her saving bank account balance towards the loan unpaid by M/s.Rekha Novel Products and thereby her cheque was dishnoured deliberately by the bank. Hence, she suffered business loss, loss of reputation and claimed Rs.2,50,000/- for business loss, Rs.1,50,000/- towards compensation for mental agony and Rs.10,000/- towards cost.



4) The O.P./bank filed written statement and pleaded that bank had filed High Court Civil Suit No.3101/1993 against Mrs.Rekha R.Salvi and Mrs.Vimal Narayan Lohane (the respondent herein) and Hon’ble High Court was pleased to pass ex parte decree against both of them. Mrs.Rekha Salvi was not traceable at the recorded address and the complainant was having same address but she was not co-operating to disclose whereabouts of Mrs.Rekha R.Salvi. Therefore, the bank in order to avoid assets of the complainant from being diluted further recorded a lien on the saving account of the complainant with a right to set off. Complainant was informed by the bank on 17/7/1999 that said suit had been decreed ex parte and bank had exercised right of lien on the saving bank account of the complainant for recovery of dues from M/s.Rekha Novel Products. The bank therefore pleaded that they had not committed any deficiency in service and the complaint as filed by the complainant is absolutely devoid of any substance.

5) On the basis of documents placed on record, the Forum below held the bank guilty of deficiency in service because it had not sent notice to the complainant before invoking guarantee of the complainant and therefore it allowed the complaint and passed an award as mentioned above. Aggrieved thereby, the bank has filed this appeal.



6) We heard submissions of Mr.Harihar Bahve, Adv. for the appellant and Mr.R.P.Medhekar, Adv. for the respondent.



7) We are finding that the bank had obtained decree from Hon’ble High Court against Mrs.Rekha R. Salvi and Mrs.Vimal Narayan Lohane/respondent herein. She was defendant No.2 in Civil Suit No.3101/1993 decreed by Hon’ble High Court on 30/3/1999. No doubt it was decreed without written statement on 30/3/1999 and complaint was filed by the complainant on 23/10/2000. On 17/7/1999, S.B.I. had sent letter to the complainant in which it was told that suit filed by them against M/s.Rekha Novel Products had been decreed in March-1999 and since she had given personal guarantee for the cash credit facility sanctioned to M/s.Rekha Novel Products, they had exercised the right to set off the balances in your saving accounts towards appropriation of dues of M/s.Rekha Novel Products. Again, another letter was sent under U.C.P. dated 31/8/2000 copy of which was marked to the complainant Mrs.Vimal Narayan Lohane requesting that the borrower should come for one time settlement. But instead of going for one time settlement, the complainant filed consumer complaint on 23/10/2000 alleging deficiency in service and the complaint was allowed by the Forum below partly.



8) The important question is whether bank can exercise its right of lien U/s 171 of Contract Act. Our finding is yes. U/s 171 of Contract Act and even under mercantile system bank has a general lien over all forms of securities and negotiable instruments including FDRs deposited by or on behalf of the customer in the ordinary course of banking business in absence of any agreement to the contrary. The general lien is a valuable right of the banker. Banker 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. This has been laid down by the Apex Court in the case of Syndicate Bank –Versus- Vijay Kumar and Other (1992) 2 Supreme Court Cases 330. In this ruling, Hon’ble Supreme Court clearly held that banker 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. Here bank had exercise its right to appropriate dues from saving bank account of the complainant because bank had obtained decree from Hon’ble High Court against Mrs.Rekha R.Salvi and complainant herein and since decree had become final it had appropriated amount lying in the saving bank account of the complainant to recover its decreetal amount. Decree was passed against complainant as well as her daughter Mrs.Rekha Salvi. The complainant was not disclosing to the bank the whereabouts of Mrs.Rekha Salvi who was co-judgment debtor with the complainant and against whom decree was passed by Hon’ble High Court. It is in the light of these facts, bank thought it fit to exercise its right of lien over the outstanding balance found in the saving bank account of the complainant. Judgment debtor’s amount laying in the saving bank account can be legally appropriated for partial satisfaction of the decree obtained by the bank against such bank account holder. This is permissible in law. The bank had rightly exercised its right of lien to appropriate its dues recoverable form complainant and her daughter jointly in terms of decree passed in High Court Suit No.3101/1993 and therefore the appellant bank was justified in appropriating that amount from the saving bank account of the respondent/complainant. This important right of the bank was overlooked by the Forum below while allowing the complaint. The Forum below also did not bother to see letter dated 17/7/1999 issued to Mrs.Vimal Narayan Lohane the respondent herein nor it bothered to read the letter dated 31/8/2000 sent to the complainant and Mrs.Rekha Novel Products. It also did not give any weightage or value to the decree passed by Hon’ble High Court against Mrs.Vimal Lohane (defendant No.2 and her daughter Mrs.Rekha Salvi, defendant No.1) and simply held that bank was guilty of deficiency in service because bank had not given any notice of appropriation of funds from the savings bank account of the complainant. We are finding that the award passed by the Forum below is bad in law and can not be allowed to sustain in law. Bank had every right to recover dues in terms of decree passed by the Hon’ble High Court against the complainant Mrs.Vimal Lohane and her daughter Mrs.Rekha Salvi who was Proprietor of M/s.Rekha Novel Products. Complainant was not disclosing the whereabouts of Mrs.Rekha Salvi. Therefore, the bank rightly exercised its right of lien to appropriate its dues from the saving bank account of the respondent herein. The bank was legally justified in doing so and there was no deficiency in service of any kind on the part of the bank. As such, the judgment and award passed by the Forum below will have to be quashed and set aside by allowing this appeal. Hence, we pass following order.

O R E D R



1) Appeal is allowed.

2) Order passed by the Forum below in Consumer Complaint No.669/2000 is hereby quashed and set aside. Complaint stands dismissed.

3) Parties are left to bear their own costs.

4) Inform the parties accordingly.







( Smt.S.P.Lale ) (P.N.Kashalkar )

Member Presiding Judicial Member





Malve/-