Smt. Sadhna Gupta & Ors. vs Sh. R.C.Gupta & Ors.
2009 Latest Caselaw 3071 Del

*           HIGH COURT OF DELHI AT NEW DELHI

+     IA NO. 8092/2001 in CS (OS) No.1731/2001

                           Date of decision : August 10, 2009

#     SMT. SADHNA GUPTA & ORS.      ..... PLAINTIFFS
!              Through : Mr. V.B. Andley, Sr. Advocate
                         with Mr. Rajinder Mathur, Adv.

                             Versus


$     SH. R.C. GUPTA & ORS.         .....DEFENDANTS
^               Through : Mr. S.L. Gupta, Advocate for
                          defendant No. 5.

%
      CORAM:
      HON'BLE MS. JUSTICE ARUNA SURESH

     (1) Whether reporters of local paper may be
         allowed to see the judgment?

     (2) To be referred to the reporter or not?           Yes

     (3) Whether the judgment should be reported
         in the Digest ?                                  Yes

                             ORDER

ARUNA SURESH, J.

1. Vide this order, I shall dispose of an application filed

by the plaintiffs under Order 39 Rule 1 and 2 read

with Section 151 CPC seeking temporary injunction

against defendant No.5 i.e. State Bank of India from

attaching before judgment or creating third party

right or interest in the suit property No. 221, Okhla

Industrial Estate, Phase-III, New Delhi.

2. Plaintiff No.1 has claimed herself to be one of the

members of the HUF defendant No.2 M/s. R.C.

Gupta and Brothers. Defendant No.1 is the Karta of

the said HUF whereas defendants No. 3 and 4 are

also members of the HUF.

3. Case of the plaintiffs in brief is that, property in suit

was allotted to defendant No.2 HUF by the Delhi

Government. Defendant No.1 obtained permission

from the Director of Industries for mortgaging the

property in view of clause (a) and (b) of the lease

deed. Defendant No.2 R.C. Gupta and Brothers HUF

availed certain financial loan/credit facilities for

working capital of defendant No.2 from defendant

No.5. At the time of raising the loan, the title deeds

of the suit property were deposited with the bank

for purposes of creating a mortgage on the said

property to secure the repayment of the loan

amount.

4. Some disputes arose on the issue of repayment of

loan. The bank filed OA No. 652/1996 before the

Debt Recovery Tribunal (DRT) against defendant

No.2 for recovery of the amount of

Rs.46,78,768.08paise. In view of Reserve Bank of

India‟s policy dated 27.7.2000 defendant No.1

settled the dispute with the bank and defendant

No.2 through defendant No.1 agreed to pay a sum

of Rs.36,23,125.27paise on the condition that on

receipt of the said amount, the bank would release

all the title deeds. Defendant No.2 accordingly

deposited the amount but, bank refused to return

the title deeds of the property in suit claiming

general lien on the plea that defendant No.1 was

liable to pay the dues of the bank in the account of

M/s Bharat Strips Ltd. and M/s Gwalior Strips Ltd.

Plaintiffs disputed the general lien exercised by the

bank in view of the affidavit filed by defendants

No.1 and 3 in DRT.

5. Plaintiffs have further disputed the authority of the

bank to exercise general lien in respect of the

mortgaged property in view of the letter of

Commissioner of Industries dated 27.3.2001 as no

permission to mortgage the said property in respect of

the account of M/s. Bharat Strips Ltd. and M/s Gwalior

Strips Ltd. was obtained from the department. It is

further averred that since property is HUF, defendant

No.5 had no right to claim lien on the said property

against the account of said two companies which are

limited companies having separate entity in the eyes of

law wherein defendant No.1 being the managing

director of the said company is associated in his

individual capacity. Since bank claimed lien on the

property, plaintiffs feared that bank is likely to attach

the suit property before judgment is passed and they

being member of the HUF will suffer irreparable loss

and injury which cannot be compensated in terms of

cost and that under the circumstances balance of

convenience tilts in their favour, this application has

been filed.

6. Defendant No.1 in his written statement while

corroborating the claim of the plaintiffs has claimed

that he is a coparcener of HUF defendant No.2 and he

has been managing activities of defendant No.2 as

Karta but, has been using the suffix „sole proprietor‟

instead of „Karta‟ while signing all papers/documents

relating to the business and official activities of the

HUF. In all communications to the government

departments including the income tax and wealth tax

departments he has signed as the sole proprietor

though defendant No.2 is an HUF and is the owner of

the property in suit. He has averred that suit property

is not his personal or individual property. He has

denied that he had executed any guarantee in his

personal capacity or as the Karta of the HUF with

regard to the credit accounts of M/s Bharat Strips Ltd.

or Gwalior Strips Ltd. in which he is the managing

director in his individual capacity. Since full and final

settlement amount has been paid by defendant No.2

and the loan account stands fully adjusted, defendant

No.5 is under a legal obligation to release and return

back the title deeds to defendant No.2. The approval

by the Delhi administration to create equitable

mortgage in favour of defendant No.5 was only for

raising working capital by defendant No.2 and there is

no approval of the lessor for the bank to exercise its

general lien over the property pertaining to the

accounts of companies run by defendant No.1. In

substance he has admitted the claim of the plaintiffs in

the present application.

7. Similar is the reply of defendant Nos. 2, 3 and 4.

8. Defendant No.5, the State Bank of India (SBI) in its

written statement has refuted the claim of the plaintiffs

supported by defendants No. 1 to 4 and have averred

that the suit property belongs to defendant No.2 in its

individual capacity and is a leasehold property. This

lease deed dated 23.6.1970 was executed by Delhi

Administration in favour of defendant No.1 being the

sole proprietor of M/s. R.C. Gupta and Brothers and he

mortgaged the property by representing it to be the

self acquired property of defendant No.1. The loan was

accordingly sanctioned to defendant No.2. Defendant

No.1 has been signing the documents as proprietor of

defendant No.2 and the bank is entitled to recover the

dues in the loan account of M/s. Bharat Strips Ltd. and

M/s. Gwalior Strips Ltd. to whom the loan and credit

facilities were sanctioned and granted by the

defendant bank on the creditworthiness and guarantee

of defendant No.1. DRT is already seized of the matter

as bank has already filed recovery application before

the DRT being OA No.285/2000 against M/s. Bharat

Strips Ltd. and defendant No.1. The DRT has

restrained the defendant No.1 from selling, alienating,

transferring or parting with possession of the suit

property vide its order dated 28.8.2001 and no such

application has been filed by the plaintiffs alleging that

defendant No.1 is not the owner of the property and

that it is an HUF property. Defendants No. 1 to 4 are

running two parallel files and have deceived the

income tax department, wealth tax department as well

as the defendant bank. Therefore, bank has every

right to exercise its general lien over the mortgaged

property and plaintiffs are not entitled to any ad-

interim injunction as prayed.

9. I have heard Mr. V.B. Andley, Sr. Advocate for the

plaintiffs, Mr. S.L. Gupta, Advocate for defendant No.5

and have carefully perused the record.

10. The admitted facts are:

i. Property No.221, Okhla Industrial Estate,

Phase-III, New Delhi was allotted in the name of

defendant No.2 M/s. R.C. Gupta and Brothers by Delhi

Administration in the year 1970.

ii. Defendant No. 2 raised loan for working

capital from defendant No.5 SBI against equitable

mortgage of the suit property.

iii. Defendant No.2 could not repay the loan

and therefore SBI filed OA No. 652/1996 before the DRT

for the recovery of due amount.

iv. Defendant No.2 repaid the settled

amount to the defendant bank in view of the policy of the

Reserve Bank of India.

v. The bank has not returned back the title

deeds of the suit property as it has claimed general lien

in view of Section 171 of Indian Contract Act (in short

„Act‟).

vi. Defendant No.1 has been signing all the

documents filed before the Wealth Tax Department and

Income Tax Department as sole proprietor of defendant

No.2.

11. Learned counsel for the plaintiffs has argued that

defendant bank cannot claim any lien under Section

171 of the Act as that relates to movable assets and

does not relate to immovable properties mortgaged

with the bank for raising a loan by a party. Since in

this case working capital was raised by defendant No.2

against equitable mortgage of immovable property lien

under Section 171 of the Act is not available to the

bank. It is further argued by learned counsel for the

plaintiffs that since it is a leasehold property without

the permission of the concerned department, the bank

cannot claim any general lien on the suit property with

a view to adjust its claim against the loan account of

M/s. Bharat Strips Ltd. and M/s. Gwalior Strips Ltd.,

companies owned by defendant No.1 in his individual

capacity and not as a Karta of the HUF, whereas the

property in suit is HUF property and necessary

permission was obtained by defendant No.1 for raising

working capital from the bank for running its business

by defendant No.2 HUF. Therefore plaintiffs who are

coparceners of the HUF property would suffer

irreparable loss and injury in case the bank is allowed

to attach the suit property before any decree is passed

in favour of the bank for its claim against defendant

No.1.

12. He has further urged that in view of the admitted

documents on the record prima facie a case is made

out in favour of the plaintiffs and against defendant

No.5. Under the circumstances, the balance of

convenience tilts in favour of the plaintiffs and

therefore, plaintiffs are entitled to the injunction as

prayed.

13. Learned counsel for defendant No.5 submits that

bank has a general lien over the property which is self-

acquired property of defendant No.1 for adjustment of

loan accounts of M/s. Bharat Strips Ltd. and M/s.

Gwalior Strips Ltd. opened by defendant No.1. DRT in

another OA No. 285/2000 filed by the bank has already

issued an injunction against defendants no. 1 and 2 not

to dispose of or alienate or part with the suit property

or create any third party interest in the same. He

submits that under the circumstances, plaintiffs are not

entitled to injunction as prayed and therefore,

application deserves dismissal.

14. Ex.-P21 is letter dated 8.5.2001 addressed by SBI to

defendant No.2. Vide this letter while informing

defendant No.2 that subject to clearing of the pay-

orders mentioned in the letter, the bank‟s dues in the

loan account of M/s. R.C. Gupta and Brothers subject

matter of recovery suit No.652/1996 pending before

the DRT stands satisfied. Defendant No.2 was further

informed:

"The above compromise amount of Rs.37.60lacs plus interest has been accepted by the bank on express condition that the Bank will continue to exercise its general lien on the property bearing No.221 Okhla Ind. Estate, New Delhi in other loan accounts of M/s. Bharat Strips Ltd. & M/s Gwalior Strips Ltd. and title deeds of the said property will not be released due to above reason."

15. Thus, defendant bank refused to return back the

title deeds as it claimed general lien on the suit

property in loan accounts of M/s. Bharat Strips Ltd. and

M/s. Gwalior Strips Ltd. owned by defendant No.1.

16. In OA No. 652/1996 defendant No.1 had filed

applications seeking return of the title deeds of the

property in suit pursuant to the compromise having

been entered into between the parties. The said

applications were dismissed by DRT vide its order

dated 11.5.2001 and 8.10.2001 respectively with the

observations, „whether bank had a lien of the suit

property or not can only be decided in the other case

OA No.285/2000‟. This OA filed by the bank pertained

to the recovery of the amount due from M/s. Bharat

Strips Ltd. and Gwalior Strips Ltd.

17. Balance sheets filed by defendant No.2 with the

bank in view of the lien agreement were signed by

defendant No.1 for and on behalf of defendant No.2 as

sole proprietor. It is pertinent that the promissory note

and DP note dated 25.3.1991 executed for and on

behalf of the defendant No.2 at the time of obtaining

the loan, agreement for cash credit dated 25.3.1991,

hypothecation agreement dated 25.3.1991, general

undertaking executed in favour of the bank, the letter

dated 25.3.1991 annexed to hypothecation agreement,

the credit account of interest and revival letter form

are all signed by defendant No.1 as sole proprietor of

defendant No.2. Vide letter dated 12.11.1982

defendant No.1 as proprietor of defendant No.2

expressed his desire to furnish collateral security of his

building in place of the personal securities of his

brothers. Defendant No.1 has been signing various

correspondences like letters dated 3.1.1983,

15.2.1983, 25.3.1991 etc. all addressed to the bank

manager as sole proprietor of defendant No.2.

18. Letter dated 18.2.1987 has been signed by Vinod

Gupta, defendant No.3, as general attorney of

defendant No.1, proprietor R.C. Gupta. Defendant No.1

deposited the title deeds of the suit property with the

bank on 17.12.1982 as sole proprietor of defendant

No.2. In the letter dated 15.2.1983 signed by him as

sole proprietor of defendant No.2, defendant No.1

informed the bank:-

"The said property is self acquired and as such no one has any interest in the said property. The said property is under my sole occupation."

19. In a letter received by the bank on 8.8.1985 signed

by defendant No.1 as proprietor of defendant No.2, he

communicated his intention of creating an equitable

mortgage over the suit property as security for the

amount due to the bank from defendant No.2. In this

letter also he has stated:

"The said property belongs to me/us absolutely and no one else has any interest therein. The said property is under my/our occupation."

20. Perpetual lease executed by Delhi Administration in

favour of defendant No.2 does not describe defendant

No.2 as an HUF. This document is also signed by

general attorney of defendant No.1, the sole proprietor

of defendant No.2. In the civil suit (No. 88 of 2001)

inter se the parties, apparently decree was obtained

collusively to show that the property was an HUF

property.

21. In OA No.652/1996 in para (J) defendant bank had

averred:

"The Applicant Bank also has the charge over the property mortgaged for recovery of its dues in the loan/credit facilities granted to M/s Bharat Strips Limited and M/s. Gwalior Strips Limited, the sister concerns of the Respondent No.1."

22. Respondent No.1 in the said OA is none else but

defendant No.1 in this case. Defendant No.1 had filed

a suit against the bank in the civil court for perpetual

injunction. In this suit plaintiff in its opening paragraph

has pleaded that he is the sole proprietor of M/s. R.C.

Gupta & Brothers and is carrying on his business at

221, Okhla Industrial Area New Delhi. It is only in the

wealth tax and income tax returns that defendant No.2

has been described as HUF barring one order dated

28.1.1984 wherein defendant No.1 has been shown as

proprietor of defendant No.2. When all the documents

read together they prima facie clearly reflect that

defendant No.1 R.C. Gupta is the proprietor of M/s. R.C.

Gupta and Brothers; defendant No.2. Also that the suit

property was leased out to defendant No.1 as sole

proprietor of M/s. R.C. Gupta and Brothers; defendant

No.2.

23. Plaintiffs have also disputed the right of the

defendant to claim lien on the suit property under

Section 171 of the Act on the plea that Section 171

specifically speaks of movable assets mortgaged with

the bank and does not give any right to the bank to

claim lien on immovable properties mortgaged with it.

Section 171 of the Act reads:

"S. 171. General lien of bankers, factors, wharfingers, attorneys and policy-brokers.--bankers, factors, wharfingers, attorneys of a High 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."

24. Thus, Section 171 creates a general as

distinguished from a particular lien of bankers. This

section, however, limits the right to a general lien, i.e.,

a right of the bankers to retain goods in their

possession as a security for a general balance of

account to them. This general lien can be excluded by

special agreement whether expressed or implied from

the circumstances but such agreement must be clearly

in consistent with the existence of general lien. When

a person has a number of accounts kept in the books of

the bank, the customer cannot take the plea in the

absence of any special contract to say that securities

which he deposited are only applicable to one

particular account and not subject to a general lien. In

other words Section 171 is clear and categoric that

unless a contract to the contrary is established by the

plaintiff the bank‟s right of lien has to be accepted.

25. As per mercantile customs recognised by the

judiciary, the banker has a general lien over all forms

of deposits or securities made on behalf of the

borrower in the ordinary course of banking business.

The documents on the record placed by the bank as

well as by the plaintiffs clearly create a general lien of

the defendant bank on the title deeds deposited by

defendant No.1 in his individual capacity as sole

proprietor of defendant No.2 for the loans raised by

him. Syndicate Bank v. Vijay Kumar and Others -

AIR 1992 SC 1066 is referred to.

26. Learned counsel for the plaintiffs has placed

reliance on Tilendra nath Mahanta v. United Bank

of India and others - AIR 2002 Gauhati 1 to

support his submissions. Therein it was observed that

banker‟s lien can properly arise only over things which

belong to customers but which are held by the bank as

security. There is no bailment in case of fixed deposits

or separate accounts as fixed deposits are basically

loans in the hands of bankers. This judgment is of no

help to the plaintiffs in the facts and circumstances of

this case.

27. In State Bank of Mysore v. Lakshmi

Construction P. Ltd. and Ors. - (2001) 103

Company Cases 258 (Madras), „a general lien‟

appearing in Section 171 has been explained as:

"20. This "general lien" as it is realized from the section is culled by way of distinction from the "particular

lien" of an artificer for work done by him on the goods in question was the basis for the English law and proved trade usage of relationship between bankers and customers. But it is also made clear that a banker‟s lien, when it is not excluded by special contract, express or implied, extends to all bills, cheques, and money entrusted or paid to him and all securities deposited with him, in his character as a banker. Thus, the statute does not seem to expressly refer to banker‟s lien in respect of deposits but, however, money has been held to be a species of goods over which, lien may be exercised. Looking into the provision of law stated above, there appears to be no lien or liability created by defendants Nos. 5 and 6 in favour of the plaintiff in the instant case over their money for loan due to the plaintiff.

"By mercantile custom the banker has a general lien over all forms of commercial paper deposited by or on behalf of a customer in the ordinary course of banking business."

is a passage found in Chitty on Contracts, Vol.II, para. 473 (23rd edition). At page 474, it is found further that a banker may not claim the protection of the lien in respect of advances made after notice that the security belongs to or is subject to some interest of a stranger. Thus, from the facts of the instant case, with reference to the contents of exhibit P-18, by applying the above legal ratio, it is made clear that the lien can be created only by prevailing over the property of the customer that is defendants Nos. 1 to 4 herein and not against the deposits made by

defendants Nos. 5 and 6 pursuant to Section 171 of the Indian Contract Act."

28. Thus, it is clear that defendant bank has a general

lien over the papers deposited by defendant No.1 with

the bank at the time of raising loan for and on behalf of

defendant No.2. Title deeds are goods within the

meaning of Section 171 and cannot be considered as

immovable properties. Possession of the property

remained with defendants No. 1 and 2 and it was never

taken over by the bank.

29. In State Bank of India v. Diwanji Buildwell

(India) Pvt. Ltd. and Anr. - (2005) 126 Company

Cases 161 (Delhi) wherein in similar circumstances

an argument was raised by the counsel for the

petitioner that by a letter issued by the bank, a specific

promise was made by the bank to the effect that if the

outstanding amount was paid with interest, the papers

deposited by way of collateral securities would be

returned and since bank had promised to return back

the documents, the title deeds in any event had to be

returned and the bank cannot claim any general lien

under Section 171 of the Contract Act, it was observed

that bank had a lien on the title deed and that there

was not just one transaction of loan between petitioner

and the bank but petitioner No.2 was involved in the

transaction with the bank being a partner of the firm.

The Court while coming to this conclusion had referred

to a letter issued by the bank whereby they claimed

general lien on the title deeds against a suit filed by

the bank for liability of the petitioner No.1 in case of

another firm.

30. In this case, I have already referred to the letter of

the bank dated 8.5.2001 wherein defendant bank

claimed general lien on the suit property in other loan

accounts of M/s. Bharat Strips Ltd. and M/s. Gwalior

Strips Ltd. of which defendant No.1 is the managing

director and declined to release the title deeds to

defendant No.2. Bank has claimed its general lien on

the suit property in OA No.652/1996 filed by the bank

against defendant No.2 for the loan accounts of the

said two companies. The DRT also refused to direct the

bank to return the title deeds after defendants and the

bank had settled and compromised the claim of the

bank in OA No.652/1996.

31. Hence, in view of my discussion as above, prima

facie plaintiffs have not been able to show that suit

property is an HUF property and that they are the

coparceners of the same. Whereas evidence on record

prima facie indicates that defendant No.1 is the sole

proprietor of defendant No.2 and the sole owner of the

suit property. It is the interest of the bank which is

likely to jeopardise in case the injunction as sought is

granted to the plaintiffs and it is the bank which shall

suffer irreparable loss and injury. Under the

circumstances, balance of convenience heavily tilts in

favour of defendant No.5.

32. Hence, I find no merits in the application. Same is

accordingly dismissed. The observations made as

above are without prejudice to the rights of the parties

on the merits of the case.

CS (OS) No.1731/2001

33. Parties shall appear before the regular Bench on

20th August, 2009 for further proceedings.

ARUNA SURESH (JUDGE) August 10, 2009 jk