[Cites 22, Cited by 0]
Kerala High Court
Jayalal D vs The Chief Manager on 23 January, 2026
WP© Nos. 26253, 36140 &
37946 of 2025
1
2026:KER:5512
CR
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE M.A.ABDUL HAKHIM
FRIDAY, THE 23RD DAY OF JANUARY 2026 / 3RD MAGHA, 1947
WP(C) NO. 26253 OF 2025
PETITIONERS:
1 RUKKIYA K.T
AGED 57 YEARS
W/O HANEEFA, KARUTHEDATH, ODAKKUNOAMPOYIL, CHIPPILITHOD,
ADIVARAM P.O., PUTHUPPADI, KOZHIKODE, PIN - 673586
2 UMMAR K.M
AGED 49 YEARS
S/O KUNJIMUHAMMAD KARUTHEDATH, ODAKKUNOAMPOYIL,
CHIPPILITHOD, ADIVARAM P.O., PUTHUPPADI, KOZHIKODE, PIN -
673586
BY ADV SRI.NIRMAL V NAIR
RESPONDENT:
IDBI BANK LTD, KALPETTA BRANCH
KALPETTA BUSINESS CENTRE, GROUND FLOOR, KALPETTA BYE-PASS
JUNCTION, WAYANAD DISTRICT, REPRESENTED BY ITS AUTHORISED
OFFICER, PIN - 673121
BY ADVS.
SMT.M.S.KIRAN
SHRI.REMESH KARTHA E.K.
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 23.01.2026,
ALONG WITH WP(C).36140/2025, 37944/2025, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
WP© Nos. 26253, 36140 &
37946 of 2025
2
2026:KER:5512
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE M.A.ABDUL HAKHIM
FRIDAY, THE 23RD DAY OF JANUARY 2026 / 3RD MAGHA, 1947
WP(C) NO. 36140 OF 2025
PETITIONER:
JAYALAL D
AGED 50 YEARS
S/O DIVAKARAN, PALATHARA, THATTAMALA P.O, KOLLAM, RESIDING
AT 'THIRUVONAM', SANTHI NAGAR 297 A, AYATHIL P.O, KOLLAM,
PIN - 691021
BY ADVS.
SRI.RAMEEZ NOOH
SMT.FATHIMA K.
SHRI.DANIC ANTONY
SMT.KRISHNENDU K.V.
SMT.JENNA SUSAN BAJI
RESPONDENT:
THE CHIEF MANAGER
STATE BANK OF INDIA, SARB, LMS COMPOUND, OPP. MUSEUM WEST
GATE, VIKAS BHAVAN P.O, THIRUVANANTHAPURAM-, PIN - 695033
BY ADV SHRI.JITHESH MENON, SC, SBI
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 23.01.2026,
ALONG WITH WP(C).26253/2025 AND CONNECTED CASES, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
WP© Nos. 26253, 36140 &
37946 of 2025
3
2026:KER:5512
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE M.A.ABDUL HAKHIM
FRIDAY, THE 23RD DAY OF JANUARY 2026 / 3RD MAGHA, 1947
WP(C) NO. 37944 OF 2025
PETITIONER:
NAJUMUDEEN.T, AGED 42 YEARS
S/O.THAJUDEEN, KOTHAMANGALATHU PADINJATTATHIL, AYATHIL,
KILIKOLLOOR, KALLUMTHAZHAM P.O, KOLLAM -, PIN - 691004
BY ADVS.
SRI.K.SIJU
SMT.ANJANA KANNATH
SMT.SAFNA P.S.
SHRI.GAUTHAM SIJU
RESPONDENTS:
1 THE CANARA BANK
REPRESENTED BY ITS REGIONAL MANAGER, CIRCLE OFFICE, TC
26/173, M.G ROAD, SPENCER JUNCTION, PB NO.159,
THIRUVANANTHAPURAM, PIN - 695001
2 THE BRANCH MANAGER, CANARA BANK, AYATHIL BRANCH, ARADHA'S
BUILDING, AYATHIL, KOLLAM -, PIN - 691577
BY ADVS.
SHRI.M.GOPIKRISHNAN NAMBIAR
SHRI.K.JOHN MATHAI
SRI.JOSON MANAVALAN
SRI.KURYAN THOMAS
SHRI.PAULOSE C. ABRAHAM
SHRI.RAJA KANNAN
SMT.RAMOLA NAYANPALLY
SMT.PARVATHI MENON
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 23.01.2026,
ALONG WITH WP(C).26253/2025 AND CONNECTED CASES, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
WP© Nos. 26253, 36140 &
37946 of 2025
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2026:KER:5512
CR
JUDGMENT
(W.P.(C) No.26253, 36140 & 37944 of 2025)
Dated this the 23rd day of January, 2026
1. Since common issues arise in these Writ Petitions, I dispose these
Writ Petitions by a common judgment.
2. The issue involved in these Writ Petitions is that, on closure of the
loan by the borrower, whether the Bank is entitled to retain the
original title deeds which were deposited with the Bank to create
an equitable mortgage to secure the said loan, invoking the
general lien under Section 171 of the Indian Contract Act, 1872,
on the ground of other dues under a different loan from the
borrower, either as borrower or as guarantor.
3. I heard the learned Counsel for the Petitioners/Borrowers,
Sri.Nirmal V. Nair, Sri.Rameez Nooh and Sri.Anjana Kannath and
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the learned Standing Counsel for the Respondents/Banks,
Sri.Jithesh Menon, Sri.Ramola Nayanpally and Sri. M.S. Kiran.
4. The learned Counsel for the Petitioners/Borrowers contended that
the Banks have no right to retain the title deeds deposited with
them to create an equitable mortgage to secure the loan when the
entire liability under the said loan is settled. When the Title Deeds
are deposited for a specific loan, they are to be returned on
settlement of the said loan. The Bankers' general lien under
Section 171 of the Indian Contract Act cannot be invoked to retain
the Title Deeds alleging arrears in some other loans. The Bankers'
general lien under Section 171 of the Indian Contract Act cannot
be invoked against immovable property, as it is available only
against goods as defined under the Sale of Goods Act, 1930. The
Title Deeds of the immovable property are not goods within the
meaning of Section 171 of the Contract Act. A general lien under
Section 171 of the Contract Act is available only in the absence of
a contract to the contrary. When the borrower has created a
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mortgage to secure a particular loan, he is entitled to redeem the
mortgage by payment of the debt. Such a mortgage is a contract
contrary to the general lien provided under Section 171. The
learned Counsel for the Borrowers cited the decisions of the
Hon'ble Supreme Court and of various High Courts including this
Court in Gurbax Rai and Others v. Punjab National Bank, New Delhi [(1984)
3 SCC 96], R.D.Saxena v. Balram Prasad Sharma [(2000) 7 SCC 264], Alekha
Sahoo v. Puri Urban Co-operative Bank Ltd. and Others [AIR 2004 Ori 142],
Biju Jacob v. The Authorised Officer, Federal Bank Limited and Others
[2010:KER:20841], State Bank of India and Another v. Jayanthi and Others
[AIR 2011 Mad 179], Syndicate Bank v. Sheela Julian [2018 (5) KHC 282],
State Bank of India v. Joshy P.K. and Others [2019:KER:19625], Sunil
Ratnakar Gutte v. Union Bank of India [AIR 2022 Bom 195], PNB Vesper Life
Science Pvt. Ltd. v. Registrar of Co-Operative Societies [2023 (3) KHC 116],
Thomas George v. Corporation Bank [2023:KER:68061], Balaram
Choudhury v. Indian Bank, Bhubaneshwar [AIR 2024 Ori 107], Inkel Ltd. v.
Federal Bank Limited [2024 KHC 1604], and Kerala Bank and Another v.
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Manarkattu Theatres (P) Ltd. [2024:KER:2707] in support of their
contentions.
5. Per Contra, the learned Counsel for the Banks contended that the
issue is no longer res integra and it is well settled by the decisions
of the Hon'ble Supreme Court and of various High Courts,
including this Court. The Banks are entitled to retain all securities
available with them to invoke the general lien provided under
Section 171 of the Contract Act. Adv.Sri.Jithesh Menon invited my
attention to the Memorandums of Deposit of Title Deeds dated
07.06.2014 and 24.08.2015 executed by the Petitioner in W.P.(C)
No.36140/2025, in which it is stated that the security of equitable
mortgage is for the credit facilities stated therein and for any other
credit facilities that may be granted to him by the Bank thereafter.
Learned Counsel further pointed out the recital in the Agreement
of Loan dated 24.08.2015, executed by the said Petitioner, that
nothing contained in the Agreement or any security documents
shall be construed as excluding the general lien. Adv.Sri.Ramola
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Nayanpally contended that W.P.(C) No.37944/2025 is premature,
as the Petitioner therein has not even settled the loan liability for
which the title documents are deposited to create the equitable
mortgage. The learned Counsel for the Banks cited the decisions
in Syndicate Bank v. Vijay Kumar and Others [(1992) 2 SCC 330], Sadhna
Gupta v. R.C. Gupta [2009 SCC OnLine Del 2334], Thankappan V.K. and
Another v. Uthiliyoda Muthukoya [2011 (2) KHC 738], Mohammad Maqbool
Kunash v. Jammu and Kashmir Bank Ltd. [AIR 2013 J&K 14], Nakulan v.
Deputy General Manager, Canara Bank, Kollam and Others [2014 (1) KHC
51], Nayabuddin v. Union of India and Others [2016 KHC 2950], Swapan Paul
and Another v. State Bank of Bikaner & Jaipur and Others [2017 SCC
OnLine Cal 12478], A.A. Associates and Another v. Indian Overseas Bank
and Others [2019 SCC OnLine Mad 783], C.R.Ramachary v. Indian Overseas
Bank and Others (Order dated 31.10.2018 of the Madras High Court in W.P.
No.16812/2018], P.V.Hariharan v. The Indian Overseas Bank and Others
[2019:KER:50206], Babu George v. State Bank of India [2022:KER:49612],
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Santhakumary Amma P. v. Indian Overseas Bank [2023 (7) KHC 440] in
support of their contentions.
6. In the light of the arguments advanced before me, the following
questions of law are to be answered in these Writ Petitions.
1. Whether the general lien under Section 171 of the Indian
Contract Act, 1872, is available to immovable property?
2. Whether the lien under Section 171 of the Indian Contract Act,
1872, is available over the title deeds of immovable property
deposited to create a mortgage?
3. Whether the mortgage created by the borrower to secure a
specific loan is a 'contract to the contrary' mentioned in Section
171 of the Indian Contract Act, 1872, to deny general lien to the
Bank?
4. Whether the Bank is entitled to retain the Title Deeds deposited
to create an equitable mortgage even after closure of the loan,
relying on the contract between the Bank and the borrower?
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5. Whether the Bank has a right of lien, apart from the lien covered
under Section 171 of the Indian Contract Act, 1872?
7. Since the above questions of law are to be decided with respect to
Section 171 of the Indian Contract Act, 1872, it is apposite to
extract Section 171 hereunder.
"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."
8. The Banker's general lien is a common law principle. The common
law principle of general lien got statutory recognition under Section
171 of the Indian Contract Act, 1872. When a common law
principle is embodied in a statute, the principle has to be
interpreted with reference to the statutory provision and not with
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reference to the common law principle. Of course, the Court can
seek aid from the common law to understand the principle.
9. Let me examine the ingredients of the general lien embodied in
Section 171, going by its literal meaning. The ingredients for
exercising lien under Section 171 are:
i. Bailment of goods.
ii. Existence of a general balance of account.
iii. Absence of a contract to the contrary.
10.When the above ingredients are satisfied, the five persons named
in the Section shall have the right to exercise the statutory lien.
The lien is to be exercised by retaining possession of the goods.
The persons other than the five persons may have the right of lien
only if there is a contract to that effect. In such a case, it is a
contractual lien, and it is governed by the terms of the contract
between the parties and not by Section 171 of the Contract Act.
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Bearing these principles in mind, let me examine the questions of
law involved in these cases.
QUESTION OF LAW NO.1
11.Bailment of goods is essential to invoke the general lien under
Section 171 of the Contract Act. Under Section 148 of the Contract
Act, 'bailment' is the delivery of goods by one person to another
for some purpose, upon a contract that they shall, when the
purpose is accomplished, be returned or otherwise disposed of
according to the directions of the person delivering them. In the
case of bailment, possession of the goods is with the bailee. As
per Section 171, the Bank, as a bailee, is allowed to retain
possession of the goods by exercising lien. Possession of goods
with the Bank is essential to exercise the lien. When lien is
exercised, the Bank is entitled to retain possession till payment of
the debt. In the case of an equitable mortgage by deposit of title
deed, the Bank with which the Title Deed is deposited will not be
having possession of the property covered by the Title Deed
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deposited. Even assuming that the lien under Section 171 of the
Contract Act is exercisable over immovable properties, the Bank
could not exercise the same without possession of such
immovable properties.
12. Section 2(7) of the Sale of Goods Act, 1930, defines "goods" as
every kind of movable property other than actionable claims and
money; and includes stock and shares, growing crops, grass, and
things attached to or forming part of the land which are agreed to
be severed before sale or under the contract of sale. It does not
include immovable property. Hence, lien under Section 171 of the
Contract Act could not be created over immovable property. If a
security is created over an immovable property by act of parties or
operation of law for the payment of money to another and the
transaction does not amount to a mortgage, it is a charge within
the meaning of Section 100 of the Transfer of Property Act, 1882,
and it could not be called as a lien over immovable property. In the
case of charge under Section 100 of the Transfer of Property Act,
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there is no requirement that possession of immovable property
shall be with the person in favour of whom the security is created,
whereas for exercising lien under Section 171 of the Indian
Contract Act, possession is mandatory. In short, when security is
created over an immovable property, it is called charge, and when
security is created over movable property, it is called lien. Both
charge and lien are for securing debt. In the case of a statutory lien
under Section 171 of the Indian Contract Act, the creditor gets a
security even before instituting the litigation for the realisation of
debt. The creditor has to approach the Court of law to realise the
debt by enforcing the lien. In Sheela Julian (supra), the Division
Bench of this Court held that a lien means a right which a person
in possession of property holds and retains it against the other in
satisfaction of a demand due to the party retaining it. When the
parties create security over immovable property by contract
between them to secure debt by referring to it as lien, it is to be
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construed as a charge over immovable property, as the intention
of the parties is to create security over the immovable property.
13. The decision of the Hon'ble Supreme Court in Syndicate Bank (supra)
is cited as the binding precedent by the Counsel for the Banks in
all the cases involving the general lien of the Banks. In this case
also, the learned Counsel for the Banks rely on the said decision.
In this decision, the Hon'ble Supreme Court considered the
common law principle of Banker's general lien with reference to
English decisions and Texts. The Hon'ble Supreme Court was
considering the question of lien over the two Fixed Deposit
Receipts of the borrower. The Hon'ble Supreme Court held that
applying the English principles to the case before it, undoubtedly,
the appellant - Bank has a lien over the two Fixed Deposit Receipts
of the borrower. The Hon'ble Supreme Court further entered a
finding that even otherwise, having regard to the mercantile
custom as judicially recognised, the Banker has such a general
lien over all forms of deposits or securities made by or on behalf
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of the customer in the ordinary course of Banking business. This
finding made by the Hon'ble Supreme Court is without reference
to Section 171 of the Indian Contract Act. The Hon'ble Supreme
Court did not consider Section 171 of the Indian Contract Act while
addressing the Banker's general lien in the said decision.
Accordingly, I hold that the general lien under Section 171 of the
Indian Contract is not available to immovable property.
QUESTION OF LAW NO.2.
14.Adv.Sri.Jithesh Menon contended that the Bank is entitled to
exercise lien under Section 171 over the title deeds deposited by
the borrower. By retaining the title deeds, the Bank is not
exercising lien over the immovable property covered by the title
deeds, but the Bank is exercising lien over the title deeds as
goods.
15. In R.D. Saxena (supra) cited by Sri.Rameez Nooh, the Hon'ble
Supreme Court considered the question of Advocate's lien over
the files entrusted by the client for securing the unpaid fees. The
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Hon'ble Supreme Court found that the Advocate has no lien over
the records entrusted by his client. The Hon'ble Supreme made
certain categorical findings in the said decision that files containing
copies of the records (perhaps some original documents also)
cannot be equated with the "goods" referred to in Section 171 of
the Contract Act; that the word "goods" mentioned in Section 171
is to be understood in the sense in which that word is defined in
the Sale of Goods Act; that "goods" to fall within the purview of
Section 171 of the Contract Act should have marketability and the
person to whom it is bailed should be in a position to dispose it of
in consideration of money; that the goods referred to in Section
171 of the Contract Act are saleable goods; and that there is no
scope for converting the case files into money, nor can they be
sold to any third party.
16. In Sadhna Gupta (supra) cited by Adv.Sri.Jithesh Menon, the Delhi
High Court held that the Defendant Bank has a general lien over
the papers deposited by Defendant No.1 with the Bank at the time
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of raising the loan for and on behalf of Defendant No.2, and that
Title Deeds are goods within the meaning of Section 171 and
cannot be considered as immovable properties.
17. In Nayabuddin (supra), the Calcutta High Court held that the Bank
has Banker's lien over a security which has come in its possession
in its usual course of business, namely, the title deeds of the
immovable property pledged as security in respect of the home
loan account.
18. In Swapan Paul (supra), the Calcutta High Court held that the Bank
is entitled to exercise Banker's lien in respect of title deeds that
have come into the possession of the Bank in its usual course of
business so long as the account in which one of the petitioners is
a guarantor is not squared off.
19. In A.A. Associates (supra), the Madras High Court held that the
respondent Bank has a general lien over the instruments
deposited by the petitioners with the Bank in the ordinary course
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of banking and such Banker's lien is a valuable right of the Bank,
which cannot be ordinarily interfered with by this Court.
20. In C.R. Ramachary (supra), the Madras High Court following the
decision of the Hon'ble Supreme Court in Syndicate Bank (supra)
held that the respondent Bank has general lien over the securities
and other instruments deposited by the petitioner with the Bank
and that the respondent Bank is well within its rights to retain the
documents furnished by way of collateral security in relation to the
earlier two loan accounts which were settled, as the third loan was
not settled.
21. In the decision of this Court in P.V. Hariharan (supra), the contention
advanced by the borrower was that general lien is available only
against goods that are bailed to the Bank and deposit of title deed
will not enable the Bank to apply Section 171 of the Contract Act
since it relates to an immovable property. The learned Single
Judge of this Court held that even though learned Counsel for the
petitioner has advanced a contention that Section 171 of the
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Contract Act will not apply to immovable properties, this Court is of
the view, the Bank has exercised its general lien as per Section
171 against the title deed deposited by the petitioner against the
loan availed by him, and since the petitioner is still indebted to the
Bank on account of other transactions, Bank is entitled as of right
to exercise the general lien under Section 171 of the Contract Act
and that a title deed available with the Bank is a 'goods bailed' to
the Bank for the purpose of Section 171 of the Contract Act. This
Court did not consider the categorical finding of the Hon'ble
Supreme Court in R.D. Saxena (supra) by distinguishing the said
decision, holding that the facts and circumstances of the case and
the legal principles laid down are entirely different.
22. In Balaram Choudhury (supra), the Orissa High Court refused to
uphold the general lien of the Bank holding that no document has
been placed before the Court to show that the borrower had given
any authorization to the Bank to hold the documents of the
mortgaged property, given to secure the loan transaction for the
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purpose of any other loan, other than the purported home loan;
that mortgage has to be construed as a 'contract to the contrary';
that the term 'goods' contemplated in Section 171 of the Contract
Act is to be understood in the sense that it should be converted in
terms of money or in other words, the goods should have
marketability and that there will be no bailment in the case of title
deeds.
23. In Inkel Ltd. (supra), the learned Single Judge of this Court found
that the borrower is entitled to get back the title deeds as the
mortgage was given for securing the debt of an LLP, which is
settled, and there is no mortgage for a Private Limited Company
from which amounts are outstanding. This Court did not consider
the Banker's right of lien.
24. The Counsel for the Banks tried to distinguish the said decision of
the Hon'ble Supreme Court in R.D. Saxena (supra), arguing that files
are entrusted by the clients with the Advocates not to create
security, whereas Title Documents are entrusted by the borrowers
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with the Banks for creating security and hence the aforesaid
findings are contextual in nature and could not be made applicable
to the case on hand. I am unable to accept the said contention of
the learned Counsel for the Banks. The Hon'ble Supreme Court
has made the aforesaid categorical findings interpreting Section
171 of the Contract Act, and it could be applied in all cases under
Section 171. Hence, I am unable to subscribe to the views of the
Delhi High Court, Calcutta High Court, and Madras High Court in
the aforesaid decisions and follow the binding precedent of the
Hon'ble Supreme Court in R.D. Saxena (supra) and accept the view
of the Orissa High Court in Balaram Choudhury (supra). The purpose
of a lien is to raise money by the sale of the item over which the
lien is exercised for adjusting the same against the outstanding
dues of the Bank. In the case of Title Deeds, money could not be
raised by the sale of the same. I hold that the Title Deeds deposited
by the borrower with the Bank to secure the debt are not goods,
as they do not have marketability and are not saleable to dispose
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of them for money, and hence the lien under Section 171 of the
Indian Contract Act could not be exercised over the same.
QUESTION OF LAW NO.3.
25. In Jayanthi (supra) cited by Sri.Rameez Nooh, the issue considered
by the Division Bench of the Madras High Court was whether there
is any contract to the contrary which prevents the Bank from
exercising its general lien under Section 171 of the Contract Act.
In the said case, the Bank refused to release the Title Deeds to the
legal heirs of the borrower on settlement of the loan, alleging the
borrower is a guarantor to a loan availed by another establishment
by the name M/s. Somerset Tea Plantation and the same has been
outstanding. The Madras High Court found that the property in
question was not bailed to the appellant Bank by the deceased
borrower at any point of time; that the property in question was
offered by the borrower to cover his liability in respect of the loans,
which he had borrowed in the accounts of M/s. Sanjay Bala Tea
Plantation and M/s. Aarthi Bala Tea Plantation and his self-
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acquired properties were mortgaged to secure this specific loan
transaction; that no document has been placed to show that the
borrower had given any authorisation to the Bank to hold the
documents of the mortgaged property, given to secure the loan
transaction for M/s. Sanjay Bala Tea Plantation and M/s. Aarthi
Bala Tea Plantation, for the purpose of any other loan availed in
any other branch by M/s. Somerset Tea Plantation in which the
borrower stood as a guarantor. It is held that the contract/mortgage
had been created by the deceased borrower for a specific purpose
and for a specific loan and the contract was self-contained and the
terms and conditions were binding upon both the borrower as well
as the Bank; that in other words, the deposit of Title Deeds by
which the mortgage was created by the deceased borrower was
for a specific purpose to cover an advance for a specific loan; that
when such is the situation, the borrower having deposited the
documents in order to secure a specific transaction, the Bank
cannot contend that they could hold the documents for a balance
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due in a different loan account where the deceased is not a
borrower. The Madras High Court distinguished the decision of the
Hon'ble Supreme Court in Syndicate Bank (supra) and held that there
was a specific contract/agreement between the deceased
borrower and the Bank, by which the borrower offered the property
in question to secure only a particular transaction; that therefore,
this agreement/mortgage has to be construed as a 'Contract to the
Contrary' and therefore, it has no hesitation to hold that the Bank
cannot claim these documents by invoking the power of general
lien under Section 171 of the Indian Contract Act, 1872.
26. In Biju Jacob (supra) cited by Adv.Sri.Nirmal V. Nair, the learned
Single Judge of this Court rejected the claim of general lien by the
Bank relying on the right of the borrower to redeem the mortgage
separately or simultaneously under Section 61 of the Transfer of
Property Act, 1882. In the said case, the borrower had availed
loans from the 2nd respondent and the 3rd respondent branches of
the same Bank by mortgaging separate properties. The request of
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the borrower to redeem the property from the 2nd respondent
branch was refused by the Bank stating that the Title Deeds
deposited with the 2nd respondent would be released only if the
borrower clears the entire liability with the 3rd respondent branch.
The learned Single Judge ordered that once the entire liability due
to the 2nd respondent Branch is cleared, the Title Deed pertaining
to the said property shall be returned by the Bank.
27. In the decision of this Court in Thomas George (supra), the learned
Single Judge of this Court ordered the Bank to release the title
deeds deposited by the borrower on closure of the loan, rejecting
the general lien under Section 171 of the Contract Act claimed by
the Bank following the Division Bench judgment of the
Chhattisgarh High Court construing mortgage as a 'contract to the
contrary'.
28. In the decision of this Court in Joshy P.K. (supra), the Division Bench
of this Court confirmed the judgment of the learned Single Judge
ordering the Bank to release the title deeds deposited by the
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Guarantor on closure of the loan, rejecting the general lien under
Section 171 of the Contract Act claimed by the Bank on the ground
that the Petitioner is a guarantor to another loan. This Court held
that the right of the mortgagor to redeem the mortgage on payment
of the loan dues is recognised by Section 60 of the Transfer of
Property Act, 1882; that the general lien claimed by the Bank under
Section 171 of the Contract Act cannot overweigh the right to
redeem the mortgage, permitted under Section 60 of the Transfer
of Property Act; that the general lien claimed under Section 171 of
the Contract Act has to be recognised only in the absence of a
contract to the contrary; that in the present matter, the mortgagee
did create a contract to contrary, in favour of the respondents/writ
petitioners; and that the right under Section 60 of the Transfer of
Property Act is in furtherance of the constitutional right granted
under Article 300(A) of the Constitution of India which stipulates
that no person shall be deprived of his property, save by authority
of law. This Court distinguished the decision of the Hon'ble
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Supreme Court in Syndicate Bank (supra) holding that the concerned
Fixed Deposit Receipts in the case before the Supreme Court,
contained specific recitals whereby, the depositor agreed that the
said deposit and renewal shall remain with the Bank so long as
any amount on any account is due from the depositors to the Bank;
that it was in that factual context the general lien right was
recognised in favour of the Bank by the court, under Section 171
of the Contract Act; that such is not the position in the present case
where admittedly, the title deeds were never deposited with such
undertaking and recitals, enabling the Bank to retain the same for
discharge of other loan liabilities.
29. In Manarkattu Theatres (P) Ltd. (supra), the Division Bench of this Court
confirmed the judgment of the learned Single Judge ordering the
release of the title deeds, distinguishing the decision of the Hon'ble
Supreme Court in Syndicate Bank (supra), finding to the effect that a
mortgage is a 'contract to the contrary'.
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30. The Division Bench decision of this Court in Babu George (supra),
cited by Adv.Sri.Ramola Nayanpally, arose from a case where the
learned Single Judge of this Court refused to order the release of
gold ornaments on closure of the gold loan, accepting the
contention of the Bank that Bank has got general lien under
Section 171 of the Contract Act for the other defaulted loan
accounts of the borrower, holding that the burden is always on the
borrower to establish 'a contract to the contrary' in order to displace
the presumption in favour of the Bank under Section 171 of the
Contract Act about the existence of a right of general lien, and the
same was affirmed by the Division Bench.
31. In Nakulan (supra), this Court was dealing with the question of lien
over gold ornaments pledged with the Bank and it is held that the
burden is always upon the borrower to establish 'a contract to
contrary' in order to displace the presumption in favour of the Bank
under Section 171 of the Contract Act about the existence of right
of general lien.
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32. In view of the aforesaid authoritative pronouncements of this Court
in Biju Jacob, Thomas George, Joshy P.K. and Manarkattu Theatres (P)
Ltd., I hold that the mortgage created by the borrower is 'a contract
to the contrary' mentioned in Section 171 of the Indian Contract
Act, and the borrower has the right to redeem the mortgage and
the Bank cannot deny the same citing statutory lien under Section
171 of the Contract Act.
QUESTION OF LAW NO.4.
33. As per Section 171 of the Contract Act, the persons other than the
five persons mentioned therein may have the right of lien only if
there is a contract to that effect. It would indicate that the said five
persons can also have a right of lien on the basis of a contract,
even if any of the ingredients mentioned in the said Section are
absent. In such a case, it is a contractual lien, and it is governed
by the terms of the contract between the parties and not by Section
171 of the Contract Act. The Bank is entitled to retain the Title
Deeds deposited by the borrower to create an equitable mortgage
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even after closure of the loan if the contract between the Bank and
the borrower permits the same. This question is answered in the
affirmative.
34.The Memorandums of Deposit of Title Deeds dated 07.06.2014
and 24.08.2015 executed by the Petitioner in W.P.(C)
No.36140/2025, in which it is stated that the security of equitable
mortgage is for the credit facilities stated therein and for any other
credit facilities that may be granted to him by the Bank thereafter.
These documents would show that, as per the contract between
the Bank and the Petitioner in W.P.(C) No.36140/2025, the
Petitioner is entitled to redeem the mortgage only after the
settlement of all the credit facilities availed by him. This is not a
case of contractual lien. As per these documents, the mortgage
created by the deposit of title deeds itself continues till the
settlement of all the credit facilities availed by him, and he cannot
demand the release of the title deeds.
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QUESTION OF LAW NO.5.
35. In Mohammad Maqbool Kunash (supra), while considering the prayer
of the borrower for Interim Injunction, referring to the terms of the
Loan agreement, the Jammu and Kashmir High Court held that
there is an express contract authorising the Bank to have a general
lien and the right of set off for all or any balance due to the Bank
over all or any securities for the time being held by the Bank and
all or any such security that may come in the hands of the Bank.
36. In Alekha Sahoo (supra), the Orissa High Court refused to uphold the
general lien of the Bank over gold ornaments. The borrower had
stood as guarantor to a loan taken by another establishment. The
Orissa High Court distinguished the decision of the Hon'ble
Supreme Court in Syndicate Bank (supra) by holding that it is a case
where the owner of the Fixed Deposit Receipts had expressly
agreed that the Bank would have lien over the Fixed Deposit
Receipts and that the Supreme Court has not laid down any law
that the Bank can exercise its general lien under Section 171 of
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the Contract Act over the properties of the surety for the liabilities
of the principal debtor to the Bank. With due respect, I am unable
to subscribe to the view of the Orissa High Court in the said
decision that unless a customer has expressly agreed that his
properties can be retained as security for the outstanding balance
in the account of some other customer, a Bank cannot exercise
lien over the properties of such customer under Section 171 of the
Contract Act. Even without any such Agreement, the Bank is
entitled to exercise a statutory lien over the gold ornaments
pledged by the borrower for securing another debt to which the
borrower stood as guarantor, as the liability of the surety is co-
extensive with that of the principal debtor as per Section 128 of the
Contract Act.
37. In Sunil Ratnakar Gutte (supra), the Division Bench of the Bombay
High Court directed the release of the title deeds deposited by the
borrower on closure of the loan, holding that the Bank has no right
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to withhold the title deeds when there is no relationship as Banker
and customer.
38. In Thankappan V.K. (supra), the learned Single Judge of this Court
held that the Bank has general lien over the securities which come
to its hands, which may be in the form of money, negotiable
instrument, or any form of security, or it may be goods.
39. In Babu George (supra), the Division Bench of this Court affirmed the
decision of the learned Single Judge of this Court refusing to order
the release of gold ornaments on closure of the gold loan, holding
that the Bank has general lien over all forms of security, including
gold ornaments deposited by or on behalf of the borrower in the
ordinary course of Banking business for the general balance of
account due from him.
40. In PNB Vesper Life Science Pvt. Ltd. (supra), the learned Single Judge
of this Court refused to uphold the contention of the Bank that it is
entitled to retain the title deeds of a secured asset deposited by
one company even after the closure of the loan as the directors of
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the said company are directors of another company from which
dues are outstanding. This Court held that the said two companies
are two different entities.
41. In Santhakumary Amma P. (supra), the learned Single Judge of this
Court refused to follow the decisions in Alekha Sahoo (supra), Sunil
Ratnakar Gutte (supra) and PNB Vesper Life Science Pvt. Ltd. (supra) in
view of the findings of the Hon'ble Supreme Court in Syndicate Bank
(supra) that the Banker has a general lien over all forms of deposits
or securities made by or on behalf of the customer in the ordinary
course of banking business.
42. In Syndicate Bank (supra), the Hon'ble Supreme Court considered
the common law principle of Banker's general lien with reference
to English decisions and Texts and not with reference to Section
171 of the Indian Contract Act, 1872. The said decision could not
be an authority for the general lien covered by Section 171, as the
ingredients for attracting the general lien therein are not
considered by the Hon'ble Supreme Court. The Hon'ble Supreme
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Court entered a categorical finding that even otherwise, having
regard to the mercantile custom as judicially recognised, the
Banker has such a general lien over all forms of deposits or
securities made by or on behalf of the customer in the ordinary
course of Banking business. Even though this finding was made
by the Hon'ble Supreme Court without reference to Section 171 of
the Indian Contract Act, the said finding is a declaration of law
made by the Hon'ble Supreme Court, and hence it is a binding
precedent in view of Article 141 of the Constitution of India. Thus,
the Bank has a general lien over all forms of deposits or securities
made by or on behalf of the customer in the ordinary course of
Banking business. Such a general lien declared by the Hon'ble
Supreme Court is not subject to the conditions in Section 171 of
the Indian Contract Act. Hence, the absence of a contract to the
contrary mentioned in Section 171 of the Indian Contract Act is not
applicable. For the application of the general lien over all forms of
deposits or securities made by the borrower in the ordinary course
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of Banking business, there is no need to ensure the absence of a
contract to the contrary. Bank is entitled to retain the title
documents deposited by the borrowers to create security till all the
dues are cleared by the borrower to the Bank, in view of the
declaration of law by the Hon'ble Supreme Court in Syndicate Bank
(supra). This Question is answered in the affirmative.
CONCLUSION
43.In view of the answer to Question of Law No.5, these Writ Petitions
are liable to be dismissed, and hence it is ordered accordingly.
Sd/-
M.A.ABDUL HAKHIM
JUDGE
Jma/shg
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APPENDIX OF WP(C) NO. 26253 OF 2025
PETITIONER EXHIBITS
Exhibit P1 A TRUE COPY OF SALE DEED NO. 2982/1/2015 DATED 29-
9-2015 OF THAMARASSERY TOWN SUB REGISTRAR OFFICE
Exhibit P2 A TRUE COPY OF THE LAND TAX RECEIPT DATED 1-7-2025
ISSUED BY THE PUTHUPPADY VILLAGE OFFICER
Exhibit P3 A TRUE COPY OF THE SALE DEED NO. 3605/1/2014 DATED
27-9-2014 OF THE KALPETTA SUB REGISTRAR OFFICE
Exhibit P4 A TRUE COPY OF THE AUCTION SALE NOTICE DATED 6-7-
2024 PUBLISHED IN THE MADHYAMAM NEWS DAILY,
WAYANAD EDITION DATED 6-7-2024
Exhibit P5 A TRUE COPY OF THE OFFER FOR ONE TIME SETTLEMENT
DATED 1-1-2024 ISSUED BY THE RESPONDENT
Exhibit P6 A TRUE COPY OF THE OFFER FOR ONE TIME SETTLEMENT
DATED 29-2-2024 ISSUED BY THE RESPONDENT
Exhibit P7 A TRUE COPY OF THE OFFER FOR ONE TIME SETTLEMENT
DATED 31-5-2024 ISSUED BY THE RESPONDENT
Exhibit P8 A TRUE COPY OF THE OFFER FOR ONE TIME SETTLEMENT
DATED 31-8-2024 ISSUED BY THE RESPONDENT
Exhibit P9 A TRUE COPY OF THE REPRESENTATION DATED 16-12-2024
SUBMITTED BY THE 1ST PETITIONER BEFORE THE
RESPONDENT
Exhibit P10 A TRUE COPY OF PAYMENT RECEIPTS DATED 29-5-2024
AND 17-12-2024 ISSUED BY THE RESPONDENT
Exhibit P11 A TRUE COPY OF THE ROUGH CALCULATION SHEET FOR
INTEREST DUE FROM 29-2-2024 TO 17-12-2024 ON THE
OUTSTANDING OTS AMOUNT ISSUED BY THE OFFICIALS OF
THE RESPONDENT
Exhibit P12 A TRUE COPY OF THE REPRESENTATION DATED 3-7-2025
SUBMITTED BY THE 1ST PETITIONER BEFORE THE
RESPONDENT ALONG WITH THE POSTAL RECEIPT DATED 3-
7-2025
Exhibit P13 A TRUE COPY OF THE JUDGMENT DATED 3-6-2025 IN W.P.
NO. 6726/2024 AND CONNECTED CASE ON THE FILES OF
THE HIGH COURT OF MADRAS
Exhibit P14 A TRUE COPY OF THE CIRCULAR NO. RBI/2023-24/60
DATED 13-9-2023 ISSUED BY THE CHIEF GENERAL
MANAGER, RESERVE BANK OF INDIA
Exhibit P15 A TRUE COPY OF THE OFFER FOR ONE TIME SETTLEMENT
DATED 8-8-2025 ISSUED BY THE AUTHORISED SIGNATORY
OF THE RESPONDENT
Exhibit P16 A TRUE COPY OF THE RECEIPT OF PAYMENT DATED 14-8-
2025 ISSUED BY THE RESPONDENT
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Exhibit P17 A true copy of the addendum to sanction letter
dated 8-8-2025 issued by the respondent to the
petitioners
Exhibit P18 A true copy of the account ledger details of the
1st petitioner's loan account issued by the
respondent
Exhibit P19 A true copy notice under Section 13(8) of SARFAESI
Act r/w Section 8(6) of the Security Interest
(Enforcement) Rules, 2002 issued by the respondent
Exhibit P20 A true copy of the judgment dated 12-3-2019 in W.A.
No. 783/2019 on the files of this Honourable Court
Exhibit P21 A true copy of the judgment dated 13-6-2022 in W.P.
No. 32/2022 on the files of the High Court of
Judicature at Bombay, Nagpur Bench
RESPONDENT ANNEXURES
Annexure R1(a) A true copy of the list of Loans availed by the
2nd petitioner with the loans in which he stood as
Guarantor or mortgagor
Exhibit R1 (b) A true copy of the Guarantee Agreement executed by
the 2nd petitioner favouring the respondent bank
dated 08 12 2015
Annexure R1(c) A TRUE COPY OF THE LIST OF 7 LOANS AVAILED BY THE
2ND PETITIONER AS PRINCIPAL
BORROWER/GUARANTOR/MORTGAGOR EVIDENCING THE
STATUS OF THE LOANS AS NPA
Annexure R1(d) A TRUE COPY OF THE VALUATION REPORT OF THE PROPERTY
OWNED BY 2ND PETITIONER DATED 12.09.2025
Annexure R1(e) A TRUE COPY OF THE VALUATION REPORT DATED
19.09.2023
Annexure R1(f) A TRUE COPY OF THE VALUATION REPORT DATED
19.09.2023
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APPENDIX OF WP(C) NO. 36140 OF 2025
PETITIONER EXHIBITS
Exhibit P1 TRUE COPY OF THE JUDGMENT DATED 03.07.2025 IN WP(C)
Exhibit P2 TRUE COPY OF THE JUDGMENT DATED 11.09.2025 IN
REVIEW PETITION NO. 1062 OF 2025
Exhibit P3 TRUE COPY OF THE LOAN CLOSURE CERTIFICATE DATED
11.09.2025
Exhibit P4 TRUE COPY OF THE PETITIONER'S REQUEST LETTER DATED
13.09.2025
Exhibit P5 TRUE COPY OF THE DISCHARGE SUMMARY OF THE
PETITIONER DATED 19.09.2025
Exhibit P6 TRUE COPY OF THE REPLY LETTER DATED 23.09.2025
ISSUED BY THE RESPONDENT BANK
RESPONDENT ANNEXURES
Annexure A True copy of the Memorandum of Deposit of Title
Deeds executed by the petitioner to the respondent
bank dated 07.06.2014
Annexure B True copy of the Memorandum of Deposit of Title
Deeds executed by the petitioner to the respondent
bank dated 24.08.2015
Exhibit R1(A) TRUE COPY OF THE AGREEMENT OF LOAN EXECUTED BY THE
PETITIONER DATED 24.08.2015
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APPENDIX OF WP(C) NO. 37944 OF 2025
PETITIONER EXHIBITS
Exhibit P1 THE COPY OF TITLE DEED OF THE PETITIONER AND HIS
WIFE VIDE SALE DEED NO.891/2018 OF KILIKOLLOOR SRO
DATED 24.05.2018
Exhibit P2 THE COPY OF REPRESENTATION DATED 09.10.2025
SUBMITTED BY THE PETITIONER BEFORE THE 1ST
RESPONDENT
Exhibit P3 THE COPY OF JUDGMENT DATED 26.10.2023 IN
Exhibit P4 THE COPY OF SALE NOTICE DT.10.11.2025 ISSUED BY
THE 1ST RESPONDENT
RESPONDENT EXHIBITS
Exhibit R1(a) True copy of the Petitioner's letter dated
07.10.2025
Exhibit R1(b) True copy of the Letter Evidencing Deposit of Title
Deeds executed by the petitioner and his wife to
the respondent bank for the housing loans, dated
29.05.2018
Exhibit R1(c) True copy of the Letter Evidencing Deposit of Title
Deeds executed by the petitioner and his wife to
the respondent bank for the housing loans, dated
19.4.2021
