PARVATHI PK

81021319018

CASE ANALYSIS I

K. Sita Vs. Corporation Bank, East Godavari District

On 24-6-1995 the petitioner took an agricultural loan of Rs.3,000 from the respondent by
pledging certain gold articles. In the year 1989 she repaid half of the said loan and the balance
including interest as on 2-10-1989 was only Rs.2,765/-. On 8-9-1990 the petitioner was given
credit for a sum of Rs.2,765/- under the Central Agricultural Debt Relief Scheme. Thus the said
loan stood practically discharged. Meanwhile on 4-1-1986 the petitioner contracted another
loan of Rs.21,000/- from the respondent-bank under Gramodaya scheme. She made some part-
payments towards this loan and the balance due as on 2-10-1989 was Rs.10,800/-. The
petitioner paid a further sum of Rs.500/-towards the Gramodaya loan on 30-9-1993. On 11-10-
1993 the petitioner issued a notice to the bank to return the jewels pledged by her for raising
the first loan i.e., the agricultural loan since the same has been fully discharged. The bank,
however, sent a reply on 30-10-1993 claiming that it has a general lien over the jewels pledged
to it and it is entitled to retain the same till the Gramodaya loan is also fully discharged.
Questioning the said action of the bank in refusing to return the gold jewels even after the
discharge of the, agricultural loan the petitioner has filed the present writ petition to direct the
respondent to release the gold ornaments.

According to sec 171, bankers can exercise general lien, they can retain as a security, goods
bailed to them, for a general balance of account. This right is available in the absence of a
contract to the the contrary.

Here the question for writ petition was, whether the respondent bank can exercise general lien
over gold ornaments pledged by the petitioner to raise a particular loan, even after repayment
of the loan, for the purpose of recovery of another loan subsequently advanced to the
petitioner by the respondent bank.

The writ petition was dismissed by the court with costs.