Date of reserved for orders :

Date of pronouncement :

Date of uploading

APHC010127192026

IN THE HIGH COURT OF ANDHRA PRADESH

PRESENT:THE HONOURABLE SRI JUSTICE RAVI CHEEMALAPATI

WRIT PETITION NO: 6724/2026

Between:

1. BALAGAM SRI VIJAYA BHARGAVI, W/O. M NAGA PHANEENDRA

KUMAR AGED 39 YEARS, OCC HOUSE WIFE R/O HOUSE NO 15

323 14 1, DEVUNI CHERUVU AREA

MACHAVARAM, MACHILIPATNAM, KRISHNA

PRADESH.

1. THE REGIONAL MANAGER, REGIONAL OFFICER

MACHILIPATNAM, UNION BANK OF INDIA, BRUNDAVAN HOSPITAL

ROAD MACHILIPATNAM, KRISHNA DISTRICT

2. THE BRANCH MANAGER, UNION BANK OF INDIA KTRWC

BRANCH, PAMARRU ROAD RTC COLONY, GUDIVADA

Petition under Article 226 of the Constitution of India praying that in the

circumstances stated in the affidavit filed therewith, the Hi

pleased to issue a writ, order or direction more particularly one in the nature

of Writ of mandamus declaring the inaction of the Respondent Bank in not

returning the gold ornaments weighing 67.1 grams pledged against gold loan

A/c No 154216540001812 even after full and final payment made on

19.08.2024 while not issuing No Due Certificate as illegal and violative of Art

1

Date of reserved for orders :16.06.2026 Neutral Citation:__________

Date of pronouncement : 16.07.2026

:16.07.2026

IN THE HIGH COURT OF ANDHRA PRADESH

AT AMARAVATI

(Special Original Jurisdiction)

THE HONOURABLE SRI JUSTICE RAVI CHEEMALAPATI

WRIT PETITION NO: 6724/2026

BALAGAM SRI VIJAYA BHARGAVI, W/O. M NAGA PHANEENDRA

KUMAR AGED 39 YEARS, OCC HOUSE WIFE R/O HOUSE NO 15

323 14 1, DEVUNI CHERUVU AREA NEAR THAVUDU FACTORY,

MACHAVARAM, MACHILIPATNAM, KRISHNA -521001 ANDHRA

...PETITIONER

AND

THE REGIONAL MANAGER, REGIONAL OFFICER

MACHILIPATNAM, UNION BANK OF INDIA, BRUNDAVAN HOSPITAL

ROAD MACHILIPATNAM, KRISHNA DISTRICT - 521001

THE BRANCH MANAGER, UNION BANK OF INDIA KTRWC

BRANCH, PAMARRU ROAD RTC COLONY, GUDIVADA

...RESPONDENT(S):

Petition under Article 226 of the Constitution of India praying that in the

circumstances stated in the affidavit filed therewith, the High Court may be

issue a writ, order or direction more particularly one in the nature

of Writ of mandamus declaring the inaction of the Respondent Bank in not

returning the gold ornaments weighing 67.1 grams pledged against gold loan

4216540001812 even after full and final payment made on

19.08.2024 while not issuing No Due Certificate as illegal and violative of Art

RC,J

W.P.No.6724 of 2026

Neutral Citation:__________

IN THE HIGH COURT OF ANDHRA PRADESH

[3332]

THE HONOURABLE SRI JUSTICE RAVI CHEEMALAPATI

BALAGAM SRI VIJAYA BHARGAVI, W/O. M NAGA PHANEENDRA

KUMAR AGED 39 YEARS, OCC HOUSE WIFE R/O HOUSE NO 15 -

NEAR THAVUDU FACTORY,

521001 ANDHRA

...PETITIONER

THE REGIONAL MANAGER, REGIONAL OFFICER -

MACHILIPATNAM, UNION BANK OF INDIA, BRUNDAVAN HOSPITAL

521001

THE BRANCH MANAGER, UNION BANK OF INDIA KTRWC

BRANCH, PAMARRU ROAD RTC COLONY, GUDIVADA -521301.

...RESPONDENT(S):

Petition under Article 226 of the Constitution of India praying that in the

gh Court may be

issue a writ, order or direction more particularly one in the nature

of Writ of mandamus declaring the inaction of the Respondent Bank in not

returning the gold ornaments weighing 67.1 grams pledged against gold loan

4216540001812 even after full and final payment made on

19.08.2024 while not issuing No Due Certificate as illegal and violative of Art

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W.P.No.6724 of 2026

2

14, and 300A of the Constitution of India, consequently directing the

Respondent Bank to return/release the said gold ornaments deposited by the

Petitioner within a time bound manner.

IA NO: 1 OF 2026

Petition under Section 151 CPC praying that in the circumstances stated

in the affidavit filed in support of the petition, the High Court may be pleased

May be pleased to direct the respondent bank to return/release the gold

ornaments deposited by the Petitioner weighing 67.1 grams pledged against

gold loan A/c No 154216540001812 even after full repayment made by the

Petitioner on 19.08.2024 and to issue No Due Certificate against gold loan.

IA NO: 2 OF 2026

Petition under Section 151 CPC praying that in the circumstances stated

in the affidavit filed in support of the petition, the High Court may be pleased

leased to direct the Respondent Bank to compensate the Petitioner at the

rate of Rs. 5000/- for each day of delay from 06/06/2025 as per the directions

of the Reserve Bank of India (Lending Against Gold and Silver Collateral),

Directions 2025 more particularly para 46 pursuant to delay in release of the

pledged collateral after full payment by the Petitioner, where reasons are

attributable to the Respondent Bank herein.

Counsel for the Petitioner:

1. ATI NAGA SURYA VENKATESH

Counsel for the Respondent(S):

1. V DYUMANI

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W.P.No.6724 of 2026

3

ORDER

This Writ Petition has been filed questioning the action of the

respondent bank in not returning the gold ornaments weighing 67.1 grams

pledged against gold loan A/c.No.154216540001812 even after full and final

payment of the loan amount.

2. The case of the petitioner, in brief, is that her husband was an

employee of respondent bank and he is presently under termination and the

said termination order is under challenge before the appellate authority. That

she had availed gold loan from the respondent bank to the tune of

Rs.2,85,000/- vide Gold Loan A/c.No.154216540001812 on 11.12.2023 by

pledging gold ornaments weighing 67.1 grams and within five (05) days of

sanction of the said gold loan, due to the reasons related to her husband’s

housing loan, the gold loan account was declared as Non-Performing Asset

(NPA) on 16.12.2023 and the bank had issued demand notices dated

03.01.2024 and 25.07.2024 to clear the entire dues of the gold loan and on

08.08.2024 final auction notice was issued proposing the date of auction as

23.08.2024, thereafter, on 19.08.2024, the petitioner had repaid the entire

loan amount and accordingly the gold loan account was closed by the

respondent bank on 23.08.2024.

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W.P.No.6724 of 2026

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It is the further case of the petitioner that thereafter the petitioner

approached the respondent bank for return of gold ornaments, but the

respondent bank did not return the gold despite repeated requests, formal e-

mail complaint and written representation. That the petitioner’s complaint

sent to Bank’s Grievance Team through e-mail dated 14.11.2025 was

disposed of by respondent bank through customer care team through e-mail

dated 09.12.2025 stating that since the petitioner is a co-applicant in the

Housing Loan A/c.No.027230100056680 in which her husband was the main

borrower, she is jointly and equally liable for repayment of the dues in the

said housing loan account and for recovery of the dues of the said Housing

Loan, the bank has applied general lien over the ornaments.

It is her further case that she is co-applicant of the housing loan availed

by her husband and due to illegal termination of her husband from the bank,

he could not repay few credit card bills and they became NPA and pursuantly

the bank authorities have further declared the Housing Loan, overdraft Loan

and vehicle Loans availed by her husband as NPA even though their

repayment is prompt and regular. That since the gold loan amount was

completely paid the banker-customer relationship in the context of security

comes to an end and the bank cannot exercise a general lien over the gold

ornaments. That unilateral withholding of gold ornaments without notice to

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W.P.No.6724 of 2026

5

the borrower before invoking general lien is bad in law and the petitioner had

never given any authorization to the bank to hold the gold given to secure the

loan transactions of her husband for the purpose of any other loan availed in

which the petitioner stood as a co-applicant or guarantor. That Section 171 of

the Indian Contract Act, 1872 allows a general lien only in the absence of a

‘contract to the contrary’ and the mortgage agreement covering the

immovable property executed between her husband and the bank in the

housing loan can be considered as a contract that excludes general lien.

Further, general lien can only be invoked for recovery of dues of any other

loans of the same borrower and not for the general balance of some other

customer’s account. Therefore, the action of the respondent bank in retaining

the gold ornaments even after clearance of the amount covered under the

gold loan is illegal, arbitrary. Hence, the writ petition.

3. Respondents 1 and 2 filed common counter denying the material

averments of the writ affidavit further contending that the petitioner earlier

had availed Housing Loan of Rs.37.17 lakhs along with her husband and the

said housing loan account became NPA and she had also availed loan of

Rs.2,85,000/- by pledging gold ornaments and the said account was closed

after repayment of the amounts and as per RBI guidelines, if one account of

the petitioner becomes NPA, all other accounts standing in the name of the

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W.P.No.6724 of 2026

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petitioner or co-applicant to any other account shall be declared as NPA and

recovery proceedings have to be initiated by following due process of law and

since the petitioner was co-applicant of housing loan account, the gold loan

account was also declared as NPA and the ornaments were not released. It is

further contended that to the representation submitted by the petitioner the

bank vide its reply mail dated 27.11.2025 categorically stated that as per

Section 171 of Indian Contract Act, banks are entitled to exercise general lien

and are entitled to retain the gold which are in its possession for recovery of

the dues. It is further contended that as clause No.11 of the Gold Loan Pledge

Form dated 11.12.2023 the petitioner has specifically agreed that the gold

ornaments pledged can be taken as security for all debts already granted or

to be granted in future either solely to the petitioner or jointly with the other

persons and therefore, the bank has rightly retained the gold ornaments and

there is no illegality or irregularity committed by the Bank while exercising its

right of general lien and set off. Accordingly, prayed to dismiss the writ

petition.

4. Heard Sri Ati Naga Surya Venkatesh, learned counsel for the

petitioner and Smt.V.Dyumani, learned Standing Counsel for respondents. The

learned counsel for petitioner also filed written arguments.

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W.P.No.6724 of 2026

7

5. Sri Ati Naga Surya Venkatesh, learned counsel, while reiterating the

contents of the writ affidavit would contend that as per the mandatory

directions of the Reserve Bank of India vide The Reserve Bank of India

(Lending Against Gold and Silver Collateral) Directions, 2025, the pledged

collateral shall be released immediately upon repayment and in any event

within seven (07) working days and since the gold loan stood fully discharged

on 19.08.2024, retention of the articles is against the mandatory directions

given by the Reserve Bank of India. He would further contend that the

housing loan was availed on 21.09.2020, whereas the gold loan was

sanctioned on 11.12.2023 and the two transactions are distinct, independent

and are governed by separate contracts and therefore the undertaking

contained in Housing Loan Agreement cannot automatically travel forward to

all the future transaction entered into by the petitioner and further since the

housing loan was sanctioned by creating an equitable mortgage over the

residential property and since the proceedings for enforcing the security were

invoked under Securitization and Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 2002 (SARFAESI Act), retention of gold

ornaments is arbitrary, excessive and contrary to the settled principles

governing banker’s lien. He would further contend that once the gold loan

amount is repaid, the baker customer relationship comes to an end and the

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W.P.No.6724 of 2026

8

bank cannot exercise a general lien over those goods, more particularly in the

absence of any authorization given by the petitioner to the bank to hold the

gold ornaments for the purpose of securing other loans availed by her

husband in which she stood as a co-applicant. He would further contend that

banker’s lien under section 171 enables retention only for debts borrowed by

the same person and the securities furnished for one transaction cannot be

withheld for liabilities arising out of another transactions in the absence of

specific authorization and in the absence of any relationship between the

petitioner and the respondent as customer and banker, retention of gold

ornaments is not justifiable and the bank has no right of general lien over the

gold ornaments after the entire loan amount as fully satisfied by her. He

would further contend that the bank cannot exercise general lien over the

properties of a customer for the general balance of some other customer’s

account. Therefore, the contention of the bank that housing loan undertaking

executed in the year 2020 automatically extends and governs the separate

gold loan availed in the year 2023, is contrary to Section 171 of the Indian

Contract Act and since the gold loan account was closed pursuant to

clearance of the loan amount, the gold ornaments pledged cannot be retained

for realization of the housing loan debt. Accordingly, prayed to allow the writ

petition.

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W.P.No.6724 of 2026

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In support of his contentions, the learned counsel relied on the

decisions in Alekha Sahoo vs. Puri Urban Co-operative Bank Limited

and others

1

, and Sunil, S/O Ratnakar Gutte vs. Union Bank of India

2

6. On the other hand, Smt. V.Dyumani, learned Standing Counsel for

respondent bank, while reiterating the contents of the counter affidavit would

contend that since the Housing Loan Account availed by petitioner’s husband

in which the petitioner is a co-applicant became NPA, in view of RBI

guidelines, all other accounts standing in the name of the petitioner, since co-

applicant of housing loan account, shall be declared as NPA and accordingly

the gold loan account of the petitioner was declared as NPA and by exercising

general lien as per Section 171 of the Indian Contract Act, the Bank had

retained the gold ornaments. She would further contend that vide clause

No.(i) of the Housing Loan agreement, the petitioner along with her husband

specifically agreed that the Bank shall have a right of general lien and set off

on all the other accounts including gold/silver ornaments in custody of bank

as securities for any other loan/advances availed by the petitioner and

therefore, the Bank can exercise general lien over the gold ornaments. She

would further contend that clause No.11 of the Gold Loan Pledge Form dated

1

. 2004 SCC OnLine Ori 25

2

. 2022 SCC OnLine Bom 1224

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W.P.No.6724 of 2026

10

11.12.2023, the petitioner specifically agreed that the gold ornaments pledged

can be taken as security for all debts already granted or to be granted in

future either solely to the petitioner or jointly with the other persons and

therefore, the gold ornaments pledged were taken as security for the housing

loan amount due to which the petitioner is a co-applicant and there is neither

illegality nor irregularity in retaining the gold ornaments by exercising right of

general lien. That the writ petition being meritless deserves dismissal and

accordingly, prayed to dismiss the writ petition.

In support of her contentions, the learned Standing Counsel relied on

the decisions in Syndicate Bank v. Vijay Kumar and others

3

, K.Sita v.

Corporation Bank, Kakinada

4

and Punjab National Bank and Ors. Vs.

Surendra Prasad Sinha

5

.

7. Perused the material available on record and considered the

submissions made by the learned counsel for the parties.

8. The undisputed facts are that husband of the petitioner availed

Housing Loan on 21.09.2020 for which the petitioner is the co-applicant. The

petitioner had availed gold loan on 11.12.2023. The Housing Loan account

3

. AIR 1992 SUPREME COURT 1066

4

. AIR 1999 ANDHRA PRADESH 367

5

. AIR 1992 SC 1815

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W.P.No.6724 of 2026

11

was declared as NPA 16.12.2023 and consequently the gold loan account was

also declared as NPA and notices were issued to the petitioner to clear the

gold loan amount and accordingly, the petitioner had cleared entire amount of

gold loan and the loan account was closed on 23.08.2024. Though the gold

loan amount was paid the bank authorities did not return the gold ornaments

contending that they are entitled to retain gold ornaments as security by

exercising general lien as per Section 171 of the Indian Contract Act, 1872.

9. The contentions advanced by the learned counsel for the petitioner,

in nutshell, are that the housing loan was availed on 21.09.2020, whereas the

gold loan was sanctioned on 11.12.2023 and the two transactions are distinct,

independent and are governed by separate contracts and therefore the

undertaking contained in Housing Loan Agreement cannot automatically travel

forward to all the future transaction entered into by the petitioner; that

banker’s lien under section 171 enables retention only for debts borrowed by

the same person and the securities furnished for one transaction cannot be

withheld for liabilities arising out of another transactions in the absence of

specific authorization.

10. It is appropriate to extract Section 171 of the Act, which reads as

follows:

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W.P.No.6724 of 2026

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“171. General lien of bankers, factors, wharfingers, attorneys and policy

brokers, bankers, factor, wharfingers attorneys of a High Court and policy

broker 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; that no other

persons have a right to retain, as a security for which balance goods, bailed to

them, unless there is an express contract to that effect.”

11. On a careful perusal of Section 171 of the Indian Contract Act, to

exercise general lien to retain goods bailed to them as a security for a general

balance of account one of the ingredients is that property must be bailed in

favour of the bank.

18. In State Bank of India vs.Jayanthi and other

6

, it was held at

paras 9 to 16 thus:

“ After having decided the above question in favour of the appellant Bank,

we now move on to consider the more important question in this appeal,

viz., as to whether the appellant Bank shall be entitled to retain the

documents of title in respect of the property which has been inherited by

the respondent claiming a right of general lien under section 171 of the

Indian Contract Act. Before we delve into the factual and legal aspect, it

would be necessary to look into section 171 of the Indian Contract Act,

1872 and for easy reference the same is extracted as herein below.

“ xxxxxxxxx”

10. The case of the appellant bank is that they have a right to retain

the title deeds of the property delivered to them in the normal course of

business transaction by exercising general lien under Section 171 of the Act

and therefore, they are not bound to return the same till the liability of the

other account where the mortgagor (husband of the 1

st

respondent herein,

since deceased), was a guarantor, is discharged.

6

. 2011(2) CTC 465

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W.P.No.6724 of 2026

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11. The learned Senior Counsel appearing for the appellant Bank

mainly placed reliance on a decision of the Hon’ble Supreme Court in

Syndicate Bank v. Vijaya Kumar and others, reported in 1992(2) SCC 331.

12. As noticed above, Section 171 of the Act states that the bankers

like the appellant Bank, in the absence of a contract to the contrary, retain

as security for a general balance account, any goods bailed to them.

Therefore, what is required to be seen in the instant case is whether there

is any contract to the contrary, which prevents the bank from exercising

their general lien and as to whether any goods have been bailed to them.

It cannot be disputed that the property in question was not bailed to the

appellant bank by the deceased borrower at any point of time. Further, it is

an undisputed fact that the property in question as offered by 9late)

N.P.S.Mahendran 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 acquired properties were mortgaged to

secure this specific loan transactions. No document has been placed before

us 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 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 (late) N.P.S.Mahendran, stood as a

guarantor. Thus, the issue boils down to the question as to whether any

contract to the contrary, which prevents the appellant Bank from exercising

its general lien under Section 171 of the Act.

13. In Chitty on Contracts, 29

th

Edition (2004) – Volume-II, Page 496

on Bankers’ Lien, it is stated as follows:

“….The most frequent example of circumstances inconsistent with the

general lien is in the case of a deposit expressed to cover an advance for a

specified purpose. However, once the original purpose has been fulfilled by

repayment of the specified advance, if a customer knowingly permits the

banker to retain the security, a general lien may ultimately be implied and

its protection then claimed in respect of other advances”

14. In the instant case, the borrower (late) N.P.S.Mahendra, had

admittedly has admittedly deposited the title deeds of the property to

secure a loan transaction availed in respect of two plantation Companies.

This fact was not disputed by the appellant Bank. Therefore, we have no

hesitation to hold that the this 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. In other words, the deposit of

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W.P.No.6724 of 2026

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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. 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 due in a different loan account

where the said N.P.S.Mahendran is not a borrower. Further, the language

of Section 171 o the Act, is explicit to the fact that the bankers are entitled

to retain as a security for a ‘general balance account’. Admittedly, it is not

the case of the appellant Bank that the amount, which is now said to be

due on account of borrowers of M/s.Somerset Tea Plantation, is a general

balance account of the deceased borrower N.P.S.Mahendran.

15. In the case of Syndicate Bank v. Vijaya Kumar, referred supra and

relied on by the learned senior counsel for the appellant Bank, it is to be

noted that the borrower therein issued a letter in favour of the bank stating

that the bank is at liberty to adjust from the Fixed Deposit receipts without

any reference to the loan and he agreed that the Fixed Deposit receipts

shall remain in the bank so loan as any amount on any account is due to

the bank from them either singly or jointly or with others. Thus, the

Hon’ble Supreme Court, while interpreting such a letter covering the

transaction executed by the borrower therein, rendered a finding that the

bank is entitled to general lien over the Fixed Deposit receipts given by the

borrower therein.

16. As noticed above, the facts of the present case are couched

differently. 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. Therefore, this

agreement/mortgage has to be construed as a ‘Contract to the Contrary’

and therefore, we have 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.”

and held that 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 due in a different loan account, wherein the

person is not a borrower.”

19. In M.Shanthi vs. Bank of Baroda, reported in 2017-2

Writ.L.R.584, Para-30 of the judgment reads as follows:

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“30. Section 60 of Transfer of Property Act, speaks about specific rights of

mortgagor. It is clear that every mortgagor is entitled to collect the

mortgage deeds ad all other documents relating to the mortgaged

properties, which are in the possession or power of mortgagee. This right

of mortgagor is certainly a legally enforceable right. The mortgagee is

under an obligation to return the title deeds upon payment of the entire

money due. This legal obligation gives an enforceable right in favour of

the mortgagor in connection with the mortgage. This legal obligation of

the mortgagee to return the title deed to the mortgagor upon discharge

of mortgage loan for which the title deeds were secured, can be certainly

treated as an implied contract contrary to Section 171 of the Indian

Contract Act.”

20. The observations referred to supra in clear terms specifies that

when the borrower deposited the documents in order to secure a specific

transaction, in the absence of any document to show that the borrower had

given any authorization to hold the documents of the mortgaged property to

secure another loan transaction to which the mortgagor stood as a guarantor,

the bank cannot contend that they could hold the documents for a balance

due in a different loan account, wherein the mortgagor is not a borrower.

21. The decision in Alekha Sahoo (supra 1) relied on by learned

counsel for petitioner, the Division Bench of High Court of Orissa held that a

bank cannot exercise a general lien under Section 171 of the Indian Contract

Act to retain a customer's assets for debts owed by a different account holder,

absent explicit authorization. This ruling limits a banker's right of retention to

securities deposited by the specific debtor, protecting individual assets from

being used to cover third-party liabilities.

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22. In the decision in Sunit, S/o. Ratnakar Gutte (supra 2) relied on

by learned counsel for petitioner, the Division Bench of High Court of Bombay

at Nagpur held that a bank cannot exercise a general lien under Section 171

of the Indian Contract Act to retain title deeds after the specific loan for which

they were deposited has been fully repaid and banker's lien terminates once

the specific, active banker-customer relationship for that loan transaction

ends, requiring the return of securities.

23. The observations made in the above decisions make it clear that

bank cannot exercise a general lien under section 171 of the Indian Contract

Act to retain the customer’s assets for the debts owed by a different account

holder, in the absence of any explicit authorization and that too when the

active banker-customer relationship for that loan transaction ends.

24. In the decision in Syndicate Bank v. Vijay Kumar and others

(supra 3) relied on by learned Standing Counsel for Bank, the Hon’ble

Supreme Court held that a bank has a legal right to keep and use a

customer's financial securities, such as Fixed Deposit Receipts (FDRs), to clear

any unpaid debts, even if those securities were originally handed over for a

completely different or specific purpose. The observations made by the

Hon’ble Supreme Court can be summarized as under:

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W.P.No.6724 of 2026

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A banker’s lien is a "general lien" by default. It allows a bank to hold onto any

securities or negotiable instruments deposited by a customer in their regular

course of business to cover an outstanding balance on any account. It is not a

"particular lien," which would limit the security to only one specific loan. If a

customer deposits FDRs as security to get a Bank Guarantee, the bank's general

lien over those FDRs does not disappear when the bank guarantee expires or is

discharged. If the customer owes money on another account (like an overdraft

facility), the bank can legally keep the funds. The Court highlighted that a

banker's general lien is a deeply rooted mercantile custom. It is a valuable right

recognized by law. It applies automatically unless the customer and the bank

have an express written agreement that says otherwise. Third-party creditors

cannot easily attach (seize) a debtor's funds held by a bank if the bank already

holds a general lien over those funds. A creditor can only claim whatever money

is left over after the bank has fully recovered its own dues from the customer

25. In K.Sita v. Corporation Bank, Kakinada (supra 4) relied on by

the learned Standing Counsel for respondent bank, a coordinate bench of this

Court held that a bank has an overriding statutory right of general lien under

Section 171 of the Indian Contract Act over all goods and securities (including

gold ornaments) pledged or bailed to it by a borrower, unless there is an

express contract to the contrary.

26. In Punjab National Bank and others v. Surendra Prasad

Sinha (supra 5) held that the law of limitation only bars the legal remedy to

recover a debt; it does not destroy the underlying right or debt itself. This

means that while a creditor cannot file a lawsuit to recover a time-barred

debt, they can still legally adjust or recover that debt using any security

already in their possession.

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27. The observations made in the decisions relied on by learned

Standing Counsel would indicate that unless there is an express contract to

the contrary a bank has an overriding statutory right of general lien under

Section 171 of the Indian Contract Act over all goods and securities (including

gold ornaments) pledged or bailed to it by a borrower to clear any unpaid

debts, even if those securities were originally handed over for a completely

different or specific purpose.

28. As per Section 171 of the Indian Contract Act, the bank has a right

of general lien over all goods and securities pledged or bailed to it to clear any

unpaid debts owed by the self same borrower, unless there is an express

contract contrary.

29. Admittedly, the petitioner is co-applicant of the Housing Loan

availed by her husband and no doubt the said account was declared as NPA.

Therefore, being a co-applicant the debt for realization of which general lien is

exercised over the pledged gold ornaments can be said to be owed by the

petitioner herself.

30. The next condition to be satisfied is whether there is any express

contract to the contrary. The petitioner could not bring to the notice of the

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W.P.No.6724 of 2026

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court any express contract to the contrary disabling the bank from exercising

general lien over the gold ornaments.

31. It is the specific contention of the petitioner that in the absence of

any specific authorization, the bank cannot exercise general lien. Whereas the

respondent bank brought to the notice of this Court clause No.11 of the Gold

Loan Pledge Form dated 11.12.2023 contending that the petitioner had

specifically agreed to give the gold ornaments as security for repayment of all

the debt or debts due to the Bank either solely or jointly.

32. For expediency, Clause No.11 of the Gold Loan Pledge Form dated

11.12.2023 is extracted hereunder:

“If the Pawner has other loans, overdrafts, advance or other debts due to the

Bank at any of its branch/es either solely or jointly with the other persons or

in any manner unless and until such debts are fully repaid by the pawner, the

ornaments/jewellery/coins pledge under this loan or any other loan or loans

that are already granted or may be granted in future will be taken as security

for all such debt or debts and may be retained by the Bank as security and

may be dealt with in regard to return, sale etc., as pledged commodity.”

33. Through the above clause, as rightly contended by the learned

Standing Counsel for the Bank, the petitioner had agreed to keep the gold

ornaments as security for due discharge of all the debts due to the bank,

either already granted or to be granted, borrowed either solely or jointly.

Therefore, not only there is absence of any express contract to the contrary

but the petitioner herself in specific terms authorized the bank to keep the

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W.P.No.6724 of 2026

20

gold ornaments pledged for availing gold loan as security for due discharge of

the loans that are already granted and that may be granted in future.

34. In view of the above, since the petitioner is the co-applicant of the

housing loan availed by her husband and she specifically authorized the bank

to keep the gold ornaments as security for discharge of all the debts

borrowed either solely or along with other persons, the bank is right in

retaining the gold ornaments by exercising general lien under Section 171 of

the Indian Contract Act.

35. The decisions relied on by the learned counsel for the petitioner

differ in facts, there was no specific authorization given by the borrowers

therein to the bank for retention of the articles, but in the present case as

already held supra, the petitioner herein had authorized the bank for

exercising general lien vide clause No.11 of the Gold Loan Pledge Form dated

11.12.2023.

36. In view of the above, as not only there is absence of contract to the

contrary but there was specific authorization given by the petitioner to the

Bank for retention of gold articles as security for the loans already granted

and to be granted in future, the bank can retain the gold ornaments by

exercising general lien under Section 171 of the Indian Contract Act.

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W.P.No.6724 of 2026

21

37. Therefore, there are no merits in the matter and the writ petition is

liable to be dismissed.

38. Accordingly, the writ petition is dismissed. There shall be no order

as to costs.

Pending miscellaneous petitions, if any, shall stand closed.

___________________________

JUSTICE RAVI CHEEMALAPATI

16

th

July, 2026.

Note: LR copy to be marked

B/o

RR

Whether the order is :

 

Speaking Yes/No / Reasoned Yes/No

 

Reportable Yes/No / Non-Reportable Yes/No