Extent of banker's lien over and above amount due.


Sir,

I would like to know if a bank can exercise lien over and above the amount due to the bank.

As of 30/Apr/2013 ICICI Bank had marked a lien on my current account of Rs 104,000.

On 30/Set/2013 they marked a lien on my savings account for Rs 111,000.
As per the bank the total amount due from me was Rs 111,000. However, the total lien exercised by the bank as of today is Rs 111000 + 104000. The total deposits held in the accounts blocked for transactions are Rs 25000 + Rs 111000.

Both the lien and the blocked amount exceed my dues and despite repeated requests the bank has not removed the excess lien mark.

Although I have cleared all my dues (and have got a NDC from the bank), I have had to liquidate my fixed deposits for the same.
This high handedness has caused me significant mental and financial duress.

To this end I have claimed Rs 25000 as compensation from the bank, to which they have refused.

City Union Bank Ltd.v.Thangarajan (2003)46 SCL 237 (Mad) it is pertinent to state certain principles with respect to Banker’s lien that was observed.
a) The bank gets a general lien in respect of all securities of the customer including negotiable instruments and FDR s, but only to the extent to which the customer is liable. If the bank fails to return the balance, and the customer suffers a loss thereby, the bank will be liable to pay damages to the customer. In the present matter the Court has based its decision on the principle that in order to invoke a lien by the bank, there should exist mutuality between the bank and the customer i.e. when they mutually exist between the same parties and between them in the same capacity. Retaining the customer’s properties beyond his liability is unauthorized and would attract liability to the bank for damages.

 

Should I go to consumer court/ banking ombudsman for remedy.


Thanks

 

 

 
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Advocate

Consumer forum is faster and this would be more effective then any other remedy.

 

Thus, you may approach the consumer forum for the relief.

 

Regards,

Advocate Rohit Dalmia

9324538481

Mumbai

 
Reply   
 


Advocate & Legal Consultant

You can definitely file complaint in the Consumer Court but I feel your complaint may be resolved faster by Banking Ombudsman.  The reason is that while a consumer court has all kinds of cases pending with them, banking ombudsman deals only with complaints of banks customers.  Hence, he would be in a position to address your complaint faster.  You have a reasonably good case to get relief. Vijay Kumar Sethi, Advocate, New Delhi M 9810501235. vijaysethi283@gmail.com

 
Reply   
 

Mr. Sharma,

First exhaust the remedies available with the Banking Ombudsman in this regard and if you are not satisfied with the action of Ombudsman, you may approach concerned consumer forum claiming damages for deficiency in service.

 
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FIN

Thanks for sharing SC judgment.

------The Regulator RBI has issued guidelines and these are exercised on banks by RBI, Watchdog BCSBI, IBA. 

These guidelines are not discretionary on the banks.

Guidelines issued by RBI are mandatory having statutory force.

>> Code of Bank s Commitments to Customers issued by Banking Codes and Standards Board of India and as adopted by the bank 


>> Indian Banks Association; Model Deposit Policy
http://www.iba.org.in/model_depositpolicy.asp

In fact, depositors are the major stakeholders of the Banking System. The depositors and their interests form the key area of the regulatory framework for banking in
India and this has been enshrined in the Banking Regulation Act, 1949.

While adopting this policy, the bank reiterates its commitments to individual customers outlined in Bankers' Fair Practice Code

 

------The issue should be covered under Banking Ombudsman Scheme

 

Banking Ombudsman Scheme, 2006

FAQs on the Banking Ombudsman Scheme

 

http://www.rbi.org.in/scripttts/FAQView.aspx?Id=24

 

------Apparently the lien for excess amount of Rs.25000 was marked to safeguard interest etc till full and final payment of dues is made.

Did you ask the bank to explain why it has exercised BL on excess mount and did the bank reply?

These communication especially explanation by the bank should be looked into.

Bank shall need to explain to any forum where you choose to agitate. Therefore pointed and specific communication is build as a matter of record.

Bank has exercised BL and it has probably not set off the amounts by exercising RTSO.

It has collected the payment from you and thereafter it should have vacated the lien.

The communications supplied by the bank to you in the interim should also be looked into carefully.

If the bank did not vacate lien even after collection payment of amounts of full, liability it has certainly caused transgression…………………….

If you have demanded in writing under POD, that Bank should pay compensation as per Compensation Policy of the bank and if bank has declined in writing then bank has certainly not admitted its deficiency that would be eligible for paying compensation.

Therefore you can certainly agitate in a forum of your choice be it BO, DCDRF or civil suite with damages………………………..

The lawyer that has seen all of your docs and has analyzed your inputs can advise you the best.

Before proceed further it shall be appropriate to consult and your lawyer can structure your representation so as to benefit you in the long run as per the relief aimed by you.

 

 

 
Reply   
 

Sirs,

Thank you for your replies. The total outstanding amount due from me as of March 2013 was Rs 104,100. On 25/March 2013, the bank marked a lien on one of my current accounts for Rs 104,100. I was constantly in touch with the bank and was asking them to waive the late payment charges on my dues which were because of non-communication (change of mobile number and subsequent travel abroad). This was a small amount Rs 14,000 and I was hopeful that the bank would waive this off as I have significant holdings with the bank.

The bank however, without any further communication in this  matter continued to charge interest (which is its right). In Sept 2013, the bank marked an additional l lien on my savings bank account of Rs 110,906, informing me its RTSO. I asked the bank to remove lien on my current account which had a balance of rs 25,000 as my dues were already marked as NPA and the bank had already exercised its right and invaded my SB account.

The bank however did not reply to my request. As my dues were marked as NPA, the bank had no right to withhold funds in excess of the value of the declared NPA. I had informed the bank in this regard to which they have not replied yet.

There is also an associated opportunity cost with the lien which I would like to be compensated. As both the accounts had lien markings, I was forced to break a fixed deposit in a third account (with the same bank) to pay the dues and manage my other financial obligations s I had no other source of funds left to use. I suffered a penalty of 1% interest on breaking this FD prematurely.

The total loss to me (Rs 25000 funds withheld by the bank in current a/c blocked due to lien + Excess lien of Rs 104,100 on current a/c+ 1% loss of interest on FD) is what I have asked the bank to return (I have asked for Rs 20000 as compensation).

I have given them a period of 30 days to reply failing which I will aproach the banking ombudsman.

Thankyou

 
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I endorse Kumar's view.

 
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retd personal

I am a defence Pensioner. The bank claimed in Aug 2013 that it had paid twice a sum of  Rs 15 Lacs against DCG,COMMUTATION,DISABILITY etc in Mar/May 2010. They asked me to pay it back with interests and at the same time marked all my FDRs ( appx 19 Lacs) as Lien.I was shocked.I found no such duplicate entries  in my passbook. I referred the matter to PCDA(Pensions) Allahabad . It asked the PDA Bank to furnish details. Instead the bank force closed my FDRs . Deposited the principal amt to my pension acct & then transfer the exact amt Rs 15,23,021.00 to their CPPC. But retained the interest component of Rs appx 3.84 Lacs to their Office acct to account for interest if asked by PCDA later. They have not informed of their act wrt interest component .

I lodged complaint to BO Hyd when they marked my FDRs as LIEN.. It was admitted as a maintainable complaint No 201314009001276.BO asked the bank to reply. On receipt of their reply disposed of my complaint  under clause 8 & 9(3) of BO rules. When they appropriated the FDRs and retained the interest amt to their OFFICE TEA PARTY acct I lodged my complaint afresh to the BO.This time the BO did not ack my complaint submitted afresh but sent me a mail informing me disposing my previous complaint again under clause 13(a) as it found no deficiency of service for the bank. Further it has invoked clause 14 to  debar me from filing an appeal to Dy Gov.

As per circular No 141 (file att) PDA bank had only option to recover a maximum of one third of the monthly  pension from the defence pensioner without approval from PCDA  without consent of the pensioner.

 What should be my best course action?



Attached File : 102206694 circular-141.pdf downloaded 73 times
 
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