Legal Question in Banking Law in India

G is a customer of HDFC bank and has been issued credit card 7 years back. She has never defaulted and has been an excellent customer for the bank.Bank has defaulted on service and in stead of regretting its lapses in writing has started bossing over G. being dignified female at a senior position G complained in writing to bank and escalated to nodal officer and then to MD.She has not been given satisfactory resolution and bank has not apologized in writing.
G has written to the bank has blocked the payments of CC.Bank started the harassment by agents including recovery and g filed a police complaint.
All this has continued and G has stood firm on her stand that bank shall have to accept its faults and apologize in writing. The principle amount of help up payment of Rs.17000/ has swollen to become Rs.45000/ with interest and penalties.
Bank has created a lien on FD of principle amount of Rs.50000/- of G, with a maturity amount of Rs.55000/ and bank Manager has claimed bank enjoys general lien vide" Banker's Lien and right to set off"
Question is without a specific approval/consent from customer can bank enjoy " Banker's Lien and right to set off"?
and
Is the action of bank legally correct in this case while the bank is resolving the grievance of customer?
and
Vide which law of the land " Banker's Lien and right to set off" is applicable on all customers.
and
is it legally applicable on all customers without any specific approval/consent from customer ?
Kindly give your valuable opinion and if possible some citations.
Should G contest the decision of bank or not?
Kindly guide.

Asked on 7/03/11, 5:52 am

2 Answers from Attorneys

KarVai Legal Solutions Rajiv Gupta 9811284735 Ch.No: 359, Western Wing, Tis Hazari, Delhi www.karvai.in

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A lien is the right of a creditor in possession of goods, securities or any other assets belonging to the debtor to retain them until the debt is repaid, provided that there is no contract express or implied, to the contrary. It is a right to retain possession of specific goods or securities or other movables of which the ownership vests in some other person and the possession can be retained till the owner discharges the debt or obligation to the possessor.

but

In Union Bank of India v/s K.V.Venugopalan where it was held by the court that the fixed deposit money lodged with the bank is strictly a loan to the bank. The banker in connection with the FD is a debtor .The depositor would accordingly cease to be the owner of the money in fixed deposit .The said money becomes money of the bank, enabling the bank to do as it likes, that however, with the obligation to repay the debt on maturity .In the same ruling it was further held that the bank being a debtor in respect of the money in FD, had no right to pass into service the doctrine of banker�s lien and the money in Fixed Deposit.

so the answer as per the judgement is lien is a legal right of bankers though

but does not extends to fixed deposits

Answered on 7/03/11, 9:11 am

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