Discuss the Cases where the Banker cannot Exercise His Right of Lien

1. In the case of securities deposited with the banker for safe custody only, the banker is acting merely as a bailee, and has no lien over such articles.

    2. In the case of funds and securities specifically appropriated, the banker cannot exercise his right of lien because there is an express contract inconsistent with the lien.

   

3. A general lien cannot arises in respect of property of a customer pledged as security for a particular debt.

    4. The banker cannot exercise his right of lien in respect of property coming into his hands by mistake or which is placed in his hands to cover an advances that is not granted (Lucas V. Dorren).

    5. No lien arises until the due date in respect of an advance of a specific amount made for a definite period.

    6. No lien arises in case the credit and liability do not exist in the same right. Thus, the banker cannot exercise his right of lien over the securities or funds of a parner in respect of a debt due from the firm.

    7. The banker cannot exercise his right of lien in respect of a separate account maintained by a customer which is known to the banker as a Trust Account.

    8. No lien arises over properties on which the customer has no title.

    9. Right of General Lien becomes that of Particular Lien.

    Banker’s right of general lien is displaced by circumstances which show an implied agreement inconsistent with the rights of general lien. In Vijay Kumar Vs. M/s Jullundur Body Builders Delhi, and Others (A.I.R. 1981, Delhi 126), the Syndicate Bank furnished a bank guarantee for Rs. 90,000 on behalf of its customer. The customer deposited with it as security two fixed deposit receipts, duly discharged, with a covering latter stating that the said deposits would remain with the bank discharged, with a covering letter stating that the said deposit would remain with the bank so long as any amount was due to the Bank from the customer.
   
    Bank made an entry on the reserve of the Receipt as “Lien to BG 11/80”. When the bank guarantee was discharged, the bank claimed is right of general lien on the fixed deposit receipt, which was opposed on the ground that the entry on the reverse of the letter resulted in the right of a particular lien, i.e., only in respect of bank guarantee.

    The Delhi High Court rejected the claim of the bank and held that the letter of the customer was on the usual printed form while “the words written by the officer of the bank on the reverse of the deposit receipt were specific and explicit. They are the controlling words, which unambiguously tell us what was in the minds of the parties at the time. Thus the written word will prevail over the printed word.” The right of the banker was deemed that of particular lien rather than of general lien.