2017 CLC 17 SINDH
2017 C L C 17
[Sindh]
Before Irfan Saadat Khan and Zafar Ahmed Rajput, JJ
HABIB BANK LIMITED----Appellant
Versus
LIQUIDATOR NATIONAL CONSTRUCTION COMPANY (PAKISTAN) LTD.----Respondent
First Appeal No.89 of 2002, decided on 19th September, 2016.
Contract Act (IX of 1872)---
----S. 171---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), Ss.9 & 22---Suit for recovery of money---Lien without contract---Scope---Suit was filed by borrower assailing lien marked by Bank over amount lying in the account---Banking Court decreed the suit in favour of borrower and against the Bank---Validity---Lien was a right in one man to retain that which was in his possession but belonged to another person, till certain demands of the person in possession were satisfied---Under the provisions of S.171 of Contract Act, 1872, a Banker, amongst others named therein, in absence of a contract to the contrary, had a right to retain as security for a general balance of account goods bailed to him---Bank retained subject margin amount under lien to secure partially outstanding liability till such time either the original guarantees were returned or a no claim/discharge certificate in lieu thereof was provided to sank for reversal of liability outstanding thereagainst---Banking Court while passing judgment and decree failed to recognize self-same right of Bank under S.171 of Contract Act, 1872, and committed an error of law---High Court set aside judgment and decree passed by Banking Court and dismissed the suit filed by borrower---Appeal was allowed in circumstances.
Shiam Lal J. Dewan v. Official Liquidators of the U.P. Oil Mills Co. Ltd. AIR 1933 Allahabad 789; R.G.N. Price, Official Liquidator, Andhra Paper Mills Company, Limited (in liquidation), v. The State of Madras AIR (39) 1952 Madras 58; Discount Bank of India Ltd., Delhi v. Triloki Nath and others AIR 1953 Punjab 145; Ch. Habibullah v. Sheikhupura Central Co-operative Bank Limited PLD 1987 SC 53; Messrs Continental Syndicate of Trade v. Lloyds Bank Ltd. PLD 1966 (W.P.) Kar. 556; Firm Jai Kishan Dass Jinda Ram and others v. Central Bank of India Ltd. AIR 1955 Punjab 250 and Muhammad Saleemullah Khan v. National Construction Company (Pak.) Ltd. through Managing Director and another PLD 1999 Lah. 456 and Farooq v. Messrs Eastern Banking Corporation Ltd., Karachi and another PLD 1980 Kar. 115 ref.
JUDGMENT
Suleman Hudda for Appellant.
Ghulam Murtaza for Respondent.
Date of hearing: 13th May, 2016.
ZAFAR AHMED RAJPUT, J.--- By this appeal, under section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, the appellant/defendant/Bank has challenged the legality and validity of the judgment and decree dated 30.03.2002 and 03.04.2002, respectively, whereby the learned
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Banking Court No.II, at Karachi decreed the suit bearing No.1204 of 1997, filed by the respondent/plaintiff against the appellant/Bank, in the sum of Rs.19,60,000/- with costs and mark-up at the rate of 44 paisa per thousand per day from 30.05.1990 to 30.04.1992 and future mark-up from the date of decree till the realization of amount.
2.Briefly stated, the facts of the case are that the respondent herein, a company incorporated under the Companies Ordinance, 1984, presently under voluntarily liquidation, filed a suit for recovery of Rs.28,78,456/- bearing No.520 of 1992 before this Court on its original civil jurisdiction against the appellant/Bank; subsequently, the said suit was transferred to the Banking Court No.II, at Karachi and re-numbered as Suit No.1024 of 1997. It was averred that on 18.06.1985 the respondent was awarded a contract by Pakistan Water and Power Development, Authority, (WAPDA), for construction, completion and maintenance of 3 x 1 MW Hydroelectric Project Gilgit (Kargah Phase VI). The respondent requested and was given mobilization advance amounting to Rs.78,400,00/- and the appellant/Bank provided guarantee No. 85/3, dated 30.06.1985, for said amount in favour of WAPDA and the respondent, in this respect, placed in PLS Term Deposit Account the bank guarantee margin at 25% of the amount amounting to Rs.19,600,00/-, which was renewed from time to time with the reduction of amount of guarantee and lastly guarantee No.89/02, dated 21.11.1989, was issued for reduced amount of Rs.19,509,03/-. It was further averred that after completion of the project and expiry of the maintenance period, the original guarantee duly discharged was returned by WAPDA vide letter, dated 28.05.1990, to the respondent but despite request of the respondents, made through several letters and reminders, the appellant/Bank failed to release the said margin amount as well as the profit accrued thereon and informed the respondent by its letter dated 18.07.1991 that the amount of margin has been retained by the appellant/Bank under lien for partially securing the outstanding L/C liability of Rs.2,95,000,00/- till such time either the said original guarantees are returned to the appellant duly cancelled by the beneficiaries or of no claim discharge certificate in lieu thereof is provided to the appellant/Bank for the reversal of liability outstanding thereagainst. It was the case of the respondent that the withholding of the respondent's margin by the appellant on the alleged plea of recovering the outstanding liability of some other guarantee is illegal, mala fide, misconceived and totally untenable as the appellant/Bank has no lawful right to withheld the margin placed with it for the guarantee in question, which already stood discharged and released. As such, cause of action allegedly accrued to respondent to file the aforementioned suit against the respondent/Bank.
3.Appellant/Bank contested the suit by filing written statement, wherein it admitted all the facts narrated by the respondent in memo of plaint but stated that the guarantee for Rs.2,95,00,100/- is outstanding against the respondent, besides the commission at Rs.7,02,800/- is due from 01.01.1991 to 30.09.1992 on continuing guarantees No.75/15, dated 30.08.1975, amounting to Rs.1,31,00,000/- and guarantee No.75/27, dated 21.10 1975 amounting Rs.1,20,00,100/-. It was further stated that the appellant/Bank has lien on margin amount of Rs.19,60,000/- and so retained it to secure partially the outstanding liability of Rs.2,95,00,100/-, up to such time the original guarantees are returned to appellant/Bank duly cancelled by the respective beneficiaries or a no claim/discharge certificate in lieu thereof is provided for the reversal of liability outstanding there against. It was also stated by the appellant/Bank that the respondent by its letter, dated 22.08.1992, admitted the outstanding bank guarantees with Commission of Rs.401,600/- up to October, 1991; hence, it prayed for the dismissal of the suit.
4.Out of pleadings of the parties, the learned trial Court framed the following issues:
(1)Whether the appellant has a lien on margin amount of Rs.19,60,000/- and is entitled to retain it for partially receiving the outstanding L/C liability against the respondent for Rs.29,500,100/- and the commission due is paid to the appellant?
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(2)Whether the respondent is entitled to receive Rs.19,60,000/- from the appellant?
(3)Whether the respondent is entitled to markup /profit on the above amount? If so at what rate and for what period?
(4)What should the decree be?
5.The learned Banking Court after recording evidence of the parties decreed the suit, vide impugned Judgment and Decree in favour of respondent against appellant/Bank in the sum of Rs.19,60,000/- with costs and mark-up @ 44 paisa per thousand per day from 30.05.1990 to 30.04.1992 and future mark-up from the date of decree till the realization of amount. It is against this Judgment and Decree the instant First Appeal has been preferred by the appellant/Bank.
6.We have heard the learned counsel for the parties and also perused the material available on record.
7.Learned counsel for the appellant has mainly contended that the impugned judgment and decree are against the principles of equity, justice and good conscience; hence the same are not sustainable in law. He has further contended that the finding of learned Banking Court on issue No.1 is erroneous and against the admitted facts that the appellant bank has a lien on margin amount of Rs.19,60,000/- and is; therefore, entitled to retain it for partially receiving the outstanding L/G liability against the respondent for Rs.29,500,100/- and the commission due is paid to the appellant; hence, the finding of the learned Banking Court that the appellant bank cannot claim the margin amount has no relevancy on the facts and circumstances of the case. He has further contended that the very suit filed by the respondent was not maintainable in view of sections 333(1)(a) and 387(1)(a) of the Companies Ordinance, 1984 as the liquidator institute the suit without the sanction of the Court. In support of his contention the learned counsel has relied on the case of Shiam Lal J. Dewan v. Official Liquidators of the U.P. Oil Mills Co., Ltd. (AIR 1933 Allahabad 789), R.G.N. Price, Official Liquidator, Andhra Paper Mills Company, Limited (in liquidation), v. The Sate of Madras (AIR (39) 1952 Madras 58) and Discount Bank of India Ltd., Delhi v. Triloki Nath and others (AIR 1953 Punjab 145). While referring section 171 of the Contract Act, 1872 (herein after referred to as "the Act of 1872"), the learned counsel has further contended that the appellant bank is entitled to combine several accounts of respondent/customer into one realization account and even in absence of any special agreement to contrary it has right to exercise lien on goods pledged in one account for balance due in other accounts; therefore, the impugned judgment and decree is liable to be set aside and in result thereof the respondents' suit should be dismissed. In this regard the learned counsel has placed his reliance in the case of Ch. Habibullah v. Sheikhupura Central Co-operative Bank Limited (PLD 1987 SC 53), Messrs Continental Syndicate of Trade v. Lloyds Bank Ltd. (PLD 1966 (W.P.) Karachi 556) and Firm Jai Kishan Dass Jinda Ram and others v. Central Bank of India Ltd., (AIR 1955 Punjab 250).
8.On the other hand, learned counsel for the respondent has maintained that the impugned judgment and decree has been passed by the learned Banking Court after appreciating the evidence on record and in the light of the relevant law, therefore, the same does not suffer from any illegality or irregularity requiring interference of this Court under its appellate jurisdiction. He has further maintained that so far the competency of filing of the suit by the liquidator of the company is concerned, the appellant bank neither in the written statement nor in the cross-examination of the attorney of the respondent company or even in this appeal has raised any objection, therefore, the appellant bank cannot be allowed to agitate the same at the stage of hearing of this appeal. He added that even the provision of sections 333 and 387 of the Companies Ordinance, 1984 does not attract to voluntarily winding up of a company, as envisaged under sections 358 and 359 of the said Act. In this regard he has referred the case of Muhammad Saleemullah Khan v. National Construction Company (Pak.) Ltd through Managing Director and another (PLD 1999 Lahore 456). He has
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also maintained that there is no contract between the parties creating any lien of the bank in respect of L/G therefore, section 171 of the Act of 1872 is not applicable in this case. In support of his contention the learned counsel has relied upon the case of Farooq v. Messrs Eastern Banking Corporation Ltd., Karachi and another (PLD 1980 Karachi 115).
9.We have heard the learned counsel for the parties and perused the material available on record.
10.The contention of learned counsel for the appellant bank with regard to the maintainability of the suit appears to be out of pleadings, as the same question has neither been raised in the pleadings of the appellant nor even any issue has been framed by the Banking Court thereon, nor even such ground has been raised by the appellant in instant appeal; therefore, the same cannot be allowed to be raised in arguments.
11.As regard to the next contention of the learned counsel for the appellant, we deem it appropriate to reproduce Section 171 of the Act of 1872, which reads as under:-
"171. General lien of bankers, factors, wharfingers, attorneys and policy-brokers. Bankers, factors, wharfingers, attorneys of a High Court and policy-brokers 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; but no other persons have a right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to that effect."
12.It may be observed that against the claim of the respondent company, it is the case/defence of the appellant Bank that it has retained the margin amount of Rs.1.960 (M), deposited by the respondent against Bank Guarantee dated 30.06.1985, under lien to secure partially the outstanding L/G liabilities of Rs.2,95,00,100/- under guarantees No.75/15, dated 30.08.1975 and 75/27, dated 21.10.1975. The attorney of the respondent has not denied the said outstanding L/G liabilities in his Affidavit-in Evidence. The learned Banking Court; however, decreed the respondent's suit holding that the appellant Bank has no lien on said margin amount; therefore, it has no entitlement to retain it for partially securing the outstanding L/G liability against the respondent for Rs.2,95,00,100/-. Apparently, the learned Banking Court while decreeing the respondent's suit did not examine the principles contained in Section 171 of the Act of 1872 with regard to the Banker's lien.
13.A lien is a right in one man to retain that, which is in his possession, but belongs to another, till certain demands of the person in possession are satisfied. Under the provisions of the Section 171 of the Act of 1872 a banker, amongst others named therein, in the absence of a contract to the contrary, has a right to retain as security for a general balance of account goods bailed to him. In the instant case, the appellant/ Bank has retained the subject margin amount of Rs.19,60,000/- under lien to secure partially the outstanding liability of Rs.2,95,00,100/-, till such time either the original guarantees are returned or a no claim/discharge certificate in lieu thereof is provided to appellant/Bank for the reversal of liability outstanding there against. The learned banking Court while passing the impugned judgment and decree failed to recognize the self-same right of appellant/Bank under Section 171 of the Act of 1872 and, thus, committed error of law.
14.We; therefore, in the light of above discussion, allow this appeal by setting aside the impugned judgment and, decree passed by the learned Banking Court No. II, at Karachi and, in consequence thereof, Suit No.1204 of 1997 stands dismissed. The parties in the circumstances of case shall bear their own costs in this Court and in the Court below.
MH/H-19/SindhAppeal allowed.
[Sindh]
Before Irfan Saadat Khan and Zafar Ahmed Rajput, JJ
HABIB BANK LIMITED----Appellant
Versus
LIQUIDATOR NATIONAL CONSTRUCTION COMPANY (PAKISTAN) LTD.----Respondent
First Appeal No.89 of 2002, decided on 19th September, 2016.
Contract Act (IX of 1872)---
----S. 171---Financial Institutions (Recovery of Finances) Ordinance (XLVI of 2001), Ss.9 & 22---Suit for recovery of money---Lien without contract---Scope---Suit was filed by borrower assailing lien marked by Bank over amount lying in the account---Banking Court decreed the suit in favour of borrower and against the Bank---Validity---Lien was a right in one man to retain that which was in his possession but belonged to another person, till certain demands of the person in possession were satisfied---Under the provisions of S.171 of Contract Act, 1872, a Banker, amongst others named therein, in absence of a contract to the contrary, had a right to retain as security for a general balance of account goods bailed to him---Bank retained subject margin amount under lien to secure partially outstanding liability till such time either the original guarantees were returned or a no claim/discharge certificate in lieu thereof was provided to sank for reversal of liability outstanding thereagainst---Banking Court while passing judgment and decree failed to recognize self-same right of Bank under S.171 of Contract Act, 1872, and committed an error of law---High Court set aside judgment and decree passed by Banking Court and dismissed the suit filed by borrower---Appeal was allowed in circumstances.
Shiam Lal J. Dewan v. Official Liquidators of the U.P. Oil Mills Co. Ltd. AIR 1933 Allahabad 789; R.G.N. Price, Official Liquidator, Andhra Paper Mills Company, Limited (in liquidation), v. The State of Madras AIR (39) 1952 Madras 58; Discount Bank of India Ltd., Delhi v. Triloki Nath and others AIR 1953 Punjab 145; Ch. Habibullah v. Sheikhupura Central Co-operative Bank Limited PLD 1987 SC 53; Messrs Continental Syndicate of Trade v. Lloyds Bank Ltd. PLD 1966 (W.P.) Kar. 556; Firm Jai Kishan Dass Jinda Ram and others v. Central Bank of India Ltd. AIR 1955 Punjab 250 and Muhammad Saleemullah Khan v. National Construction Company (Pak.) Ltd. through Managing Director and another PLD 1999 Lah. 456 and Farooq v. Messrs Eastern Banking Corporation Ltd., Karachi and another PLD 1980 Kar. 115 ref.
JUDGMENT
Suleman Hudda for Appellant.
Ghulam Murtaza for Respondent.
Date of hearing: 13th May, 2016.
ZAFAR AHMED RAJPUT, J.--- By this appeal, under section 22 of the Financial Institutions (Recovery of Finances) Ordinance, 2001, the appellant/defendant/Bank has challenged the legality and validity of the judgment and decree dated 30.03.2002 and 03.04.2002, respectively, whereby the learned
1 of 52/22/2018, 12:23 PM
Case Judgementhttp://www.plsbeta.com/LawOnline/law/content21.asp?Casedes=2017K201
Banking Court No.II, at Karachi decreed the suit bearing No.1204 of 1997, filed by the respondent/plaintiff against the appellant/Bank, in the sum of Rs.19,60,000/- with costs and mark-up at the rate of 44 paisa per thousand per day from 30.05.1990 to 30.04.1992 and future mark-up from the date of decree till the realization of amount.
2.Briefly stated, the facts of the case are that the respondent herein, a company incorporated under the Companies Ordinance, 1984, presently under voluntarily liquidation, filed a suit for recovery of Rs.28,78,456/- bearing No.520 of 1992 before this Court on its original civil jurisdiction against the appellant/Bank; subsequently, the said suit was transferred to the Banking Court No.II, at Karachi and re-numbered as Suit No.1024 of 1997. It was averred that on 18.06.1985 the respondent was awarded a contract by Pakistan Water and Power Development, Authority, (WAPDA), for construction, completion and maintenance of 3 x 1 MW Hydroelectric Project Gilgit (Kargah Phase VI). The respondent requested and was given mobilization advance amounting to Rs.78,400,00/- and the appellant/Bank provided guarantee No. 85/3, dated 30.06.1985, for said amount in favour of WAPDA and the respondent, in this respect, placed in PLS Term Deposit Account the bank guarantee margin at 25% of the amount amounting to Rs.19,600,00/-, which was renewed from time to time with the reduction of amount of guarantee and lastly guarantee No.89/02, dated 21.11.1989, was issued for reduced amount of Rs.19,509,03/-. It was further averred that after completion of the project and expiry of the maintenance period, the original guarantee duly discharged was returned by WAPDA vide letter, dated 28.05.1990, to the respondent but despite request of the respondents, made through several letters and reminders, the appellant/Bank failed to release the said margin amount as well as the profit accrued thereon and informed the respondent by its letter dated 18.07.1991 that the amount of margin has been retained by the appellant/Bank under lien for partially securing the outstanding L/C liability of Rs.2,95,000,00/- till such time either the said original guarantees are returned to the appellant duly cancelled by the beneficiaries or of no claim discharge certificate in lieu thereof is provided to the appellant/Bank for the reversal of liability outstanding thereagainst. It was the case of the respondent that the withholding of the respondent's margin by the appellant on the alleged plea of recovering the outstanding liability of some other guarantee is illegal, mala fide, misconceived and totally untenable as the appellant/Bank has no lawful right to withheld the margin placed with it for the guarantee in question, which already stood discharged and released. As such, cause of action allegedly accrued to respondent to file the aforementioned suit against the respondent/Bank.
3.Appellant/Bank contested the suit by filing written statement, wherein it admitted all the facts narrated by the respondent in memo of plaint but stated that the guarantee for Rs.2,95,00,100/- is outstanding against the respondent, besides the commission at Rs.7,02,800/- is due from 01.01.1991 to 30.09.1992 on continuing guarantees No.75/15, dated 30.08.1975, amounting to Rs.1,31,00,000/- and guarantee No.75/27, dated 21.10 1975 amounting Rs.1,20,00,100/-. It was further stated that the appellant/Bank has lien on margin amount of Rs.19,60,000/- and so retained it to secure partially the outstanding liability of Rs.2,95,00,100/-, up to such time the original guarantees are returned to appellant/Bank duly cancelled by the respective beneficiaries or a no claim/discharge certificate in lieu thereof is provided for the reversal of liability outstanding there against. It was also stated by the appellant/Bank that the respondent by its letter, dated 22.08.1992, admitted the outstanding bank guarantees with Commission of Rs.401,600/- up to October, 1991; hence, it prayed for the dismissal of the suit.
4.Out of pleadings of the parties, the learned trial Court framed the following issues:
(1)Whether the appellant has a lien on margin amount of Rs.19,60,000/- and is entitled to retain it for partially receiving the outstanding L/C liability against the respondent for Rs.29,500,100/- and the commission due is paid to the appellant?
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(2)Whether the respondent is entitled to receive Rs.19,60,000/- from the appellant?
(3)Whether the respondent is entitled to markup /profit on the above amount? If so at what rate and for what period?
(4)What should the decree be?
5.The learned Banking Court after recording evidence of the parties decreed the suit, vide impugned Judgment and Decree in favour of respondent against appellant/Bank in the sum of Rs.19,60,000/- with costs and mark-up @ 44 paisa per thousand per day from 30.05.1990 to 30.04.1992 and future mark-up from the date of decree till the realization of amount. It is against this Judgment and Decree the instant First Appeal has been preferred by the appellant/Bank.
6.We have heard the learned counsel for the parties and also perused the material available on record.
7.Learned counsel for the appellant has mainly contended that the impugned judgment and decree are against the principles of equity, justice and good conscience; hence the same are not sustainable in law. He has further contended that the finding of learned Banking Court on issue No.1 is erroneous and against the admitted facts that the appellant bank has a lien on margin amount of Rs.19,60,000/- and is; therefore, entitled to retain it for partially receiving the outstanding L/G liability against the respondent for Rs.29,500,100/- and the commission due is paid to the appellant; hence, the finding of the learned Banking Court that the appellant bank cannot claim the margin amount has no relevancy on the facts and circumstances of the case. He has further contended that the very suit filed by the respondent was not maintainable in view of sections 333(1)(a) and 387(1)(a) of the Companies Ordinance, 1984 as the liquidator institute the suit without the sanction of the Court. In support of his contention the learned counsel has relied on the case of Shiam Lal J. Dewan v. Official Liquidators of the U.P. Oil Mills Co., Ltd. (AIR 1933 Allahabad 789), R.G.N. Price, Official Liquidator, Andhra Paper Mills Company, Limited (in liquidation), v. The Sate of Madras (AIR (39) 1952 Madras 58) and Discount Bank of India Ltd., Delhi v. Triloki Nath and others (AIR 1953 Punjab 145). While referring section 171 of the Contract Act, 1872 (herein after referred to as "the Act of 1872"), the learned counsel has further contended that the appellant bank is entitled to combine several accounts of respondent/customer into one realization account and even in absence of any special agreement to contrary it has right to exercise lien on goods pledged in one account for balance due in other accounts; therefore, the impugned judgment and decree is liable to be set aside and in result thereof the respondents' suit should be dismissed. In this regard the learned counsel has placed his reliance in the case of Ch. Habibullah v. Sheikhupura Central Co-operative Bank Limited (PLD 1987 SC 53), Messrs Continental Syndicate of Trade v. Lloyds Bank Ltd. (PLD 1966 (W.P.) Karachi 556) and Firm Jai Kishan Dass Jinda Ram and others v. Central Bank of India Ltd., (AIR 1955 Punjab 250).
8.On the other hand, learned counsel for the respondent has maintained that the impugned judgment and decree has been passed by the learned Banking Court after appreciating the evidence on record and in the light of the relevant law, therefore, the same does not suffer from any illegality or irregularity requiring interference of this Court under its appellate jurisdiction. He has further maintained that so far the competency of filing of the suit by the liquidator of the company is concerned, the appellant bank neither in the written statement nor in the cross-examination of the attorney of the respondent company or even in this appeal has raised any objection, therefore, the appellant bank cannot be allowed to agitate the same at the stage of hearing of this appeal. He added that even the provision of sections 333 and 387 of the Companies Ordinance, 1984 does not attract to voluntarily winding up of a company, as envisaged under sections 358 and 359 of the said Act. In this regard he has referred the case of Muhammad Saleemullah Khan v. National Construction Company (Pak.) Ltd through Managing Director and another (PLD 1999 Lahore 456). He has
3 of 52/22/2018, 12:23 PM
Case Judgementhttp://www.plsbeta.com/LawOnline/law/content21.asp?Casedes=2017K201
also maintained that there is no contract between the parties creating any lien of the bank in respect of L/G therefore, section 171 of the Act of 1872 is not applicable in this case. In support of his contention the learned counsel has relied upon the case of Farooq v. Messrs Eastern Banking Corporation Ltd., Karachi and another (PLD 1980 Karachi 115).
9.We have heard the learned counsel for the parties and perused the material available on record.
10.The contention of learned counsel for the appellant bank with regard to the maintainability of the suit appears to be out of pleadings, as the same question has neither been raised in the pleadings of the appellant nor even any issue has been framed by the Banking Court thereon, nor even such ground has been raised by the appellant in instant appeal; therefore, the same cannot be allowed to be raised in arguments.
11.As regard to the next contention of the learned counsel for the appellant, we deem it appropriate to reproduce Section 171 of the Act of 1872, which reads as under:-
"171. General lien of bankers, factors, wharfingers, attorneys and policy-brokers. Bankers, factors, wharfingers, attorneys of a High Court and policy-brokers 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; but no other persons have a right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to that effect."
12.It may be observed that against the claim of the respondent company, it is the case/defence of the appellant Bank that it has retained the margin amount of Rs.1.960 (M), deposited by the respondent against Bank Guarantee dated 30.06.1985, under lien to secure partially the outstanding L/G liabilities of Rs.2,95,00,100/- under guarantees No.75/15, dated 30.08.1975 and 75/27, dated 21.10.1975. The attorney of the respondent has not denied the said outstanding L/G liabilities in his Affidavit-in Evidence. The learned Banking Court; however, decreed the respondent's suit holding that the appellant Bank has no lien on said margin amount; therefore, it has no entitlement to retain it for partially securing the outstanding L/G liability against the respondent for Rs.2,95,00,100/-. Apparently, the learned Banking Court while decreeing the respondent's suit did not examine the principles contained in Section 171 of the Act of 1872 with regard to the Banker's lien.
13.A lien is a right in one man to retain that, which is in his possession, but belongs to another, till certain demands of the person in possession are satisfied. Under the provisions of the Section 171 of the Act of 1872 a banker, amongst others named therein, in the absence of a contract to the contrary, has a right to retain as security for a general balance of account goods bailed to him. In the instant case, the appellant/ Bank has retained the subject margin amount of Rs.19,60,000/- under lien to secure partially the outstanding liability of Rs.2,95,00,100/-, till such time either the original guarantees are returned or a no claim/discharge certificate in lieu thereof is provided to appellant/Bank for the reversal of liability outstanding there against. The learned banking Court while passing the impugned judgment and decree failed to recognize the self-same right of appellant/Bank under Section 171 of the Act of 1872 and, thus, committed error of law.
14.We; therefore, in the light of above discussion, allow this appeal by setting aside the impugned judgment and, decree passed by the learned Banking Court No. II, at Karachi and, in consequence thereof, Suit No.1204 of 1997 stands dismissed. The parties in the circumstances of case shall bear their own costs in this Court and in the Court below.
MH/H-19/SindhAppeal allowed.
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