husband's implicitly incurring a liability on the contract entered into
by his wife with a third party, in the absence the husband's express or
implied consent thereto, does not arise. Had it been a case of contract
between wife and husband, given the statutory obligation of spousal
maintenance, the parameters, of course, would have differed.
27. Veering back to the facts of the case, I may observe that
evidently the wife contracted, as the record reveals, the loan having
provided the sureties, who do not include her husband. The husband,
in fact, contracted the loan subsequently. In my considered view, the
Bank's plea that it bona fide believed that the petitioner could offer
his property as security is to be discounted. For by the time the wife
took the loan, the husband was not at all in the picture--his loan was
subservient.
28. Unless a person is a party to a loan transaction in whichever
capacity, the question of the Bank's exercising the general lien vis-
vis the property of that person--even if he or she were the spouse of
the contracting party--does not arise. Put differently, it falls foul of
the contractual obligations of the banker and customer.
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU
TUESDAY, THE 8TH DAY OF MARCH 2016/
WP(C).No. 2527 of 2015 (M)
LONANKUTTY ANTONY @ T.L.ANTONY,
Vs
THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES,
DAMA SESHADRI NAIDU, J.
----------------------------------
W.P. (C) No. 2527 of 2015 (M)
----------------------------------
Dated this the 8th day of March, 2016.
The petitioner, a member of the third respondent Co-operative
Bank, availed himself of a loan after mortgaging a piece of property
and later cleared it. When he sought the return of the title deeds of
the property after clearing the loan, the respondent Bank refused.
The refusal seems to be on the premise that the petitioner's wife also
secured a loan, and the petitioner's title deeds are deemed to have
been kept as security for the realisation of the said debt, too. In other
words, the third respondent Bank has exercised its general lien.
Aggrieved, the petitioner has filed the present writ petition.
2. The learned counsel for the petitioner has submitted that the
petitioner has nothing to do with the loan obtained by his wife. He
has further submitted that the petitioner is not a guarantor to the
loan. Nor has he offered his property as security.
3. The learned counsel for the respondent Bank has, on the
other hand, strenuously contended that the petitioner has all along
known about the loan obtained by his wife. He has, in fact, contended
that it is the petitioner that is instrumental in his wife's securing the
loan.
4. In elaboration of his submissions, the learned counsel has
also contended that the Bank has bona fide believed that the
husband's property could be used for securing his wife's loan.
5. The learned counsel has also drawn my attention to Ext.R3(g)
issued by the Assistant Registrar allowing the respondent Bank to
retain the petitioner's title deeds until his wife's loan is cleared.
6. Heard the learned counsel for the petitioner and the learned
counsel for the respondent Bank, apart from perusing the record.
7. To a specific query whether the petitioner and his wife are
living together, the learned counsel for the petitioner did submit that
they had been living together, though he added apologetically that
they had a strained relationship. I must acknowledge that the answer
to my question, either way, has no impact on the issue.
8. To begin with, this Court is aware that it cannot indulge in
any moral adjudication. The liability of the party, be it husband or
wife, is required to be determined strictly in statutory terms--in terms
of either the contract they have entered into or the law governing the
issue.
9. In the first place, the learned counsel for the respondent
Bank could not bring to the notice of this Court any provision under
which the Assistant Registrar issued Ext.R3(g) allowing the respondent
Bank to retain the petitioner's documents for the loan contracted by
his wife. It is indeed an extra-legal order with no enforceability. And
it is required to be ignored as devoid of any force. It is thus
disregarded.
Securities-Lien:
10. In Transcore v. Union of India1, the Apex Court has
delineated on the securities that could be offered. Broadly, there are
three types of security over an asset. First is where the creditor
obtains an interest in the asset concerned (mortgage). Second is the
security in which the rights of the creditor depend on possession of
the asset (pledge/lien). The third is the charge where the creditor gets
neither ownership nor possession of the asset, but the asset is
appropriated to satisfy the debt or obligation in question. The
dichotomy, which is important, is that more than one obligation could
1(2008) 1 SCC 125,
arise from the same transaction, namely, to repay the debt or to
discharge other obligation.
11. Focusing on the contractual concept of the term, we may
examine `lien'. Black's Law Dictionary2 defines lien as a legal right or
interest that a creditor has in another's property, usually lasting until
a debt or duty it secures is satisfied. Typically, the creditor does not
take possession of the property on which the lien has been obtained.
Of the banker's lien, the same lexicon defines it to be the right of a
bank to satisfy a customer's matured debt by seizing the customer's
money or property in the bank's possession.
12. In West's Encyclopedia of American Law3 lien is defined as a
right given to another by the owner of property to secure a debt, or
one created by law in favour of certain creditors. A lien is an
encumbrance on one person's property to secure a debt the property
owner owes to another person. The statement that someone's
property is "tied up" describes the effect of lien on both real and
personal property. Lien is a French word meaning "knot or binding"
that was brought to Britain during the Norman Conquest in 1066.
29th Ed.
32nd Ed. Vol.6, P.315
W.P.(C.) No. 2527/2015 -5-
13. The Hon'ble Supreme Court in Syndicate Bank v. Vijay
Kumar4 has examined the numerous definitional dynamics of the
expression `the Banker's Lien.' In Halsbury's Laws of England5, the
lien is defined to mean a right in one man to retain that which is in his
possession belonging to another until certain demands of the person
in possession are satisfied. As per this primary sense, it is given by
law and not by contract. A banker's lien on negotiable securities,
according to Chalmers on Bills of Exchange6, is `an implied pledge'. A
banker has, in the absence of an agreement to the contrary, a lien on
all bills received from a customer in the ordinary course of banking
business regarding any balance that may be due from such customer.
14. In Paget's Law of Banking7, it is observed that apart from
any specific security, the banker can look to his general lien as a
protection against loss on loan or overdraft or other credit facility.
The general lien of bankers is part of law merchant and judicially
recognised. In Chitty on Contract8, the Banker's lien is explained as
under:
4(1992) 2 SCC 330
52nd Edn., Vol. 20, p. 552, para 695,
613th Edn., p. 91
78th Edn., p. 498
826th Edn., p. 389, para 3032
W.P.(C.) No. 2527/2015 -6-
"Extent of lien.-- By mercantile custom the banker has a general lien
over all forms of commercial paper deposited by or on behalf of a
customer in the ordinary course of banking business. The custom does
not extent to valuables lodged for the purpose of safe custody and may
in any event be displaced by either an express contract or
circumstances which show an implied agreement inconsistent with the
lien .... The lien is applicable to negotiable instruments which are ...
remitted to the banker from the customer for the purpose of collection.
When collection has been made the proceeds may be used by the
banker in reduction of the customer's debit balance unless otherwise
earmarked."
(emphasis original as in Vijaya Kumar)
15. Putting the issue in perspective, we may say that a lien is the
creditor's right to retain the debtor's asset, movable or immovable,
until the debt is repaid. If the asset is retained till the debt for which
the asset is offered as security is repaid, it is a particular lien. On the
other hand, if the asset is retained till any other unconnected debt is
repaid, it is a general lien. As the general lien is mostly exercised by
the bankers, it is also called the banker's lien. With either a particular
lien or a general one, there shall be no contract, express or implied,
to the contrary. Even with general lien, the owner of the asset has to
be contractually connected to the debt in the capacity of either a
borrower or a guarantor.
16. In fact, Section 171 of the Indian Contract Act gives statutory
W.P.(C.) No. 2527/2015 -7-
shape to the general lien of bankers, factors, etc. The provision reads
to the effect that bankers, factors, wharfingers, attorneys of a High
Court and policy-brokers may, in the absence of a contract to the
contrary, retain as security for a general balance of account, any
goods bailed to them. But no other persons have a right to retain, as
security for such balance, goods bailed to them, unless there is an
express contract to that effect. It serves well to remember, however,
that lien in service jurisprudence differs from that under the contract
act or even common law.
17. As is well known, a statute of limitation bars or runs against
the remedy, but does not discharge the debt or extinguish or impair
the right, obligation, or cause of action. Keeping this in view, let us
proceed further.
18. In Anson's Law of Contract9, it is opined that at Common
Law lapse of time does not affect contractual rights. Such a right is of
a permanent and indestructible character, unless either from the
nature of the contract or from its terms, it be limited in point of
duration. According to the Anson's, though the contractual right is of
permanent character, the remedies arising from its violation are
919th Edn. p. 383, as quoted in Bombay Dyeing & Mfg. Co. Ltd. v. State of Bombay
W.P.(C.) No. 2527/2015 -8-
withdrawn after a certain lapse of time. The remedies are barred,
though the right is not extinguished.
19. Quoting the above, in Bombay Dyeing & Mfg. Co. Ltd. v.
State of Bombay10, a Constitution Bench of the Apex Court has held
that when a creditor has a lien over goods by way of security for a
loan, he can enforce the lien for satisfying the debt, even though an
action thereon would be time barred.
20. There is, in this case, no privity of contract; nor any legal
obligation even by implication, however.
Coverture:
21. The archaic and now obsolete common law concept of
spousal unity is a matter of coverture. Black's Law Dictionary defines
coverture as the condition of being a married woman. Under common
law, a woman under coverture could sue only through the personality
of her husband. The lexicon further amplifies thus:
"Coverture, is a French word signifying any thing that covereth, as
apparell, a coverlet . . . . It is particularly applied in our common lawe,
to the estate and condition of a married woman, who by the lawes of
our realme, is in (potestate viri) and therefore disabled to contract with
any, to the preiudice of her selfe or her husband, without his consent
and privity; or at the least, without his allowance and confirmation."
John Cowell, The Interpreter (1607).
101958 SCR 1122
W.P.(C.) No. 2527/2015 -9-
"Coverture is by law applied to the state and condition of a married
woman, who is sub potestati viri, (under the power of her husband) and
therefore unable to contract with any to the damage of herself or
husband, without his consent and privity, or his allowance and
confirmation thereof. When a woman is married, she is called a Femme
couvert, and whatever is done concerning her during marriage is said to
be done during coverture." The Pocket Lawyer and Family Conveyancer
96 (3d ed. 1833)
22. To rid the phrases of their French flavour, we may
say femme sole is a single woman, and femme covert, literally, a
covered woman. In Chapter XV of the Commentaries on the Laws of
England11, William Blackstone explains the concept of coverture. The
legendary legal commentator describes the legal consequences of
making and dissolving a marriage by observing thus:
"By marriage, the husband and wife are one person in law: that is, the
very being or legal existence of the woman is suspended during the
marriage, or at least is incorporated and consolidated into that of the
husband: under whose wing, protection, and cover, she performs every
thing; and is therefore called in our law-French a feme-covert; is said to
be covert-baron, or under the protection and influence of her husband,
her baron, or lord; and her condition during her marriage is called her
coverture. Upon this principle, of a union of person in husband and
wife, depend almost all the legal rights, duties, and disabilities, that
either of them acquire by the marriage. I speak not at present of the
rights of property, but of such as are merely personal. For this reason, a
man cannot grant any thing to his wife, or enter into covenant with her:
for the grant would be to suppose her separate existence; and to
covenant with her, would be only to covenant with himself: and
therefore it is also generally true, that all compacts made between
11At P.722 of iBooks
W.P.(C.) No. 2527/2015 -10-
husband and wife, when single, are voided by the intermarriage."
23. Under the English Common Law, wife and husband are
regarded as one person and are presumed to have but one will.
Courts have gone to the extent of saying that they cannot be accused
of conspiracy for one person cannot conspire with oneself. This
common law concept has, however, largely confined to testimonial
privileges. It is based on the premise that once wife and husband are
treated as but one, one testifying against another, as a matter of legal
fiction, amounts to self-incrimination. On the converse, one testifying
for another is nothing but a reaffirmation of one's own testimony: it
cannot even be corroborative--just repetitive. Undeniably there are
myriad exceptions to this rule. Indian Law has, however, refused to
recognise this spousal immunity of biblical origin. Section 120 of the
Evidence Act makes it clear.
24. Further, at page 725 of Commentaries on the Laws of
England, Blackstone observes that in the civil law, the husband and
wife are regarded as two distinct persons; and may have separate
estates, contracts, debts, and injuries. And the learned author thus
concludes that a woman may sue and be sued without her husband.
W.P.(C.) No. 2527/2015 -11-
25. At any rate, in the first place, the coverture covers, rather
subsumes the proprietary rights of a wife under those of her husband.
The converse cannot be said. Second, in India, from either
perspective, wife and husband are two independent legal entities
capable of contracting on their own. One does not bind the other,
especially by implication, vis-`-vis a transaction involving a third
party. In India, law has been consistent when dealing with the
property rights of, or contracts involving, either of the spouses. The
law equates the wife with the husband; it puts them on the same
pedestal. Both of them can independently acquire and hold the
property in their own names. One can, therefore, contract with third
persons independently of the other.
26. In conclusion it may be held that the question of the
husband's implicitly incurring a liability on the contract entered into
by his wife with a third party, in the absence the husband's express or
implied consent thereto, does not arise. Had it been a case of contract
between wife and husband, given the statutory obligation of spousal
maintenance, the parameters, of course, would have differed.
27. Veering back to the facts of the case, I may observe that
evidently the wife contracted, as the record reveals, the loan having
provided the sureties, who do not include her husband. The husband,
in fact, contracted the loan subsequently. In my considered view, the
Bank's plea that it bona fide believed that the petitioner could offer
his property as security is to be discounted. For by the time the wife
took the loan, the husband was not at all in the picture--his loan was
subservient.
28. Unless a person is a party to a loan transaction in whichever
capacity, the question of the Bank's exercising the general lien vis-`-
vis the property of that person--even if he or she were the spouse of
the contracting party--does not arise. Put differently, it falls foul of
the contractual obligations of the banker and customer.
29. In these circumstances, I am of the considered view that the
respondent Bank's action of retaining or withholding the petitioner's
title deeds even after his clearing the loan is per se illegal and
arbitrary.
30. In the facts and circumstances, the Court allows the writ
petition directing the respondent Bank to return to the petitioner the
title deeds of the property, which he had earlier mortgaged for a loan.
The debt admittedly stood discharged in due course.
31. Needless to observe that the respondent Bank should
execute and register the `gehan deed', as expeditiously as possible, at
any rate, within one month from the date of receipt of a copy of this
judgment.
32. If the officials of the Bank have lent the money to the
petitioner's wife without ensuring sufficient security for its repayment,
it is open for either the Management of the Bank or the Department to
enquire into the issue and take remedial steps, which includes
initiation of disciplinary proceedings against the negligent or
conniving officials.
33. In the manner stated above, the writ petition is disposed of.
No order as to costs.
sd/- DAMA SESHADRI NAIDU, JUDGE.
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