Facts of the case
- X deposited a jewel worth ₹50,000 with the bank for safe custody.
- Subsequently, X became a debtor to the bank by availing a loan or overdraft.
Issues in the case
- Whether the banker can claim a right of lien over the jewel for the debt owed by X.
- Whether the banker can retain or sell the jewel to recover the outstanding loan amount.
Principles associated with the case
- A general lien under Section 171 of the Indian Contract Act gives bankers the right to retain goods for a general balance of account.
- However, no lien can be exercised over articles deposited for a specific purpose, such as safe custody.
- In cases of safe custody, the relationship is bailor and bailee, not debtor and creditor.
- The bank is acting in a trustee or fiduciary capacity, and the goods must be returned to the depositor upon request.
Judgement
- The banker has no legal right to retain the jewel deposited for safe custody to satisfy the debt.
- Since the jewel was held in a fiduciary capacity, it cannot be subject to lien for later debts.
- The banker must return the jewel to X or his legal heirs, and may pursue legal recovery for the debt through other lawful means.