General Studies · Banker's General Lien
A customer maintaining a safe deposit locker with a bank for five years has paid the annual rent consistently. During an audit, the bank discovers the customer defaulted on a personal loan from the same branch, classified as a Non-Performing Asset (NPA). The manager decides to exercise the Banker's General Lien under Section 171 of the Indian Contract Act, 1872 by refusing locker access until the loan is settled. Is the manager's action legally sustainable?
- 1No, the bank can only exercise a lien if the customer had specifically pledged the contents of the locker as security for the personal loan.
- 2Yes, because the locker rent agreement usually contains a clause that links all liabilities of the customer to the services provided by the bank.
- 3No, the relationship in a safe deposit locker is that of a Lessor and Lessee (or bailor/bailee in modified contexts, but specifically without actual possession of contents by the bank), and the bank does not have possession of the contents to exercise a lien.✓
- 4Yes, Section 171 gives the bank a general lien over all goods and securities in its possession for the general balance of the account.
Correct answer
No, the relationship in a safe deposit locker is that of a Lessor and Lessee (or bailor/bailee in modified contexts, but specifically without actual possession of contents by the bank), and the bank does not have possession of the contents to exercise a lien.
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