Banker Customer Relationship
BANKER CUSTOMER RELATIONSHIP
BANKER
RIGHTS
* Right of Lien * Right of Set-off * Right of Appropriation DUTIES
* Duty to Honour Cheques * Duty to Secrecy
BANKER::RIGHTS
LIEN:
Right to retain a security until the debt is discharges or a promise to performed.
LIEN
GENERAL SPECIFIC
- One security more than one charge - One security one charge
- Normally the right is exercised - The charge is offered (created by borrower)
- This is available to Bankers, Factors (finance against receivables), Attorneys of High Court, Wharfingers ) - This charge is available to all persons/lenders who provide finance against specific securitIes
- Lender can, not only retain the security but also can sell it after giving a reasonable notice to the borrowers - Lender is empowered to hold the security the security. He cannot sell it. Eg: Tailor, Goldsmith, Finder of lost goods, Pawn broker
* As long as Specific Lien is there, General Lien cannot be exercised
Banker’s General Lien:
Banker can exercise General Lien: on all the goods which are received by him
(a) during the normal course of business (b) in the capacity of a Banker, provided there are no instructions to the contrary.
Example – 1: ‘X’ repaid Gold Loan and demanded the jewels back. Banker refused to do so by stating that he exercised Banker’s General Lien on the jewels for the overdue/recalled loan account of ‘X’. Whether the Banker is the right?
Answer:
a) loan is closed and hence the Jewels are free,
b) Jewels are received in the capacity of a Banker (Creditor-Debtor)
c) There are no contrary instructions
Hence, Banker can exercise Banker’s General Line
Example – 2: ‘Y’ took a Demand Loan from the Bank. The loan is guaranteed by ‘X’. The loan became overdue and is recalled. Today ‘X’ came to the Bank, closed his jewel loan and requested for return of the jewels. Branch Manager refused to deliver the jewels stating that he exercised Banker’s General
BANKER
RIGHTS
* Right of Lien * Right of Set-off * Right of Appropriation DUTIES
* Duty to Honour Cheques * Duty to Secrecy
BANKER::RIGHTS
LIEN:
Right to retain a security until the debt is discharges or a promise to performed.
LIEN
GENERAL SPECIFIC
- One security more than one charge - One security one charge
- Normally the right is exercised - The charge is offered (created by borrower)
- This is available to Bankers, Factors (finance against receivables), Attorneys of High Court, Wharfingers ) - This charge is available to all persons/lenders who provide finance against specific securitIes
- Lender can, not only retain the security but also can sell it after giving a reasonable notice to the borrowers - Lender is empowered to hold the security the security. He cannot sell it. Eg: Tailor, Goldsmith, Finder of lost goods, Pawn broker
* As long as Specific Lien is there, General Lien cannot be exercised
Banker’s General Lien:
Banker can exercise General Lien: on all the goods which are received by him
(a) during the normal course of business (b) in the capacity of a Banker, provided there are no instructions to the contrary.
Example – 1: ‘X’ repaid Gold Loan and demanded the jewels back. Banker refused to do so by stating that he exercised Banker’s General Lien on the jewels for the overdue/recalled loan account of ‘X’. Whether the Banker is the right?
Answer:
a) loan is closed and hence the Jewels are free,
b) Jewels are received in the capacity of a Banker (Creditor-Debtor)
c) There are no contrary instructions
Hence, Banker can exercise Banker’s General Line
Example – 2: ‘Y’ took a Demand Loan from the Bank. The loan is guaranteed by ‘X’. The loan became overdue and is recalled. Today ‘X’ came to the Bank, closed his jewel loan and requested for return of the jewels. Branch Manager refused to deliver the jewels stating that he exercised Banker’s General