Summary
The Court ordered refund of Rs.40 crores deposited to demonstrate the borrowers’ bona fides for a proposed settlement under a High Court order later set aside. The deposit was expressly treated as money with the court registry, not payment of the debt or a secured asset. The bank could not retain it through a general lien or merely because further recovery proceedings remained pending.
Issues
- Whether the bank could retain or appropriate the court-directed bona fides deposit after rejection of the settlement and setting aside of the writ orders.
Provisions considered
- Section 171, Indian Contract Act, 1872Applying Axis Bank, the Court rejected general lien over money expressly treated as a court-registry deposit rather than a bailment or security with the bank. (¶ 10–11)
Held
- The Rs.40 crore deposit was made only to demonstrate bona fides for the revised settlement proposal and was not intended to satisfy the loan debt. The High Court had expressly deemed it deposited with its registry. (¶¶ 5–8, 11)
- The reasoning in Axis Bank concerning court or tribunal deposits applied: this money was not a secured asset or secured debt available for appropriation, and the bank had no general lien over it. The borrowers’ established refund entitlement could not be defeated by directing continued deposit pending recovery litigation. (¶ 10–11)
- The impugned order was set aside and the borrowers’ refund application allowed, with return of the deposit and any accrued interest within two weeks. (¶ 12–13)
Result
Appeals allowed without costs; High Court order dated 19 March 2019 set aside. Rs.40 crore deposit to be returned to the appellants within two weeks with interest, if any, accrued on it. Loan liability itself not adjudicated.