AIR 2011 MADRAS 179 ::(2011) 101 AllIndCas 919 (MAD) ::(2011) 4 BankCas 9 ::(2011) 3 Mad LJ 245

Madras High Court

Hon'ble Judge(s): M. Y. Eqbal , C.J. AND T. S. Sivagnanam , J

(A) Contract Act (9 of 1872) , S.131— Liability of guarantor - Death of guarantor - Liability which existed on date of death of guarantor does not stand extinguished - Such liability will exist and can be fastened on estate of deceased guarantor being inherited by his legal heirs - Creditor can recover dues out of estate of deceased. W. P. No. 25277/2010, D/- 7th June, 2010, Reversed. (Para 8) (B) Contract Act (9 of 1872) , S.171— Banker's right of general lien - Specific contract/agreement between deceased borrower and bank, by which borrower offered property in question to secure only a particular transaction - This agreement/mortgage has to be construed as a "Contract to Contrary" - Deposit of title deeds by which mortgage was created by deceased borrower was for a specific purpose to cover an advance for a specific loan - Bank cannot contend that they could hold documents for a balance due in a different loan account where said person is not a borrower - Further, when it is not case of Bank that amount, which is now said to be due on account of borrowings of different loan account is a general balance account of deceased borrowers - Bank cannot claim title deeds by invoking power of general lien. (Para 14 16) ....