Rights Of A Banker

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BANKING LAW

1. Rights of a Banker;
Banker’:-
* Right of lien
* Right to set off
* Right of appropriation of payments.

2. Banker Regarded As A Favoured Debtor
lll A

CONTENT
1. Right of lien………………………………………………………………………pages 3-9 a. Introduction -what is lien?
b. Types of lien
c. Circumstances for exercising banker’s general lien d. Lien - an implied pledge
e. Case laws
f. Principles governing banker’s lien
g. When is lien not permissible
2. Right of set-off……………………………………………………………………pages 10-13 h. Introduction
i. Conditions necessary to set-off (ingredients of set-off) j. Automatic right of set off
k. Right of set off in the case of;
l. Relationship between lien and set-off
3. Right for appropriation of payment……………………………………………..pages 14-17 m. Introduction
n. Appropriation by the debtor
o. Appropriation by the creditor
p. Appropriation by law where neither party appropriates 4. Banker Regarded As A Favoured Debtor……………………………………….pages 18-20 q. Relation of a debtor and a creditor
r. General obligations of banker towards customer
5. Conclusion……………………………………………………………………… page 20 6. Bibliography……………………………………………………………………..page 21

RIGHT OF LIEN
* INTRODUCTION -WHAT IS LIEN?
A lien is the right of a creditor in possession of goods, securities or any other assets belonging to the debtor to retain them until the debt is repaid, provided that there is no contract express or implied, to the contrary. It is a right to retain possession of specific goods or securities or other movables of which the ownership vests in some other person and the possession can be retained till the owner discharges the debt or obligation to the possessor. In Halsbury’s Laws of England, it is stated: "Lien is, in its primary sense, a right in one man to retain that which is in his possession belonging to another until certain demands of the person in possession are satisfied. In its primary sense, it is given by law and not by contract." In Chalmers on Bills of Exchange, the meaning of the Banker’s Lien is stated: "A bankers’ lien on negotiable securities has been judicially defined as ‘an implied pledge’. A banker has, in the absence of agreement to the contrary ,a lien on all bills received from a customer in the ordinary course of banking business in respect of any balance that may be due from such customer." it should be noted that the lien extends only to negotiable instruments which are remitted to the banker from the customer for the purpose of collection .When collection has been made the process may be used by the banker in reduction of the customer’s debit balance unless otherwise earmarked. We can also refer to Peget’s Laws of Banking, where speaking about the Banker’s lien the learned author has stated that apart from any specific security, the banker can look to his general lien as a protection against loss on loan or overdraft or other credit facility. The general lien of bankers is part of law merchant and judicially recognized as such. * TYPES OF LIEN; There are two types of lien such as:

i. PARTICULAR LIEN
Particular lien is one, in that the craftsman can retain those goods on which he has spent time, effort and money until he is paid. In Particular lien the creditor doesn’t have the right to retain all the properties of the debtor. Under Section 170 of the Indian Contacts Act, 1872 the provision relating to specific lien has been laid down. ii. GENERAL LIEN

General lien gives the banker the right to retain goods and securities delegated to him in his capacity as a banker, in the absence of a contract contradictory to the right of lien. It extends to all goods/properties placed with him as a banker by his customer which are not particularly identified for another purpose. In India, the right of general lien is specially conferred on bank by Section...
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