General lien cannot cover surplus SARFAESI sale proceeds; excess must be refunded unless lawfully attached.

A bank cannot invoke general lien under Section 171 of the Indian Contract Act, 1872 to retain surplus sale proceeds realised under the SARFAESI Act after satisfying the secured debt, where the surplus arose from sale of a guarantor's mortgaged property and the bank sought to adjust it against a separate account. The surplus is not goods bailed to the banker for a general balance of account, so Section 171 does not authorise appropriation towards another liability. The amount, once realised in excess of the secured debt, must be returned to the person entitled to it unless lawfully attached or otherwise validly appropriated, and refund with interest was upheld.

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Issues: Whether the Bank could appropriate the surplus amount realised from sale of the mortgaged property of the guarantor towards dues of a different account by invoking general lien under Section 171 of the Indian Contract Act, 1872, and whether the surplus amount was liable to be refunded with interest to the guarantor.

Analysis: The surplus arose from sale of the secured property under the SARFAESI Act after satisfying the dues of the borrower account for which the guarantor's property had been sold. The Bank sought to adjust that surplus against separate outstanding dues of another concern said to be run by the guarantor. The Court held that the two accounts were distinct and that Section 171 of the Indian Contract Act, 1872 applies to goods bailed to a banker as security for a general balance of account. The surplus sale proceeds were not goods bailed to the Bank, and the concept of general lien could not be extended to permit appropriation of such surplus towards a separate liability. Reliance was placed on the principle that the amount, once realised in excess of the secured debt, must be returned to the person entitled to it unless lawfully attached or otherwise validly appropriated.

Conclusion: The Bank had no right to retain or appropriate the surplus amount under general lien, and the direction to refund the amount with interest was upheld.

Final Conclusion: The writ appeal failed and the order directing refund of the surplus sale proceeds to the respondent stood confirmed.

Ratio Decidendi: General lien under Section 171 of the Indian Contract Act, 1872 cannot be invoked to appropriate surplus sale proceeds realised under the SARFAESI Act against a separate liability, because such surplus is not goods bailed to the banker.

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