Bank of Bihar v. State of Bihar

Facts

• Securities were deposited with the bank with specific instructions regarding their purpose
• The bank attempted to exercise general lien over these securities for other debts owed by the customer
• The customer objected, arguing the deposit was for a specific purpose only

Issue

1. Whether a bank can exercise general lien under S.171 over securities deposited for a specific purpose.

Held

• S.171 expressly provides that the general lien operates "in the absence of a contract to the contrary." Where securities are deposited with specific instructions (e.g., "for safe custody only," "as security for a particular loan," "for transmission to a third party"), this creates an implied contract to the contrary. The general lien does not extend to such property.

Ratio Decidendi

Deposit for a specific purpose creates an implied contract to the contrary under S.171. General lien is excluded for property held under specific instructions. The bank can only exercise lien over property deposited without specific restrictive instructions.