General Lien and Particular Lien

Lien is defined as the right possessed by a person to retain or detain the goods or property belonging to another person for the non-fulfillment of an obligation by that other person. Two kinds of lien are defined by the Indian Contract Act.  They are particular lien and general lien covered by Section 170 and Section 171 respectively of the Act. Particular lien is applicable for a bailee while general lien can be exercised by bankers, factors, wharfingers, attorneys of high courts and policy brokers only. 

A lien guarantees an undelying obligation to a creditor. If the underlying obligation is not fulfilled, the creditor gets the right to seize the asset or security. In banking in India, lien is noted often when a loan is granted against the security of deposit maintained with the bank. This gives the right to the banker to set off the deposit against the liability in case of non-repayment.  This is one of the most common ftypes of charge creation used in banks especially when bank deposits are affered as security. Loan against fixed deposits needs only simple documentation formalities.

General Lien (Section 170)

If the bailee who has rendered any service involving the exercise of labour or skill in respect of the goods bailed has the right to retain such goods until he receives the remuneration for the services rendered by him. To exercise general lien, there shall not be a contract to the contrary and the service rendered shall be in accordance with the purpose of bailment. For example, a tailor who was entrusted with the task of stitching a coat is entitled to retain the coat till he is paid  for the services. However, if the tailor had agreed for a credit period for paying the charge, say one month, then he cannot exercise general lien and retain the coat. 

To have general lien, labour and skill must have been carried out in accordance with the purpose of bailment to improve the goods. Further, the right will be only over the goods on which the labour and skills bestowed and not on other goods.   

Particular Lien (Section 171)

Particular lien can be exercised only by defined persons and in the absence of a contract to the contrary. Bankers, factors, wharfingers, attorneys of high courts and policy brokers can exercise particular lien. Any goods bailed to them can be retained as a security for a general balance of account by exercising general lien. No other persons have a right to retain goods bailed to them unless there is a contract to the same. 

General balance of account is defined as the ultimate balance or the final sum arrived at by combining all the accounts. Thus, a banker can exercise general lien over securities received by him in normal course of business as a banker. This right can be exercised over all bills, cheques etc entrusted to him and all securities deposited with him in his capacity as banker. General lien can be extended to transactions prior to the one in respect of which it is sought to be exercised.  

A ‘contract to the contrary’ arises when the goods in the custody of the banker are 
a.    The subject matter of an intervining charge or assignment to another person  and
b.    The banker has notice of that assignment or charge 

A contract to the contrary is implied when goods are deposited with the banker for a special purpose. Hence, banks cannot exercise general lien on valuables deposited for safe custody, trust money which is not the property of the customer, Title deeds casually left with the banker  etc.