' SHEIKH HAKIM ALI, J.---Through this Civil Appeal, judgment dated 22-2-2001 delivered by a learned Division Bench of the Lahore, High Court, Lahore in EFA No,316 of 2000 has been assailed.
2. Precise of facts can be narrated in the following sentences. Respondents had obtained different loans of various natures from the appellant Bank on different dates. Three loans obtained by the respondents were through separate three sanctioned letters, dated 23-12-1987 amounting to Rs,27,15,000 additional financial assistance of Rs,30,00,000 on 20-6-1988 and the amount of Rs,15,00,000 through letter, dated 4-2-1989 which had swollen up to the extent of Rs,85,10,596 for the recovery of which appellant-Bank had instituted suit before the Banking Tribunal, Lahore on 4-2- 1995 with additional prayer for the award of cost of Rs,21,504 also. Admittedly, the suit was decreed and execution of that decree had also commenced, before the concerned Executing Court.
Respondents paid different amounts, on different dates, the detail of which is available in the impugned judgment also. Payment and receipt of amounts are not being disputed by either of the parties. The question for resolution in the case is with regard to appropriation of an amount of Rs,29,20,000 which was adjusted by the appellant bank in the another account of judgment- debtors/respondents on its own discretion, after having received that amount with specific 'instruction of respondents to appropriate that amount in the present decree. This became the bone of contentions between the parties. The judgment-debtors/respondents filed a petition before the Banking Court/Executing Court on 7-8-2000 with a prayer that the amount of Rs,29,20,000 has wrongly been adjusted by the Bank against the specific instructions. While Bank invoked the provisions of section 171 of the Contract Act, 1872 and pleaded that it had got the right to adjust that amount to any debt obtained by the aforementioned respondents. The petition was dismissed, so the judgment-debtors/respondents filed the above noted EFA No,316 of 2000 before the learned Lahore High Court, Lahore, which was accepted with direction to adjust the amount in dispute against the decretal amount. The learned Division Bench, however was appraised of the payment of all the decretal, amount of the decree, so the execution petition, was dismissed by holding it to have been satisfied.
3. Learned counsel for the appellant-Bank submits that section 59 of the Contract Act, 1872 has wrongly been applied to the case. The proper provision applicable to the facts and circumstances of the case was section 171 of the Contract Act, 1872, by which discretion was conferred upon bankers to retain as security for a general balance of account, any goods bailed to them i,e, the disputed amount. Elaborating his arguments, learned counsel submits that the above mentioned amount of Rs,29,20,000 was rightly and correctly appropriated to the others debts which were to be paid by the respondents.
4. We have considered the arguments of the learned counsel for the appellant-Bank. To appreciate the arguments, reproduction of provisions of sections 59 and 171 of the Contract Act, 1872 are necessary for ready reference:--- ' Section 59: Application of payment where debts to be discharged is indicated.---Where a debtor, owing several distinct debts to one person, makes a payment to him, either with express intimation, or under circumstances implying that the . Payment is to be applied to the discharge of some particular debt, the payment, if accepted must be applied accordingly."
' Section 171.--General lien of bankers, factors, harbingers, attorneys and policy brokers.---Bankers, factors, wharfingers, attorneys of a High Court and policy brokers may, in the absence of a contract to the contrary, retain, as a security for a general balance of account, any goods bailed to them; but no other persons have a right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to that effect.
' The words used in section 171 of the Contract Act, 1872 "in the absence of the contract to the contrary, and unless there is an express contract to that effect" are very important and cannot be neglected from consideration. The pre-condition for the applicability of section 171 of the Contract Act, 1872 is that there must not be an explicit or implied contract indicative of the intention of the depositors. If the customer has deposited the amount with specific instruction to adjust the amount in such and such account, in that event, when the bank accepts it as such, it cannot vary it or change and adjust it to any other account. Section 171 of the Contract Act would apply when no such specific, express or implied instructions at the time of deposit were conveyed or imparted to the Bank. Moreover, the provision of section 171 of the Contract Act is not applicable to the case on other counts also. In the instant case, the petitioner was made to know through letter, the specific instructions by the judgment-debtors. Therefore, the Bank having accepted that amount with specific directions to adjust the amount into the indicated loan amount (decretal amount), was bound to adjust it in that account. The bank, in pursuance of the indicated instructions, afterwards had no discretion/power/authority to vary that agreed adjustment for any other account on its own whim and will, without express consent of the judgment-debtors/respondents. Therefore, the provision of section 59 of the Contract Act, ,1872 has rightly been applied by the learned Division Bench, through its judgment to the facts and circumstances of the present case. The wordings of the section "whether a debtor in several distinct debts to one person makes a payment to him, either with express intimation, or under circumstances implying that the payment is to be applied to the discharge of some particular debt, the payment, if accepted must be applied accordingly......" are clear, used with lucidity and unambiguous, and need no further comments or interpretation to apply it to the facts and circumstances of the case, wherein express intimation was given to the Bank by the judgment-debtors to adjust the disputed amount into the decretal amount.
4(sic). From the above discussion, we are not in agreement with the arguments of the learned counsel for the appellant-Bank that section 171 of the Contract Act, 1872 was applicable to the instant facts and circumstances of the case. The judgment reported in PLD 1952 Dacca 279 Munshi Emamuddin Ahmed, through Muhammad Abdur Rehman and others v. Province of East Bengal and others was correctly applied to the facts and circumstances of the case. The appeal having no merit is, therefore, dismissed.