Section 171 of ICA : Section 171: General Lien Of Bankers, Factors, Wharfingers, Attorneys And Policy-Brokers

Explanation using Example

Imagine John has a current account with XYZ Bank. Over time, John also avails some credit facilities from the bank, creating a 'general balance of account,' which includes his deposits and credit. One day, John hands over some important documents to the bank for safekeeping. Later, John faces financial difficulties and is unable to repay his debts. According to Section 171 of the Indian Contract Act, 1872, XYZ Bank has the right to retain John's documents as security until he settles his general account balance with the bank, unless there was a prior agreement that specifically stated the bank could not do this.