What are the rules/condition/formalities for exercising the right of “Set-Off” by Banker?

Answer:

a)  Mutual debts must be certain: Before exercising  right of set off the claim and the counter claim must be determined accurately.

b)  Debts must be due: Only those  debts which are due and revocable on the date of set off can be the subject of set off.

c)  Debts in the same right: The loan account and the deposit account which will be appropriated must be in the same right.

d)  No agreement to the contrary: The right of set off can not be exercised if there is  any agreement between Banker & Borrower to the contrary of set off.

e)   Notice of set off: Before exercising right of set off Banker’s should serve notice of set off to the borrower before reasonable time.

What are the essential conditions for exercising the right of lien by Banker?

Answer:

a)  The goods or securities over which the right of lien shall be exercised must be in the possession of Bank.

b)  There must be a lawful advance due to the bank.

c)  There shall be no contract contrary to lien

d)  Goods or securities over which right of lien shall be exercised must be suitably discharged in favor of bank.

What is Maritime Lien?

Answer:

A maritime lien is a right specially binding a ship her furniture, machinery, cargo and freight for the payment of claim based upon the maritime law. For  example, the person who has suffered losses as a result of collision due to ship’s negligence has the right of lien on ship and her belongings.

What is Equitable Lien?

Answer:

An Equitable Lien is an equitable right conferred by law to a charge upon the movable or immovable property of another until certain claim is satisfied such as, a partner who  pays partnership debts on dissolution has an equitable lien on the property of the partnership.

What is Negative Lien?

Answer:

The Banker sometimes asks a borrower to execute a letter declaring that his assets are free from encumbrance at the time advance is made. The borrower also undertakes that the assets stated in the said letter shall not be encumbered or disposed of without the Bank’s permission in writing so long the advance continues. This undertaking is a Negative Lien.

Question: What is Banker’s Lien?

Answer:

Banker’s Lien is more than a General Lien, it is an implied pledge . In the event of the default of the borrower, the banker has a power of sale to liquidate without intervention of the court.