What is LIEN?

A lien is a right of any one person to retain that, which is in his possession, belonging to another, until certain demands of a person in possession are satisfied. In other words, a lien means the right to ‘retain’ the possession of the goods or property until the claim is paid or satisfied. Possession is essential to create a right of lien. It must be rightful and continuous.

Lien may arise by —

1) statute 2) express or implied contract; and 3) in ordinary course of dealings.

Lien does not include right of sale. Lien is of two kinds:

1) General lien; and 2) Particular or Specific lien.

General Lien:

General lien means the right to retain any goods of another until all the claims of the holder are satisfied. It is a right of retention of goods not only towards the demands arising out of the article in possession but for a general balance of account in favor of the holder. General lien is available only to bankers, Factors, Attorneys and Policy Brokers.

Section 171 of the Act provides for a general lien. Bankers, factors, Wharfingers, attorneys of High Court and Policy Brokers may, in the absence of a contract to the contrary, retain as security for a general balance of account, any goods bailed to them. No other person has a right to retain, as a security or such balance, the goods bailed to tem, unless there is an express contract to that effect.

Obligation to return the brief is not just a legal but a moral imperative. Advocate is within his rights to deduct his fees from any money of the client remaining in his hand at termination of proceedings but the rules do not provide him with lien over the litigation papers and files.

Particular or Specific Lien:

A particular or specific lien means the right to retain the particular goods until claims arising on those goods are satisfied. Particular lien is attached to specific goods for the unpaid price or claim thereof

Bailee’s particular lien: (Sec 170) Where the bailee has in accordance with the purposes of the bailment, rendered any service involving the exercise of labor or skill in respect of the goods bailed, he has in the absence of a contract to the contrary, aright to retain such goods until he receives due remuneration for the services he has rendered in respect of them. Bailee’s lien therefore extends only in respect of the goods bailed to him.

Bailee an exercise the right to a particular lien only under the following circumstances:

(1) There is no contract to the contrary, for example, the price not to be paid in future, i.e. the bailee has not agreed to give credit for the price to the bailor.
(2) Bailee must have rendered any service or skill in accordance with the purpose of bailment and with regard to the thing bailed.
(3) Service involves labor or skill in respect of the goods bailed.
(4) Service must be performed in full and the payment must be due. If services are not rendered in accordance with the terms of the contract the bailee cannot exercise his right of a particular lien.
(5) The goods must be in possession of the bailee.

Right of lien is possessory in nature, and personal in character. If the bailee has no possession of the goods or possession is lost or parted with for any reason, the right of lien is also lost. Even if the bailee comes into possession of the similar goods again subsequently, the right of lien cannot be revived, because there is no fresh contract. The right of lien is lost with the satisfaction of the debt.

Right of particular lien can be exercised among others by – unpaid seller, a partner, finder of goods, bailee, agent, pawnee.

Particular Lien and General Lien distinguished:

Particular Lien

1) Particular lien can be exercised only against the goods on which bailee has rendered services.
2) Particular lien can be exercised only for amount due on account of labor or skill employed or work done upon the goods retained.
3) Particular lien can be exercised by all bailees.

General Lien:

1) General lien can be exercised against any goods or property of another in possession of the person exercising the right. General lien can be exercised for a general balance of account due.
2) General lien can be exercised only by bankers, factors, wharfingers, attorneys and policy brokers.