TMI Blog1966 (12) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... promissory note and also retain the said goods found to have been delivered to him and therefore in his custody. - Civil Appeal No. 776 of 1964 - - - Dated:- 13-12-1966 - SHELAT, J.M. And BACHAWAT, R.S.,JJ. JUDGMENT The Judgment of the Court was delivered by Shelat, J. This appeal by certificate is directed against the judgment and decree passed by the High Court of Allahabad reversing the judgment and decree passed by the Civil Judge, Allahabad, directing the respondents to pay to the appellant Rs. 18,142/and costs. Two questions arise in this appeal : viz., (1) whether the first respondent pledged certain quantity of aeroscraps purchased by him from military authorities at Bamrauli Depot, Allahabad and delivered possession thereof to the appellant under an agreement of pledge entered into between them and (2) whether the appellant was entitled to any relief when his case was that the first respondent never delivered to him the said goods and the said agreement never ripened into a pledge. On January 10, 1946 the appellant advanced Rs. 20,000/- to the first respondent against a promissory note and a receipt. The first respondent also executed an agreement whereby he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said goods to the appellant and the said goods therefore remained in his custody and (2) that even if the goods were delivered to the appellant the appellant could under section 176 of the Contract Act still maintain his suit on the said promissory note and recover the amount due thereunder. As the High Court's judgment is one of reversal Mr. Rana took us through the relevant portions of the evidence and submitted that on- the evidence the findings of the High Court cannot be sustained. The first question is whether the first respondent after obtaining the aeroscraps from the military authorities delivered them to the appellant. Before however we proceed to consider this question we may first set out certain undisputed facts. There is no dispute that the appellant advanced Rs. 20,000/- to the first respondent. There is also no, dispute that the first respondent executed the said agreement agreeing to pledge the said goods. There is further no dispute that the said goods were stored in a plot near the aerodrome. The dispute between the parties lies therefore within a short compass, viz., whether the custody of the said goods after they were stored at the aforesaid place was wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not deliver them and stored them near the Aerodrome, lie placed, on a request by the respondents, the services of the watchmen at their disposal. But he could not explain as to why lie continued to pay the salaries of the watchmen, though their services were no longer required by him. The explanation given by him in this regard did not impress the High Court and in our view rightly. If the goods were not delivered to the appellant and were never in his custody there was no reason why he should continue to pay the watchmen's salaries. Even assuming that he had engaged the watchmen in the first instance in the hope that the goods would be placed in his possession, he would have discharged them on the first respondent failing to hand over the goods to him. The only explanation that appears to be acceptable in these circumstances is that he continued to employ those watchmen as the goods were in his possession and required to be safely kept as security. The evidence shows that on or about August 18, 1946 the first respondent removed part of the said goods but he did so after paying to the appellant Rs. 1,000/- towards the principal and Rs. 200/towards interest. The removal of these g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m Ex. C which also gave a similar intimation to the first respondent. It cannot be, disputed that through these notices the appellant was informing the first respondent that he intended to exercise his right to sell the said goods pledged with him. These notices are clearly inconsistent with the position adopted by him that the goods were never delivered to him or that they were not pledged with him or that the transaction of pawn had not materialised. His explanation that these notices were sent at the instance of the first respondent to compel the second respondent to pay up the said debt is without any foundation and was rightly rejected by the High Court. Apart from this documentary evidence which satisfactorily established that the said goods were in his possession, there was also oral evidence, which if accepted, would prove that the said goods were handed over to the appellant and remained in his control. The most important part of the oral evidence was that of Manmohan Banerjee, the Commissioner appointed by the Court in a suit filed by the Calcutta National Bank against the respondents. In that suit the Court had passed an order of attachment before judgment of the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty as a security for some debt or engagement. A pawner is one who being liable to an engagement gives to the person to whom he is liable a thing to be held as security for payment of his debt or the fulfilment of his liability. The two ingredients of a pawn or a pledge are : (I ) that it is essential to the contract of pawn that the property pledged should be actually or constructively delivered to the pawnee and (2) a pawnee has only a special property in, the pledge but the general property therein remains in the pawner and wholly reverts to him on discharge of the debt. A pawn therefore is a security, where, by contract a deposit of goods is made as security for a debt. The right to property vests in the pledgee only so far as is necessary to secure the debt. In this sense a pawn or pledge is an intermediate between a simple lien and a mortgage which wholly passes the property in the thing conveyed. (See Halliday v. Holygate.( [1868] L.R. 3 Ex. 299) A contract to pawn a chattel even though, money is advanced on the faith of it is not sufficient in itself to pass. special property in the chattel to the pawnee. Delivery of the chattel pawned is a necessary element in the maki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bt and under section 175 he is entitled to receive from the pawner any extraordinary expenses he incurs. for the preservation of the goods pledged with him. Section 176 ,deals with the rights of a pawnee and provides that in case of default by the pawner the pawnee has (1) the right to sue upon the debt and to retain the goods as collateral security and (2) to sell the goods after reasonable notice of the intended sale to the pawner. Once the pawnee by virtue of his right under section 176 sells the goods the right of the pawner to redeem them is of course extinguished. But .as aforesaid the pawnee is bound to apply the sale proceeds towards ,satisfaction of the debt and pay the surplus, if any, to the pawner. 'So long, however, as the sale does not take place the pawner is entitled to redeem the goods on payment of the debt. It follows therefore .that where a pawnee files a suit for recovery of debt, though he is .entitled to retain the goods he is bound to return them on payment .of the debt. The right to sue on the debt assumes that he is in a position to redeliver the goods on payment of the debt and therefore 'if he has put himself in a position where he is not able to redeliv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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