TMI Blog2000 (4) TMI 811X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. had fallen to ₹ 700 per share though it was more than the value of the share at the time these shares were pledged with the bank. The appellant has arrived at the figure of ₹ 8, 50, 000 as the loss occasioned to him. On 30th June, 1992 his overdraft account showed debit balance of ₹ 3, 40, 962.53 with the bank. The appellant, therefore, said that he suffered a loss of ₹ 5, 09, 037.45 after deducting the debit balance, which he, thus, claimed with interest and other charges like damage for loss of long standing business due to non-renewal of letter of credit; for non-releasing of securities; undue and unjust harassment, thus, making a total of ₹ 29, 56, 264.76. On the face of it apart from the claim of damages for loss in selling the shares other claims are too much overblown to be considered at all. The appellant would, thus, be entitled to the award of ₹ 5, 09, 037.47 with interest at the rate of 11 per cent per annum from 1st August, 1992. The bank is granted four weeks time to make the payment. In case of default, the appellant shall be entitled to further interest at the rate of 18 per cent per annum on the amount of ₹ 5, 09, 037.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1992 from its head office stating that it did not receive the letter dated 23rd April, 1992 of the appellant and further that the shares were not in the head office. By letter dated 29th July, 1992, Nagpur Branch of the bank informed the appellant that head office was not holding the shares. It was, however, found that the shares were lying with the Nagpur Branch itself. By this time it appeared that the price of the share fell and the shares could not be sold at the price indicated by the appellant. He, therefore, filed a claim with the National Commission for Rs. 5, 09, 037.53 in respect of shares of Castrol Ltd. as under : Less on account of non-sale of 500 shares of Castrol Ltd. Rs. (a) Estimated sale price of 500 shares @ Rs. 2, 400 per share 12, 00, 000.00 Deduct price prevailing on 23rd July, 1992 @ 700 per share 3, 50, 000.00 8, 50, 000.00 -------------- Deduct amount of effective debit balance in O/D on 3, 40, 962.53 30th June, 1992 -------------- 5, 09, 037.53 He also filed other claims against the bank with which we are not concerned in this appeal. 4. There cannot be any doubt if action had been taken by the bank promptly or within a reasonable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... system of deferred payment and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person; ' 8. We think that the argument that the appellant is not a consumer or that the bank is not rendering service is an argument in desperation. No such plea was raised before the National Commission. Overdraft limit prescribed by the bank was not without consideration. Bank is rendering service by providing overdraft facilities to a customer which is not without consideration. Bank is charging interest and other charges as well in providing the service. Provision for overdraft facility is certainly a part of the banking and its service within the meaning of clause (o) of section 2 of the Act. In ordinary parlance 'banking' is a business transactions of a bank (The Concise Oxford Dictionary). 'Banking' is defined in the Black's Law Dictionary. It is as under : The business of banking, as defined by law and custom, consists in the is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant himself It was then contended that the bank had lien over certain shares which the appellant had pledged as security for the overdraft facility of Rs. 5, 00, 000 provided by the bank. It was stated that the bank, in fact, acceded to the request of the appellant and sanctioned the overdraft facility after imposing certain terms and conditions. It was also submitted that prior to the agreement for grant of overdraft facility of Rs. 5, 00, 000 appellant had executed a letter of lien and set off dated 9th August, 1989 which entitled the bank to retain all the shares, which were in its possession or which may come into the possession of the bank at any future date, as collateral security for all the outstanding dues of the appellant apart from any specific facility provided to him. Then the bank said that it was well-settled principle of law that the banker's lien extended to all securities deposited in its character as a banker. It was, therefore, contended that it was undisputed that the bank had every right to exercise lien over the pledged shares. Then it was submitted that though the appellant had requested the bank to sell the shares through his broker who w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suffered and that in any case fluctuations in the value of the shares could also be worked out other way, i.e., to the prejudice of the bank. That is all to the case set up by the bank. 13. We have been referred to various decisions by Mr. Krishna Venugopal, who appeared for the bank. He submitted that he could certainly raise issues such as the law of pledge or the jurisdiction of the National Commission in this appeal for sustaining the decision of the National Commission. In support of his submission, he referred to a decision of this court in Management of Northern Railway Co-operative Society Ltd. v. Industrial Tribunal 1967 (2) SCR 476. But as held by this court in Chinta Lingam v. Government of India 1970 (3) SCC 768 when there is no foundation laid in the pleadings before the National Commission argument of such pleading could not be allowed to be raised in this court. However, if it is a pure question of law going to the root of the case, this plea may be allowed to be raised with the permission of the court. We may in this connection refer to order 41, rule 22, of the Code of Civil Procedure, 1908 which provides that though the respondent may not have appealed from any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to recover the value of the shares. It was held that even assuming the sale to be wrongful, the immediate right to the possession of the shares was not by the sale revested in the plaintiff, and that he could not, therefore, maintain trover, either for the whole value of the shares or for nominal damages. 16. In S. L. Ramaswamy Chetty v. MSAPL Palanlappe Chettiar 1930 AIR(Mad) 364 (DB) the court said : The respondent (pledgor) could not compel the appellants to exercise the power of sale as a means of discharging or satisfying the decree. His only rights were : (1) in case the appellants (a pawnee) exercised the power, to insist that it should be honestly and properly done and the sale proceeds applied to the debt, (2) in case the appellants did not exercise the power, to redeem the pledges on payment of the debt or so much of it as remained otherwise unpaid and (3) in case the sale was improperly exercised, to get damages caused thereby. 17. A Single Judge of the Delhi High Court in Bank of Maharashtra v. Racmann Auto (P.) Ltd. 1991 AIR(Del) 278 on examining the provisions of sections 176-177 said : In view of the provisions of section 176 of the Contract Act, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the period of notice sent by it in August 1947. The material plea of the defendant was that the bank could not function after August 1947 due to disturbances that the bank could not bring the records to India due to restrictions imposed by the Pakistan' Government and that before the shares could be sold the bank had to get the sanction of the Custodian of Evacuee Property. Suit of the plaintiff was decreed on appeal by the defendant to the High Court. Reference was made to section 176 of the Contract Act which requires a reasonable notice of the sale. It was submitted by the defendant that the sale should take place within a reasonable time of the notice but the High Court negatived this plea. High Court referred to an earlier decision in Surajmal v. Fulchand 1951 AIR(Nag) 264 where it was held that a pawnee who has given a reasonable notice of sale under section 176, Contract Act can sell at any time and is not bound to sell within a reasonable time after the expiry of the period mentioned in the notice. Section 176 of the Contract Act talks of reasonable notice of sale. The pawnor is warned by notice that if he does not discharge the debt within a reasonable time the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , there must be a demand by the customer at the branch where the current account is kept, or where the deposit is made and kept, before the bank need pay, and for these reasons the English courts hold that the situs of the debts is at the place where the current account is kept and where the demand must be made.It was explained further that if the bank wrongly refused to pay when a demand was made at the proper place and time, then it could be sued at its head office as well as at its branch office, but the reason was that the action is then, not on the debt, but on the breach of the contract to pay at the place specified in the agreement , and reference was made to Warrington, LJ at page 116 and Atkin, LJ at page 121 of New York Life Insurance Co. v. Public Trustee. That is the position in regard to banking law and practice, and it is apparently in that light that the Regulation has been framed. 21. Chitty on Contract, 27th edn. dealt with unlawful dealing by the pledgee. It said : 'If the pledgee deals with the thing pledged in an unlawful manner, such as by sale before the time fixed for repayment of the debt, or by wrongfully claiming to be absolute owner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht under the law to retain the pledged goods. Bank says it was misled by the appellant that the shares were lying in Bombay when in fact these were lying in the Nagpur branch itself where the appellant had the overdraft account. Could not the bank verify as to where the pledged shares were kept when on the basis of those very shares as security overdraft facility was granted ? We think that the bank is just firing shot from the shoulders of the appellant to hide its own defaults, ney negligence. As far as the appellant is concerned, he has clearly stated, which has not been denied, that the pledged shares were to be transferred in the name of the bank and sufficient number of blank transfer forms duly signed by him were submitted to the bank and further that the share department of the Bombay head office of the bank was centralised for handling all matters concerning shares and that bonus shares in this very case were received by the Bombay head office of the bank. Bank also advanced a plea that the appellant was guilty of contributory negligence by which the bank tacitly admitted its own negligence on its part as well. That the appellant suffered loss because of the delay in not d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... len to Rs. 700 per share though it was more than the value of the share at the time these shares were pledged with the bank. The appellant has arrived at the figure of Rs. 8, 50, 000 as the loss occasioned to him. On 30th June, 1992 his overdraft account showed debit balance of Rs. 3, 40, 962.53 with the bank. The appellant, therefore, said that he suffered a loss of Rs. 5, 09, 037.45 after deducting the debit balance, which he, thus, claimed with interest and other charges like damage for loss of long standing business due to non-renewal of letter of credit; for non-releasing of securities; undue and unjust harassment, thus, making a total of Rs. 29, 56, 264.76. On the face of it apart from the claim of damages for loss in selling the shares other claims are too much overblown to be considered at all. The appellant would, thus, be entitled to the award of Rs. 5, 09, 037.47 with interest at the rate of 11 per cent per annum from 1st August, 1992. The bank is granted four weeks time to make the payment. In case of default, the appellant shall be entitled to further interest at the rate of 18 per cent per annum on the amount of Rs. 5, 09, 037.47 from the date of the award till paymen ..... 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