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Smt. Aratibala Mohanty Versus State Bank of India and Ors.

1990 (4) TMI 295 - ORISSA HIGH COURT

Original Jurn. Case No. 4054 of 1988 - Dated:- 6-4-1990 - G.B. Pattanaik and J.M. Mahapatra, JJ. For the Appellant: B.B. Ratho and R.P. Mohapatra, Advs. For the Respondent: M.N. Das, Adv. JUDGMENT G.B. Pattanaik, J. 1. A short but interesting question of law that arises for consideration in this writ application is whether the pawnee not being in a position to release the pledged articles for some supervening circumstances can charge interest on the amount in question for the period for which th .....

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spose of the pledged articles by public auction. Between 3-12-1973 and 23-7-1974 by pledging 729.700 grammes of gold, the petitioner had taken a loan of ₹ 17,200/-. On 2-4-1976, the petitioner wrote to the Bank to release the gold ornaments pledged under Account No. 15/557 and requested that she may be intimated the outstanding amount of the principal and the interest so that she would be able to pay the money and release the ornaments. The said letter has been annexed as Annexure 1. Again .....

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te parties. The opposite party No. 3 intimated the petitioner by letter dated 7-6-1977 that the gold in question had been sized by the police in connection with a criminal case against the husband of the petitioner and the Bank was holding the property as Zimadar and, therefore, the Bank would not be able to release the gold. It was also stated therein that the petitioner should wait for further hearing from the Bank. This document has been annexed as Annexure 2. The gold in question had been se .....

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the Bank never wrote again to the petitioner though it had promised to do so under Annexure 3. On 30-8-1988 the petitioner tendered a cheque of ₹ 500/- for encashment which was dishonoured by the Bank on the ground that the funds had been attached by the District and Sessions Judge. This intimation has been annexed as Annexure 4 and obviously the Bank was under an misapprehension, as the order of attachment had been vacated since 23-9-1981. On 8-10-1988, the Bank gave a notice to the petit .....

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ve another notice on 12-11-1988 under Annexure 6 requiring the petitioner to deposit ₹ 1,79,478.28 paise. The petitioner thereafter has approached this Court. 3. The only contention raised by Mr. Ratho for the petitioner is that the petitioner having approached the Bank to take release of the pledged articles on 2-4-1976 but the Bank refusing to release these articles on the ground that the articles have been seized by the police, would not be entitled to charge interest on the loan amount .....

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Bank expressed its inability to release the ornaments under Annexure 3 and thereafter the Bank never knew of the order vacating the attachment by the Sessions Judge and, therefore, the question of informing the pledger does not arise. It is further stated that the order of attachment having been vacated at the behest of the petitioner, the petitioner should have approached the Bank immediately after the same and that not having been done, she is not entitled to claim that no interest could be c .....

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"pawnor" and the bailee is called the "pawnee". "Pledge' is a contract whereunder deposit of goods is made a security for a debt and the right to the property vests in the pawnee so far as is necessary to secure the debt. In the ordinary sense of the term it amounts to advancement of money on keeping possession of goods or chattels of the persons who takes the money. Under the pledge though no title to the goods passes to the pawnee, but right to retain possession re .....

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or to redeem is extinguished, but the pawnee is bound to apply the sale proceeds towards satisfaction of the debt and pay the balance, if any, to the pawnor. But so long as the safe has not taken place, the pawnor is entitled to redeem the goods on payment of debt. If the pawnee is not in a position to deliver the goods then he cannot have both the payment of debt and also the goods. Broadly, this is the legal position with regard to pledge. 6. Mr. Ratho, the learned counsel for the petitioner, .....

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places reliance on two decisions of the Supreme Court in Lallan Prasad v. Rahmat Ali AIR 1967 SC 1322 and The Bank of Bihar v. The State of Bihar AIR 1971 SC 1210. In Lallan Prasad's case AIR 1967 SC 1322 after analysing the provisions of Sections 172 to 176 of the Indian Contract Act, their Lordships observed:- (at pp. 1325-26 of AIR): ".........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 .....

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act of pledge. The pawnee, therefore, can sue on the debt retaining the pledged goods as collateral security. If the debt is paid he has to return the goods with or without the assistance of the Court and appropriate the sale proceeds towards the debt. But if he sues on the debt denying the pledge, and it is found that he was given possession of the goods pledged and had retained the same, the pawnor has the right to redeem the goods so pledged by payment of the debt. If the pawnee is not in a p .....

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liable to pay interest for that period. In The Bank of Bihar's case AIR 1971 SC 1210what their Lordships were considering was the right of a pawnee vis-a-vis the rights of other creditors of the pawnor. It was held by their Lordships that the rights of the pawnee who had parted with money in favour of the pawnor on the security of the goods could not be defeated by the goods being seized by the Government and money being made available to other creditors of the pawnor without the claim of th .....

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tisfy the claim of other creditors of the pawnor. But by a mere act of lawful seizure the Government could not deprive the plaintiff of the amount which was secured by the pledge of the goods to it......." We also fail to appreciate as to how this decision is of any assistance in advancing the contention of the petitioner. None of these decisions lays down that the moment the pawnee becomes incapable of delivering possession of the goods pledged, the relationship of pawnor and pawnee ceases .....

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Annexure 3. The petitioner herself got the order of attachment vacated by moving the Sessions Judge on 23-9-1981 but thereafter never intimated the Bank about the same, nor wanted to exercise her right to redeem the pledged articles by satisfying the debt. The petitioner, on the other hand, wanted to rely upon the Bank's letter that she would be intimated about the release of the goods later. The Bank has taken the stand that it was unaware of the order of vacation of attachment by the Sessi .....

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