TMI Blog1959 (10) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... efendant. The case of the plaintiff is that to secure the due payment of certain advances made by the 1st defendant-Bank to her husband amounting to ₹ 45,000 he pledged 9,100 B-Class shares bearing Nos. 143762 to 152861 of the 3rd defendant Company, that her husband died on 20-4-1948 at Madras and that she was his widow and nearest heir, that in spite of her intimation that she was making arrangements to pay the amounts due to the 1st defendant Bank and redeem the pledge, the 1st defendant-Bank without notice to her sold the 9100 B-Class shares to the 2nd defendant-company, and that the sale is illegal and void and would not affect her right to redeem the pledge. She, therefore, prayed for a de deration that her right to redeem the pledge remained unaffected and for an injunction restraining the 3rd defendant company from recognising and registering the shares. 2. The 1st defendant-Bank contended in its written statement; first, that inasmuch as on her own admissions the late R.K. N.G. Raju died leaving a will appointing her as an executrix, she was not entitled to 61e a suit without obtaining a probate or producing a succession Certificate; secondly, that her husband, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned sale of shares by the 1st defendant to the 2nd defendant was binding on the plaintiff. 5. On issue 4, the learned Subordinate Judge held that inasmuch as on the admissions of the plaintiff herself, her husband the late R.K. N.G. Raju left a will appointing her as an executrix in the absence of a probate or at least the production at the will, it could not be said that the plaintiff had established her prima facie right to maintain both suit as the heir of her husband. 6. As regards the form of the suit, the learned Subordinate Judge held that a suit for declaration with an ancillary relief for injunction was maintainable in the circumstances of this case. But in view of his findings on issues 1, 2, 3 and 4, the learned Judge dismissed the suit. 7. The plaintiff, filed the present appeal in the High Court of Madras, which eventually was transferred to this Court. During the pendency of the appeal, the appellant died and the present four appellants have been brought on record as her legal representatives. 8. In this appeal, it has been contended by Mr. Ramachandra Raju, the learned counsel for the appellants that (i) there is no default in the matter of payment of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the Andhra Cement Company bearing share Nos. 143762 to 152861, stated to have been purchased by him at ₹ 12/- per share. He had an over-draft account with the 1st defendant, Andhra Bank Ltd., both in his personal capacity and as partner of Raja Industrial and Chemical Agencies. On those two accounts the 1st defendant-Bank made several advances to him, on various dates in 1947 totalling upto a sum of ₹ 45,000. In order to secure the due payment of the amounts, R.K. N.G. Raju executed an instrument of security on 22-9-1947. Along with the said instrument, 9100 B-class shares were delivered to the 1st defendant Bank together with blank share transfer forms duly signed by R.K. N.G. Raju. During his life time certain payments were made to the Bank. R.K. N.G. Raju died at Madras on 20-4-1948. On 25-11-1948, the counsel for the plaintiff wrote to the 1st defendant-bank a communication (Ex. B-2) stating that R.K. N.G. Raju diet! at Madras on 20-4-1948, leaving a will appointing his wife as the executrix, and that he was instructed to take steps to secure adequate legal representation to the estate of the deceased. In that connection the counsel requested the 1st defenda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 6-4-0 per share, 14. On 25-3-1949, the 1st defendant-Bank sold the 9198, B-class shares of the Andhra Cement Company Ltd., at ₹ 6-5-0 per share to the 2nd defendant the Jaipur Sugar Company Ltd., and had also forwarded to them 5 transfer deeds signed by R.K. N.G. Raju for their signatures. On the same day the 1st defendant-Bank wrote a letter (Ex. B-12) to the plaintiff informing her that since no arrangements had been made by her for the adjustment of the loans, the Bank decided to realise the amounts due by the sale of the securities pledged and accordingly sold them at ₹ 6-5-0 per share. On 30-3-1949, a telegram (Ex. B-13) was sent by the plaintiff to the 1st defendant-Bank to the effect that the sale of 9100 B-class shares was illegal and that the Bank was liable in damages. 15. On 5-4-1949, the counsel for the plaintiff sent a registered notice (Ex. B-14) to the 1st defendant-Bank with a copy to the Andhra Cement Company Ltd., (3rd defendant) stating that he confirmed the telegram sent by the plaintiff on 30-4-1949, and that the sale of the shares was without notice to his client and, therefore, invalid and not binding on her. 16. The present action w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fault of payment at the stipulated time, if any, or at a reasonable time after demand and non-payment if no time for payment is agreed upon. 19. The essential distinction, therefore, between a pledge and a mortgage is that unlike a pledgee a mortgagee acquires general property in the thing mortgaged subject to the right of redemption of the mortgagor. In other words, the legal estate in the goods mortgaged passes on to the mortgagee. But a pledgee has only the special property in the goods pledged, namely, the right of retainer of the goods as security, and in case of default he must either bring a suit against the pawnor or sell the goods after giving a reasonable notice. 20. Whether a particular transaction is a mortgage of moveable property or a pledge can only be determined by reference to the intention of the parties, and other surrounding circumstances. (Vide Arjun Prasad v. Central Bank of India, (S) AIR1956Pat32 . It is argued by Mr. Somasundaram that the execution along with Ex. B-1 of blank transfers indicates that it is a mortgage. We are unable to agree that that circumstance alone, without more will mean that the transaction is one of mortgage. A pledge of shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the stipulated time of the promise, in respect of which the goods were pledged, the pawnee may bring a suit against the pawnor upon the debt or promise, and retain the goods pledged as a collateral security, or he may sell the thing pledged, on giving the pawnor reasonable notice of the sale. If the proceeds of such sale are less than the amount due in respect of the debt or promise, the pawnor is still liable to pay the balance. If the proceeds of the sale are greater than the amount so due, the pawnee shall pay over the surplus to the pawnor. 23. On a plain reading of the section it seems to us that before exercising the power of sale the pawnee should give to the pledger reasonable notion of the sale. The contention of the Advocate for the respondent, however, is that in Ex. B-1 the pawnor had waived the right to receive such a notice and this found favour with the trial court. The learned counsel for the appellants has assailed the correctness of that finding 011 various grounds, 24. It is first contended that in the case the waiver is not founded on an assent or affirmance of the sale by the pledger subsequent to the contract of pledge, but is referable only to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unconditional power of sale. This opinion is held by the three distinguished editors (Sir Frederick Pollock, Sir Dinshah Mulla and Sir Maurice Gwyer) of Mulla's Indian Contract Act, Edn. 7 (see p. 519). It follows that even if It is possible to regard the contract of 23rd, 24th October, 1941, as a sale by the Bank as pledgee of Mr. Nissim that sale is invalid as being in breach of Section 176. unless it could be shown that before this insolvency Mr. Nissim effectively waived the giving of notice so as to bind the Official Assignee. 27. This case was carried in appeal to the Federal Court. Their Lordships held by a majority that in view of the assent for sale of shares by the pledger and the acquiescence thereof by the Official Assignee the sale was good and the further questions argued before them as to whether the pledgor could enter into a contract contrary to the provisions of Section 176 or whether a want of notice is a mere irregularity not affecting the title of the bona fide purchaser for value did not arise for consideration. 28. In Bharat Bank Ltd. v. Sheoji Prasad AIR 1953 Pat 285, a Bench of the Patna High Court has held that Section 176 is mandatory and the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice as it would be inconsistent with the provisions of Section 176, should prevail. 33. Mr. Somasundaram very strenuously contended before us that the right to receive notice 35 conceived in the interests of the pawnor and when a statute gives a party certain advantage or right it is always open to him to waive it- In support of the contention he cited a large number of authorities. 34. In Wilson v. McIntosh 1894 AC 129, the facts were that the respondent. McIntosh lodged an application in the office of the Registrar General to bring under the Real Property Act (26 Victoria No. 9) certain lands in New South Wales. Under Section 23 of that Act every caveat shall be deemed to have lapsed unless the caveator took the proceedings in any court of competent jurisdiction to establish his title to the estate and gave notice of that to the Registrar General and also obtained an injunction from the Supreme Court, In the case referred to above the respondent filed a case and obtained an order against the appellant to state her case both of which proceeded upon the fooling that the caveat was still in existence. It was held that the respondent having waived her right to claim that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct the tenant. It was pointed out by the learned Chief Justice that no public policy, was involved in that case and a landlord could well abridge his right. 40. The rule as to waiver is stated in Maxwell on Interpretation of Statutes p. 388 (10th Edn.) in these words: Every one has a right to waive and to agree to waive the advantage of law or rule made solely for the benefit and protection of the individual in his private capacity, which may be dispensed with without infringing any public right or public policy. 41. Mr. Ramachandra Raju has contended that the terms of Section 176 are conceived in general public interest and referable to public policy. It is argued by him that in the stress of need a pledger might assent to terms so manifestly deleterious to his interest and it is to prevent such people being exploited and that some notice being given before the pledgee exercises the right of sale that advisedly in Section 176 no provision is made to contract contrary to its terms. In this contention strong reliance was placed on the observation of Farwell J. in Soho Square Syndicate Ltd. v. E. Pollard and Co. Ltd. 1940 1 Ch 638 at p. C43, to the following effect: If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estate including the shares in the suit. It is not in dispute that R.K.N.G, Raju died at Madras on 20-4-1948 leaving a will. The counsel of the plaintiff wrote to the 1st defendant-Bank a letter on 25th November, 1948 marked as Ex. B-2 in these terms: To The Agent, Andhra Bank Ltd., Bezwada. Sir, Reference : Sri R.K. N.G. Raju Garu. The above gentleman died at Madras on 20th April 1948, leaving a will appointing his wife as executrix. In the said will he makes a reference to the current account dealings he had with you. From a perusal of his Bank Pass Book we have the following particulars, folio No. 683/3, account 822. I am now instructed to take steps to secure adequate legal representation to the estate of the above-named deceased. The balance of his account with you has to be disclosed to Court. I shall he highly obliged if you can furnish to me at the earliest opportunity the balance now standing to the credit of the abovenamed deceased together with accrued interest, if any. I further understand that he has pledged with you 9100-B, ordinary fully paid up shares which he held in the Andhra Cement Company Limited, Rezwada on 22nd September, 1947 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, dated 25th November, 1948, caused by the plaintiff to be issued by Sri P. Satyanarayana Raju Garu, Advocate, Madras, to the first defendant-Bank after giving instructions? The said notice has been filed in the court. These interrogatories were not answered, 51. On 14-12-1950, a notice was served on the counsel appearing for the plaintiff in these terms: O.S. No. 86 of 1949. Between: Sri Rajah Kakarlapudi Venkata Sudarsana Sundara Narasayamma Garu..... Plaintiff. And The Andhra Bank Ltd., and Others. Defendants. NOTICE TO PRODUCE DOCUMENTS To Sri Metlapalli Koteswara Rao Pantulu Garu, B,A., B.L., Vijayawada. Take notice that you are required to produce on 16th December 1950 the hearing date, the will-nama alleged to have been executed by late Sri R.K.N.G. Raju Garu and referred to in the letter Written On 25th November, 1948 by the plaintiff's advocate at Madras, to the 1st defendant-Bank. Batta of Re. 1/- is sent herewith. Sd./- K. Nagabhushana Rao Advocate for 1st Defendant. 14-12-1950. Received copy and batta of Re. 1/-, Sd./- M. Koteswararao, Advocate, 52. The will was not produced. Even d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shown that his title has been displaced. If the defendant merely proves that a will is in existence and does not prove the terms of that will, that is not necessarily inconsistent with the plaintiff's title. In the first place, the will may not be a valid will, and, in the second place, the plaintiff may be a legatee under the will. The mere existence therefore, to a will does not necessarily displace the plaintiff's title. It is necessary for the defendant to go further and to prove that some one other than the plaintiff has title under the will. This he cannot do by virtue of the provisions of Section 187. Anantakrtshna Ayyar J., observed as follows: Thus where a plaintiff makes out a prima facie title in himself to the property in dispute, the defendant has to show a better title either in him-self or in some third person. If what is stated above be the correct principle of pleading applicable to such cases, it follows that when the plaintiff in the present case shows a prima facie title in himself to the property in dispute -- as the admitted heir-at-law of the last owner -- the defendant has 'to show a better title' either in himself or in some third p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Even in cases where the will has been executed outside the limits of the presidency towns the position is the same. In Ramiah v. Venkata Subbamma a Full Bench of the Madras High Court held that in the case of a Hindu will executed in the mofussil to which the Hindu Wills Act does not apply, the estate vests in the executor, who accepts office, from the date of the testator's death, This decision is later affirmed by the Privy Council in Venkata Subamma v. Ramayya It seems to us, therefore, that on the date of the testator's death the property of the late R.K.N.G, Raju vested in the plaintiff as an executrix. 57. In Parlhasarathy Aiyar v. Subbaraya Gramany AIR 1924 Mad 07 at p. 70, it was observed by Schwabe C. J., that It is not right, as has been suggested in some cases, to treat a will of which probate has not been ranted as non-existent and the property passing y intestacy. This will of course depend upon the fact whether the plaintiff has accepted the office as an executrix. The learned counsel for the appellant has placed strong reliance on certain observations in the judgment of the Madras High Court in Parthasarathy Appa Rao v. Venkatadri Appa Rao 43 M LJ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mes and Hennam published an advertisement in the paper that all persons who have any claim on the estate of late John Feaver were requested to send their respective accounts due without delay to Symes or Hannam, his executors in trust. It was held that the conduct of those two persons amounted to an absolute acceptance of the executorship. 61. In Jnanandra Nath v. Jitendra Nath, a Bench of the Calcutta High Court has held that: The office of executor being a private office of trust named by the testator and not by the law, one named executor may refuse the office or renounce. It is, however, too late to refuse or renounce when one has once elected to act as executor, and he may determine such election by acts which amount to an administration, One of the acts which amounts to administration so that the executor cannot afterwards refuse is something done by him with relation to the estate of the testator which shows an intention in him to enter upon the office of the executor. 62. In view of these authorities, we are of opinion that the plaintiff had accepted the office of the executrix, and it is not open now to the appellants' counsel to contend that she did not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et damages for the improper sale. 66. In Cooverji v. Mawji, Wadia J., held that the sale of pledged goods without proper notice does not render the sale void but by analogy to Section 69(3) of Transfer of Property Act, the remedy of the pawnor for an improper sale of the mortgaged property is damages for conversion to the pawnor, and the correct measure of damages is the loss which the pawnor has actually sustained, taking into account the pawnee's interest in the goods at the time of the conversion. 67. In AIR1955Pat288 a Bench of the Patna High Court held that if the sale of the pawned article is wrongful, the pawnor has got the remedy to sue the pawnee for having converted his goods to his own use. 68. In Chagla J., after a review of English authorities held as follows: (i) that although the pledgee may sell the goods unauthorisedly or unlawfully, the contract of pledge is not put an end to and the pledgor does not become entitled to the possession of the goods pledged without tendering the amount due on the pledge; or, in other words, without seeking to redeem the pledge, and; (ii) that without a proper tender of the amount due on the pledge, the only right ..... X X X X Extracts X X X X X X X X Extracts X X X X
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