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Sankaranarayana Iyer Saraswathy Amal Versus The Kottayam Bank Ltd.

1949 (11) TMI 13 - TRAVANCORE HIGH COURT

A.S. Nos. 26 and 113 of 1120 - Dated:- 29-11-1949 - K.T. Koshi, K. Sankaran and Charley Simon P., JJ. For the Appellant: K.N. Narayanan Nair, Adv. For the Respondent: T.K. Joseph, Adv. JUDGMENT 1. These two appeals arise from the judgment and decree of the Kottayam District Court in O.S. No. 72 of 1115. In that suit the Kottayam Bank Ltd., Kottayam (hereafter in this judgment referred to as the Bank) sought to recover from Defendants 1 and 2 the balance of three loans they advanced to Defendant .....

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2, 14.9.1112 and 23.9.1112 respectively. Exhibits B, C and D provide for payment of interest at 101/2 per cent per annum. One hundred shares of the Indian Iron and Steel Company Ltd., and two hundred shares of the Midland Rubber Company Ltd., were pledged with the Bank when the first loan was advanced. For the second loan the security given was two hundred shares of the Midland Rubber Company Ltd., and for the third two hundred shares of the Indian Iron and Steel Company, Ltd. On the day the fir .....

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. As however no response was made they issued a notice, Ex, F (4-2-1938) demanding payment of all amounts due within 7 days and intimating Defendant 1 that otherwise they would sell the shares and proceed to realise the balance. To this Defendant 1 sent a reply Ex. E (7-2-1938) to the effect that he was endeavouring his best to close the transactions and that it would be inopportune to sell the shares at that time when the market was dull. Though the reply proceeds on the assumption that the Ban .....

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n for some farther time. In October 1938 they caused a lawyer's notice (Ex. IX) to be sent demanding settlement of these and other transactions Defendant 1 had with them failing which they threatened they would take legal action. That threat was also not executed. However in August 1939 they sold the 400 shares of the Midland Rubber Company Ltd., at the then market rate for ₹ 1,125, Defendant 1 was informed of this sale as per Ex. X (18-9-1939). That letter also contained a demand to c .....

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ealised dividends on the Indian Iron and Steel Co., Ltd., shares to the extent of ₹ 2,097-14-0 and the suit giving rise to these appeals was brought to realise the balance from Defendants 1 and 2. The balance claimed was ₹ 5,420-11-9. Though the stipulated rate of interest was 10 1/2 per cent per annum the Bank claimed only 9 per cent 2. Defendant 2 died soon after the suit was filed and his legal heirs were brought on the record as Defendants 3 to 6. They are none other than Defenda .....

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was a case of wrongful conversion and he put forward a counter claim for ₹ 6,737-8-0. It was further contended that the debt being secured under Act III (3) of 1116 the Bank cannot claim more than 6 per cent interest per annum. 4. The Court guardian of the minor Defendants even put the Bank to prove the genuineness of Ex. A and contended that even if that be genuine it cannot have any operation with respect to the loans advanced under Exs. C and D, but only to that under Ex. B. Another con .....

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laim to ₹ 4,303-13-4. A decree was passed against Defendant 1 for this amount and future interest thereon. The Bank was also allowed their costs. As against the legal heirs of Defendant 2 the Bank was given a decree only for ₹ 2,356-9-6 with future interest and half the costs incurred by the Bank in the suit. The learned Judge was of opinion that though Ex. A was couched in wide terms as to cover all advances made by the Bank to Defendant 1 on promissory notes and the security of Com .....

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t 1 and Defendant 3 (the wife of Defendant 1) as representing the estate of the deceased Defendant 2, have preferred separate appeals against the lower Court's judgment and decree. 6. A.S. No. 26 of 1120 is the appeal by Defendant 3 and A.S. No. 113 of 1120 is Defendant 1's appeal. In his appeal, Defendant 1 has repeated his-claim for damages and paid Court-fee for the full amount of his counter-claim (Rs. 6,737-8-0). The Bank has raised no complaint against the lower Court's decisio .....

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and (3) that there was inordinate delay in effecting the sales which resulted in the shares being sold at low prices and the Bank should be made liable for the loss caused by the delay. We shall deal with these points in their order. 8. In dealing with the first point, it may be mentioned that in the Court below it was even contended that the Bank cannot effect the sale of the securities pledged with them without the consent or permission of Defendant 1. In the appeal no such point was urged an .....

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d, 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 duo, the pawnor shall pay over the surplus to the pawnor. Defendant 1 had executed promissory notes with respect to the loans and they had become overdue when Ex. F letter was sent on 4th February 1938. That there were prior demands is set out in .....

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ly take notice that if the amounts which come to ₹ 14,916-6-2 is not paid within 7 days, we will be forced to sell the securities in the open market and realise the proceeds towards the loan. You will be responsible for the charges that may be incurred on account of the sale and the balance amount after crediting the sale proceeds will be realised from you. The letter makes it clear that unless the amounts which had already become over due are not paid within the period specified it was th .....

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ted 10th February 1938). The subsequent exchange of letters did not therefore take away the effect of Ex. F or mar its purpose. The argument that the pawnee should give notice of the actual date, time and place of the intended sale to the pawnor is one which Courts have always repelled. See Sankara Pillay v. Nedungadi Bank, Ltd. (19 T.L.J. 1211) and Kunj Behari Lal v. Bhargava Commercial Bank, Jubbulpore 40 ALL. 522 : (A.I.R. 1918 ALL. 363). The Appellant's learned Advocate urged before us t .....

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an intimation of the intention to sell and not that a sale should be arranged beforehand and due notice of all details given to the pawnor finds abundant support in earlier as well as in later decided cases. The latest pronouncement of an Indian High Court on the subject is that occurring in Official Assignee v. Modho Lal Sindhu A.I.R. 1947 Bom. 217 : (48 Bom. L.R. 828). At p. 227 of the report after stating that the law with regard to a pawn enacted in the Indian Contract Act, 1872 is a codific .....

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ve in him (as we shall presently see) a right of redemption. And at p. 263: The common law of England, existing in the time of Glanville, seems to have required a judicial process to justify the sale, or at least to destroy the right of redemption. But the law as at present established leaves an election to the pawnee. He may file a bill in equity against the pawnor for a foreclosure and sale; or, he may proceed to soil cx mero motu, upon giving notice of his intention to the pledgor. The Englis .....

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J. who took part in the decision of the case. On pp. 592 to 594 of the report Stirling L.J. has stated as follows: This case was decided in the Court of first instance and has been argued in this Court, on the basis that the relation between the Plaintiff and the Defendants was that of mortgagor and mortgagee; and I think that it must now be dealt with on that footing. I agree with Farwell J. in thinking that the statement of the law at p. 276 of vol. I of Robbins on Mortgages is correct. The pa .....

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this head. Some light may be derived from what has been said by learned Judges as to the rights of pawnee or pledgee of chattels in like circumstances. Thus, Bowen L.J. said is Ex parte Hubbard; In re Hardwick (1886) 17 Q.B.D, 690 at p. 698 : (55 L.J.Q.B. 490): 'There is at common law an authority to the pledgee to sell the goods on the default of the pledgor to repay the money, either at the time originally appointed, or after notice by the pledgee.' In Ex parte Official Receiver; In re .....

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In re Morritt, (1886) 18 Q.B.D. 222 at p. 233 : (56 L.J.Q.B. 139), with reference to the position of a mortgagee of personal chattels: 'Where there is no express power of sale given by the mortgage, he has, after default in payment, and after he has given the mortgagor a reasonable time to pay the money due, a power to sell and give a good title to the purchaser, though, of course, the mortgagor has, at any time before sale, a right on payment of the money due, including expenses, to preven .....

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ment of an excessive sum has been held to be bad; Pigot v. Cubley (1864) 15 C.B. (N.S.) 701 : (33 L.J.C.P. 134), The notice must give a reasonable opportunity to the mortgagor to pay what is due under the mortgage; and I think it is at least desirable that it should fix a day for that purpose, and also convey to the mind of the mortgagor that, if he fails to avail himself of the opportunity given to redeem the mortgagee will be in a position to put in force his rights. 9. We are now, no doubt, b .....

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port of this part of the case viz., Nandalal v. Dasarathi A.I.R. (19) 1982 Cal. 534 at p. 535 : (59 Cal 1052), that the form of the notice in that case did not conform to law. The notice stated that failing payment by the day fixed the pawnee shall arrange for sale of the hypothecated stock. It was said that such a notice should contain more definite particulars and that what such particulars should be must depend upon the peculiar facts of each case. Whatever that be on closer examination it wo .....

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uch use to the Appellant in this case. Here Ex. F contains an unequivocal indication of the Bank's intention to sell the shares if occasion demanded it; the Appellant had notice of it and what he did was to attempt to gain more time so that the gale may be held when the share market was more favourable. The lower Court's decision that the legal requirements of a valid notice are satisfied in this case has therefore to be upheld. 10. In view of our decision on the first point the other tw .....

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ar the consequent loss the Appellant sustained thereby. We have to consider these two points on their respective merits. 11. No case of any agreement to postpone the sale was pleaded or proved. No issue was raised with respect to it nor has the lower Court considered the point. The memorandum of appeal to this Court is equally silent about it. The Appellant's learned Advocate however made a laboured attempt before us to bring the case within the principle of the decision in Pigot v. Cubley ( .....

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h 11 of the plaint which was very much relied upon by the Appellant's learned Advocate does not indicate anything more than that the Bank had shown some indulgence in the matter of enforcing its rights against the debtor and the securities. No trace of an agreement as sought to be made out on behalf of the Appellant can be found in the plaint or in the evidence of P.W. 1, the Managing Director of the Bank. No other material was relied upon in support of the argument except para. 9 of the App .....

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re was clear evidence of the Bank having waived its right of sale of the shares. This aspect of the case, though not raised by the pleadings or the issues raised in the case has been considered by the Court below. Paragraph 11 of the judgment of the learned Judge below discusses the question. The point is however not taken in the memorandum of appeal to this Court. Be that as it may, we shall discuss it. One ground on which a waiver was sought to be spelled out was from the delay in effecting th .....

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x. F was sent, made no reference to the Bank's right of sale but only to a suit in a Court of law to recover the amounts due. It is too far-fetched to contend that the implication of the notice is necessarily the abandonment of the right of sale. Section 176 gives a pawnee the right to bring a suit against the pawnor upon the debt or promise, and retain the goods pledged as a collateral security as also the right to sell the thing pledged, on giving the pawner reasonable notice of the sale. .....

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to in this judgment. With Ex. F notice, the Plaintiff had acquired the right to sell the shares and we concur in the view the learned Judge in the Court below took that it was not since lost at any time until it was put into operation. This branch of the case also therefore has to be decided against the Appellant. 14. Now we come to the third and the last point argued in the appeal. That point as mentioned earlier in that the sales were inordinately delayed with the result that only low prices .....

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definitely against him. See 19 T.L.J. 1211; Kesarimal v. Suryanarayanamurthy A.I.R. 1928 Mad. 1022 : (114 I.C. 820); Champaka Rice Mill Co. v. Rama 1950 swami Pillai 1929 M.W.N. 167 and Travancore National and Quilon Bank Ltd. v. Cheriyan (1945 T.L.R. 864). The two cases of the Madras High Court now cited are referred to with approval and followed in 19 T.L.J. 1211 and Travancore National and Quilon Bank Ltd. v. Cheriyan 1945 T.L.R. 864. The headnote to the decision in Kesarimal v. Suryanarayana .....

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f the pawnor to effect the actual sale and he is not thereafter bound to sell She pledged goods within a reasonable time after expiry of the period mentioned in the notice. In Mannargudy Champaka Rice Mills, Ltd. v. Ramaswami Pillai 1929 M.W.N. 167, referring to Section 176, Coutts-Trotter C.J. observed as follows: That (Section 176) has been in fact construed by the learned Judge to mean not merely that the notice of the proposed sale must be within a reasonable time but that the unfortunate pa .....

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he learned Chief Justice's comment regarding the conduct of the pawnor in asking the pawnee to postpone the sale and afterwards turning round to say that the sale was delayed applies with equal, force to the conduct of the Appellant in this case. The evidence shows that the shares were sold by recognised brokers through the medium of well-known institutions like the Central Bank of India Ltd. In fact the Appellant's Advocate had no complaint before us that the sales did not fetch the cur .....

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y the sale, the pawnor has nothing to complain about. Further than this, the law does not impose any limitation upon she powers of a pledgee to sell. On the whole there is no substance in the complaint that the sales were inordinately delayed or as to the manner in which they were effected. In fact no point was made before us concerning the latter aspect and as to the former the law is on the side of the Bank. 15. What follows from our decision on the points raised is that the sales held of the .....

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h their Court guardian on behalf of the estate of the deceased Defendant 2. In our view that estate got all possible benefits it could get at the hands of the Court below and the appeal is devoid of any merit. 17. Practically every point urged before us in this appeal is new in that the written statement filed by the Court guardian of the minor Defendants did not raise them. Nor did, for that matter, the written statement of Defendant 1 contain any one of them. It was first urged that Ex. A was .....

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ced to Defendant 1 on the strength of promissory-notes executed by him and the pledge of shares in limited companies. There was no time limit or any limit for the amounts for which Defendant 2 stood guarantee. The contention does not even find mention in the memorandum of appeal and we cannot help looking upon the point as thoroughly untenable. 18. It was next urged that the sale of the shares effected without notice to the guarantor rendered it invalid as against him and that the guarantor' .....

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