1963 (1) TMI 66 - HC - Indian Laws

Summary

Issues Involved:
1. Nature of the suit transaction (whether it is a pledge or a mortgage of movables).
2. Applicability of Section 31 of the Andhra Court Fees Act.
3. Applicability of Section 23(1)(a) or Section 23(2)(b) of the Andhra Court Fees Act for determining court fees.

Detailed Analysis:

1. Nature of the Suit Transaction:
The primary issue was to determine whether the transaction in question constituted a pledge or a mortgage of movables. The court analyzed Section 172 of the Indian Contract Act, which defines a pledge as "the bailment of goods as security for payment of a debt or performance of a promise." The essential ingredients of a pledge include:
- Bailment of goods.
- Bailment by way of security.
- Security for payment of a debt or performance of a promise.

The court noted that a pledge creates an estate in the pledgee, distinct from ownership, which includes the right of possession but not the right of enjoyment. The court distinguished between a pledge and a mortgage by stating that a pledge involves bailment, whereas a mortgage involves some transfer of the right of property by way of security. The court concluded that the transaction in question was a pledge and not a mortgage of movables, as it involved the transfer of possession but not ownership of the shares.

2. Applicability of Section 31 of the Andhra Court Fees Act:
The court examined whether Section 31, which pertains to the redemption of a mortgage, was applicable. Section 31(8) states that in a suit against a mortgage for redemption of a mortgage, the fee shall be computed on the amount due on the mortgage or on one-fourth of the principal amount secured under the mortgage, whichever is higher. The court found that Section 31 does not specifically refer to mortgages of immovables and could be argued to include mortgages of movable property. However, since the court determined that the transaction was a pledge and not a mortgage, Section 31 was deemed inapplicable.

3. Applicability of Section 23(1)(a) or Section 23(2)(b) of the Andhra Court Fees Act:
The court then considered which section of the Andhra Court Fees Act was applicable for determining the court fees. The lower court had held that the suit fell under Section 23(1)(a), which applies to suits for movable property with market value. However, the petitioners contended that it fell under Section 23(2)(b), which applies to suits for possession of documents of title where the plaintiff's title to the money or property secured by the document is not denied.

The court analyzed the definition of "document of title" and concluded that shares of a limited company fall within this definition. Therefore, the suit for recovery of pledged shares, being documents of title, fell under Section 23(2)(b). As a result, the court directed that the court fees should be computed based on the amount at which the relief sought is valued in the plaint or at which such relief is valued by the court, whichever is higher.

Conclusion:
The court concluded that the transaction was a pledge, not a mortgage of movables, and thus did not fall under Section 31 of the Andhra Court Fees Act. Instead, the suit fell under Section 23(2)(b) of the Act, and the court fees should be computed accordingly. The revision petition was allowed, and the lower court was directed to determine the correct valuation for the first relief and collect the court fees based on the higher valuation. No order as to costs was made.