1962 (7) TMI 67 - HC - Indian Laws

Summary

Issues Involved:
1. Right of the pawnee to sell the pledged shares after instituting a suit for recovery of debt.
2. Reasonableness of the notice of sale under Section 176 of the Indian Contract Act.
3. Allegation of mala fide intention in the proposed sale of shares.
4. Discretionary relief of injunction.

Issue-wise Detailed Analysis:

1. Right of the pawnee to sell the pledged shares after instituting a suit for recovery of debt:
The plaintiff contended that the defendant lost the right to sell the pledged shares upon instituting Suit No. 858 of 1959 for the recovery of debt. The argument was based on the interpretation of Section 176 of the Indian Contract Act, suggesting that the right to sue on the debt and the right to sell the pawn are alternative and not concurrent. The court, however, held that the pawnee has concurrent rights to sue on the debt and to sell the pawn. The court emphasized that the retention of the pawn does not exclude the right to sue, and the sale of the pawn does not destroy the right to recover the balance due. The institution of a suit does not reduce the pledge to a passive lien and does not destroy the pawnee's right to sell the pawn.

2. Reasonableness of the notice of sale under Section 176 of the Indian Contract Act:
The plaintiff argued that the notice dated February 6, 1960, was not reasonable as it did not specify the actual sale, place, date, and time of the sale. The court held that the notice was reasonable and sufficiently gave the plaintiff time to pay the debt and redeem the pawn. The notice clearly stated that in default of payment by February 18, 1960, the shares would be sold. The court noted that Section 176 does not require the notice to specify the place, date, and time of the sale and that the reasonableness of a notice varies from case to case. The plaintiff failed to prove any special circumstances that would necessitate such particulars in the notice.

3. Allegation of mala fide intention in the proposed sale of shares:
The plaintiff alleged that the proposed sale was mala fide, citing an offer to pay a higher price per share and the fact that the shares were part of a controlling block in the British India Corporation Ltd. The court rejected this contention, stating that the defendant was not bound to accept the offer and that the offer could lead to complications. The allegation regarding the controlling block of shares was not proved, and there was no evidence of mala fide intention by the defendant.

4. Discretionary relief of injunction:
The court observed that the plaintiff had not instituted a suit for redemption of the shares and had defaulted in payment of the debt. The debt was not fully secured, and the plaintiff was unable to deposit any money in court. Even if the court were inclined to grant an injunction, it would have done so only upon the plaintiff depositing the entire amount due to the defendant. The court exercised its discretion to refuse the injunction.

Conclusion:
The court dismissed the appeal, holding that the plaintiff had not made out any case for an injunction. The notice of sale was deemed reasonable, and the pawnee's right to sell the pawn was upheld despite the institution of the suit for debt recovery. The allegations of mala fide intention were not substantiated, and the discretionary relief of injunction was not warranted. The appeal was dismissed with costs, and the interim injunction was vacated and discharged.