9911796707
TMI Blog1995 (3) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... as security with State Bank of India, the defendant No.2. It was specifically understood that the defendant No.1 would utilise the transfer forms only for the purpose of executing documents of security and not to transfer the ownership rights to defendant No.2. Subsequently, the plaintiff made time to time payments on account of interest to the defendant NO.1 by means of bank drafts. In February 1983, the proposal of defendant No.1 asking if the plaintiff was interested in disposing of its shares was declined by the plaintiff. On 9.2.83, the plaintiff telegraphically requested for the return of the pledged shares against payment of the loan amount. There were subsequent requests as well. But the shares were not returned by the defendant No.1 to the plaintiff's bankers, as instructed and requested by the plaintiff. The plaintiff came to know that defendant No.1 had pledged the shares with defendant No.2, handed over the blank transfer forms signed by the plaintiff and that the defendant No.2 had approached the defendant No.3 for transferring the shares in the name of defendant No.2 or any of its nominees. Neither the defendant No.1 nor defendant No.2 had any power or authority t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered entitled under the circumstances of the case , may be granted to the plaintiff and against the defendants. (4) All the defendants excepting No.3 are contesting the suit by filing written statements. (5) I.A. No. 10044/94 styled as one under Order 7 Rule 11 (d) has been filed on behalf of defendant No.4 on 21.11.1994. (6) The learned counsel for defendant No.4 has raised the following four contentions : (I)Though it is admitted that the plaintiff had pledged the shares with the defendant No.1 and though it is the case of the plaintiff that the transactions in suit have commenced with the pledge made by the plaintiff in favor of defendant No.1 yet the plaintiff has chosen to sue only for declaration of title with consequential relief of injunction, deliberately avoiding seeking relief of redemption of pledge, the suit does not lie as the remedy of a pawnor is to sue only for redemption of a pledge and that too after tendering the amount of loan due. (ii) A bare suit for declaration is also hit by the provisions to section 34 of the Specific Relief Act. (iii) Defendant No.3 is protected by proviso to Section 27 of the Sale of Goods Act. (iv) The plaintiff canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be filed by the defendant No.4 the plaintiff had already examined about eight witnesses in the court. A commission had also been issued by the court for recording statements of witnesses at Bombay. The plaintiff and defendant No.4 have examined their witnesses at Bombay on commission. (9) It may be noted that the court fee stamps additionally filed by the plaintiff bear the following endorsement :- SUIT For Declaration Permanent Injunction 1.Value of the suit for the purpose of jurisdiction ...........14,0200/ 2. Value of the suit for the relief of redemption declaration injunction ..........14,00,000/ 3. Value of the suit for the relief of accounts. .. 200/ 4. Court fee paid ................9,240/ plaintiff through New Delhi Dated 30.1.1988 ( M.L. Verma/Suresh Singh) Advocates For plaintiff (10) At the very outset of hearing on the application I told the learned counsel for the plaintiff that merely because the application filed by defendant No.4 bears the label of Order 7 Rule 11 (d) Cpc, I would not keep the counsel confined to clause (d) alone for the label assigned to the application; I would hear the application on the facts set out therein and reject the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and thereby save the public time and energy which would be wasted in the event of court finding itself in agreement with the contention of defendant No. 4 at the fag end of the trial. (13) The application has been consequently heard on merits. Having heard the learned counsel at length and having given my anxious consideration I am firmly of the opinion that the application deserves to be dismissed on merits for the reasons to follow. (14) It is true that the plaintiff has not sought for the relief of redemption of pledge specifically and in so many words. The counsel for the plaintiff has in all fairness conceded that the plaintiff having pledged the shares with the defendant No.1 he shall have to seek redemption of pledge, that being the only remedy available to him in accordance with the provisions of Chapter Ix (Sections 172 to 179) of the Contract Act. Still the court should not go guided by technicalities in construing of the language employed in the prayer clause of the plaint but should go by the substance of the reliefs sought for, persuasively appealed the counsel for the plaintiff. (15) Emphasising the need of making a justice oriented approach by the courts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... look at the substance of the matter and not its form 16.4. So was the view taken in Uoi Vs Pearl Hosiery Mills The plaintiff had sued for declaration alone specifically stating that no consequential relief was asked for and the same was not necessary in the circumstances of the case. Still the court observed : THIS averment in the plaint would not affect the real situation which would depend upon the interpretation of the plaint read as a whole and specially the prayer clause in the same . The Court concluded the case was one for declaration and consequential relief and not for declaration simpliciter. (17) The Code of Civil Procedure does not provide for a form of decree to be passed in a case of redemption of pledge as it does in suits relating to mortgages of Immovable property. The provisions of Contract Act too do not detail a provision contemplating suit for redemption of pledge. (18) What is redemption ? It is realisation of a right to have the title of pledged property restored free and clear of the pledge by performing the pawnor's obligation essential for the purpose and restoration of physical possession of the pledged property with the plaintiff if th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of the pledgor in respect of an unlawful or unauthorised sale is in tort for damages actually sustained by him. We are in accord with the view of Chagla J., that in case of an unauthorised sale by a Pledgee the relief that the pledgor can seek is to file a suit for redemption by depositing the money, treating the sale as if it had never taken place, or where the suit for redemption is not filed, to ask for damages on the foot of conversion. The present suit is neither the one nor the other. It is a suit merely for declaration with an ancillary relief for an injunction restraining the 3rd defendant from registering the shares in the name of the 2nd defendant. We are of the opinion that the suit as framed is not sustainable. 22.2 It will be seen that it is on the authority of the view taken by Chagla, J. in Air 1947 Bom 217 that the Andhra Division Bench has formed an opinion that a suit for redemption of pledge can be filed only by depositing the money. 22.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cedent. 22.7.I may make it clear that if the Bombay and Andhra Pradesh decisions go on to the extent of holding that a suit for redemption of a pledge cannot be filed unless preceded by a tender or accompanied by a deposit of the pledge money then I express my respectful disagreement with the view so taken. No provision in any statute and no principle of law has been brought to my notice which may persuade me taking a view in line with the view taken by the Andhra Pradesh High Court. 22.8. Here I may utilise this opportunity for extracting other principles of law laid down by Chagla, J. in his illuminating judgment which are based on several authorities. They are :- (i) The provisions of Section 176 Contract Act are mandatory. The applicability and sweep of Section 176 unlike several other provisions on the same subject is not eclipsed by the phrase- in the absence of a contract to the contrary. The notice that is to be given to the pledgor of the intended sale by the pledgee is a special protection which statute has given to the pledgor and parties cannot agree that in the case of any pledge, the pledgee may sale the pledged articles without notice to the pledgor (para 55) (ii)I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as expressed his approval and agreement with the following statement of law in Story's Law of Bailments, (8th Edition, page 272):- A pledge of stock has no legal right to sell the same without notice to the pledgor and such sale passes no title as against the pledgor, even to a bonafide party . 22.11 The above said principles deducible from the opinion recorded by Chagla, J. with which I find myself in full agreement lend strength to the plaintiff's case. It may also be noticed that the suit before the Division Bench of Andhra Pradesh was merely for a declaration with ancillary relief restraining registration of the shares. The suit was held to be not maintainable, also hit by Section 42 of the Specific Relief Act (old). It was not a suit for redemption which the present suit has been held to be by me. (23) Division Bench decision of Madras High Court in S.L. Ramaswamy Chetty vs. Msapl Palaniappa Air 1930 Mad 364, was relied on by both the parties and has been referred to by the Andhra Pradesh High Court too in the above-referred to decision. It will be useful to extract and reproduce the following statement of law there from :- IT was suggested that the non- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saddled with the defendant's costs. If the suit is filed without tendering the money and it is found that the pledged property cannot be returned to the pawnor, then the pawnor may have a decree in damages. In either case his suit cannot be dismissed. (25) Section 27 of the Sale of Goods Act reads as under :- SALE BY Person Not The owner:- Subject to the provisions of this Act and of any other law for the time being in force, where goods are sold by a person who is not the owner thereof and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell : Provided that, where a mercantile agent is, with the consent of the owner, in possession of the goods or of a document of title to the goods, any sale made buy him, when acting in the ordinary course of business of a mercantile agent, shall be as valid as if he were expressly authorised by the owner of the goods to make the same; provided that the buyer acts in good faith and has not at the time of the contract of sale notice that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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