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TMI Blog1958 (4) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... timately it stood at ₹ 3,50,000/- in 1947. From August, 1948, the Bank wrote a number of letters to the plaintiff pointing out that the securities held in deposit by the Bank against the advances made to the plaintiff fell below the stipulated margin of 40 per cent and requesting the plaintiff to restore the margin either by sending sufficient funds, or by furnishing further securities. On the plaintiff's failure to restore the margin the Bank sold some of the shares in 1949 and was about to sell some more shares when the plaintiff instituted a suit for redemption on 12-5-1950, praying for redemption of the shares pledged by him on a proper accounting of all the dealings and transactions between the plaintiff and the Bank. In the plaint the principal grievances made by the plaintiff are that (a) the defendant Bank had wrongfully debited the plaintiff's account with interest in excess of the rate fixed by agreement and (b) the sale of the shares by the Bank was in breach of the terms and conditions of the said hypothecation and was contrary to law. On 5-3-1951 it was ordered and decreed with the consent of the parties that the suit be referred to Mr. B.K. Chakravarti, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Bank has decided to conform to the minimum interest rates stipulated by the Calcutta Exchange Banks. You are by this letter informed that interest on your overdraft account secured by shares will be increased as from date to 1/2 per cent over Bank rate minimum 3 1/2 per cent. The defence case is that a copy of this notice was sent to the plaintiff by ordinary post and though there was no express acceptance of its terms on his behalf, there was an implied acceptance by conduct. This case has been accepted by Sarkar, J. 3. Mr. Meyer appearing for the appellant has argued (a) that the terms contained in the Circular--Ex. 9 cannot be said to constitute a proposal (b) that it has not been proved that the circular reached the plaintiff and (c) that the evidence on the record does not justify an inference of implied acceptance on the part of the plaintiff. Mr. De appearing for the respondent Bank has contended on the other hand, that the evidence adduced by the Bank is sufficient to prove communication of the proposal to the plaintiff and alternatively that even if the case of express proposal fails, the evidence on the record is sufficient to Justify an inference of implied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a whole, upon the view that no such case had been made in the pleadings. For these reasons it must be held that the plaintiff had adequate notice of the alternative case of implied proposal and implied acceptance and that she will not be prejudices in any way if that case be allowed to be made before this Court. 5. Turning now to the merits of the argument, Mr. Meyer has pointed out that upon the language of the cyclostyled circular, Ex. 9 as quoted above, it can hardly be said to be a proposal, as defined by S. 2(1) of the Indian Contract Act; because it does not signify to the Constituent the intention of the Bank to raise the rate of interest with a view to obtaining the Constituent's assent. It is, on the other hand, a unilateral decision to enhance the rate of interest with effect from the date of the notification. If, as the circular states, the rate of interest is to he raised as from date , the Constituent has hardly any opportunity to accept or reject the proposal. Reference is made to the evidence of Mr. Macgregor, the Manager of the Calcutta branch of the Bank who states in answer to question No. 17, that the Bank gave fifteen days' notice of the increase in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saying in answer to question No. 221 that as he used to sit at the same table with Lajjaram Dubey, he saw Laijaram actually signing the circular addressed to Chandmull Batia, be admits in answer to question No. 225 that it was his inference from the register. Indeed, it is impossible for any man to have independent recollection of such a fact after the lapse of five years. As regards, sending of the circular to the plaintiff, both Pannalal Burman and Mr. Maegregor, the manager of the Bank state that the initials of the officers in charge of the three parts of the register against the name of each Constituent signify that a copy of the circular was sent to each constituent. Mr. Macgregor says nothing as to the manner in which the circular was sent; but Burman gives the details. He says that a bunch of circulars was handed over to Lajjaram Dubey who signed them and sent them by ordinary post without any certificate of posting through important and reliable chaprashis of the Bank . There is no evidence as to who wrote the address and who affixed the postage stamps, and there is no evidence that the so called important and reliable chaprashis actually posted the circulars or received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by disturbances , as is required by the explanation to illustration (f) of Section 114, Evidence Act. The case of the Bank in so far as it is based upon express proposal and express communication of that proposal to the plaintiff must accordingly fail. 9. The question, however, still remains whether there was an implied promise on the part of the plaintiff to pay interest at the rate of 3 1/2 per cent from 17-10-1946. According to Section 9 of the Indian Contract Act, if either or both the proposal and acceptance which constitute a promise is or are made in words, the promise is said to be express; but if either or both of them is or are made otherwise than in words , the promise is implied. It is true that the notice (Ex, 9) communicating the decision of the Bank to raise the rate of interest to 3 1/2 per cent with effect from 17-10-46 cannot be said to he an express proposal within the meaning of Section 2(1) of the Indian Contract Act; but it nevertheless contains an implied proposal to the effect that if the plaintiff wanted to keep alive his overdraft account with the Bank or desired to take further advances from the Bank it could be done only on the terms contained in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... answers to questions Nos. 60 to 69). It is, therefore, impossible to believe that the plaintiff did not know that the respondent Bank which was affiliated to an Exchange Bank, had also raised its interest to 3 1/2 per cent from 17-10-1946. The respondent Bank has also produced the plaintiff's Pass Book showing the plaintiff's account from December, 1942 to February 1950 -- Ex. 14. The entries in these Pass Books show that different sums used to he debited against the plaintiff's account from month to month as interest due on his overdraft account the rate of interest charged by the Bank is not specified in this Pass Book but the plaintiff's witness Anath Bandhu Bagchi admits that the plaintiff's books of account used to be periodically audited once and sometimes twice a year and the auditors did not raise any objection on the ground that the Bank had improperly raised the rate of interest (See Question? 82 to 86). The plaintiff also admits that he did not object to the Bank having raised the rate of interest to 3 1/2 per cent per annum when his officer Anath Bandhu Bagchi came to know about it sometime in 1949 (See questions 143 to 151). After the enhancement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he decisions in the cases of Haridas Ranchordas v. Mercantile Bank of India 47 Ind App 17: (AIR 1920 PC 61) (A); Bata Krishna Pramanik v. Bhowanipore Banking Corporation Ltd. AIR 1932 Cal 521 ; Gaddarmal v. Tata Industrial Bank.: AIR1927All407 and Bruce v. Hunter (1813) 3 Camp 467 (D). The decision of the Judicial Committee in Haridas Ranchordas (A) is a strong case in support of implied agreement. There the only question was whether the Bank was entitled to charge compound interest with monthly rests though the written contract between the parties provided only for yearly interest on the daily balance in respect of the overdraft. The Bank disclosed the pass books which showed that at the end of every month interest was added to the amount then due and the resultant balance which included the interest was carried forward to the debit of the customer as the balance due on the first of the following month . The customer did not raise any objection to this principle of charging interest. From these facts Sir John Edge, following the principle laid down in (1813) 3 Camp. 467 (D) observed at page 23 (of Ind App): (at p. 63 of AIR) the fact that the defendant had not objec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tead of 3 1/2 per cent. Reliance has been placed upon the following extract of the order of reference to the Special Referee : And it is further ordered and decreed with the like consent that in taking the said accounts and in making the said enquiry the said Special Referee is to proceed on the basis of and shall not disturb (1) any settled account or (2) any account examined and accepted as correct by conduct or otherwise..... 13. It is argued that since the plaintiff signed the last confirmation slip on 31-3-1949 he had no right to claim that the rate of interest prior to 31-3-1949 was less than 3 1/2 per cent. There is no substance in this contention of the respondent. The order of reference does not give the respondent an independent right to resist the plaintiffs claim that interest should be calculated at the rate of 3 per cent. All that it says is that the plaintiff shall not be entitled to travel beyond any settled account or an account which has been examined and accepted as correct which necessarily postulates an investigation into the question whether the plaintiff examined the accounts submitted by the Bank and accepted them as correct. Before the Special Ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the notice contemplated by Section 176 must be such as to give the pawner an opportunity to redeem the goods pledged at any subsequent time before the actual sale of them . Therefore, according to the appellant, the notice must specify the actual date, time and place of the intended sale so as to enable the appellant to redeem the shares before the sale is actually held. In support of this proposition reliance is placed upon the case of The Co-operative Hindus-than Bank Ltd. v. Surendra Nath De AIR1932Cal524 . The language of Sections 176 and 177 of the Indian Contract Act seems to suggest that those two sections apply in terms only to cases where a time is stipulated in the agreement of hypothecation for the payment of the debt or the performance of the promise But even in the case of a loan for an indefinite period it is necessary to put an end to the debtor's credit by requiring him to repay the loan within a particular date before the pawner can exercise the right of sale, as the debtor cannot be said to be in default unless he fails to repay the loan within that date. In such a case therefore the debtor is in the same position as if a date for the payment of the loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oment up to sale ..... As I have held that Section 176 applies to the present case, I need not pursue the matter further. 17. The next question is whether the notices that were given by the Bank to the appellant can be said to be reasonable notices of the intended sale or of the intention to sell. The evidence of Mr. Macgregor, Manager of the Bank, makes it quite clear that the notices by which the Bank reserved to itself the right to sell off the securities were not intended as notices to sell the shares (See Questions 612, 613 and 614) because he expressly admits in his answers to these questions that by reserving the right to sell, the Bank never intends to sell. Sarkar, J. however, has relied upon the letter dated 12-5-1949 for his conclusion that the Bank had given a reasonable notice of its intention to sell by that letter. That letter runs as follows : We regret to observe that in spite of our repeated requests you have not found it convenient to call at the Bank to see us nor have you taken any steps to restore the requisite margin on your account. Your account is daily deteriorating and we shall therefore arrange to effect sale of your securities as and when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at notice must be given of the sale that will be actually held; or in other words the pawnee must first arrange for a sale and then give a reasonable notice thereof. I cannot, however, accept this argument as correct. The sale in Section 176 means the intended sale and not the sale that has been actually arranged by the pawnee. If the pawnee is required to give notice to the pawner after entering into a binding agreement for the sale of the pledged goods, he will be liable for damages for breach of that agreement to the intending buyer in case the pawner chooses to redeem the pledged goods before the actual sale, under Section 177. For these reasons I agree with the view taken by the Allahabad High Court in Kunj Behari Lal's case (F) and hold that the reasonable notice of the sale does not require specification of the date, time and place of the sale. The decision in the case of AIR1932Cal524 does not lay down any contrary proposition but merely says that the contents of the notice required to be given under Section 176 depend upon the facts of each case. I, accordingly, hold that the notice dated 12-5-49 read with the notices dated 9-2-49 and 10-3-49 to which it refers is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to release certain Tea and Timber shares (Ex. 4 (vi)). In reply to both these letters, the Bank informed the plaintiff on 11-8-49, that it would release the Tea and Timber shares on payment of ₹ 67,000/- and ended by saying; It is possible if you called to have an interview with us, an arrangement suitable to both will be made (Ex. 4 (vii)). By Ex. 4 (viii) the plaintiff informed the Bank on 22-8-1949 that it was arranged at the interview proposed by the Bank that the plaintiff would deposit further securities of the value of ₹ 40,000/- and would make monthly payments of ₹ 5,000/- in consideration of which the Bank would desist from further sales and would also hand over Barduar Tea Shares. 22. The plaintiff has also disclosed a receipt granted by the Bank on 22-8-49, showing the deposit of a large number of shares by plaintiff on that date (Ex. 4 (ix)). There is also another receipt granted by the Bank, on 20-2-1950 which shows that the plaintiff deposited further securities in the Bank. Ex. 4 (xiv)). The list of shares sold by the Bank and disclosed by the Bank as annexure D to its State of Facts before the Special Referee shows that on 23-2-50, 30-3-50, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and immediately thereafter sold a large number of shares pledged by the plaintiff in nine lots, before 3 P.M. when the share market closes. He admits receipt of the letter sent by the plaintiff's attorney on that date but says that he had probably issued the sale cards before that though he is not at all sure of that. (Questions 667 to 686). I am not at all convinced that the defendant had issued Sale cards before the receipt of the letter of the plaintiff's attorney. What is more probable is that the defendant was racing with time to sell as many of the plaintiff's shares as could be sold during the short interval the injunction stood dissolved. It appears that the plaintiff applied for restoration of the suit and also the order of injunction on the following day, i.e. 21-2-51 and the suit and the order of injunction were restored on 22-2-51 upon the plaintiff depositing with the defendant's attorney a sum of ₹ 30,000/-. 25. What happened on 21-2-51 is very interesting. According to the plaintiff he sent a cheque for ₹ 60,642/12/- to the defendant on that date pursuant to the directions given by Sarkar, J. As the defendant refused to accept a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... njunction is equivalent to an order made by the Court authorising the defendant to sell the shares without notice, he is entirely mistaken. The discharge o the order of injunction meant nothing more than this that the parties were free to take any action they liked entirely at their peril. It did not confer any authority to any of the parties to act in a particular manner. If the Bank did not serve any fresh notice before the sale held on 20-2-51, it must be taken to have proceeded on the strength of the notice dated 12-5-49. That notice, as I have already said, is not sufficient in law to justify the sales held in 1950 and it is still more insufficient to justify the sale held in 1951. 28. The second reason why I hold the sale dated 20-2-51 to be invalid is that many of the shares sold on that date were pledged by the plaintiff long after 12-5-49 and consequently they cannot be covered by that notice. For example 100 Barmahjan Tea shares sold on 20-2-51 (Ex. 13 (ii)) were pledged on 22-8-49 as per receipt (Ex. 4 (ix)); 100 Hashinara Tea shares sold on 20-2-51 were also pledged on 22-8-49 as per receipt (Ex. 4 (iv)); out of 800 Teloijan Tea shares sold on 20-2-51 (Exs. 13 and 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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