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TMI Blog1977 (10) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... pt of ₹ 57,429 which was in the fixed deposit account with the bank. By mutual agreement the Bank guarantee was extended to June 23, 1947. The guarantee amount was treated by the bank as a cash-credit account of the distillers in its books. (3) The Drum and Screw Cap Plant arrived in Karachi in April and June 1947. The bank paid the following two amounts to Francis Klein of Calcutta through whom the goods were purchased from the foreign manufacturers: 1.₹ 1,13,809/5.00 . 2.₹ 1,01,024/6.00 . TOTAL₹ 2,14,833/11.00 . (4) In return the plant was pledged by the distillers with the bank as security for the advance made in the cash credit account. (5) The bank's head office was in Darya Ganj at Delhi. It had its branches in Karachi and Lahore. From England the goods arrived at Karachi port. The bank took delivery of the goods. A part of the plant was stored by the bank in its godown at Karachi. Another part was stored by the bank with a company of clearing and forwarding agents known as the Eastern Express Company Limited, Karachi (Express Company) under its lien. (6) In March 1950 the bank sold and delivered the said plant-to one Akhtar Ali Khan of P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Karachi by sending your authorised representative there. We have not heard from you anything in reply. ASour Branch at Karachi is already closed, we can't continue to hold the Drum Plant for long. We request you to give the matter your immediate attention." (9) On August 8, 1951 the distillers cleared the loan account of the bank. They remitted the balance sum "in full and final settlement of the account" and wrote to the bank: "KINDLYarrange to deliver the Drum and Screw Cap Plant to us, at your earliest convenience." (10) This is the starting point of the trouble. On September 19, 1951 the bank wrote the following letter to Express Company "EX.12 Bharatbank LIMITED 37,Faiz Bazar, Delhi. 19THSeptember, 1951 REF.HO/RSD/6473 M/S.Eastern Express Co. Ltd., BUNDERRoad, Karachi. (Pakistan). Dear Sir, RE: Outstanding bills for drum making plant stored with you under lien of the bank. OURlien on the plant does not stand now. You may please recover your full amount of up to date unpaid bills for storage charges etc. from Messrs. Jagatjit Distilling and Allied Industries Ltd., with whom you may deal about it in future. YOURSfaithfully, SD/-Ill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accept your instructions regarding the disposal of the above consignment provided our charges are paid up to the date of delivery and that you obtain a release order from the Department of Supply and Development, Govt. of Pakistan, as we have received instructions from them not to give delivery without their permission. YOURSfaithfully, FORthe Eastern Express Co. Ltd. SD/-Illegible Manager." (15) One thing we would mention at the outset that the Pakistan Government prohibited the transfer of the plant because the Lahore Branch of the bank had made the payment of ₹ 30,000.00 to Akhtar Ali on account of damages from their resources in Pakistan. The Pakistan Government considered it to be a violation of the Foreign Exchange Regulations which had come into force in the meanwhile. That Government took the view that the payment of ₹ 30,000.00 should have been made by the bank from their moneys in India and since it was not done they required the Lahore branch of the bank "to recoup" this sum of ₹ 30,000.00 from India. The bank did not do so. The Pakistan Government did not allow the plant to be delivered to anybody. (16) There was a stalemate. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1953, has enabled us to reconsider the case and it has now been decided to release the machine tools in question, for export to India, subject to the condition stated in para 2 below :- 2.The State Bank of Pakistan has reported that M/s. Bharat Bank Ltd., Karachi, sold certain items of the consignment in question to M/s. Pakistan Development Corporation Ltd., Karachi, but later redeemed them by refunding the price together with a sum of ₹ 30,000 as damages. As the bank has paid this sum of ₹ 30,000 from its resources in Pakistan, it is necessary that the amount should be recouped by them from India through the State Bank of Pakistan. The release of the machine tools is, therefore, subject to the condition that an amount of ₹ 30,000 is transferred by the head office of M/s. 'Bharat Bank Ltd., in India to their Karachi Branch through the State Bank of Pakistan, 3.You are requested to arrange for this transfer, after which,the necessary permit will be issued for the export of the machinery. YOURSSincerely, SD/-M. L. Rahman." P.Vaidyanathan, ESQR.First Secretary (Commercial) INDIANHigh Commission, Karachi. (19) On the receipt of the conditional & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l if you would kindly take up this matter with the Ministry of Finance urgently. YOURS sincerely, SD/-(P. Vaidyanathan) COMMERCIALAttache- R.N. Kapur, Esqr, UNDERSecretary to the Government of India, MINISTRYof Commerce and Industry. New Delhi. COPYto Messrs. Jagatjit Distilling and Allied Industries, Kapurthala (Mr. L. P. Jaiswal Camp Karachi.) SD/-(P. Vaidyanathan) COMMERCIALAttache." (20) The Indian High Commission on August 30, 1954 wrote' to the Government of Pakistan as follows :- "EX.21. FIRSTSecretary (Commercial), INDIANHigh Commission. VALIKAMahal, Karachi-1. DATED27th/30th- August, 1954. NO.S. 9/ITGC/51/J-35, DEARMr. Rahman, Please refer to your D.O. letter No. 335/515/51 dated the 22nd May, 1954 to Vaidyanathan regarding release of certain machine tools imported before partition for Messrs Jagatjit Distilling and Allied Industries, Kapurthala. 2.The Government of India have allowed, as special case, the remittance of a sum of ₹ 30,0000 by Messrs Bharat Bank (now known as Bharat Nidhi Ltd. Delhi) to their Lahore Branch through the State Bank of Pakistan. Necessary instructions to this effect have been issued by the Ministry of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - (2)That the bank did not sell the machinery to Akhtar All with the knowledge and consent of the distillers and the said sale was, therefore, illegal. (3)The distillers we're not liable to pay ₹ 30,000.00 to the bank which the bank had to pay to Akhtar Ali for the cancellation of sale. (4)THEBank was in possession of the machinery on August 9 1951(the date of full and final settlement of the loan account) on behalf of the distillers. (5)THEtransaction was one of bailment and not pledge (6) THEcontract between the bank and the distiilers and not pledge. (7)The State Bank of Pakistan required the bank to replenish the Sum of ₹ 30,000.00 from its funds in India trough its branch in Pakistan. (8)The Bank was liable to remit ₹ 30,000 to Pakistan. (9)The distillers- should themselves arrange to Pay ₹ 30,000 to Pakistan Government and obtain delivery of the plant. (10)The distillers can realise ₹ 30.000 from the bank "because the loss was caused by the action of defendant No. 1". (Bharat Nidhi). (26) The Central Question: Bailee's obligations: The conclusions of the trial judge, if we may say so with respect, are a strange ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount of Rs.. 30,000 from India and that the release of the plant was subject to the condition that the amount of ₹ 30,000 is transferred by the head office of the bank in India to their Karachi branch in Pakistan through the State Bank of Pakistan. This averment was clearly made in paragraph 14 of the plaint. The copy of the letter dated May 22, 1954 by Mr. Rehman to the Indian High Commission was annexed to the plaint. Therefore, the bank could not have denied knowledge of the conditional permission after August 6, 1954. It was open to them to comply with the requirement of the State Bank of Pakistan on the receipt of the information and secure to the distillers the plant by fulfillling the said condition. (30) Whether the distillers would have ultimately obtained delivery of the plant from Express Company is not the question before us in the appeal. The question is : Did the bank clear the obstacle placed in the way of the delivery of the plant to the distillers by paying 'a sum of ₹ 30,000 from its head office in India to their branch in Pakistan through the State Bank of Pakistan ? From the evidence it clearly appears that the Pakistan Government on March 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to disclaim . the responsibility which was exclusively its own. Nor can it be allowed to shift its responsibility to distillers' shoulders. That will be passing the buck, to use a colloquial phrase. (33) The Express Company informed the distillers that they had to do three things before delivery of the goods could be made to them. These are : 1.The instructions of the Bharat Bank Delhi to deliver the goods should be confirmed by the Lahore branch. 2.That the distillers should pay their charges. 3.That the distillers should obtain release orders from the Ministry of Supply, Government of Pakistan which had forbidden the disposal of the goods on March 7, 1951. (34) This being the situation of the distillers wrote to the bank on November 2, 1951 an important letter in these words :--- "D-31. Jagatjitdistilling And Allied Industries LTD. 2ND Nov., 1951. M/S.Bharat Bank Ltd. 37,Faiz Bazar, Delhi. DEARSir, "WE have since received a copy of the letter No. 5172/493/ Mtc dated the 24th October, 1951, addressed by M/s. THEEastern Express Co. Ltd. Karachi to your address in response to your letter foresaid. From this, it is clear that it is necessary for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt by this defendant to deliver the said machinery to the plaintiff at Karachi the said agreement became incapable of performance because of the restrictions of the Pakistan Government mentioned in the plaint and as such the present suit is not admitted to be maintainable." (41) This paragraph refers to the allegations made in the plaint. But when we turn to the plaint we find it clearly said that the Pakistan Government had forbidden the disposal of the machinery on March 7, 1951, but on May 22, 1954 the Government of Pakistan had decided to release the plant subject to the condition of repatriation of ₹ 30,000 from India to Pakistan. (42) Now the condition of transfer of Rs, 30,000 was not impossible of performance. This meant "crediting to Pakistan that amount of foreign exchange in Indian currency" as the Indian High Commission put it in their letter dated 22nd/24th May, 1954 (L-l). There is evidence that the Reserve Bank was ready to give permission to the bank to remit ₹ 30,000 from India to Pakistan. The Ministry of Finance, Government of India was also agreeable. There was no hitch or hurdle. The combined efforts of the distillers and Indian Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... frustration ever there was, was caused by the bank's own fault. There was a default by the bank in selling the plant to Akhtar Ali which caused the allegedly frustrating event. As Lord Russell said in. "POSSIBLEvarieties (of fault) are infinite." GIVINGan illustration he said: "Thoughtlessness of the prima donaa who sits in a draught and loses her voice" caanot be said to be a frustration of the contract as the resultant frustration is "self-induced". (46) The rule that frustration must not be self-induced applies to all deliberate or negligent acts, whether they are actually breaches of contract or not. For it is in all these cases unjust to make the other party to bear the loss. (47) It appears to us that the bank is responsible for the no delivery of the plant and it cannot plead frustration. It is in evidence of Shri Ravi Tandon, First Secretary of Indian High Commission in Karachi, that the plant was never declared as an evacuee property and that Foreign Exchange Control Restrictions had come into force in Pakistan on the 19th of September, 1949. It would, therefore, appear that the sale d delivery of the plant on March 11, 1950 to Akht ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted August 5, 1950. True it is that the whirlpool of political events of August 1947 caught people in their swirl and cast them hither and thither." In the surging waters of the great divide there was no ark of safety. But with every year of peace the landscape brightened. In 1954 the distillers were able to sort out things with the Pakistan Government. As a, result of the untiring efforts of the distillers and the good offices of the Indian High Commission permission was ultimately obtained on May 22, 1954 when the Government of Pakistan agreed to release the plant on the condition of repatriation of ₹ 30,000. Therefore, it will not be correct to say that the agreement, factually or legally, became impossible of performance so as to attract Section 56 of the Contract Act. We can see no justification for a conclusion, of law that the contract was frustrated. Frustation is not to be lightly invoked as the dissolvent of a contract. "No court has an absolving power". (51) It appears to us that the instant case is not a case of frustration but one of abuse of possession. Winfield says, it is possible for you to commit conversion of my goods by wrongfully abusing p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the admitted position by the two banks that there was no assignment by Bharat Bank in favor of the Punjab National Bank. In view of the positive stand taken by the bank in the pleadings it cannot now be contended with justice that the Punjab National Bank was a necessary party to the suit and failure to prosecute the claim - against it is fatal to the suit of the distillers. (55) 3. Delivery of Possession : Counsel submitted that possession was delivered by the bank to the distillers by writing to Express Company on September 19, 1951 (Ex. 12) that they had raised their lien on the goods stored with it and that on payment of their charts they may deliver the goods to the distillers. We cannot accept this position. (56) This argument raises a fundamental question for decision : What is the nature of the transaction ? Was it a pledge or a lien ? The trial court found that it was a case of bailment and not pledge. We do not agree. To us it seems a clear case of pledge. (57) The position in Indian Law is the same as in English law. Section 172 of the Contract Act which defines a "pledge" affirms the English Common law. Section 172 states that "the bailment of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of detaming the res until the money owning is paid : a lien disappears if possession is lost, and there is no right of sale. Sale on default is an incident of pledge. A pledge is assignable. A lien cannot be taken in execution, as the lien is merely a personal right : (61) 29 cases of the plant were stored with the Express Company by the bank. The possession of the goods remained with the bank throughout. To begin with some goods were stored by the bank in its godown, some were stored with Express Company. After the cancellation of the sale in favor of Akhtar Ali all the 29 cases were stared with Express Company. Without the permission of the pledgee the pledger could not obtain the goods. From the letters it is quite clear that the possession was of the bank. Therefore, in law the bank was bound to deliver possession at least in Karachi if not in India. There was (1) the advancing of loan, (2) the endorsement of the documents in favor of the bank enabling it to take delivery and to store goods with it, and (3) after taking delivery the bank stored the goods with Express Company (See A-9 dated May 22, 1950). Their combined effect was that the bank was in control of the goods till ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the distillers are entitled to a decree for the said amount. (66) 4. Knowledge : Counsel argued that the distillers at no time informed the bank that the Pakistan Government had agreed to release the plant on condition of repatriation of ₹ 30,000. From the record it appears to us to be so. But there are two simple answers to this argument. First, it was the duty of the bank to get the restriction" removed and deliver the goods. Section 160 casts a duty on the bailee : "160.Return of goods bailed on expiration of time or accomplishment of purpose-It is the duty of the bailee to return, or deliver according to the bailor's directions, the goods bailed, without demand, as soon as the time for which they were bailed has expired or the purpose for which they were bailed has been accomplished." (67) The bank cannot escape from this liability simply by writing to Express Company. It bad to see to it that the goods are delivered to the distillers after they had brought the impediment to its -notice by means of its letters. (See D/31 supra). The complaint of the distillers that they were unable to get the delivery by reason of the hank's default in making p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. The receipt of possession by the bailee is an, essential factor. But the bailor also has the "right" to possess. Since he has a right to immediate possession the bailor has an interest worth protecting. The' "right" to possess is treated as being possession itself. Law has adopted a fairly good working scheme of possession to confer on the bailor the right to get back that possession of which he parted with in favor of the bailee. This is how the concept of possession is used as a tool of legal thought to invest the bailor with possessory remedies. Nothing could be clearer than the words of "UNDEREnglish law, where there is a simple contract of bailment at will the possession of the goods bailed passes to the bailee. The bailor has in such a case the right to immediate possession, and by reason of this right can exercise those possessory remedies which are available to the possessor. The person having the right to immediate possession is, however, frequently referred to in English law as being the 'possessor'-in truth English law has never worked out a completely logical and exhaustive definition of 'possession'." (73) The same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,08,800 the distillers gave a fixed deposit receipt of ₹ 57,429 which was in the fixed deposit account with the bank. By mutual agreement the Bank guarantee was extended to June 23, 1947. The guarantee amount was treated by the bank as a cash-credit account of the distillers in its books. (3) The Drum and Screw Cap Plant arrived in Karachi in April and June 1947. The bank paid the following two amounts to Francis Klein of Calcutta through whom the goods were purchased from the foreign manufacturers: 1.₹ 1,13,809/5.00 . 2.₹ 1,01,024/6.00 . TOTAL₹ 2,14,833/11.00 . (4) In return the plant was pledged by the distillers with the bank as security for the advance made in the cash credit account. (5) The bank's head office was in Darya Ganj at Delhi. It had its branches in Karachi and Lahore. From England the goods arrived at Karachi port. The bank took delivery of the goods. A part of the plant was stored by the bank in its godown at Karachi. Another part was stored by the bank with a company of clearing and forwarding agents known as the Eastern Express Company Limited, Karachi (Express Company) under its lien. (6) In March 1950 the bank sold and del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake back the delivery of the Drum Plant lying in Karachi by sending your authorised representative there. We have not heard from you anything in reply. ASour Branch at Karachi is already closed, we can't continue to hold the Drum Plant for long. We request you to give the matter your immediate attention." (9) On August 8, 1951 the distillers cleared the loan account of the bank. They remitted the balance sum "in full and final settlement of the account" and wrote to the bank: "KINDLYarrange to deliver the Drum and Screw Cap Plant to us, at your earliest convenience." (10) This is the starting point of the trouble. On September 19, 1951 the bank wrote the following letter to Express Company "EX.12 Bharatbank LIMITED 37,Faiz Bazar, Delhi. 19THSeptember, 1951 REF.HO/RSD/6473 M/S.Eastern Express Co. Ltd., BUNDERRoad, Karachi. (Pakistan). Dear Sir, RE: Outstanding bills for drum making plant stored with you under lien of the bank. OURlien on the plant does not stand now. You may please recover your full amount of up to date unpaid bills for storage charges etc. from Messrs. Jagatjit Distilling and Allied Industries Ltd., with whom you may de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant and write to confirm that we are willing to accept your instructions regarding the disposal of the above consignment provided our charges are paid up to the date of delivery and that you obtain a release order from the Department of Supply and Development, Govt. of Pakistan, as we have received instructions from them not to give delivery without their permission. YOURSfaithfully, FORthe Eastern Express Co. Ltd. SD/-Illegible Manager." (15) One thing we would mention at the outset that the Pakistan Government prohibited the transfer of the plant because the Lahore Branch of the bank had made the payment of ₹ 30,000.00 to Akhtar Ali on account of damages from their resources in Pakistan. The Pakistan Government considered it to be a violation of the Foreign Exchange Regulations which had come into force in the meanwhile. That Government took the view that the payment of ₹ 30,000.00 should have been made by the bank from their moneys in India and since it was not done they required the Lahore branch of the bank "to recoup" this sum of ₹ 30,000.00 from India. The bank did not do so. The Pakistan Government did not allow the plant to be delive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to in Mr. Sinha's D.O. letter of the 5th May, 1953, has enabled us to reconsider the case and it has now been decided to release the machine tools in question, for export to India, subject to the condition stated in para 2 below :- 2.The State Bank of Pakistan has reported that M/s. Bharat Bank Ltd., Karachi, sold certain items of the consignment in question to M/s. Pakistan Development Corporation Ltd., Karachi, but later redeemed them by refunding the price together with a sum of ₹ 30,000 as damages. As the bank has paid this sum of ₹ 30,000 from its resources in Pakistan, it is necessary that the amount should be recouped by them from India through the State Bank of Pakistan. The release of the machine tools is, therefore, subject to the condition that an amount of ₹ 30,000 is transferred by the head office of M/s. 'Bharat Bank Ltd., in India to their Karachi Branch through the State Bank of Pakistan, 3.You are requested to arrange for this transfer, after which,the necessary permit will be issued for the export of the machinery. YOURSSincerely, SD/-M. L. Rahman." P.Vaidyanathan, ESQR.First Secretary (Commercial) INDIANHigh Commission, Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort of the machinery to India. I shall be grateful if you would kindly take up this matter with the Ministry of Finance urgently. YOURS sincerely, SD/-(P. Vaidyanathan) COMMERCIALAttache- R.N. Kapur, Esqr, UNDERSecretary to the Government of India, MINISTRYof Commerce and Industry. New Delhi. COPYto Messrs. Jagatjit Distilling and Allied Industries, Kapurthala (Mr. L. P. Jaiswal Camp Karachi.) SD/-(P. Vaidyanathan) COMMERCIALAttache." (20) The Indian High Commission on August 30, 1954 wrote' to the Government of Pakistan as follows :- "EX.21. FIRSTSecretary (Commercial), INDIANHigh Commission. VALIKAMahal, Karachi-1. DATED27th/30th- August, 1954. NO.S. 9/ITGC/51/J-35, DEARMr. Rahman, Please refer to your D.O. letter No. 335/515/51 dated the 22nd May, 1954 to Vaidyanathan regarding release of certain machine tools imported before partition for Messrs Jagatjit Distilling and Allied Industries, Kapurthala. 2.The Government of India have allowed, as special case, the remittance of a sum of ₹ 30,0000 by Messrs Bharat Bank (now known as Bharat Nidhi Ltd. Delhi) to their Lahore Branch through the State Bank of Pakistan. Necessary instructions to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k against moneys advanced in cash credit account.- (2)That the bank did not sell the machinery to Akhtar All with the knowledge and consent of the distillers and the said sale was, therefore, illegal. (3)The distillers we're not liable to pay ₹ 30,000.00 to the bank which the bank had to pay to Akhtar Ali for the cancellation of sale. (4)THEBank was in possession of the machinery on August 9 1951(the date of full and final settlement of the loan account) on behalf of the distillers. (5)THEtransaction was one of bailment and not pledge (6) THEcontract between the bank and the distiilers and not pledge. (7)The State Bank of Pakistan required the bank to replenish the Sum of ₹ 30,000.00 from its funds in India trough its branch in Pakistan. (8)The Bank was liable to remit ₹ 30,000 to Pakistan. (9)The distillers- should themselves arrange to Pay ₹ 30,000 to Pakistan Government and obtain delivery of the plant. (10)The distillers can realise ₹ 30.000 from the bank "because the loss was caused by the action of defendant No. 1". (Bharat Nidhi). (26) The Central Question: Bailee's obligations: The conclusions of the trial jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Bank of Pakistan required them lo replenish the amount of Rs.. 30,000 from India and that the release of the plant was subject to the condition that the amount of ₹ 30,000 is transferred by the head office of the bank in India to their Karachi branch in Pakistan through the State Bank of Pakistan. This averment was clearly made in paragraph 14 of the plaint. The copy of the letter dated May 22, 1954 by Mr. Rehman to the Indian High Commission was annexed to the plaint. Therefore, the bank could not have denied knowledge of the conditional permission after August 6, 1954. It was open to them to comply with the requirement of the State Bank of Pakistan on the receipt of the information and secure to the distillers the plant by fulfillling the said condition. (30) Whether the distillers would have ultimately obtained delivery of the plant from Express Company is not the question before us in the appeal. The question is : Did the bank clear the obstacle placed in the way of the delivery of the plant to the distillers by paying 'a sum of ₹ 30,000 from its head office in India to their branch in Pakistan through the State Bank of Pakistan ? From the evidence it clearl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ispute and remain indifferent. It cannot be allowed to disclaim . the responsibility which was exclusively its own. Nor can it be allowed to shift its responsibility to distillers' shoulders. That will be passing the buck, to use a colloquial phrase. (33) The Express Company informed the distillers that they had to do three things before delivery of the goods could be made to them. These are : 1.The instructions of the Bharat Bank Delhi to deliver the goods should be confirmed by the Lahore branch. 2.That the distillers should pay their charges. 3.That the distillers should obtain release orders from the Ministry of Supply, Government of Pakistan which had forbidden the disposal of the goods on March 7, 1951. (34) This being the situation of the distillers wrote to the bank on November 2, 1951 an important letter in these words :--- "D-31. Jagatjitdistilling And Allied Industries LTD. 2ND Nov., 1951. M/S.Bharat Bank Ltd. 37,Faiz Bazar, Delhi. DEARSir, "WE have since received a copy of the letter No. 5172/493/ Mtc dated the 24th October, 1951, addressed by M/s. THEEastern Express Co. Ltd. Karachi to your address in response to your letter foresaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot;even if it be proved that there was an agreement by this defendant to deliver the said machinery to the plaintiff at Karachi the said agreement became incapable of performance because of the restrictions of the Pakistan Government mentioned in the plaint and as such the present suit is not admitted to be maintainable." (41) This paragraph refers to the allegations made in the plaint. But when we turn to the plaint we find it clearly said that the Pakistan Government had forbidden the disposal of the machinery on March 7, 1951, but on May 22, 1954 the Government of Pakistan had decided to release the plant subject to the condition of repatriation of ₹ 30,000 from India to Pakistan. (42) Now the condition of transfer of Rs, 30,000 was not impossible of performance. This meant "crediting to Pakistan that amount of foreign exchange in Indian currency" as the Indian High Commission put it in their letter dated 22nd/24th May, 1954 (L-l). There is evidence that the Reserve Bank was ready to give permission to the bank to remit ₹ 30,000 from India to Pakistan. The Ministry of Finance, Government of India was also agreeable. There was no hitch or hurdle. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is case it appears that the frustrating event, if frustration ever there was, was caused by the bank's own fault. There was a default by the bank in selling the plant to Akhtar Ali which caused the allegedly frustrating event. As Lord Russell said in. "POSSIBLEvarieties (of fault) are infinite." GIVINGan illustration he said: "Thoughtlessness of the prima donaa who sits in a draught and loses her voice" caanot be said to be a frustration of the contract as the resultant frustration is "self-induced". (46) The rule that frustration must not be self-induced applies to all deliberate or negligent acts, whether they are actually breaches of contract or not. For it is in all these cases unjust to make the other party to bear the loss. (47) It appears to us that the bank is responsible for the no delivery of the plant and it cannot plead frustration. It is in evidence of Shri Ravi Tandon, First Secretary of Indian High Commission in Karachi, that the plant was never declared as an evacuee property and that Foreign Exchange Control Restrictions had come into force in Pakistan on the 19th of September, 1949. It would, therefore, appear that the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2, 1950, D-15 dated February 17, 1950 and D-18 dated August 5, 1950. True it is that the whirlpool of political events of August 1947 caught people in their swirl and cast them hither and thither." In the surging waters of the great divide there was no ark of safety. But with every year of peace the landscape brightened. In 1954 the distillers were able to sort out things with the Pakistan Government. As a, result of the untiring efforts of the distillers and the good offices of the Indian High Commission permission was ultimately obtained on May 22, 1954 when the Government of Pakistan agreed to release the plant on the condition of repatriation of ₹ 30,000. Therefore, it will not be correct to say that the agreement, factually or legally, became impossible of performance so as to attract Section 56 of the Contract Act. We can see no justification for a conclusion, of law that the contract was frustrated. Frustation is not to be lightly invoked as the dissolvent of a contract. "No court has an absolving power". (51) It appears to us that the instant case is not a case of frustration but one of abuse of possession. Winfield says, it is possible for you to comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r claim against the Punjab National Bank in view of the admitted position by the two banks that there was no assignment by Bharat Bank in favor of the Punjab National Bank. In view of the positive stand taken by the bank in the pleadings it cannot now be contended with justice that the Punjab National Bank was a necessary party to the suit and failure to prosecute the claim - against it is fatal to the suit of the distillers. (55) 3. Delivery of Possession : Counsel submitted that possession was delivered by the bank to the distillers by writing to Express Company on September 19, 1951 (Ex. 12) that they had raised their lien on the goods stored with it and that on payment of their charts they may deliver the goods to the distillers. We cannot accept this position. (56) This argument raises a fundamental question for decision : What is the nature of the transaction ? Was it a pledge or a lien ? The trial court found that it was a case of bailment and not pledge. We do not agree. To us it seems a clear case of pledge. (57) The position in Indian Law is the same as in English law. Section 172 of the Contract Act which defines a "pledge" affirms the English Common law. Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of retention. One who has a lien has only a right of detaming the res until the money owning is paid : a lien disappears if possession is lost, and there is no right of sale. Sale on default is an incident of pledge. A pledge is assignable. A lien cannot be taken in execution, as the lien is merely a personal right : (61) 29 cases of the plant were stored with the Express Company by the bank. The possession of the goods remained with the bank throughout. To begin with some goods were stored by the bank in its godown, some were stored with Express Company. After the cancellation of the sale in favor of Akhtar Ali all the 29 cases were stared with Express Company. Without the permission of the pledgee the pledger could not obtain the goods. From the letters it is quite clear that the possession was of the bank. Therefore, in law the bank was bound to deliver possession at least in Karachi if not in India. There was (1) the advancing of loan, (2) the endorsement of the documents in favor of the bank enabling it to take delivery and to store goods with it, and (3) after taking delivery the bank stored the goods with Express Company (See A-9 dated May 22, 1950). Their combined effect w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m worth considering. (65) We, therefore, hold that the distillers are entitled to a decree for the said amount. (66) 4. Knowledge : Counsel argued that the distillers at no time informed the bank that the Pakistan Government had agreed to release the plant on condition of repatriation of ₹ 30,000. From the record it appears to us to be so. But there are two simple answers to this argument. First, it was the duty of the bank to get the restriction" removed and deliver the goods. Section 160 casts a duty on the bailee : "160.Return of goods bailed on expiration of time or accomplishment of purpose-It is the duty of the bailee to return, or deliver according to the bailor's directions, the goods bailed, without demand, as soon as the time for which they were bailed has expired or the purpose for which they were bailed has been accomplished." (67) The bank cannot escape from this liability simply by writing to Express Company. It bad to see to it that the goods are delivered to the distillers after they had brought the impediment to its -notice by means of its letters. (See D/31 supra). The complaint of the distillers that they were unable to get the deliv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bailment is that possession should pass to the bailee. The receipt of possession by the bailee is an, essential factor. But the bailor also has the "right" to possess. Since he has a right to immediate possession the bailor has an interest worth protecting. The' "right" to possess is treated as being possession itself. Law has adopted a fairly good working scheme of possession to confer on the bailor the right to get back that possession of which he parted with in favor of the bailee. This is how the concept of possession is used as a tool of legal thought to invest the bailor with possessory remedies. Nothing could be clearer than the words of "UNDEREnglish law, where there is a simple contract of bailment at will the possession of the goods bailed passes to the bailee. The bailor has in such a case the right to immediate possession, and by reason of this right can exercise those possessory remedies which are available to the possessor. The person having the right to immediate possession is, however, frequently referred to in English law as being the 'possessor'-in truth English law has never worked out a completely logical and exhaustive defin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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