Research › Search › Judgment

Calcutta High Court · body

2008 DIGILAW 201 (CAL)

Goyals Private Limited v. Punjab National Bank

2008-02-15

B.Bhattacharya, Rudrendra Nath Banerjee

body2008
JUDGMENT Bhaskar Bhattacharya, J. 1. THIS first appeal is at the instance of the defendants in a suit for recovery of money and is directed against the judgment and decree dated 30th April, 1991 passed by the Assistant District Judge, 10th Court at Alipore in Money Suit No.9 of 1983 thereby passing a decree for recovery of Rs.3,54,797.10p. against both the appellants with interests at the rate of 13 per cent per annum from the date of institution of the suit till payment. 2. BEING dissatisfied, the defendants have come up with the present first appeal. The case made out by the plaintiff may be summed up thus: (a) The defendant No.1 carries on business of dealers in jute and jute- products and the defendant No.2 is the Director of the defendant No.1. On or about 31st May, 1974, the defendant No.1 approached the plaintiff and applied for overdraft loan of Rs. 1,50,000/- in the name of the defendant No.1 for its said business and the same was sanctioned by the plaintiff. (b) The defendant No.1 executed the relevant documents, namely, application for overdraft, promissory notes, letters of pledge and account- opening form. (c) The defendant No.1 in due course pledged with the plaintiff six transferable Pucca Delivery Orders (hereinafter referred to as PDO) for the jute-products dated 20th May, 1974 and 21st August, 1974 issued by Khardah Company Limited in favour of the defendant No.1 as security for repayment of the plaintiffs due. (d) The said account of the defendant No.1 had become bad and doubtful inasmuch as the defendant No.1 failed and neglected to make payment of the amount due and after giving credit of all payments made by the defendant No.1, the overdraft account towards the principal and interest calculated up to March 31, 1981 came to Rs.3,54,797.10p. 3. THE suit was contested by the defendants by filing written statement thereby denying the material allegations made in the plaint. According to the defendants, in the year 1974-75, the plaintiff as the registered holder of the PDOs demanded delivery of the goods covered by those PDOs from the Khardah Company Limited which the said Khardah Company Limited did not comply but the plaintiff failed and neglected its duty as a possessor of those PDOs in taking proper step against the said Khardah Company Limited. THE goods covered by the said PDOs were very valuable and the present market value of the goods should be about Rs.10 lac. 4. BY filing additional written statement, the defendants pointed out that the Central Bank of India had filed a suit in the Original Side of this Court being Suit No. 255 of 1975 against the Khardah Company Limited and wherein among the others Pucca Delivery Orders holders, the plaintiff, the Punjab National Bank also filed an application for leave to be given to it for intervention for the protection of its right, title and interest over the goods covered by six PDOs and for direction upon the Joint Receiver not to interfere with the right, title and interest of the Punjab National Bank in any of the goods and not to sell or deal with it. The sole witness for the plaintiff admitted that as per the order of the Hon'ble High Court, the PDOs had been disposed of and the sale-proceeds were deposited with the receiver appointed by this High Court. It was further admitted that the defendant No.2 had no personal liability in the matter. 5. THE witness for the appellant, on the other hand, specifically asserted that the goods covered by the PDOs have already been sold and after the sale of the PDOs, the defendants had no liability. It was further stated that the defendants had no objection if the claim of the plaintiff is satisfied out of the sale proceeds of the goods covered by the said six PDOs. 6. THE learned Trial Judge, as pointed out earlier, although took note of the fact that the six PDOs had been sold in the proceedings by the order of the Hon'ble High Court and the learned Receiver had deposited those sale- proceeds with the plaintiff-Bank, passed a decree on the ground that there was no evidence that the plaintiff's claim had been adjusted out of such sale- proceeds. THE learned Trial Judge further held that the defendant No.2 was also liable for the repayment of loan. Mr. THE learned Trial Judge further held that the defendant No.2 was also liable for the repayment of loan. Mr. Talukder, the learned Advocate appearing on behalf of the appellant, by relying upon the decision of the Supreme Court in the case of Lallan Prasad vs. Rahamat Ali, reported in AIR 1967 SC 1322 , vehemently contended before us that the PDOs having already been sold, the suit filed by the plaintiff was not maintainable without giving credit to the sale- proceeds. Mr. Talukder submits that once it is admitted that the goods covered by the PDOs were sold and the money is lying in deposit with the plaintiff, the same should be first adjusted and it should be further proved that even after such adjustment, the plaintiffs due had not been satisfied. 7. MS Haider, the learned Advocate appearing on behalf of the respondent submits that she had no instruction in the matter and her client was not contacting her in spite of repeated communications. 8. AFTER hearing the learned Counsel for the parties and after going through the materials on record we agree with Mr. Talukder that the plaintiff having admitted in evidence that all the goods covered by all the six PDOs having been sold and the sale-proceeds having been deposited with the plaintiff, so long the account is not given by the plaintiff, the suit was not maintainable. Although, an application under Order 41 Rule 27 of the Code of Civil Procedure was filed showing that more than the decretal amounts are lying as sale-proceeds in the Bank's account, we have not taken into consideration such document in view of the admission of the witness of the plaintiff in the suit itself that the goods covered by the PDOs are sold at the instance of the plaintiff. In this connection, we may refer to the following observations of the Apex Court in the case of Lallan Prasad vs. Rahamat Ali (supra) relied upon by Mr. Talukder: "There is no difference between the common law of England and the law with regard to pledge as codified in sections 172 to 176 of the Contract Act. Under section 172 a pledge is a bailment of the goods as security for payment of a debt or performance of a promise. Talukder: "There is no difference between the common law of England and the law with regard to pledge as codified in sections 172 to 176 of the Contract Act. Under section 172 a pledge is a bailment of the goods as security for payment of a debt or performance of a promise. Section 173 entitles a pawnee to retain the goods pleaded as security for payment of a debt and under section 175 he is entitled to receive from the pawner any extraordinary expenses he incurs for the preservation of the goods pledged with him. Section 176 deals with the rights of a pawnee and provides that in case of default by the pawner the pawnee has (1) the right to sue upon the debt and to retain the goods as collateral security, and (2) to sell the goods after reasonable notice of the intended sale to the pawner. Once the pawnee by virtue of his right under section 176 sells the goods the right of the pawner to redeem them is of course extinguished. But as aforesaid the pawnee is bound to apply the sale proceeds towards satisfaction of the debt and pay the surplus, if any, to the pawner. So long, howsoever, the sale does not take place the pawner is entitled to redeem the goods on payment of the debt. It follows, therefore that where a pawnee files a suit for recovery of debt, though he is entitled to retain the goods he is bound to return them on payment of the debt. The right to sue on the debt assumes that he is in a position to redeliver the goods on payment of the debt and, therefore, if he has put himself in a position where he is not able to redeliver the goods he cannot obtain a decree. If it were otherwise, the result would be that he would recover the debt and also retain, the goods pledged and the pawner in such a case would be placed in a position where he incurs a greater liability than he bargained for under the contrast of pledge. The pawnee, therefore, can sue on the debt retaining the pledged goods as collateral security. If the debt is paid he has to return the goods with or without the assistance of the Court and appropriate the sale proceed towards the debt. The pawnee, therefore, can sue on the debt retaining the pledged goods as collateral security. If the debt is paid he has to return the goods with or without the assistance of the Court and appropriate the sale proceed towards the debt. But if he sues on the debt denting the pledge, and it is found that he was given possession of the goods pledged and had retained the same, the pawner has the right to redeem the goods so pledged by payment of the debt. If the pawnee is not in a position to redeliver the goods he cannot have both the payment the debt and also the goods. Where the value of the pledged property is less the debt and in a suit for recovery of debt by the pledgee, the pledgee denies, the pledge or is otherwise not in a position return the pledged goods he has to give credit for the value of the goods and would be entitled then to recover only the balance. That being the position the appellant would not be entitled to a decree against the said promissory note and also retain the said goods found to have been delivered to him and, therefore in his custody. For, if it were otherwise the first respondent as the pawner would be compelled not only to the amount due under the promissory note but lose the pledged goods as well. That certainly is not the effect of section 176. The contentions urged by Mr. Rana, therefore must be rejected." 9. WE, therefore, hold that the suit is not maintainable so long the plaintiff has not come forward with the specific case that even after the adjustments of the sale-proceeds, the dues have not been wiped out. 10. WE, thus, set aside the judgment and decree passed by the learned Trial Judge with the finding that the suit was not maintainable once the goods covered under the PODs are sold. The dismissal of this suit will not stand in the way of the parties in seeking appropriate remedy before the appropriate forum in accordance with law. In the facts and circumstances, there will be, however, no order as to costs.