Lallan Prasad v. Rahmat Ali and Anr.

Lallan Prasad v. Rahmat Ali & Anr.

1967 SCR (2) 233

FACTS:

The appellant advanced Rs. 20,000 to the first respondent against a promissory note and a ‘receipt. The first respondent executed an agreement whereby he agreed to pledge as security-for the debt aeroscapes, to deliver them to the appellant, and to keep them in the appellant’s custody.

The appellant filed a suit on the promissory note claiming that the first respondent failed to deliver the goods, that the agreement therefore did not ripen into a pledge, and that consequently, he was entitled to recover the amount advanced by him. It was found on the evidence that the goods were delivered to the appellant, and that he was it pledgee thereof.

HELD:

Trial Court: favoured the appellants

High Court: favoured the respondents

SUPREME COURT

Issues

1. Whether the first respondent pledged aeroscraps  and delivered possession thereof to the appellant ?
2. Whether the appellant was entitled to any relief when his case was that the first respondent never delivered to him the said goods and the said agreement never ripened into a pledge?
3. Whether the custody of the said goods after they were stored at the aforesaid place was with A or R?

Contention(s)

Appellant- Even if the said delivery was made, s.176 entitles the appellants to maintain the suit on the promissory note.

SHELAT, J.

1. (w.r.t.1^stissue) The goods were under the control and custody of the appellant. Some of the evidences apart from oral evidences are-
   • The appellant showed indifference about the delivery.
   • Considering the huge amount that had been advanced he could not ordinarily be content merely with a promissory note.
   • The appellant was to permit the first respondent to remove and sell part of the said goods provided he paid to the appellant 3/4th of the sale proceeds.
   •  The letter of surety from the second respondent itself stated that the goods were pledged with the appellant, that the appellant was not allowing the first respondent to remove them for sale.
   •  Appellant continued to pay the salaries of the watchmen, though their services were no longer required by him.
   •  The first respondent removed part of the said goods but did so after paying to the appellant.
   •  Amrit Lal directly gave the cheque to the appellant w.r.t 100 maunds of the said aeroscraps that he purchased from A.
2. (w.r.t.2^nd issue)The appellant would not be entitled to a decree on the promissory note and also retain the goods found to have been delivered to him and to be in his Custody. So long, however, as the sale does not take place, the pawner is entitled to redeem the goods on payment of the debit. Therefore, the right to sue on the debt assumes that pawnee is in a position to redeliver the goods on payment of the debt, and if by denying the pledge or otherwise, he has put himself in a position whereby he is not able to redeliver the goods, he cannot obtain a decree.

 

LAW POINTS

Section 176 of the Indian Contract Act, 1872, 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) the right to-sell the goods after reasonable notice of the intended sale to the pawner.