Judgement

Appeal (No. 54 of 1936) from a judgment and decree of the High Court of Madras in its appellate jurisdiction (January 24, 1935) affirming a judgment and decree of that Court in its original jurisdiction (August 9 and November 15, respectively).

The appellants and the respondents, the Mercantile Bank of India, Ld., and the Central Bank of India, Ld., respectively, carried on the business of bankers in Madras. C. K. Narayana Ayyar & Sons (the merchants) carried on business in Madras as buyers and exporters of ground-nuts, and were entitled to obtain delivery of the ground-nuts from up-country growers under railway receipts. Both the appellants and the respondents had been in the habit of making loans to the merchants on the security of the goods covered by the several railway receipts. The practice was that the merchants should deliver to the bank the relevant railway receipts by way of pledge, giving at the same time to the bank a promissory note for the amount advanced and a letter of lien. The bank would then pass the railway receipts on to their own godown keeper so as to enable him to obtain possession of the goods. What was in practice then done was for the banks godo