Judgement

Appeal (No. 44 of 1933) from a decree of the High Court (April 18, 1932) reversing an order made by Waller J. in the exercise of the insolvency jurisdiction of the Court.

By a notice of motion by the appellant in the insolvency of C. K. Narayana Ayyar & Sons, who were adjudged insolvents on February 11, 1929, the appellant claimed a declaration that the respondent Bank had no valid pledge of, or any right to, certain bags of groundnuts, or alternatively a declaration that the said groundnuts were in the possession, order or disposition of the insolvents at the commencement of the insolvency with the consent of the true owners within the meaning of s. 52, ; sub-s. 2 (c), of the Presidency-towns Insolvency Act, 1909 ; and an order directing payment to the appellant of the proceeds of the said groundnuts together with interest.

Pleadings having been directed, the respondents by their written statement stated that the railway receipts for the goods were indorsed and handed to them by the insolvents to secure advances made by them to the insolvents; they denied that the goods were in the possession, order or disposition of the insolvents.

The facts of the case, and the material provisions of the Indian Legislature, appear from the judgment of the Judicial Committee.

Waller J. heard the motion and made an order as prayed.

An appeal by the Bank was allowed and the motion dismissed. The judgment was delivered by Stone

J. and concurred in by Beasley C.J. The appeal is reported at I. L. R. 56 M. 177.

1934. July 17, 19, 20. Van den Berg K.C., Moresby, and Hon. Quintin Hogg for the appellant. The respondent Bank had no lien or charge upon the goods in the absence of notice to the railway company in whose custody they were. In Ramdas Vithaldas v. S. Amerchand & Co. (( 1916) L. R. 43

I. A. 104.) the Board held merely that a railway receipt was an " instrument of title " within s. 103 of the Contract Act for the purpose of stoppage in transitu. Even if a railway receipt is a " document of title to goods " within s. 178 of that Act there was no pledge of the goods to the Bank. The section does not apply to a pledge effected by the owner of the goods. The section was intended to give effect to the law existing in England under which only a mercantile agent within the Factors Act could effectively pledge goods by pledging a document of title (except, by custom, a bill of lading) ; in the absence of notice to the person in custody of the goods, the owner could not effectively do so William McEwan & Sons v. Smith (( 1849) 2 H. L. C. 309.); Dublin City Distillery, etc., Ld. v. Doherty ([ 1914] A. C. 823.); Inglis v. Robertson. (3) The decision in the case last mentioned was notwithstanding s. 3 of the (English) Factors Act, 1889, by which " a pledge of documents of title to goods shall be deemed to be a pledge of the goods." By the Indian Factors Act, 1844 (see particularly s. 4), the law as to factors in India was the same as in England, and the Indian Legislature in s. 178 of the Contract Act, 1872, did not intend to vary principles existing in England. Sufficient effect is given to the words " a person who is in possession, etc." in s. 178 by treating them as referring merely to unpaid vendors, mercantile agents, etc., without bringing in owners. If s. 178 has the meaning given to it below s. 103 of the Act was not needed. In any case the transaction did not amount to a pledge of the goods. Sect. 178 treats a pledge of documents as differing from a pledge of the goods ; that distinction was recognized in Inglis v. Robertson. ([ 1898] A. C. 616.) If there was a pledge it was merely of the railway receipts. The terms of the letters of hypothecation were not specifically proved, nor were they relied upon below. [Reference was made also to the Transfer of Property Act, s. 137 (explanation), and to the new s. 128 of the Contract Act enacted by Act IV. of 1930.] The appellant contends further that the goods were in the " possession, order o