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1975 Supreme(AP) 88
Andhra Pradesh High Court
Judges : ALLADI KUPPUSWAMI, V.MADHAVA RAO
Sait Kesarimal Mulaji - Appellant
Versus
Salt Nainimal - Respondent
Decided On : 06-09-75
A suit for accounts is not maintainable in the case of a pledge, as there is no statutory right on the part of the pledger to ask for the accounts, nor is there an equitable right to sue for accounts.
Headnote:
SUIT FOR ACCOUNTS - PLEDGE - MAINTAINABILITY - LIMITATION - SALE OF PLEDGED ARTICLES - VALIDITY.
Fact of the Case:
Plaintiff filed a suit for accounts against the defendants, alleging that he had a mutual and current account with the defendant firm and that he had pledged gold, gold articles, and silver as security for the amounts borrowed. He claimed that the defendants were bound in law, contract, and equity to render a true and correct account of all the monies realized by the sale of articles pledged with the firm and to pay the balance that may be found due to the plaintiff.
Finding of the Court:
The trial court dismissed the suit, holding that the plaintiff had no right to call for the accounts from the defendants and that the defendants were not liable to render accounts. The appellate court allowed the appeal, holding that the defendants were liable to render account and that Art. 120 of the Limitation Act applied. The High Court remanded the matter to the lower appellate court for re-hearing and dealing with all the issues arising in the matter.
Issues: 1. Whether a suit for accounts is maintainable in the case of a pledge? 2. Whether the suit was barred by limitation? 3. Whether the sale of pledged articles was valid?
Ratio Decidendi: 1. A suit for accounts is not maintainable in the case of a pledge, as there is no statutory right on the part of the pledger to ask for the accounts, nor is there an equitable right to sue for accounts. The relationship between the pledgor and the pledgee is only that of a creditor and debtor, and there is no fiduciary relationship. 2. The suit was not barred by limitation, as Art. 120 of the Limitation Act applied. 3. The sale of pledged articles was valid, as it was properly held and conducted.
Final Decision: The second appeal was dismissed with costs.
( 1 ) THE Plaintiff in O. S. No. 258/50, district Munsif Court, Amalapuram is the appellant. The sixth respondent was the seventh defendant in the suit. It is firm which originally consisted of two partners, Sait Anjarmal and Sait chunilal who were brothers. After their death, the firm was continued by their legal representatives, namely, the sons and widow of Anjarmal and the widow of Chunilal who were defendants 1 to 4 and 5 respectively. The sixth defendant was added on the ground that he was a partner of the seventh defendant firm, but the defendants denied that he was a partner.
( 2 ) THE suit was filed against the defendants praying for a decree directing the defendants to render a true and correct account of the dealings between the plaintiff and the defendant firm and for a further direction to pay the amount that may be found due to the plaintiff on taking accounts.
( 3 ) THE cases of the Plaintiff as stated in the plaint is briefly as follows:
( 4 ) THE plaintiff was having a bus/ness of banking, money-lending and gold and silver business. He had a mutual and current account with the seventh defendant firm. He was borrowing amounts from time to time and as security for the amounts borrowed, he was pledging gold, gold articles and silver. He was repaying amounts now and then and was also redeeming some of the articles pledged. A regular katha was opened in the defendant s firm from 3rd November, 1943. The plaintiff was asking the partne-- of the firm for on account of his dealings so that he may pay away any money that may be due to the firm but they refused to render account to the plaintiff, and the phntiff had recourse to criminal proceedings, but it was held that the plantiff should pursue his remedy in a civil court. Ultimately, by a registered notice dt. 28-9-1948 the plaintiff was informed that his Jewels will be auctioned on 3-11-1948. Subsequently, he was In formed that the auction was to be held on 21-11-1948. The plaintiff protested by a telegram that the firm had no right to sell and that the sale should not be held. Inspite of such protest, the sale appears to have been held but the plaintiff was not Informed of the price fetched by the sale of the Jewels. The alleged sale Is not bonafide and valid. The plaintiff was always willing to pay any amount that may be found due from him. In calculating the amount, interest has to be calculated only at the rate of 6% simple interest and the firm was not entitled to claim compound interest with quarterly rests. In these circumstances, the plaintiff stated that the defendants were bound in law. contract and equity to render a true and correct account of all the monies realised by the sale of articles pledged with the firm and to pay the balance that may be found due to the plaintiff.
( 5 ) IN the written statement filed by defendants I to 4 and 7, It was contended that they did not admit the truth and correctness of the accounts maintained by the plaintiff They denied that the account was mutual and current. The main contention was that the suit as filed for accounts was not maintainable and in any event the suit was clearly barred by limitation. It was further stated that the monies were lent on pledges according to the practice with interest at Rs. 8/- per cent per mensem compounded every three months. After mentioning some details about the borrowing, pledges etc. it was stated that the amount which remained was only about 123 tolals of gold and 143 tolas of silver. As the security became inadequate for the debt payable by the plaintiff as per his Katha and as the plaintiff did not pay Inspite of notices, the pledged articles we e sold openly in an auction at Kakinada from 21-11-1948. to 26-11-48. An amount of Rs. 10,194-8-6 was fetched by that sale, leaving a balance of the debt of Rs. 11, 385-0-6 due from the plaintiff. A registered notice dt. 4-12-1948 was issued for payment of this balance, but the plaintiff did not pay the amount. It wa
