Back
1968 Supreme(Cal) 255
IN THE HIGH COURT AT CALCUTTA
Ramendra Mohan Datta, J.
Samarjit Kumar Chatterjee - Petitioner
Versus
Central Bank of India Ltd. - Respondent
Central Bank of India Ltd. - Petitioner
Versus
Cosmopolitan Trading Co. - Respondent
Suit No. 1600 of 1964 and Suit No. 153 of 1965
Decided on : December 24, 1968
For Petitioner: P. K. Dutta
For Respondent (Bank): Amiya K. Basu and T. K. Basu
A pledgor cannot have an immediate right to possess the pledged articles until the dues are tendered or until payment of the debit to the pledgee, and the pledgor's action for the return of the pledged articles must be preceded by a tender of the entire amount to the pledgee.
Headnote:
CONTRACT - PLEDGE - SUIT FOR RECOVERY OF PLEDGED ARTICLES - PLEDGOR'S RIGHT TO POSSESSION - PLEDGEE'S LIABILITY - PLEDGEE'S DUTY TO SELL - PLEDGEE'S RIGHT TO SELL - PLEDGEE'S FAILURE TO ACCOUNT FOR SALE PROCEEDS - PLEDGEE'S NEGLIGENCE - PLEDGEE'S LIABILITY FOR SHORTAGE - PLEADING - CAUSE OF ACTION - LIBERAL CONSTRUCTION OF PLEADINGS - AMENDMENT OF PLEADINGS - CONSOLIDATION OF SUITS - ADMISSIONS - EVIDENCE - BURDEN OF PROOF - DAMAGES - COSTS.
Fact of the Case:
Plaintiff, a pledgor, filed a suit against the defendant bank, the pledgee, seeking to recover the pledged articles or their value. The plaintiff alleged that the defendant bank had failed to sell the pledged goods as per the plaintiff's instructions, had not accounted for the sale proceeds, and had been negligent in safeguarding the pledged goods, resulting in a shortage. The defendant bank denied the allegations and claimed that it had sold the pledged goods and credited the proceeds to the plaintiff's account.
Finding of the Court:
1. The plaint did not disclose a cause of action as it failed to plead the pledgor's tender of the entire amount to the pledgee and the pledgor's subsequent right to seek the return of the pledged articles. 2. The plaintiff could not have exercised his right to redeem the pledged goods as they had already been sold by the bank. 3. The statement of stock prepared by the bank could not be relied upon by the plaintiff as an admission as it was based on representations made by the plaintiff. 4. The correspondence between the parties and the bank's admission in a letter regarding the value of the stock did not amount to an admission of liability on the part of the bank. 5. The bank's pleading in the cross suit filed against the plaintiff did not help the plaintiff in making out a cause of action. 6. The Supreme Court cases cited by the plaintiff did not support his contention as they dealt with cases where liability was clearly admitted without reservation or where the pleadings were liberally construed to avoid prejudice to the other side. 7. The plaintiff's alternative argument that the court could grant appropriate reliefs under Order 7, Rule 7 of the Code of Civil Procedure was rejected as it was a question of want of pleading of cause of action. 8. The plaintiff's contention that the pleader had the duty to render a true and correct account of the sale proceeds was not accepted as the frame of the suit should have been different if such a case was sought to be made out. 9. On the merits, the court found that the plaintiff had 191 M. ton 187.666 Kgs. of iron and steel goods in the godown on 29th June, 1962, and that the value of the stock lying in the godown on that date was to be calculated at the agreed rate of Rs. 600/- per M. ton. 10. The court also found that the statement of stock dated 29th June, 1962 was prepared by the bank on the basis of representations made by the plaintiff and that only 37.18 M. ton of goods were found on weighment on or about 23rd October, 1963. 11. The court held that the bank was negligent in safeguarding the pledged goods and that the bank was liable for the shortage. 12. The court dismissed the plaintiff's suit on the ground that the plaint did not disclose a cause of action, but directed that each party bear its own costs in view of the finding on merits in favor of the plaintiff. 13. In the cross suit filed by the bank, the court granted a decree for Rs. 77,018.57/- as claimed in the plaint with interest on decree and costs, but refused interim interest.
Issues: 1. (a) On or about June 29, 1962 did the plaintiff have in his godown 191––187.666 Metric tonnes of goods as alleged in paragraph 11 of the plaint? (b) What was the value of the stock lying in the said godown on or about June 29, 1962 ? (c) Was the statement being annexure "A" to the plaint prepared in the circumstances and on the basis as alleged in paragraph 8 of the written statement? (d) Were only 37.18 Metric tonnes of goods found on weighment on or about October 23, 1963, as alleged in paragraph 8 of the written statement? 2. Does the plaint disclose any cause of action ?
Ratio Decidendi: 1. A pledgor cannot have an immediate right to possess the pledged articles until the dues are tendered or until payment of the debit to the pledgee. 2. The pledgor's action for the return of the pledged articles must be preceded by a tender of the entire amount to the pledgee. 3. The pledgee's liability to sell the pledged goods arises only if the pledgor makes default in making payment. 4. The pledgee's failure to sell the pledged goods as per the pledgor's instructions, failure to account for the sale proceeds, and negligence in safeguarding the pledged goods, resulting in a shortage, may give rise to a cause of action against the pledgee. 5. The pleadings should clearly set out the cause of action and the material averments necessary to establish the same. 6. The court may allow amendments to the pleadings to avoid prejudice to the other side, but only if such amendments are necessary and justified. 7. Consolidation of suits may be ordered when there is a common question of law or fact involved in the suits. 8. Admissions made by a party in pleadings or correspondence may be considered as evidence against that party. 9. The burden of proof lies on the party who asserts a fact or claim. 10. Damages may be awarded to compensate for the loss or injury suffered by a party due to the breach of contract or negligence of the other party. 11. Costs are generally awarded to the successful party in a lawsuit, but the court may exercise its discretion to order otherwise in certain circumstances.
Final Decision: The plaintiff's suit was dismissed on the ground that the plaint did not disclose a cause of action. The defendant bank was granted a decree for Rs. 77,018.57/- as claimed in the cross suit with interest on decree and costs.
The judgment of the Court was as follows :––
The main point for decision herein 18 whether the plaint discloses a cause of action.
2. The plaintiff has an overdraft account with the Central Bank of India Ltd. in its New Market Branch. By a Deed called the Deed of Hypothecation the plaintiff in order to secure the said overdraft account pledged and/or hypothecated in favour of the Bank various iron and steel materials viz., joists, M.S. Rounds, Strips, Angles etc. The plaintiff also executed the usual promissory notes, and other necessary documents as desired by the Bank in its favour. The limit of overdraft was to the extent of 35% of the value of the security. It was subsequently raised to 40%.
3. The plaintiff's case as made out in the plaint, shortly, inter alia, is that in the said overdraft account there were various dealings and transactions between November, 1959 and 29th June, 1962; monthly statements of the stock of the goods were submitted by the Bank from time to time; those were signed by the plaintiff and countersigned by the Godown Keeper of the Bank the plaintiff's last transaction with the Bank would appear from the statement dated 29th June 1962 on the basis whereof the plaintiff made out his claim in this suit. Inasmuch as there were no further transactions after that date, by its letter dated 14th January, 1963 the plaintiff asked the bank to sell his goods lying in the godown at Shalimar. The next averment made in the plaint is that the value of the goods on the basis of the said statement dated 29th June, 1962 was Rs. 1,14,712.60 calculated at the agreed rate of Rs. 500/- per M. ton. The plaintiff gave credit to the defendant bank in respect of its entire dues as shown in the overdraft account to the extent of Rs. 81,957.68 paise and after adjusting the same against the aforesaid value of the said security the account showed a credit balance in his favour to the extent of Rs. 32,754.92 paise. Over and above the said amount, several other sums had also been claimed by way of sales tax, god own rent and interest and on that basis the total amount claimed by the plaintiff had come up to Rs. 41,274.16P. Thereafter the plaintiff pleaded a notice dated 3rd August, 1964 from his Solicitor calling upon the defendant bank to pay the said sum of Rs. 41,274.16 paise but the defendant failed and neglected to pay the said sum or any part thereof.
4. From the above it will appear that the plaint as framed is somewhat unusual in the sense that although the security is being sought to be recovered from the pledgee by the pledgor yet in the plaint there is no mention about the pledgee’s liability to sell nor any default on the part of the pledgee has been pleaded. In paragraph 11 of the plaint the plaintiff has alleged that the total tonnage of his pledged goods was to the extent of 191 M. ton and 187.666 Kgs. on 29th June, 1962. The plaintiff in effect has asked for the price of the said goods and on the basis thereof has sought to wipe out the dues of the bank after adjusting the same from the value of the security which at the agreed rate was shown at Rs. 1,14,712.60 paise. Inspite of knowledge the plaintiff had totally suppressed in his plaint the fact that the said pledged goods were weighed by the bank some time on or about 22nd on 23rd October, 1963 and upon such weighment they were found to weigh only about 37 M. tons. The plaintiff has further suppressed in the pleading that the said pledged goods to the extent of about 37 M. tons were sold by the bank to the third party and the bank realized only a paltry sum of Rs. 19,000/- and cruelted the same to the plaintiff's account. It is difficult to appreciate how under those circumstances the plaintiff could ask for credit to the extent of a sum of Rs. 1,14,712.60 paise in his account as the value of the pledged goods without pleading any default or liability on the part of the Bank or its duty to sell the same in accordance with the direction or the plaintiff. The
