The main legal point established in the judgment is that under the law of India, a valid pledge of shares can be created by the deposit of the share certificate, even without an instrument of transfer, emphasizing the nature of shares as goods and the enforceability of the pledge through legal recourse.

1. The question, raised in. this appeal is whether there can be a valid pledge of shares by the deposit of the share certificate when it is not accompanied by an instrument of transfer. The appellant instituted a suit in the Court of the District Munsif of Palghat to recover what was due on a promissory note executed by one Subramania Pattar in favour of one Ramakrishna Pattar, the instrument having been endorsed to the appellant. When the appellant demanded the amount due under the promissory note, the maker deposited with, him as security for payment a. share certificate in respect of shares held by him in the Parli Tile Works, Limited. The certificate was not accompanied by a deed transferring the shares to the appellant, but he claims that notwithstanding this there was a valid pledge of the shares. The suit was contested by the fourth defendant, who is the first respondent in this appeal. On a date subsequent to the deposit of the share certificate with the appellant the first respondent attached the shares by a prohibitory order issued under Order 21, Rule 46 of the Code of Civil Procedure. He denied that a valid pledge of the shares was created in favour of the appellant and maintained that he himself had obtained title to the shares by reason of the attachment and subsequent sale.

2. The District Munsif held that a valid pledge had not been created, but on appeal the Subordinate Judge of South Malabar reversed the District Munsifs decision. In his opinion, a valid pledge had been created by the deposit of the share certificate. The first respondent appealed to this Court. The appeal was heard by Venkataramana Rao, J., who agreed with the District Munsif and accordingly allowed the appeal. This appeal is from the judgment of Venkataramana Rao, J., under clause 15 of the Letters Patent.

3. In the opinion of Venkataramana Rao, J., shares are not goods within the meaning of Section 172 of the Indian Contract Act and there can be no valid security unless the scrip is accompanied by an instrument of transfer. When a share certificate is handed over by way of security to another with a deed of transfer duly executed, the transaction constitutes more than a pledge, because there is a transfer of the holders rights in the property, subject of course to the right of redemption. We shall return to the meaning of pledge in a moment. The learned Judge recognised that according to the English law the mere deposit of a share certificate by way of security is treated as an equitable mortgage, but in his opinion that did not help the appellant, because the deposit had not been made in the City of Madras. He regarded an equitable mortgage of movable property as being on the same basis as an equitable mortgage of immovable property and therefore an equitable mortgage of movable property could not be effected outside the towns specified in the Transfer of Property Act. It is not necessary for the Court to discuss this question because Mr. Kuttikrishna Menon, on behalf of the appellant, has been content to confine his case to the plea of pledge.

4. Now let us see what is implied by the expression pledge. In Hallday v. Holgate (1868) L.R. 3 Exeh. Cas 299, Willes, J., placed a pledge between a simple lien and a mortgage. He pointed out that in the case of a lien there is no transfer of interest, but in the case of a mortgage the property passes. In the case of a pledge a deposit of goods is made security for a debt and the right to the property vests in the pledgee so far as it is necessary to secure the debt. Section 148 of the Indian Contract Act defines bailment as the delivery of goods by one person to another for some purpose upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. Section 172 defines a pledge as the bailment of goods as security for the payment of a debt or the performance of an obligation. Section 176 provide