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High Court Of Orissa
P. K. Misra
COMMERCE AND INDUSTRIES - Appellant
Versus
PUNJAB NATIONAL BANK - Respondent
Civil Revision 62 Of 1996
Decided On : 11/09/1998
INJUNCTION - PLEDGE - ORDER 39, RULES 1 AND 2, CPC - SALE OF PLEDGED ARTICLES - RIGHT OF PLEDGEE TO SELL PLEDGED ARTICLES - RIGHT OF PLEDGER TO REDEEM PLEDGED ARTICLES - DUTY OF PLEDGEE TO RETURN PLEDGED ARTICLES ON PAYMENT OF DEBT - RIGHT OF PLEDGEE TO SUE FOR DEBT - RIGHT OF PLEDGER TO CREDIT FOR VALUE OF PLEDGED ARTICLES IF PLEDGEE NOT IN A POSITION TO RETURN THEM - DIRECTIONS FOR DISPOSAL OF PROCEEDING UNDER ORDER 9, RULE 13, CPC - FRAMING OF ISSUE TO DETERMINE MARKET VALUE OF PLEDGED ARTICLES SOLD BY BANK - ADJUSTMENT OF VALUE OF PLEDGED ARTICLES AGAINST CLAIM OF PLAINTIFF - DIRECTION TO PLAINTIFF TO RETURN EXCESS AMOUNT, IF ANY, WITH INTEREST, OR DIRECTION TO DEFENDANTS TO PAY BALANCE AMOUNT, AS THE CASE MAY BE - RENEWAL OF AMOUNT DIRECTED TO BE KEPT IN FIXED DEPOSIT - CONSOLIDATED COST OF RS. 5,000/- TO BE PAID BY BANK TO PETITIONERS.
Fact of the Case:
The petitioners had pledged their property with the opposite party-bank as security for a loan. During the pendency of a suit filed by the bank for recovery of the loan amount, the bank applied for permission to sell the pledged articles. The trial court rejected the application, and the High Court dismissed the bank's revision petition against the order. The suit was decreed ex parte, and the petitioners were directed to pay the decretal amount within three months, failing which the bank was permitted to realize the amount through the process of law. The petitioners filed an application under Order 9, Rule 13 of the CPC to set aside the ex parte decree, which was pending before the trial court. Meanwhile, the bank published a notice for auction sale of the pledged articles. The petitioners filed an application under Order 39, Rules 1 and 2 read with Section 151, CPC, to injunct the bank from holding the auction. The trial court rejected the application as infructuous after the bank sold the pledged articles to a third party.
Finding of the Court:
The court held that the bank's sale of the pledged articles after obtaining an ex parte decree was illegal and that the bank was not entitled to sell the pledged articles unilaterally. The court also held that the pledger had the right to redeem the pledged property upon tender of the amount advanced, but that right would be lost if the pawnee had in the meantime lawfully sold the property pledged.
Issues: 1. Whether the bank had the right to sell the pledged articles after obtaining an ex parte decree without taking recourse to the process of law? 2. Whether the pledger had the right to redeem the pledged property upon tender of the amount advanced?
Ratio Decidendi: The court relied on the provisions of Section 176 of the Contract Act, 1872, which provides that the pawnee (pledgee) is bound to return the pledged property to the pawner (pledger) upon payment of the debt. The court also relied on the decision of the Supreme Court in Lallan Prasad v. Rahmat Ali and Anr., which held that the pawner has an absolute right to redeem the property pledged upon tender of the amount advanced, but that right would be lost if the pawnee has in the meantime lawfully sold the property pledged.
Final Decision: The court allowed the revision petition and set aside the order of the trial court rejecting the application for injunction. The court directed the trial court to dispose of the proceeding under Order 9, Rule 13, CPC, as expeditiously as possible and to frame a specific issue to find out about the market value of the property sold by the bank on the date of such sale. The court also directed the bank to pay a consolidated cost of Rs. 5,000/- to the petitioners.
P. K. MISRA, J.
( 1 ) THE opposite party filed money Suit No. 31 of 1985 against the present petitioners for realisation of Rs, 15,15,915. 84 paise. During the pendency of the suit, the opposite party filed an application seeking permission of the Court to sell away the raw materials and machineries of the petitioners industry which had been given by way of pledge to the Bank. The said application was rejected. Civil Revision No. 805 of 1987 filed by the plaintiff against the aforesaid order was dismissed by the High Court by order dated 11. 7. 1990. Therefore, the suit was decreed ex parte on 13. 3. 1994 and the defendant-petitioners were directed to pay up the decretal amount within three months failing which the plaintiff was permitted to realise the amount through process of law. Thereafter, the present petitioners filed Misc. Case No, 127 of 1994 under Order 9, Rule 13 of the Code of Civil procedure (hereinafter referred to as the cpc') to set aside the ex parte decree and the said petition is still pending before the trial court.
( 2 ) WHILE the matter stood thus the opposite party published a notice in the daily 'samaj for auction sale of raw materials and other finished products of the industry. The present petitioners filed an application under order 3. 9, Rules 1 and 2 read with Section 151, CPC, before the trial Court to injunct the opposite party from holding such auction and the matter was fixed to 27. 10. 1995 for hearing. At that stage the opposite party sought for adjournment and the case was fixed to 17. 11. 1995 for hearing on the question of injunction and after completion of hearing the matter was posted to 27. 11. 1995 for pronouncement of the order. Hpwever, without waiting for the order, the opposite party sold the raw materials and other products to one jayant Kumar Das of Balasore. It is alleged by the petitioners that the aforesaid sale took place in a clandestine and dubious manner and no other bidder except Jayant. Kumar Das had participated. It is further alleged that the finished products and. the raw materials were sold on weight basis for a paltry sum of Rs. 8,32,600/ -. According to the petitioners, the property if sold on piece basis would have fetched about Rs, 25,00,000/ -. After such sale was effected, the counsel for the opposite party filed a memo on 22. 11. 1995 stating that the goods had already been disposed of by the bank and, thereafter, the trial Court rejected the application of the petitioners for injunction as being infructuous.
( 3 ) THE petitioners have filed this revision against the order dated 27. 11. 1995 wherein the trial Court rejected the application under order 39, Rules 1 and 2, CPC as infructuous. The learned eounsel for the opposite party-bank, has justified the action of the Bank by stating that since the property had been pledged with the Bank, it had the absolute right to sell the pledged property. The learned counsel for the petitioners has however combated this position and submitted that the sale was completely illegal.
( 4 ) THE narration of facts clearly disclose the design of the Bank to overreach the process of law and also display the lack of application of judicial mind on the part of the trial court. There is no doubt that the property had been pledged with the Bank. Keeping in view the provisions of Section 176 of the Contract act, there is no doubt that the Bank had right to sue on the basis of the loan and keep the pledged articles as security or to sell the pledged articles. The Bank's application for seeking a direction to sell pledged articles during the pendency of the suit having been rejected by the trial Court as well as by the High Court, it did not behove the Bank to sell away the pledged articles after obtaining an ex parte decree, particularly when in the ex parte decree it had been mentioned that if the amount was not cleared within a particular period, the. Bank had the right to realise the amount through the process of law.
( 5 ) IT h
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