A pawnee is not entitled to interest on the amount representing the value of pledged goods if it has not sold the goods as required by Section 176 of the Contract Act, 1872.

( 1 ) THIS appeal has been preferred by Punjab and Sind Bank. The dispute lies in a very narrow compass. It is not necessary to go into detailed facts. The suit stands decreed. Interest has been fixed at the rate 171/2 %. The judgment-debtor had addressed a letter Ex. P/ 50 to the Bank on 9th Oct. 1978. It is the impact of this letter which is relevant for the purpose of this appeal. This reads as under:" As we are not able to clear your dues, we hereby handover to you complete factory premises situated at 13 Industrial Estate, Gwalior including Plant and Machinary and all other items lying there. You are at liberty to lock it, or dispose it, and the amount realised may be credited to our loan account. "

( 2 ) TAKING note of this, the trial Court concluded that even though the suit is being decreed but the Bank will not be entitled to interest on the amount representing value of the articles mentioned in Ex. P/50. In para 34 of the judgment it was concluded :" Accordingly, plaintiff- Bank gates a decree of Rs. 2,71,859-90 NP with future interest @ 171/2% per annum from the date of institution of the suit i. e. 4-3-1980, but out of this decrial amount, the list Ex. P/51 that were handed over by the defendants to the plaintiff-Bank per letter Ex. P/50 on 19-10-1978, shall be reduced with interest @ 171/2% per annum on that sum from 19-10-1978. Defendants shall pay the costs of the suit to the plaintiff-Bank. "

( 3 ) IT is the above conclusion, which is the subject matter of this appeal.

( 4 ) LEARNED counsel appearing for the Bank has argued that the Bank was not obliged to sell the goods as Ex. P/50 was not categoric in terms. The decree was passed in the year 1986. This has not been executed till today.

( 5 ) THE only argument as noticed above that the direction given that the interests will not be payable on the amount which may be realised after the sale of the articles is not sustainable.

( 6 ) RELIANCE has been placed on Section 176 of the Contract Act. According to the counsel for the petitioner the bank was not obliged to sell the articles, therefore, it can validly claim the interest. Section 176 of Contract Act, 1872 reads as under:"if the pawnor makes default in payment of the debt, or performance, at the stipulated time of the promise, in respect of which the goods were pledged, the pawnee may bring a suit against the pawnor upon the debt or promise, and retain the goods, pledged as a colateral security; or he may sell the thing pledged, on giving the pawnor reasonable notice of the sale. If the proceeds of such sale are less than the amount due in respect of the debt or promise, the pawnor is still liable to pay the balance. If the proceeds of the sales are greater than the amount so due, the pawnee shall pay over that surplus to the pawnor. "

( 7 ) THE factual position be noticed again. Vide Ex. P/50 on 19th Oct. 1978, the articles mentioned in Ex. P/51 were placed at the disposal of the Bank. These continue to be so at the disposal of the Bank. As such no fault can be found with the conclusion arrived at by the trial Court. As a matter of the Bank could not maintain a suit for recovery of debt and retain pledged property as well. See Lallan Prasad v. Rahmat Ali, AIR 1967 SC 1322 where in it was observed:"the second question would then be whether the appellant was entitled to recover the balance of the said loan in view of his denial of the pledge and his failure to offer to redeliver the goods. Under the Common Law a pawn or a pledge is a bailment of personal property as a security for some debt or engagement. A pawnor. is one who being liable to an engagement gives to the person to whom he is liable a thing to be held as security for payment of his debt or the fulfillment of his liability. The two ingredients of a pawn or a pledge are: (1) that it is essential to the contract of pawn that the property pledged should be actually or constructively delivered to the pawnee and, (2) a pawnee has only a sp