P L D 1959 (W (PLP)

"The market rate of the goods in dispute in 1951 and 1952 had fallen to a little extent but it did not affect me much. This was not the reason for not getting the delivery of the goods. The reason for not taking delivery of the goods has already been stated by me." The statement of the Manager of the defendant Bank D. W. 3 Mr. Khalid (Exh. 12) fully supports the defendants' case. He states: "The delay in the clearance was due to the fact that the plaintiff had registered with the Customs in July 1951 a Bill of Entry in his own name. Our clearing agent could not clear the goods as long as this bill was not cancelled Exhs. 5/7, 5/8, 5/9, 5/10, 5/11, 5/13 and 5/14 are the letters exchanged between the parties for the cancellation of the Bill of Entry. On 10th September 1951 (Exh. 5/13) the plaintiff merely sent a copy of the bill of entry which had been filed by him in the Customs. We sent the copy. Our clearing agent replied on 12th September 51 vide Exh. 8/4 that a copy of the bill of entry was not sufficient but the plaintiff should send a letter addressed to the Assistant Collector of Customs for the cancellation of the bill of entry. There was also some discrepancy in the value of the goods shown in the contract and the sale note which did not tally with the invoices. He requested the parties to contract him and explain this. We instructed the plaintiff by Exh. 5/28 to contact the clearing agent. The plaintiff also failed to supply the correspondence between him and the foreign suppliers. After the goods were cleared, we sent telegraphic notice to the parties Exh. 6/13 dated 29‑2‑52 requiring the plaintiff to take immediate delivery of the goods." After carefully considering the oral and documentary evidence produced by the parties, I am of the opinion that the defendant bank or their agent was not responsible for the delay in the clearance of the goods from the Customs. The delay was primarily due to the fact that the plaintiff took a long time to get the Bill of Entry, filed by him with the Customs Authorities, cancelled. The delay was also caused because the Customs Authorities detected difference between' the valuation shown in the sale note and the invoice and the plaintiff failed to explain this discrepancy within a reasonable time, to the satisfaction of the Customs Authorities. The law relating to the question under consideration is covered by sections 211 and 212 of the Contract Act. It appears to me that under these provisions of law the agent cannot be held responsible if he has discharged his duties in a proper manner and has acted with due diligence. There is no evidence in this matter to fix any responsibility for the delay of the clearance of the goods on the defendant bank or on their clearing agents. I entirely agree with Mr. Noorul Arlin, the learned counsel for the defendants, that the delay in the clearance of the goods was primarily due to the fact that the plaintiff had already registered a bill of entry in his own name and did not get it cancelled till the 29th of November 1951. It was also due to the fact that the Customs Department demanded the production of the corres pondence between the buyers and the suppliers, which resulted in the discovery of a discrepancy in the valuation of the goods shown in the contract and remained unexplained in the invoice. I there fore decide this issue against the plaintiff. Issue No. 2.‑The goods in dispute were admittedly cleared on the 14th of February 1952. On the 29th February 1952 the defendant bank by telegram (Exh. 6/13) asked the plaintiff to take delivery of the goods. The plaintiff instead of paying the amount called upon the defendants to supply him with a statement of account by letter dated 1st March 1952 (Exh. 5/5). The statement of account (Exh. 6/16) was sent to him under a letter dated 5‑3‑52 (Exh. 6/15). The plaintiff raised objections by his letter dated 11th March 1952 (Exh. 5/1).. On 17‑3‑1952 by a letter (Exh. 6/12) the defendant bank asked him to visit them so that the relevant entries may be explained to him. There are two letters produced on the record : one is Exh. 5/3 dated 26th March 1952 written by the plaintiff to the defendants, in which the plaintiff has stated that he could not visit the bank as their officers had misbehaved him. In the other letter dated 27th March 1952 (Exh. 7/2) produced by the plaintiff, which is a copy of a letter sent by him to the defendants, it is stated that he visited the bank on the 19th and that he was not satisfied with the clarification made by the bank. On the 15th of March 1952 the defendants under letter (Exh. 6/17) sent the copies of the Bill of Entry to the plaintiff in reply to his letter (Exh. 5/22). On the 15th of August 1952, by letter (Exh. 6/18) the defendant bank wrote as under: "We have to inform you that as your account has not been adjusted in spite of our repeated requests we are now unable to allow you any further periods. We have, therefore, decided that if you fail, within 36 hours, to take any steps to get it adjusted, legal action shall be taken against you." No reply was received from the plaintiff and ultimately on 14th November 1952, by letter (Exh. 12/1), which is not admitted by the plaintiff to have been received by him, the defendant bank informed him that as he has failed to take delivery of the goods, and as the stocks have been cleared and are stored since long, they have no alternative but to dispose of the goods at his risk and cost. The plaintiff failed to attend to this letter and the goods were eventually sold on the 11th of November 1952, to Abdul Sattar Nagaria, a local cloth merchant. The plaintiff has taken up the position that in reply to the above‑mentioned communica tion, he made an oral offer to pay a sum of Rs. 64,731‑2‑0, but the defendant (did not) accept it. This plea is not supported by any documentary evidence and finds place only in his bare statement. He stated: "I approached the bank for the delivery of the goods but they insisted for payment of the whole amount viz., Rs. 65,823. 1 disputed this amount and offered them Rs. 64,731‑2‑0, but the defendant refused to take' this amount and failed to deliver the goods to me." The Manager of the defendant Bank, Mr. Khalid, D. W. 3 (Exh. 12) has denied this fact on oath and stated: "Then we sent him the statement of account Exh. 6/16 the balance outstanding against him was Rs. 65,

823. He did not pay this amount. He did not even offer to pay Rs. 64,000." I have given my serious consideration to this question and in my opinion the plea of the offer to pay Rs. 64,731‑2‑0 is an after thought. I am not prepared to place any reliance on the bare oral testimony of the plaintiff in this respect. If it was a fact, the plaintiff could have mentioned it in the correspondence between the parties. In the absence of any reliable evidence I will decide this issue against the plaintiff. Issue No. 3.‑In view of my finding that the plaintiff, never offered any amount to the defendants towards their claim, this issue does not arise, I am, however, of the opinion that on the evidence on the record the defendant bank was perfectly justified in not delivering the goods in dispute to the plaintiff. It was the duty of the plaintiff to pay the dues of the defendants and as he failed to do so he was not entitled to get the delivery of the goods in dispute. Issues Nos. 4 & 5.‑These are the most important issues in the case. The defendants (claim) that in view of the Letter of Lien (Exh. 5/15) and Cash Credit Agreement (Exh. 5/16) dated the 27th of August 1951, they were entitled to sell the goods without giving any notice to the plaintiff. The relevant portions of the Letter of Lien (Exh. 5/15), which empowered the defendants to sell the goods in dispute without any notice to the plaintiff are reproduced below: "In consideration of any advance (including any loan, over draft or other advance) or credit of any nature and kind whatsoever you have allowed or may from time to time allow me to us. (b) All mark table securities and goods coming into your possession on our account or deposited with you or for the time being held by you on our behalf, whether alone or jointly with others, are hereby pledged for and shall stand charged with the due payment of the amount of such advance or credit with interest thereon 6% p.a., with rests and all costs, charges and expenses incurred by you in connection with such advance or credit, and we agree and undertake that in the event of our failure to maintain the margin on the said movable property, marketable securities and goods in the manner hereinafter provided or failing repayment on demand to you by us of the amount of such advance or credit with interest costs, charges and expenses as aforesaid. You shall be entitled, but not bound to sell or otherwise dispose of all or any of the said movable property, marketable securities and goods by public auction or private contract in such manner and upon such terms and subject to such conditions as you may think fit without any reference to us or obtaining our consent and the proceeds of such sale or disposal shall be applied first in payment of all costs, charges and expenses of and incidental to such sale or (torn) and the enforcement of the pledge and charge in your favour hereby created, secondly in repaying the amount of such advance or credit with interest as aforesaid and all charges and expenses incurred by you in relation thereto not otherwise met including loss in exchange (if any) and all other, debts and monies howsoever due to you by us and lastly in payment to us of the surplus, if any, thereafter remaining declaring as it is hereby expressly provided, agreed and declared that this shall be continuing security to cover the amount of any advance or credit which you have allowed to us or may from time to time allow us with interest, cost, charges and expenses and all other debts and monies due as aforesaid and that you shall not be responsible for any loss, damage or depreciation which the said' movable property, marketable securities and goods may suffer whilst in your possession or in course of realization or disposal hereunder. And in case of the amount of the proceeds of such sale or disposal falling short we are, of course, liable to make good the deficit to you. And we undertake to maintain in favour of the Bank a margin by payment in cash so that the amount of the advance or credit (inclusive of all such interest, costs, charges and expenses) as aforesaid be not more than‑‑‑‑per cent of the market value of the said movable property, marketable securities and goods for the time being. And we agree that the Bank's decision as to the market value of the said movable property, marketable securities and goods shall in all cases be final and binding upon us." Clauses 3 and 9 of Cash Credit Agreement (Exh. 5/16) read as follows: "3rd.‑That the Bank shall not be required to make advances under this Agreement upon such account or accounts as aforesaid to an amount at any one time exceeding in the aggregate with the interest thereon the sum of Rs. 50,000 (fifty thousand only) and shall not be required to make advances exceeding in the aggregate with the interest thereon‑‑‑per cent o f the market value (not being in excess of the normal value) of the Goods Produce and Merchandise for the time being pledged but within the said limits the Bank shall from time to time until such account or accounts as aforesaid shall .be closed by such demand of payment thereof as aforesaid make such advances as the Borrower shall require upon the security of the Goods Produce and Merchandise for the time being pledged with the Bank as aforesaid. 9th.‑That in default of such payment as last aforesaid the Bank may at any time or times or times thereafter without any notice to the Borrower (without prejudice to the Bank's right of suit against the Borrower) either by public auction or private contract absolutely sell or otherwise dispose of the Goods Produce and Merchandise then remaining pled ed to the Bank under this Agreement or any part thereof an out of the pro ceeds thereof reimburse the Bank the said balance or balances of the said account or accounts or so much thereof as shall remain unpaid with interest thereon at the rate of six per cent per annum from the closing of the said account or accounts until payment." Although the learned counsel for the plaintiff did not urge before me that the above‑mentioned agreement is not binding on the plaintiff but I had my own doubts about it and called upon the defendants counsel to clarify the position in the light of the relevant provision of law. The learned counsel for the defendants placed the case of both the parties, as was expected from him, very fairly before me. He invited my attention to section 176 of the Contract Act which reads as under: "

176. 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 collaterals 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 sale or greater than the amount so due, the pawnee shall pay over the surplus to the pawnor. This section requires that the pledgee before exercising his right to sell the goods pledged with him must give notice to the pledgor' of the sale. It was conceded by Mr. Noorul Arfin and it also appears to me that the said provision of law is not subject to any contract to the contrary entered into by the parties. Section 176 of the Contract Act is not one of those provisions of law, which is subject to the parties' contractual freedom. This being the position, I am clearly of the opinion that the terms of the agree ment arrived at between the parties referred to above will not make any effect on the right of the pawnor to get a notice about the disposal of the goods as contemplated in section 176 of the Contract Act. It will therefore be necessary to consider in this case whether any notice required in law was given by the defendant bank before the disposal of the goods in dispute. The defendants in this case have relied on two documents to prove that, before the goods were disposed of, notice was given to the plaintiff about the contemplated sale. These documents are Exh. 6/18 dated 15‑8‑52 and a copy of a letter dated 14th November 1952, (Exh. 12/1). Their contents are reproduced below: "We have to inform you that as your account has not been adjusted in spite of our repeated requests we are now unable to allow you any further periods. We have, therefore, decided that if you fail, within 36 hours, to take any steps to get it adjusted, legal action shall be taken against you." REF. F. A. C. 634, 633. "Inspite of our repeated requests you have not up till now taken any steps to take delivery of the consignment covered under your F. A. C. 634‑

633. The stocks have been cleared and are stored since long and are deteriorating. 1n the circums tances we have no other alternative but to dispose of at your risk and cost." The plaintiff has denied the receipt of letter dated 14th November 1952 and expressed his inability to produce its original. It was hotly contested on his behalf that it was not sent to him by the defendants. I am, however, satisfied on the statement of D. W. 3 Mr. Khalid, the Manager of the‑ Bank, that the letter dated 14‑11‑52 (Exh. 12/1) was sent by the defendant bank to the plaintiff. The only question that remains for consideration is whether on the facts of this case the provision of section 176 of the Contract Act, has been sufficiently complied with. In the first letter, the defendants only called upon the plaintiff to pay tae amount due from him within 36 hours and on his failure to do so threatened him with legal action. In the second letter (Exh. 12/1), the defendants only informed the plaintiff that as he has not taken any step to take delivery of the consignment which has been cleared, stored and deteriorating since long, they have no alternative but to dispose it of at his risk and cost. It will be noticed that in none of these letters the plaintiff was informed that he should pay the amount due by a particular date otherwise the goods would be sold. It was urged by the learned counsel for the defendants that the notice contemplated in the said section does pot require that the pawnor or the pledgor of the goods should be informed that the sale is going to take effect on such and such a date but it merely requires that the pledgor should be informed that the pledgee has exercised his right to sell the goods and is about to dispose them of in their claim. The learned counsel in this connection has placed reliance on two decisions: Kunj Behari Lal v. The Bhargava Commercial Bank, Jubbulpore (I L R 40 All. 522) and Sankaranaraya Iyer Saraswathy Amal v. The Kottyam Bank Ltd. (A I R 1950 Travco. 66). In the first case the learned Judges of a Division Bench of the Allahabad High Court were considering a case in which the Bhargava Commercial Bank, Jubullpore advanced a loan of Rs. 1,700 to the defendant on the security of certain ornaments which were pledged with them. The defendant failed to pay the amount and ultimately the bank gave notice to him that if the account was not settled within a fortnight, they would sell the ornaments without further reference. It was urged before them that on a true construction of section 176 of the Contract Act the pawnee was to give reasonable notice not only of his intention to sell but of the actual sale itself. The Bench, however, on considera tion of the words "He may sell the things pledged on giving the pawnor reasonable notice of the sale"; came to the con clusion that it means only a notice of the intention to sell and does not necessarily mean that a sale should be arranged before hand and that due notice of all the details should be given to the pawnor. They observed: "It is quite clear that all that the law intends is that the pawnee should give the pawnor a reasonable time within which to exercise his right of redemption and‑ proceed to sell if the property be .not redeemed. His right to sell is analogous to the seller's right of reselling granted under section 107 of the Contract Act, and we take it that the two rights must be exercised in more or less the same method." The learned Judges therefore came to the conclusion that the bank concerned gave the appellant notice, and a very reasonable notice indeed, of the intended sale. In the second case a Full Bench of the Travancore Cochin High Court was also considering a case in which a bank had advanced some moneys to one of the defendants on the security of some shares in some limited companies. The defendant failed to pay the amount due from him and the bank concerned on the 4th of February 1938 informed him that if all the amounts due were not paid within seven days, they would sell the Shares' and proceed to realise the balance. This was followed by one more notice in which the bank concerned threatened the defendant to take legal action. Thereafter the bank sold the defendant's shares in some companies. The question for consideration in that case was whether the notice given to the defendant by the bank concerned was a proper notice within the meaning of the provisions of section 177 of the Contract Act. The learned Judges after referring to the case law on the subject came to the conclusion that "the expression he may sell the thing pledged on giving reasonable notice of the sale' in section 176 only means an intimation of the intention to sell and not that a sale should be arranged beforehand and due notice of all details given to the pawnor". They further held that "where the notice contained an unequivocal indication of the pawnee's intention to sell the security (shares) if the debt was not paid within 7 days and the pawnor had notice of a. the legal requirements of a valid notice are satisfied." Mr. Noorul Arfin, the learned counsel the defendants also placed before me some decisions of the Indian Courts which are in conflict with the decisions referred to above. He referred to Co‑operative Hindusthan Bank Ltd. v. Surendra Nath Dey (A I R 1932 Cal. 524) and Bharat Bank Ltd. v. Sheoji Prasad (A I R 1955 Pat. 288). In both these cases it way. held that section 176, Contract Act lays down that the pawnee may sell the thing pledged on giving the pawnor reasonable notice of sale. According to their views a notice that `failing which we shall arrange for the sale of hypothecated stock' is merely an intimation that arrangements will be made for a sale and no; a notice of the sale that is to be held. They held that the notice contemplated requires more definite particulars and what such particulars should be must depend upon the peculiar facts of each case. The learned counsel has strenuously urged before the that the view taken in the Allahabad and Travancore cases is correct and I should also accept that view. In order to appreciate the point involved in this case it must be borne in mind that the pawnee has two courses open to him viz., he may either sue for the amount due to him, in which case he must retain the goods pledged with him as a security or he may exercise his right to sell the goods pledged with him for the recovery of the amount due. If the pawnee elects to exercise his power of sale under section 176 of the Contract Act, the sale must be made after giving reasonable notice to the pawnor. It appears to me that no hard and fast rule can be laid down in this respect and it will depend on the facts of each case whether the notice given to the pawnor was a reasonable notice within the meaning of the said provision of the Contract Act. I am, however, clear in my mind that under the said section, is not at all necessary that the notice should contain the actual elate of sale and the time. It only requires that the pawnor should be given a reasonable time to redeem the property pledged with the pawnee and the pawnee must inform him that if by such and such a time he will not pay the amount due from him, the property pledged with him will be sold for the recovery of the amount due. It would thus appear that the view taken by the Allahabad and Travancore High Courts that a notice must be given of the intended sale is more in accordance with law. Now coming to the merits of the case it will appear that the notice Exh. 12/1 dated 14‑11‑52 cannot be considered to be a valid notice within the meaning of section 176 of the Contract Act. In this letter it is not mentioned at all by what time the plaintiff' should pay the amount and after what particular period the goods will be sold. The notice is silent on this point. It only conveyed information to the plaintiff that the defendants were going to dispose of the goods and is vague in other respects. It appears to me that the notice suffered from various defects. It is silent not only on the question that the goods will be disposed of in exercise of the right of sale but also did not fix any final time to redeem the goods on payment of the legitimate dues. On this view of the matter I will hold that the defendants did not give any notice to the plaintiff as contemplated by section 176 of the Contract Act. The next question for consideration is whether the plaintiff is bound by the sale effected by the defendants of the pledged gods in this case. In my opinion there is no doubt that if a reasonable notice is not given to the pawnor such sale is not at all effective and cannot be held to be binding on him. I will therefore hold that the sale in this case is not valid and binding on the plaintiff' and cannot defeat his claim. These two issues are decided against the defendants. Issue No. 6.‑In view of my finding that the defendant bank was not responsible for the delay caused in the clearance of the goods, the plaintiff is bound to pay the demurrage. Issues Nos. 7, 8 & 9.‑It is admitted by the defendants that they sold the goods pledged with them to Messrs Abdul Sattar Nagaria on the 11th of December, 1952. The sale has been proved by D. W. 2 Moosa son of Ali Muhammad (Exh. 9). His statement shows that they purchased the goods in dispute at the rate of Rs. 42 per piece on the 11th of December 1952, vide Exhs. 9/1 and 9/2. This fact is further proved by the counterfoils of the cheques given in lieu of the price of the goods to the defendant bank (Exhs. 9/3 and 9/4). It is thus obvious that the defendant bank wrongfully converted the goods and they are responsible to compensate the plaintiff for the wrong ful conversion of the goods in dispute. The next question for consideration is what should be the measure of damage in this case. The learned counsel for the defendants has urged before me that in a suit for wrongful conversion it is well settled that the measure of damages is ordinarily the value of the goods on the date of such conversion. He has ‑ placed reliance on two decisions: Alliance Bank of Simla v. Ghamandi Lal Jaini Lal (A I R 1927 Lah. 408) and F. Nanak Chand Ramkrishan Das and others v. Lal Chand Ganeshi Lal and others (A I R 1958 Pb. 222). A I R 1927 Lah, 408 is a Division Bench decision of the Lahore High Court. Tek Chand, J., in that case observed as under: "The case is clearly one of wrongful conversion and it is well settled that in cases of this kind, the measure of damage is ordinarily the value of the goods on the date of such conversion," The learned Judge in this connection relied on Henderson v. Williams ((1895) 1 Q B 521) and Ebrahim Ahmad Mehlar v. Samual Balthazar (34 I C 297). A I R 1958 Pb. 222 is another Division Bench decision of the East Punjab High Court. In that case also the learned Judges observed: "If the goods are sold by the pawnee without a notice as provided by section 176 of the Contract Act, they will be deemed to have been converted and an action for conversion of .the same would lie against the pawnee, but damages would be assessed by taking into consideration the market rates of the goods in question as on the date of conversion, which ordinarily would be the date on which the goods were wrongfully sold." The learned counsel for the plaintiff has not been able to cite any decision contrary to the view taken in the above mentioned cases: It appears to me that the action in this case is in the nature of tort and the party entitled to compensation cannot assess damages by arbitrarily fixing the date of the wrongful conversion of the goods. I am in full agreement with the view that in such cases the measure of damages is the market rate of the goods ‑on the date on which they were wrongfully sold. Admittedly the goods in this case were disposed of on the 11th of December 1952 and in my opinion, the plaintiff is not entitled to claim damages on the basis of the market rate prevalent on the 23rd of October 1953. The plaintiff has not produced any evidence about the market rate of the goods on the 11th December 1952 but the defendants have examined D. W. 2 Moosa (Exh. 9). This witness has stated that the goods purchased by them were sold immediately thereafter to various parties. These sales are proved by the account books of Messrs Abdul Sattar Nagaria. The statement of account Exh. 9/5 and its translation Exh. 9/6 shows that on 13th December 1952, 800 pieces were sold to Hussain Ibrahim at the rate of Rs. 46 per piece. On the 26th of December 1952, 50 pieces were sold at the rate of Rs. 48 per piece to Nazar Husain Nazar Multan. On 24th December 1952 another (sic) pieces were sold to Nazar Muhammad and on the 26th and 27th December 1952, 92 pieces were sold at the rate of Rs. 47‑8‑0 per piece to various other parties. This shows that the market rate of the goods in dispute in the month of December 1952 was not more than Rs. 48 per piece. I would therefore assess the market rate on 11th December 1952 at Rs. 48 per piece. At this rate the value of the plaintiff's goods comes to Rs. 57,

120. I will therefore award the plaintiff damages in the said amount. Issue No. 10.‑The plaintiff has suffered damages in this case as already held in the sum of Rs. 57,

120. He, however, was indebted to the defendants on the 11th of December 1952 in the sum of Rs. 69,437‑8‑0 as proved by Exh. 12/2. In this way the plaintiff still owes to the defendants a sum of Rs. 12,317‑8‑0, He is therefore not entitled to claim any amount from the defendant bank and the amount awarded to him as damages will be adjusted towards the amount due to the defendants. It was hotly contested between the parties that the statement of accounts submitted by the defendants to the plaintiff contained some wrong items, Mr. Mohsinali, the learned counsel for the Plaintiff, urged that in Exh. 6/16, Rs. 7,300 are shown to have been paid towards Customs Duty, but in fact the Bill of Entry Exh. 6/1 shows that only Rs. 6,997‑3‑0 was paid for this purpose. The learned counsel further urged that in Exh. 6/1 only Rs. 3,032 was paid towards Sales Tax but the accounts submitted by the defendants showed that Rs. 3,300 was paid. These contentions are well‑founded and show that the defendants claimed Rs. 302‑13‑0 in excess to what had been paid towards Customs Duty and Rs. 268 in excess to what had been paid towards the sales tax. The plaintiff is entitled to the credit of the said items. But this finding, so far as the relief is concerned, will not make any difference. For the reasons given above, I will dismiss the suit, but in the special circumstances of the case the parties are left to bear their own costs. A. H. Suit dismissed.