ORDER
D.P. Mohapatra, J.
1. In this revision petition filed under Section 115 read with Section 102, Civil Procedure Code (for short 'C.P.C.), the defendant has assailed the decision of the lower appellate Court by which the appeal filed by the plaintiff-opposite party was allowed and the conditional decree passed by the trial Court was modified.
2. The factual backdrop of the case over which there is no controversy is as follows:
The petitioner had availed a gold loan of Rs.900/- from the State Bank of India, Kasipur Branch (hereinafter referred to as the 'Bank) on 24-10-83 securing the same by executing a demand promissory note and by pledging gold ornaments with gross weight of 7.7 grams and net weight of 7 grams and stipulating therein to repay the loan with interest at the rate of 11.5% per annum. The Bank instituted the suit, M.S. No. 102 of 1986, in the Court of the Munsif, Rayagada for realisation of Rs. 1261.40, pendente lite and future interest thereon at the contractual rate of 11.5% per annum and cost; alleging, inter alia, that the defendant had defaulted in payment of the dues of the Bank.
The defendant contested the suit taking the pleas, inter alia, that he had availed the loan from the Bank as alleged; he was ready and willing to repay the dues of the bank and to get back his gold ornaments; he had indeed, approached the officials of the Bank on several times for that purpose, but they refused to return the gold ornaments falsely alleging that the ornaments pledged by him (defendant) were not of gold and were spurious. The defendant categorically denied the assertion made by the plaintiff that after taking the loan he had executed a document on 27-2-85 accepting the position that the articles pledged by him were not gold ornaments and they were spurious ones.
3. Considering the pleadings of the parties, the trial Court framed the issues to the effect that whether the gold mortgaged by the defendant with the plaintiff Bank is pure, and whether the defendant executed a document in the nature of a letter dated 27-2-85 (Ex. 3) in favour of the plaintiff-bank,admitting therein that the gold mortgaged was not pure?
4. Assessing the evidence led by the parties the trial Court came to hold that the defendant had pledged pure gold ornaments and that the defendant has not executed the letter Ext. 3 and that the plaintiff is entitled to the suit claim amount with pendente lite and future interest at the contractual rate till realisation and is liable to return pure gold earring (Fasias) of gross weight 7.7 grams and net weight 7 grams on repayment of the dues. On those findings he decreed the suit with costs directing repayment of the suit claim amount with pendente lite and future interest at the rate of 11.5% per annum till realisation within 30-10-88 and delivery of three pure gold earrings (Fasias) of gross weight 7.7 grams and net weight of 7 grams to the defendant immediately after repayment.
5. Against the judgment and decree of the trial Court the Bank filed Money Appeal No. 3 of 1988 which was disposed of by the learned Subordinate Judge, Rayagada by the impugned judgment. As appears from the discussions in the judgment the challenge against the decree of the trial Court was two fold : (i) non-inclusion of the costs of the suit tn the decree; and (ii) the direction to deliver pure gold earrings (Fasias) by the Bank.
6. There is little difficulty in accepting the first ground since admittedly the trial Court in its judgment decreed the suit with cost; but while drawing up the decree the direction for payment of cost was not included. The lower appellate Court was, therefore, right in modifying the decree of the trial Court to include the cost of the suit.
Regarding the second ground, the lower appellate Court took the view that the trial Court had no jurisdiction to impose the condition regarding return of the pledged ornaments which, as determined by him, were of pure gold. He therefore deleted the said condition and passed a simple money decree for the suit amount together with pendente lite and future interest and cost in favour of the Bank. The decision of the lower appellate Court is assailed in this revision petition.
7. The bone of contention between the parties relates to the question whether the lower appellate Court was right in deleting the direction in the decree for return of the pledged ornaments by the plaintiff-bank to the defendant on the latter satisfying the direction in the decree to pay to the Bank the loan amount together with pendente lite and future interest and costs of the suit. As noted earlier, there is no dispute that while taking the loan the petitioner had pledged with the Bank certain ornaments with the stipulation that the same will be returned to him on his repaying the loan with interest at the rate stipulated. There is, therefore, no doubt that the relationship between the parties is that of pawner and pawnee.
The rights and liability of the parties are governed by the provisions in Sections 172 to 179 of the Indian Contract Act, 1872.
Section 172 defines the terms 'pledge', 'pawner' and 'pawnee'.
Section 173 lays down that the pawnee may retain the goods pledged, not only for a payment of the debt or the performance of the promise, but for the interest of the debt, and all necessary expenses incurred by him in respect of the possession or for the preservation of goods pledged.
In Section 174 it is laid down that the pawnee shall not, in the absence of a contract to that effect, retain the goods pledged for any debt or promise other than the debt or promise for which they are pledged; but such contract, in the absence of anything to the contrary, shall be presumed in regard to subsequent advances made by the pawnee.
Section 175 vests the right in the pawnee to receive from the pawner extraordinary expenses incurred by him for the preservation of the goods pledged.
Sections 176 and 177 of the Act which, in my view, are of particularly significant in this case are quoted hereunder ;
'176. Pawnee's right where pawner makes default:-- If the pawner makes default in payment of the debt, or performance, at the stipulated time, of the promise in respect ofwhich the goods were pledged, the pawnee may bring a suit against the pawner upon the debt or promise, and retain the goods pledged as a collateral security, or he may sell the thing pledged, on giving the pawner 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 pawner is still liable to pay the balance. If the proceeds of the sale are greater than the amount so due, the pawnee shall pay over the surplus to the pawner.'
'Section 177. Defaulting pawner's right to redeem-- If a time is stipulated for the payment of the debt, or performance of the promise, for which the pledge is made, and the pawner makes, default in payment of the debt or performance of the promise at the stipulated time he may redeem the goods pledged at any subsequent time before the actual sale of them; but he must, in that case, pay, in addition, any expenses which have arisen from his default.'
On a bare reading of Section 176 it is evident that if the pawner makes default in payment of the debt in respect of which the goods were pledged, two courses are open to the pawnee, he may bring a suit against the pawner upon the debt or promise, and retain the goods pledged as a collateral security; or he may sell the thing pledged on giving the pawner 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 pawner is still liable to pay the balance and if on the other hand the proceeds of the sale are greater than the amount so due, the pawnee shall pay over the surplus to the pawner.
Section 177 expressly vests right in the defaulting pawner to redeem the goods pledged at any subsequent time before the actual sale of them on the condition that he will be liable to pay in addition to the dues any expenses which have arisen from his default.
8. On analysis of the aforementioned provisions it is clear that in a case where the pawnee has filed the suit against the pawner for realisation of the debt, it is to be presumed that he has not sold the pledged articles andis in position to return the same to the pawner on the suit claim being satisfied. In the present case the Bank has taken recourse to the alternative to sue the pawner for the debt together with interest and cost and has held the pledged articles as a collateral security. It cannot therefore be said that by any logic or principle of sound reasoning the return of the pledged articles to the pawner has no connection with realisation of the dues of the Bank and the Bank is entitled to a decree for its dues on the promissory note without any condition for return of the pledged articles in its possession. The lower appellate court was clearly in error in deleting from the decree the direction for return of the pledged articles by the plaintiff to the defendant on the latter paying to the former to the suit amount. The view taken by me gains support from the decision of the Supreme Court in the case of Lallan Prasad v. Rahmat Ali, reported in AIR 1967 SC 1322, wherein the Court discussing the question in paragraph 17 of the judgment observed thus (at page SC 1325 & 1326):
'There is no difference between the common law of England and the law with regard to pledge as codified in Ss. 172 to 176 of the Contract Act. Under S. 172 a pledge is a bailment of the goods as security for payment of a debt or performance of a promise. Section 173 entitles a pawnee to retain the goods pledged as security for payment of a debt and under S. 175 he is entitled to receive from the pawner any extraordinary expenses he incurs for the preservation of the goods pledged with him. Section 176 deals with the rights of a pawnee and provides that in case of default by the pawner the pawnee has (1) the right to sue upon the debt and to retain the goods as collateral security, and (2) to sell the goods after reasonable notice of the intended sale to the pawner. Once the pawnee by virtue of his right under Section 176 sells the goods the right of the pawner to redeem them is of course extinguished. But as aforesaid the pawnee is bound to apply the sale proceeds towards satisfaction of the debt and pay the surplus, if any, to the pawner. So long however, the sale does not take place the pawner is entitled to redeem the goods onpayment of the debt. It follows, therefore, that where a pawnee files a suit for recovery of debt, though he is entitled to retain the goods he is bound to return them on payment of the debt. The right to sue on the debt assumes that he is in a position to redeliver the goods on payment of the debt and, therefore, if he has put himself in a position where he is not able to redeliver the goods he cannot obtain a decree. If it were otherwise, the result would be that he would recover the debt and also retain the goods pledged and the pawner in such a case would be placed in a position where he incurs a greater liability than he bargained for under the contract of pledge. The pawnee, therefore, can sue on the debt retaining the pledged goods as collateral security. If the debt is paid he has to return the goods with or without the assistance of the Court and appropriate the sale proceeds towards the debt. But if he sues on the debt denying the pledge and it is found that he was given possession of the goods pledged and had retained the same, the pawner has the right to redeem the goods so pledged by payment of the debt. If the pawnee is not in a position to redeliver the goods he cannot have both the payment of the debt and also the goods. Where the value of the pledged property is less than the debt and in a suit for recovery of debt by the pledgee, the pledgee denies the pledge or is otherwise not in a position-to return the pledged goods he has to give credit for the value of the goods and would be entitled then to recover only the balance. That being the position the appellant would not be entitled to a decree against the said promissory note and also retain the said goods found to have been delivered to him and, therefore, in his custody. For if it were otherwise the first respondent as the pawner would be compelled not only to pay the amount due under the promissory note but lose the pledged goods as well. That certainly is not the effect of Section 176 .'
A similar view was also taken by the Punjab and Haryana High Court in the case of S. K. Engineering Works, Batala v. New Bank of India, Batala, reported in AIR 1987 P&H; 90.
9. The question that remains to be considered relates to the condition imposed by the trial court that the Bank shall return three earrings (Fasias) of 'pure gold'. This condition, as contended by Shri M.M. Das, the learned counsel appearing for the Bank, was beyond the scope of adjudication in the suit and therefore uncalled for. He relied on the Bench decision of the Madras High Court in the case of State Bank of India v. N. Sathiah, reported in AIR 1989 Madras 279, wherein it was held inter alia, that the precondition of verification of genuineness of pledged articles imposed, preventing the plaintiff from recovering the amounts due to it is against the rights of the pawnee recognised under Section 176 of Contract Act and this is an aspect which is foreign to the nature of the suits, and it is left to be considered in appropriate proceedings which would be dependent upon what would transpire when the jewels are returned to defendants. I have perused the decision. In my view the decision does not lay down a general principle applicable in all suits between the pawner and pawnee in which there is some dispute regarding the nature and condition of the pledged articles. The decision in my view is to be read in the background of the facts of that case. It appears from the discussions in the judgment that the factual background of the case was that the Bank had raised certain serious controversy regarding genuineness of the pledged jewelleries which dispute was pending before the criminal court in a separate proceeding; the defendants had themselves reserved their right to file separate suit after proving in the criminal case that they had pledged only genuine jewels, it was not the stand of the plaintiff-Bank that it would not return the jewels in specie, if the amounts claimed by it are paid by respective defendants. In the background of these facts, the Court observed that the pawnee is bound to return the jewels as soon as the amounts covered by the decrees are paid and this observation was based on the statement of the defendants in their written statement that 'the defendants are prepared to pay the principal and interest up to date if the plaintiff returns those items' and the Court held that this stand taken by them itself entitled theplaintiff to secure the decree as prayed for. Therefore in the factual background of that case the Division Bench took the view that without entering into the question of determination of purity/genuineness of the jewels the decree for the dues of the Bank should be passed and the Bank should return the jewels pledged by the defendants with it. The court left it open for the defendants to take such steps as permissible under law in case they found that the jewels are not those pledged by them which they would be in a position to know only after return of the same by the Bank. It is worth noting here that the High Court did not consider the ratio decided by the Supreme Court in the case of Lallan Prasad v. Rahamat Ali (supra) wherein it was held, inter alia, that when the pawned goods in specie could not be delivered by the pawnee, the suit is not maintainable. Hence this decision has no relevance to the present case.
10. On the ultimate analysis I am of the view that the decision of the lower appellate court to delete the condition regarding return of pledged articles by the Bank to the petitioner (defendant) is unsustainable. The decision of the lower appellate court is, therefore, set aside and that of the trial court is confirmed subject to the modification that on payment of the suit amount by the petitioner to the opposite party, the latter will return the pledged articles to him.