Sri Raja Kakarklhpud... v. The Andhra Bank Ltd....

The Judgment of the Court was delivered by

Seshachalapathi, J.

2. This is an appeal against the Judgment and Decree of the learned 1st Additional Subordinate Judge, Vijayavada in O.S No. 86 of 1949. The suit was brought by one Sri Raja Kakarlapudi Venkata Sudarsana Sundara Narasayamma Garu, for a declaration that the sale of 9100 B-Class shares of Andhra Cement Company Ltd., Vijayavada (3rd defendant) by the Andhra Bank Ltd., Vijayavada (1st defendant) to the Jaipur Sugar Company Ltd., Rayagaddah (2nd defendant), is contrary to law, void and did not a fleet her right to redeem the pledge effected by her husband in favour of the 1st defendant-Bank and for an injunction restraining the 3rd defendant from recognisiing and registering the shares in the name of the 2nd defendant. The case of the plaintiff is that to secure the due payment of certain advances made by the 1st defendant Bank to her husband amounting to Rs. 45,000/- he pledged 9100 B. Class shares bearing Nos. 143762 to 152861 of the 3rd defendant Company, that her husband died on 20-4-1948 at Madras and that she was his widow and nearest heir, that in spite of her intimation that she was making arrangements to pay the amounts due to the 1st defendant-Bank and redeem the pledge, the 1st Defendant-Bank without notice to her sold the 9100 B-class to the 2nd defendant Company, and that the sale is illegal and void and would not affect her right to redeem the pledge. She, therefore, prayed for a declaration that her right to redeem the pledge remained unaffected and for an injunction restraining the 3rd defendant Company from recognising and registering the shares.

3. The 1st defendant-Bank contended in its written statement, first, that inasmuch on her own admissions the late R.K.N.G Raju died leaving a will appointing her as an executrix, she was not entitled to file a suit without obtaining probate or producing a succession certificate; secondly, that her husband, the late R.K.N.G Raju, hypothecated the shares in question on 22-9-1947 along with blank transfers duly signed by him and that in that instrument power had specifically been given to the Bank to sell and dispose of the shares either by public auction or private treaty as the Bank might deem fit without reference to him, and thirdly, that the Bank did demand the repayment of the loans and sold them only when there was no repayment and that even if notice of sale is required, the letters written by the Bank constituted sufficient notice. It was lastly contended that the suit for a mere declaration with regard to the sale of shares was misconceived and not maintainable in law. The 2nd defendant-Company while adopting the main contentions of the 1st defendant pleaded that it is a bona fide purchase for value and that the plaintiff had no cause of action against it. The 3rd defendant-Company filed a written statement pleading that it had done nothing to prejudice the interests of the parties concerned, that it was not a necessary party to the suit, that the plaintiff was not entitled to any injunction in the manner prayed for, and that it is in no way concerned with the disputes alleged in the plaint.

4. On these pleadings, the learned Subordinate Judge framed the following issues:—

1. What are the terms of pledge?

2. Whether the sale of shares by the 1st defendant to the 2nd defendant is true, valid and binding on the plaintiff?

3. Whether the plaintiff is entitled to the declaration prayed for?

4. Whether the plaintiff cannot file this suit without obtaining probate?

5. Whether the suit is not maintainable as it is for mere declaration?

6. To what relief is the plaintiff entitled?

5. On issues 1, 2 and 3, the learned Subordinate Judge, after a review of the evidence held that the only objection of the plaintiff that there was no notice under Section 176 of the Indian Contract Act was not tenable, as in the circumstances of the case it should be held that the pledgor waived the right to receive the notice of sale, and that such a waiver was legal and valid. He also held that the sale by the 1st defendant in favour of the 2nd defendant was at the prevailing market rate and that there was no evidence of any dishonesty or fraud on the part of the 1st defendant. On those findings, the learned Subordinate Judge held that the impugned sale of shares by the 1st defendant to the 2nd defendant was binding on the plaintiff.

6. On issue 4, the learned Subordinate Judge held that inasmuch as on the admissions of the plaintiff herself, her husband late R.K.N.G Raju left a will appointing her as an executrix in the absence of a probate or at least the production of the will, it could not be said that the plaintiff had established her prima facie right to maintain the suit as the heir of her husband.

7. As regards the form of the suit, the learned Subordinate Judge held that a suit for a declaration with an ancillary relief for injunction was maintainable in the circumstances of the case. But in view of his findings on issues 1, 2, 3 and 4, the learned judge dismissed the suit.

8. The plaintiff filed the present appeal in the High Court of Madras, which eventually was transferred to this Court. During the pendency of the appeal, the appellant died and the present four appellants have been brought on record as her legal representatives.

9. In this appeal, it has been contended by Mr. Ramachandra Raju, the learned counsel for the appellants that (1) there is no default in the matter of payment of the debt since neither in the instrument of pledge (Ex-B-1), nor in the subsequent letters of demand written by the 1st defendant-Bank was any specific date for the repayment mentioned, (2) that in any event the sale is invalid, because there was no notice as required by Section 176 of the Indian Contract Act; (3) that on the facts of this case there was no waiver of such a notice by the plaintiff either expressly or by conduct amounting to such waiver; and (4) that the waiver relied on by the learned Subordinate Judge is only referable to certain expressions in the contract of pledge (Ex. B-1) which, even on the assumption that they amount to waiver are inoperative in law as they would amount to terms which cannot be legally incorporated in the contract, being manifestly opposed to the mandatory terms of Section 176.

10. On the otherhand, it has been contended by the learned counsel for the 1st defendant-Bank that (i) on a proper construction of Ex. B-1 coupled with the execution of blank transfers, the transaction would amount to mortgage of shares and that the legal estate in the shares stood transferred to the 1st defendant-Bank, with the result that when on demand the debt was not discharged, it could foreclose and sell the shares and convey a valid title to the purchaser; (ii) that even on the assumption that Ex. B-1 constitutes a pledge of the shares and letters written by the Bank (Exs. B.-5, 6 and 8) are sufficient notice: (iii) that assuming they do not constitute sufficient notice, the transaction of sale cannot be held to be invalid because in Ex. B-1 there is an express and unambiguous waiver of the right to receive such notice. It is also argued that on the footing that the sale in favour of the 2nd defendant is invalid and inoperative, the proper remedy for the plaintiff is to sue for redemption of the shares by tendering the money or for damages on the foot of conversion. Lastly, it is argued that the plaintiff, having been appointed, on her own admissions as an executrix under the will of her husband she cannot file the present suit without obtaining a probate and without any reference to the will whatever.

11. For appreciating the contentions raised and debated before us, it would be necessary to state in brief outline the main facts of this case. The husband of the plaintiff was one R.K.N.G Raju. He held 9100 B-Class shares in the Andhra Cement Company bearing share Nos. 143762 to 152861, stated to have been purchased by him at Rs. 12/- per share. He had an over-draft account with the 1st defendant in Andhra Bank Ltd., both in his personal capacity and as partner of Raja Industrial and Chemical Agencies. On those two accounts the 1st defendant-Bank made several advances to him, on various dates in 1947 totalling upto a sum of Rs. 45,000/-. In order to secure the due payment of the amounts, R.K.N.G Raju, executed an instrument of security on 22-9-1947. Along with the said instrument, 9100 B-Class shares were delivered to the 1st defendant-Bank together with blank share transfer forms duly signed by R.K.N.G Raju. During his life time certain payments were made to the Bank. R.K.N.G Raju died at. Madras on 20-4-1948. On 25th November, 1948, the counsel for the plaintiff wrote to the 1st defendant Bank a communication (Ex. B-2) stating that R.K.N.G Raju died at Madras on 20-4-1948, leaving a will appointing his wife as the executrix, and that he was instructed to take steps to secure adequate legal representation to the estate of the deceased. In that connection the Counsel requested the 1st defendant-Bank to furnish the particulars of the account of the late R.K.N.G Raju with the 1st defendant-Bank, and also the amount due to the Bank in respect of overdraft transactions covered by the pledge of 9100 B-Class shares in the Andhra Cement Company. In reply to that communication from the Counsel, the 1st defendant-Bank wrote a letter (Ex. B-3) dated 8-12-1948 that all necessary particulars were furnished to the 1st plaintiff and advised the counsel to obtain the information from her. By a letter of even date (Ex. B-4) the Bank wrote to the plaintiff the widow of R.K.N.G Raju, that with respect to the overdraft accounts by her husband and the pledge of 9100 B-Class shares in the Andhra Cement Company, a sum of Rs. 37,216-8-0 was due. The Bank requested that arrangements might be made for the payment of debts and taking the delivery of the said shares.

12. On 17th December, 1948, the Bank wrote a letter (Ex. B-5) to the plaintiff giving particulars of the advances made to her husband and the amounts due and requesting her as the legal heir of the late R.K.N.G Raju to take immediate steps to repay the outstanding amounts due to the Bank. This letter was addressed to the plaintiff Co. The Andhra Cement Company Ltd. This letter obiviously did not reach the plaintiff as it was returned unserved. Thereupon the Bank wrote another letter (Ex. B-6) dated 5-1-1949 to her address at Rajahmundry, giving the particulars of the loans and the balance due and requiring her to take immediate steps for repayment. It is not in dispute that this letter was received by the plaintiff.

13. On 7-1-1949, the Counsel of the plaintiff from Madras wrote to the Bank asking for the particulars asked for by him on the assumption that the widow of the deceased would have already authorised the Bank to disclose the information. Accordingly the 1st defendant Bank wrote to the Counsel a letter (Ex. B-3) dated 9-2-1949. There was no reply by the plaintiff to the 1st defendant-Bank's letter dated 5-1-1949.

14. The 1st defendant-Bank thereupon would seem to have made enquiries with Somayajulu & Co., Stock and Share Brokers, Madras as to the market price of the B-Class shares of the Andhra Cement Company. By a letter dated 10-2-1949 the firm advised the 1st defendant-Bank that it would be possible to sell the Andhra Cement Company Ltd.,'s B-Class shares round about Rs. 6-4-0 per share.

15. On 25th March, 1949, the 1st defendant-Bank sold the 9100 B-Class shares of the Andhra Cement Company Ltd., at Rs. 6-5-0 per share to the 2nd defendant the Jaipur Sugar Company Ltd., and had also forwarded to them 5 transfer deeds signed by R.K.N.G Raju for their signatures. On the same day the 1st defendant Bank wrote a letter (Ex. B-12) to the plaintiff informing her that since no arrangements had been made by her for the adjustments of the loans, the Bank decided to realise the amuonts due by the sale of the securities pledged and accordingly sold them at Rs. 6-5-9 per share. On 30th March, 1949, a telegram (Ex. B-13) was sent by the plaintiff to the 1st defendant-Bank to the effect that the sale of 9100 B-Class shares was illegal and that the Bank was liable in damages.

16. On 5th April, 1949, the Counsel for the plaintiff sent a registered notice (Ex. B-14) to the 1st defendant-Bank with a copy to the Andhra Cement Company Ltd., (3rd defendant) stating that he confirmed the telegram sent by the plaintiff on 30-4-1949, and that the sale of the shares was without notice to his client and, therefore, invalid and not binding on her.

17. The present action was then instituted by the plaintiff on or about the 20th April, 1949 for the reliefs already mentioned.

18. Before dealing with the main case of the appellants, we consider it convenient to deal at the outset with a contention advanced by Mr. Somasundaram, that Ex. B-1 is not an instrument of pledge, but a mortgage. The relevant portion of the instrument (Ex. B-1) may be extracted:—

“That failing payment on demand to you by us of the amount of such advances you shall be entitled, but not bound to sell or otherwise dispose of all or any of the said moveable properties, 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 sale or disposal snail be applied first in payment of all costs, charges and expenses of and incidental to such sale or disposal and the enforcement of the pledge and charge in your favour hereby created.”

19. Under the Indian Law, unlike in England a share is not a mere chose in action. Section 137 of the Transfer of Property Act clearly states that Chapter VIII of the Act dealing with transfer of actionable claims will not apply to stocks, shares or debentures, or to instruments which are for the time being by law or custom, negotiable, or to any mercantile documents of title of goods. Section 2(7) of the Sale of Goods Act defines goods as meaning ‘every kind of moveable property other than shares etc.’ With respect, therefore, to this class of moveable property there can be a mortgage or a pledge. This distinction between the two is clearly brought out in the following passage in Halsbury's Laws of England, Hailsham Edn. (2nd Edn.) para 330, page 226 of Volume XXIII.

“A mortgage of personal chattels is essentially different from a pledge or pawn under which money is advanced upon the security of chattels delivered into the possession of the lender, such delivery of possession being an essential element of the transaction. A mortgage conveys the whole legal interest in the chattels; a pledge or pawn conveys only a special property, leaving the general property in the pledger or pawnor; the pledgee or pawnee never has the absolute ownership of the goods, but has a special property in them coupled with a power of selling and transferring them to a purchaser on default of payment at the stipulated time, if any, or at a reasonable time after demand and non-payment if no time for payment is agreed upon.”

20. The essential distinction, therefore, between a pledgee and mortgage is that unlike a pledgee a mortgagee acquires general property in the thing mortgaged subject to the right of redemption of a mortgagor. In other words, the legal estate in the goods mortgaged passes on to the mortgagee. But a pledgee has only the special property in the goods pledged, namely, the right of transfer of the goods as security, and in case of default he must either bring a suit against the pawnor or sell the goods after giving a reasonable notice.

21. Whether a particular transaction is a mortgage of moveable property or a pledge can only be determined by reference to the intention of the parties, and other surrounding circumstances, vide Arjuna Prasad v. Central Bank of India.1 It is argued by Mr. Somasundaram that the execution along with Ex. B-1 of blank transfers indicates that it is a mortgage. We are unable to agree that circumstance alone, without more, will mean that the tranaction is one of mortgage. A pledge of shares can also be accompanied by blank transfers as in the case of The Official Assisnee v. Madholal . A.I.R 1947 Bom. P. 217. In Elaya Nayar v. Krishna Pattar,3 it was held that a share in a Company could be the subject matter of a pledge which can be enforced, but unless the pledgee at the time of deposit secures a deed of transfer which he can use in case of necessity or obtains one from his debtor at a later stage, he must have recourse to the Court when he wishes to enforce his security. In other words, obtaining of blank transfers is a convenient mode of exercising the right of sale when the pledgee in law is entitled to do so. In any view, it seems to us that this question as to the nature of the transaction cannot be considered at this stage, be case the parties throughout treated the transaction as a pledge. In Ex. B-o the plaintiff's Counsel referred to the transaction as one of pledge. In some of the letters written by the Bank, the expression ‘pledge’ is used. The plaint proceeds upon the footing that the shares were pledged. The expression ‘pledge’ has a definite legal significance and there is no warant for the assumption that the 1st defendant-Bank used the expression ‘pledge’ by inadvertance. In the written statement filed by the 1st defendant the plea that the transaction amounts to a mortgage and not a pledge is not clearly set out. The first issue farmed at the trial is ‘What are the terms of the pledge?’ The main case as put forward by the parties in the trial court was as to whether there was notice as required under Section 176 of the Indian Contract Act, or whether on the fact of this case there was a waiver by the pledgor of the right to recieve notice. There was no oral evidence adduced by either side as to the suit transaction. In those circumstances, we are of opinion that the transaction must be treated as one of pledge alone.

22. The term pledge is defined in Section 172 of the Indian Contract Act as ‘the bailment of goods as security for payment of a debtor performance of a promise.’ The bailor is called the pawnor and the bailee is called the pawnee.

23. Section 176 of the Act deals with the right or the pawnee or the pledgee in the case of default by the pledgor. The Section is in these terms:—

“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 collateral 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 are greater than the amount so due, the pawnee shall pay over the surplus to the pawnor.”

24. On a plain reading of the Section it seems to us that before exercising the power of sale the pawnee should give to the pledgor reasonable notice of the sale. The contention of the Advocate for the respondent, however, is that in Ex. B-1 the pawnor had waived the right to receive such a notice and this found favour with the trial court. The learned Counsel for the Appellants has assailed the correctness of chat finding on various grounds.

25. It is first contended that in this case the waiver is not founded on an assent or affirmance of the sale by the pledgor subsequent to the contract of pledge, but is referable only to the recitals of Ex. B-1, and that those recitals are not clear and unambiguous, that notice has been waived. In support of that contention reliance was placed upon the decision of Wallis J., in Venkatesa Perumal Chetty v. S. Parthasarathy Iyengar, where it was held that a party to a contract who relies upon a clause as affording him protection from liability cannot succeed unless the clause he relies on is clearly and unambiguously expressed. We do not think the expression in Ex. B-1 to the effect that the sale could be held by the pledgee without reference to the pledgor is ambiguous or uncertain. It seems to us that the expression ‘without reference to us’ is wide enough to include notice.

26. But the more important arguement of Mr. Ramachandra Raju is that even assuming that the expression constitutes waiver of notice, such a waiver is not permissible as it would be inconsistent with the mandatory terms of Section 176. It is argued that wherever the legislature thought that a particular term could be subject of a contract it had said so by incorporating words such as: ‘subject to the contract’ or ‘in the absence of a contract to the contrary’. In Section 176 there are no such qualifications. Therefore, any contract contrary to the terms of Section 176 would, be a contract inconsistent with the provisions of the Act within the meaning of Sec. 1 of the Contract Act.

27. There is considerable judicial authority in support of the above contention. In Hindustan Bank Ltd. v. Surendra Nath a Bench of the Calcutta High Court has held that Section 176 of the Contract Act unlike some other Sections, such as, 163, 171, 172 does not contain a saving clause in respect of special contracts contrary to its express terms, and that inasmuch as Section 177 gives to the pawnor a right to redeem even after the stipulated time for payment but before the sale. In order that provision should not be made nugatory, the proper interpretation to put on Section 176 is to hold notwithstanding any contract to the contrary notice has to be given. In The Official Assignee v. Madholal, a Bench of the Bombay High Court consisting of Stone C.J and Chagla J., took substantially the same view. The learned Chief Justice observed as follows:

“In my judgment, a notice must be given in all cases of pledge, even when the instrument of pledge itself contains an unconditional power of sale. This opinion is held by the three distinguished editors (Sir Federick Pollock. Sir Dinshaw Mulla and Sir Maurice Gwyer) of Mulla's Indian Contract Act, Edn. 7 (See p. 519) It follows that even if it is possible to regard the contract of 23rd, 24th October, 1941, as a sale by the Bank as pledgee of Mr. Nissim, that sale is invalid as being in breach of Section 176, unless it could be shown that before this insolvency Mr. Nissim effectively waived the giving of notice so as to bind the Official Assignee.”

28. This case was carried in appeal to the Federal Court. Their Lordships held by a majority that in view of the assent of sale of shares by the pledgor and the acquiescence thereof by the Official Assignee the sale was good and the further questions argued before them as to whether the pledgor could enter into a contract contrary to the provisions of Section 176 or whether a want of notice is a mere irregularity not affecting the title of the bona fide purchaser for value did not arise for consideration.

29. In Bharat Bank Ltd.… v. Sheoji Prasad…. a Bench of the Patna High Court has held that Section 176 is mandatory and the required notice has to be given for the right to exercise redemption, and under Section 176 it would be rendered illusory if such notice is not given.

30. In Hulas Kunvar v. Allahabad Bank a Bench of the Calcutta High Court has held following the decision in Hindustan Bank Ltd. v. Surendra Nath Dey that the obligation of the pawnee to give a reasonable notice of sale under Section 176 is mandatory and supersedes any contract to the contrary. In that case, as in the case of Hindustan Bank Ltd. v. Surendra Nath Dey the contract of pledge authorised the pawnee to sell the pledged goods without notice to the pawnor. It was held in both the decisions that such a clause could not relieve the pawnee from the mandatory obligation to give notice.

31. When in an enactment, in some sections the expression ‘subject to the contract’ or in the absence of the contract to the cowrary’ are used and in others not, it is a well settled principle of construction that the provisions of the latter class of sections are not subject to contract to the contrary.

32. In Mohammed Sher Khan v. Raja Seth Swami Dayal.4 While dealing with Section 60 of the Transfer of Property Act, their Lordships of the Judicial Committee observed as follows:—

“The Section is unqualified in its terms, and contains no saving provisions as other sections do, in favour of contracts to the contrary. Their Lordships, therefore see no sufficient reason for withholding from the words of the section their full force and effect. In this view the mortgagor's right to redeem must be affirmed, and as both suits are not before the Board there will be no difficulty in passing one decree in both so framed as to give the effect to this right.”

33. To the same effect is the observation of Srinivasa Ayyangar J., in Mulla Vittil Seeti Kutti v. K. M. K. Kunhi Pathumma . I.L.R 40 Mad. P. 1040 @ 1062.:—

“The Indian Legislature in Section 60 of the Transfer of Property Act, as has been pointed out, has omitted the words ‘in the absence of a contract to the contrary’ with a view to prevent the mortgagor from contracting himself out of his right of redemption at the time of the mortgage.”

34. Following the decision arising under Section 176 of the Indian Contract Act and the principle of construction enunciated in the two aforesaid decisions it seems to us that the contention of Mr. Ramachdndra Raju that at the time of entering into a contract of pledge, the pawnor cannot agree to waive notice as it would be inconsistent with the provisions of Section 176, should prevail.

35. Mr. Somasundaram very strenuously contended before us that the right to receive is conceived in the interests of the pawnor and when a statute gives a party certain advantage or right it is always open to him to waive it. In support of the contention he cited a large number of authorities.

36. In Wilson v. Mcintosh . 1894 A.C P. 129. the facts were that the respondent Mcintosh lodged an application in the Office of the Registrar-General to bring under the Real Property Act (26 Victoria No. 9) certain lands in New South Wales. Under Section 23 of that Act every caveat shall be deemed to have lapsed unless the cavetor took the proceedings in any court of competent jurisdiction to establish his title to the estate and given notice of that to the Registrar General and also obtained an injunction from the Supreme Court. In the case referred to above the respondent filed a case and obtained an order against the appellant to state her case both of which proceeded upon the footing that the caveat was still in existence. It was held that the respondent having waived her right to claim that the caveat should be regarded as having lapsed and obtained a case stated by the applicant he cannot in equity plead the bar under Section 23. The decision rested on the assumption that an applicant may waive the objection of pleading lapse under Section 23 of the Real Property Act.

37. In Corporation of the City of Tornoto v. John Russel the facts were that in the City of Tornoto a land was advertised for a sale under Ontorio Assessment Act of 1897 for arrears of taxes and after an adjournment was brought by the appellant. But before the sale appellants published their intention to purchase in case the amount fixed was less than the arrears of tax, but omitted to give the respondent a notice in writing under Section 184 to that effect. It was held by the Privy Council that the notice under that Section could be waived and that as a matter of fact, it was waived.

38. In Selwyn v. Grafit the question of waiver did not really fall to be considered as the only man, the mortgagor, who could have waived notice had already parted with his equity of redemption as has been made clear in the Judgment of Bowen L.J

39. In Griffiths v. The Earl of Dudley the question was as to whether a workman could agree not to claim compensation for personal injuries under the Employers' Liability Act of 1880. It was held that the widow of the workman was bound by the conditions of employment assented to by her husband and the agreement not to claim damages for personal injuries was on the facts of that case not opposed to public policy.

40. A reference was also made to the decision of the Privy Council in Vellayan Chettiar v. Government of the Province of Madras where Lord Simonds speaking for the Privy Council held that there is no inconsistency between the proposition that the provisions of Section 80 are mandatory and must be enforced by the Court, and that they may be waived by the authority for whose benefit they are provided. This decision is not directly in point, for, the question of contracting out of the mandatory terms of the Section did not arise in that case.

41. In Raja Chetty v. Jagannadhadas Govindas a Bench of the Madras High Court held that notwithstanding the provisions of the Madras Building Lease and Rent Control Act of 1946, a landlord could contract to waive his right to evict the tenant. It was pointed out by the learned Chief Justice that no public policy was involved in that case and a land lord could well abridge his right.

42. The rule as to waiver is stated in Maxwell on Interpretation of Statutes p. 388 (10th Edn) in these words:—

“Every one has a right to waive and to agree to waive the advantage of a law or rule made solely for the benefit and protection of the individual in his private capacity, which may be dispensed with without infringing any public right of public policy.”

43. Mr. Ramachandra Raju has contended that the terms of Section 176 are conceived in general public interest and referable to public policy. It is argued by him that in the stress of need a pledger might assent to terms so manifestly deleterious to his interest and it is to prevent such people being exploited and that some notice being given before the pledgee exercises the right of sale that advisedly in Section 176 no provision is made to contraot contrary to its terms. In this connection strong reliance was placed on the observation of Farell, J. in Soho Square Syndicate Ltd. v. E. Polard & Co. to the following effect:—

“If it be right to say that a mortgagee, by merely getting the consent of the mortgagor, can avoid the necessity of applying to the Court, a large part of the protection which this Act was intended to provide would virtually disappear. People in the possession of such persons as I have mentioned might easily be persuaded to give a consent without really knowing what exactly was involved in such consent, and an opportunity of expressing their reasons for their inability to pay, whatever they may be, and of stating their difficulties, which is now afforded to them by the necessity of an application to the Court would be entirely removed. Moreover, difficult questions might also arise whether the consent had in fact been obtained, or whether it was a consent which was binding, and similar questions.”

44. The point that arose for decision in that case was whether a mortgagor could under the provisions of the Courts Emergency Powers Act, 1939 assent to the appointment of a Receiver without the leave of the Court. The learned Judge held that he could not so assent as the provision for the leave of the court being obtained for the appointment of a Receiver was conceived in the interests of the people who had gone to war and was referable to public policy.

45. In Bowmaker, Limited v. Tabor, Goddard, L.J, has taken the same view with reference to some of the other provisions of the Courts (Emergency Powers) Act and had approved the principle of the decision of Farewell, J., in the case earlier referred to.

46. It is not necessary for us to consider in this case the question further, in view of the direct decisions of the Indian High Courts, with which we are in agreement interpreting Section 176 of the Contract Act, and holding that its terms are mandatory and that, even if there is a term in the contract of pledge to waive notice, still, the pledgee is not relieved of his obligation to give notice notice before the sale.

47. We, therefore, do not accede to the contention very strenuously pressed on us by Mr. Somasundaram that in this case the objection as to want of notice is without substance by reason of the waiver of such a notice by the pledgor in Ex. B-1.

48. But we are of opinion that the suit must fail for a different reason. In the plaint the plaintiff claims to be the widow and the heir of the late R.K.N.G Raju and entitled to his estate including the shares in the suit. It is not dispute that R.K.N.G Raju died at Madras on 20-4-1948 leaving a will. The Counsel of the plaintiff wrote to the 1st defendant-Bank a letter on 25th November, 1948 marked as Ex. B-2 in these terms—

The Agent, Andhra Bank Ltd., Bezwada.

Reference: Sri R.K.N Gajapathi Raju Garu.

The above gentleman died at Madras on 20th April, 1948, leaving a will appointing his wife as executrix. In the said will be makes a reference to the current account dealings he had with you. From a perusal of his Bank Pass Book we have the following particulars: Folio No. 68313, Account No. 822.

I am now instructed to take steps to secure adequate legal representation to the estate of the above named deceased. The balance of his account with you has to be disclosed to Court. I shall be highly obliged if you can furnish to me at the earliest opportunity the balance now standing to the credit of the above named deceased together with accrued interest, if any.

I further understand that he has pledged with you 9100-B, ordinary fully paid up shares which be held in the Andhra Cements Company Ltd., Bezwada on 22nd September, 1947 to secure over-draft account. Kindly furnish me the particulars as to the rate of interest and the amount now outstanding to you in respect of the overdraft transactions.”

49. From this letter it is clear that the plaintiff was appointed the executrix and that she was taking steps to get the estate duly represented, which in the circumstances, could only mean taking out a probate. On those facts the 1st question that emerges is whether the suit could be filed without obtaining the probate.

50. It is common ground between the parties that if the will had been executed at Madras, it is necessary to obtain the probate before filing the suit. Section 213 of the Indian Succession Act inter alia provides as follows:

51. Section 213(1):—

“No right as executor or legatee can be established in any court of Justice, unless a Court of competent jurisdiction in British India has granted probate of the will under which me right is claimed, or has granted letters of administration with the will or with a copy of an authenticated copy of the will annexed.”

52. On behalf of the appellants it is contended that Section 213 of the Succession Act has no application to this case for two reasons; (i) that there is no proof that the will of the late R.K.N.G Raju was executed at Madras; and (ii) that even on the footing that it was so executed, the present suit is not filed for establishing any right as an executrix or legatee and has been instituted by the plaintiff in his capacity as the heir of late R.K.N.G Raju. We will now take up the first question.

53. In Ex. B-2 there is no mention as to the place where the will was executed, though the suggestion that steps were being taken to get the estate duly represented may be suggestive of the will having been executed at Madras. On behalf of the defendant interrogatries were served on the plaintiff on 5-1-1950, under Or. 12, R. 3 C.P.C in these terms:

“The Andhra Bank Ltd., and others. … … Defendants,

Notice to admit documents under Or. XII, Rule 3, C.P.C

Sri Metlapalli Koteswara Rao Pantulu Garu. B.A, B.L, Advocate for Plaintiff, Vijayavada.

Take notice that you are hereby required to reply to the following matters within two days on the receipt of this notice:—

1. Do you admit the execution of the willnama by the plaintiff's husband in Madras?

2. Do you admit the registered notice, dated the 25th November, 1948, caused by the plaintiff to be issued by Sri P, Satyanarayana Raju Garu, Advocate, Madras, to the 1st defendant-Bank after giving instructions?

The said notice has been filed in the Court.”

54. These interrogatries were not answered. On 14-12-1950, a notice was served on the Counsel appearing for the plaintiff in these terms:—

O.S No. 86 of 1949.

55. Between:—

Sri Raja Kakarlapudi Venkata Sudarsana Sundara Narasayamma Garu … … Plaintiff;

and

The Andhra Bank Ltd., & ors. … … Defendants.

NOTICE TO PRODUCE DOCUMENTS.

Sri Metlapalli Koteswara Rao Pantulu Garu, B.A, B.L, Vijayavada

Take notice that you are required to produce on 16th December, 1950, the hearing date, the willnama alleged to have been executed by late Sri R.K.N Gajapati Raju Garu and referred to in the letter written on 25th November, 1948 by the plaintiff's Advocate at Madras, to the 1st defendant-Bank. Batta Re. 1/- is sent herewith.

14-12-1950,Sd. K. Nagabhushana Rao, Advcate for 1st defendant,-

Received copy and batta of Re. 1/-,Sd. M. Koteswara Rao, Advocate.”

56. The will was not produced. Even during the course of the arguements before us the Counsel for the appellants could not give information as to where exactly the will was executed. In the circumstances, of this case, therefore, we are of opinion that this vital information was withheld because, if given it would be detrimental to the interests of the appellant. We would be justified in drawing inferences adverse to the plaintiff. We are, therefore, of the view that the will should have been executed at Madras in which case Section 213 of the Succession Act would be a bar for the institution of this suit.

57. The second argument is that the suit is filed by the plaintiff not for establishing any right as executor or legatee under the will, but as the heir of her husband. In support of his contention, the learned counsel of the appellants laid strong reliance on a decision of the Full Bench of the Madras High Court in Ganshamdoss Narayandoss v. Gulab Bi Bai and Western Indian Insurance Company v. Asima Sirkar. The point referred to the Full Bench of the Madras High Court was this:—

“Can a defendant resisting a claim made by the plaintiff as heir-at-law rely in defence on a will executed in his favour at Madras in respect of property situate in Madras when the will is not probated and no letters of administration with the will annexed have been granted.”

58. It was held that a defendant resisting a claim made by the plaintiff as heir-at-law cannot rely in defence on a will which required to be probated but which has not been, and Section 187 of the Indian Succession Act (X of 1865) corresponding to Section 213 of Act XXXIX of 1925 is a bar to every one claiming under such a will, whether a plaintiff or defendant. But what is relied upon by the learned Counsel are certain observations of Phillips, officiating C.J to the following effect:—

“The plaintiff is suing as heir-at-law but he was resisted by the defendants who claim under a will of which no probate has been taken. It is argued that it is a sufficient answer to the plaintiff's case to allege and prove the existince of a will, for in that case the plaintiff, who would be the heir in case of intestacy, would, no longer have any right. This rather ignores one point which, I think, is important namely, that the plaintiff being the heir under intestacy, which must be presumed until a will is proved, is entitled to succeed to the property, unless it can be shown that his title has been displaced. If the defendant merely proves that a will is in existence and does not prove the terms of that will, that is not necessarily inconsistent with the plaintiff's title, in the first place, the will may not be a valid will, and, in the second place, the plaintiff may be a legatee under the will. The mere existence, therefore, of a will does not necessarily displace the plaintiff's title, it is necessary for the defendant to go further and to prove that some one other that the plaintiff has title under the will this he cannot do by virtue of the provisions of Section 187”,

59. Ananthakrishna Ayyar J., observed as follows:—

“Thus where a plaintiff makes out a prima facie title in himself to the property in dispute, the defendant has to show a better title either in himself or in some third person, if what is stated above be the correct principle of pleading applicable to such cases, it follows that when the plaintiff in the present case shows a prima facie title in himself to the property in dispute as the admitted heir-at-law of the last owner the defendant has ‘to show a better title’ either in himself or in some third person ……. The general law would seem to be that the defendant's plea of jus tertii cannot be entertained when he does not state in whom the right resides the defendant must trace the title to a third party other than the plaintiff, Aimere suggestion that there may be a third party with better title is nothing,”

60. To the same effect is the decision in Western India Insurance Company v. Asima Sirkar. We are unable to appreciate the bearing of these decisions on the facts of the present case. This is not a case where the defendant is setting up the rights under the will, or setting up jus tertii for the purposes of non-suiting the plaintiff who has shown a prima facie title as the heir-at-law of the deceased. The real question in this case is whether the plaintiff who on statements made on her bealf is the executrix appointed under the will of her husband can maintain the present action as an heir as if on intestacy.

61. That the plaintiff was appointed as an executrix under the will of her husband is beyond all doubt. That being so, under Section 211 of the Succession Act, the entire property of the testator vests in the executor or executrix, as the case may be, from the time when the will takes effect. Section 211(1) of the Act is in these terms:—

“The executor or administrator, as the case may be, of a deceased person is his legal representative for all purposes, and all the property of the deceased person vests in him as such.”

62. Even before the obtaining of the probate on the death of the testator, the property vests in the executrix ‘as such’. It is not Section 213 which deals with the vesting of the property of the deceased persons, but Section 211. The vesting of the property of the deceased persons in the executor as such does not arise from the probate. The executor derives his title from the will. Immediately upon the testator's death his property vests in the executor, for, the law knows no interval between the testator's death and the vesting of the property (vide Whitehead v. Talor and Raja Ram v. Fakuruddin Saheb therefore, even without obtaining the probate of the will, the executor becomes the representative of the estate of the deceased. All that the grant of the probate does is not to give him title, but only to make his title certain (vide Hewson v. Shelley).

63. Even in cases where the will has been executed outside the limits of the presidency towns the position is the same. In Ramiah v. Venkata Subbamma a Full Bench of the Madras High Court held that in the case of a Hindu will executed in the moffusil to which the Hindu Wills Act does not apply, the estate vests in the executor, who accepts office, from the date of the testator's death. This decision was later affirmed by the Privy Council in Venkata Subamma v. Ramiah. It seems to us, therefore, that on the date of the testator's death the property of the late R.K.N.G Raju vested in the plaintiff as an executrix.

64. In Parthasdrathy v. Subbaraya it was observed by Schwabe C.J, that

“It is not right, as has been suggested in some cases, to treat a will of which probate has not been granted as non existent and the property passing by intestacy.”

65. This will, of course, depend upon the fact whether the plaintiff has accepted the office as an executrix. The learned Counsel for the appellant has placed strong reliance on certain observations in the Judgment of the Madras High Court in Parthasarathy Appa Rao v. Venkatadri Appa Rao. But that case obviously has no application, because on the facts of that case it was found that the executor died without accepting the office or showing any indication that he took upon himself the duties of executor. Whether the executor has accepted the office or not will depend upon the facts of each case. In this case the plaintiff has not given evidence, and no oral evidence was at all tendered by her. We can only therefore, deduce the fact of her acceptance from the record available. In, Ex. B-2 the Counsel of the plaintiff stated that his client was appointed as an excutrix under the will of her husband and that he was instructed to take adequate legal steps to have the estate duly represented. We are of opinion that this letter written obviously on behalf of the plaintiff is enough to constitute acknowledgment of the acceptance of the plaintiff of her office as an executrix.

66. The following passage in Williams on The Law of Executors & Administrators (13th Edn. p. 44 para 60) is directly in point:—

“Where a man was named as one of several executors, in answer to an enquiry who were the executors, wrote a letter saying that he and others were executors, this was held to afford sufficient evtdence that he had acted as executor. The insertion of an advertisement calling on persons to send in their accounts, and to pay money due to the testator's estate, to A & B, ‘his executors in trust’, was held to make them compellable to take probate, and to subject them personally to the costs occasioned by their resistance (the estate being small, and left for two years and a helf without a representative).”

67. The above passage is founded on two cases: Vickers v. Bell and Long and Feaver v. Symes and Hannam. The facts of the 1st case are as follows: The defendants' solicitor wrote to the plaintiff's solicitor in answer to a querry on behalf of a creditor as to who had proved the will. The defendants' Solicitor replied that the executors of the will are his widow and daughter and Robert Smith, thus acknowledging himself to be an executor. Turner L.J held that letter was enough to indicate that there was an acceptance of the office of the executor.

68. In the second case: Long and Feaver v. Symes and Hannam certain persons, Symes and Hannam published an advertisement in the paper that all persons who have any claim on the estate of late John Beaver were requested to send their respective accounts due without delay to Symes or Hannam, his executors in trust. It was held that the conduct of those two persons amounted to an absolute acceptance of the executorship.

69. In Jananandra Nath v. Jitendra Nath a Bench of the Calcutta High Court held that:

“The office of executor being a private office of trust named by the testator and not by the law, one named executor may refuse the office or renounce. It is, however, too late to refuse or renounce when one has once elected to act as executor; and he may determine such eletcion by acts which amount to an administration,”

70. One of the acts which amount to administration so that the Executor cannot afterwards refuse is something done by him with relation to the estate of the testator which shows an intention in him to enter upon the office of the executor.

71. In view of these authorities, we are of opinion that the plaintiff had accepted the office of the executrix, and it is not open to the appellants' Counsel to contend that she did not accept the office, that the will is of he avail whatever and that she is entitled to file and sustain the action as an heir of her husband as if on intestacy.

72. We, therefore, hold that the present suit filed by the plaintiff as the heir of her husband is incompetent and should fail.

73. It is contended by Mr. Somasundaram that the suit in any event for a declaration and injunction in terms prayed for is incompetent. It is argued that a pledgor who impugnes the sale by the pledgee of the pledged goods must either seek to redeem or sue for damages on the foot of conversion. This contention finds support in the decision of the Privy Council in Neckram Dobav v. The Bank of Bengal. In that case the facts were that the plaintiff Dobay deposited with the Bank of Bengal certain Government promissory notes for the purpose of securing loans. A part of those securities were sold lawfully by the Bank, upon the borrower failing to comply with the terms of the agreement. As to the rest, the pledgor redeemed a part, but was led to believe that the Government papers that were actually delivered back to him were all the securities which remained unsold in the Bank's possession. But it was found as a fact that the Bank had taken over considerable portion of those secutities and sold them to itself, crediting the borrower, however, with the price of the sale. On those facts, the contention advanced before the Judicial Committee, was that the sale by the pledgee-Bank to itself was illegal and, therefore, the plaintiff was entitled to a declaration that what purported to have been the sale to the Bank itself, was no sale at all and that the plaintiff was entitled to redeem according to the terms of his pledge. The Privy Council, however, held that:—

“It would be inequitable to allow the Bank, after this transaction, to treat the securities, which it had sold to itself, and then had in its hands, as still subject to the pledge. In their Lordships' opinion, the Bank should be held to be no longer a pledgee of these notes, and to have converted them to its own use, and to be liable in damages for the value of them, including the interest thereon.”

74. In S.L. Ramaswamy Chetty v. M.S.A.P.L. Palaniappa Chettiar a Bench of the Madras High Court has held that in case of an improper sale of the pledged goods by the pawnee the remedy of the pledgor is to get damages for the improper sale.

75. In Courerji v. Mawji. Wadia J., held that the sale of pledged goods without proper notice does not render the sale void but by analogy to Section 69(3) of transfer of Property Act, the remedy of the pawnor for an improper sale of the mortgaged property is damages for conversion to the pawnor, and the correct measure of damages is the loss which the pawnor has actually sustained, taking into account the pawnee's interest in the goods at the time of conversion.

76. In Bharat Bank Ltd.… v. Sheoji Prasad…. a Bench of the Patna High Court held that if the sale of the pawned articles is wrongful, the pawnor has got the remedy to sue the pawnee for having converted his goods to his own use.

77. In Official Assignee v. Madholal Sindhu Chagla J., after a review of English authorities held as follows:—

(i) “that although the pledgee may sell the goods unauthorisedly or unlawfully, the contract of pledge is not put an end to and the pledgor does not become entitled to the possession of the goods pledged without tendering the amount due on the pledge; or, in other words, without seeking to redeem the pledge; and

(ii) that without a proper tender of the amount due on the pledge, the only right of the pledgor in respect of an unlawful or unauthorised sale is in tort for damages actually sustained by him”

78. We are in accord with the view of Chagla J., that in case of an unauthorised sale by a pledgor the relief that the pledgor can seek is to file suit for redemption by depositing the money, treating the sale as if it had never taken place, or where the suit for redemption is not filed, to ask for damages on the foot of conversion. The present suit is neither the one nor the other. It is a suit merely for a declaration with an ancillary relief for an injunction restraining the 3rd defendant from registering the shares in the name of the 2nd defendant. We are of the opinion that the suit as framed is not sustainable.

79. The learned Subordinate Judge has taken the view that a suit for declaration and injunction in terms prayed for was not incompetent. But it seems to us that in view of the fact of the admitted existence of the will, the plaintiff who has filed the action as the heir of her deceased husband has not the legal character or right to the property as such, so as to justify her to seek the present reliefs within the seope of Section 42 of the Indian Specific Reliefs Act, vide the decision of the Privy Council in Sheoprasan Singh v. Ramanandam Prasad Singh. On this ground also, it seems to us that the suit should fail.

80. Mr. Kuppuswami, the learned Counsel for the 2nd defendant has urged that the 2nd defendant is a bona fide purchaser for value and that no relief could be claimed, in any event, against the 2nd defendant. He contends that the shares accompained by blank transfers were sold for proper value and when once a Bank who was in the nature of a mercantile agent sells the shares without anything to put the purchaser on notice as to any infirmity of title, the registered holder of the shares is estopped from questioning the title of the purchaser. He placed strong reliance on the decision in Colonial Bank v. Caddy and Williams, Fazal v. Mangaldas and Abdul v. Hasan Ali. The view of Kanga J., in Fazal v. Mangaldas was, however, dissented from by a Bench of the Bombay High Court in Abdul Vaheed v. Hasanalli Alli Bhai, where it was held that a registered owner of shares does not by handing over the share certificates and blank transfers signed by him to another person, make a representation to the world that such person is entitled to deal with the shares, and, therefore there is no question of any estoppel against the registered owner of the shares. But in the view we have taken that the suit filed by the plaintiff must fail, it is not necessary to pursue the question further.

81. For these reasons, we hold that the appeal should fail and it is accordingly dismissed with costs, one set.

Ch. R.

Appeal dismissed.