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Sri Raja Kakarlapudi Venkata Sudarsana Sundara Narasayyamma Garu (Died) and ors. Vs. Andhra Bank Ltd., Vijayawada and ors. - Court Judgment

LegalCrystal Citation
CourtAndhra Pradesh High Court
Decided On
Case NumberAppeal No. 7 of 1953
Reported inAIR1960AP273
ActsTransfer of Property Act, 1882 - Sections 58 and 137; Contract Act, 1872 - Sections 172, 176 and 177; Succession Act, 1925 - Sections 211 and 213; Specific Relief Act, 1877 - Sections 42
AppellantSri Raja Kakarlapudi Venkata Sudarsana Sundara Narasayyamma Garu (Died) and ors.
RespondentAndhra Bank Ltd., Vijayawada and ors.
Appellant AdvocateM. Ramachandra Raju and ;P. Sitaramaraju, Advs.
Respondent AdvocateP. Somasundaram, ;C.V. Narasimha Rao and ;A. Kuppuswamy, Advs.
DispositionAppeal dismissed
(i) contract - interpretation - sections 58 and 137 of transfer of property act, 1882 and sections 172 and 176 of contract act, 1872 - delivery of blank share transfer form along with instrument of security - whether mortgage or pledge - question to be answered with reference to intention of parties, facts and circumstances - mere delivery of blank transfer form does not make transaction a mortgage - blank transfer form can accompany share under pledge - held, transaction amounts to pledge. (ii) property - requirement of probate - sections 211 and 213 of succession act, 1925 - suit by executor under will - whether probate is necessary before filing suit - property vests in executor even before obtaining of probate - executor does not get title by grant of probate but it makes executor's.....seshachalapati, j.1. this is an appeal against the judgment and decree of the learned 1st additional subordinate judge, vijayawada, in o. s. no. 86 of 1949. the suit was brought by one sree raja kakarlapudi venkata sudarsana sundara narasayamma garu, for a declaration that the sale of 9,100 b-class shares of the andhra cement company ltd., vijayawada (3rd defendant) by the andhra bank ltd., vijayawada (1st defendant) to the jaipur sugar company ltd., rayagaddah (2nd defendant), is contrary to law, void and did not affect 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 recognising and registering the shares in the name of the 2nd defendant.the case of the plaintiff is that to secure the due.....

Seshachalapati, J.

1. This is an appeal against the judgment and decree of the learned 1st Additional Subordinate Judge, Vijayawada, in O. S. No. 86 of 1949. The suit was brought by one Sree Raja Kakarlapudi Venkata Sudarsana Sundara Narasayamma Garu, for a declaration that the sale of 9,100 B-Class shares of the Andhra Cement Company Ltd., Vijayawada (3rd defendant) by the Andhra Bank Ltd., Vijayawada (1st defendant) to the Jaipur Sugar Company Ltd., Rayagaddah (2nd defendant), is contrary to law, void and did not affect 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 recognising 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 9,100 B-Class shares bearing Nos. 143762 to 152S61 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 shares 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 de deration that her right to redeem the pledge remained unaffected and for an injunction restraining the 3rd defendant company from recognising and registering the shares.

2. The 1st defendant-Bank contended in its written statement; first, that inasmuch as 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 61e a suit without obtaining a probate or producing a succession Certificate; secondly, that her husband, the late R. K, N. G. Raju, hypothecated the shares in question on 22-9-19-17 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 sab 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.

3. On those 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?

4. 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 this case it should be held that the pledger 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.

5. On issue 4, the learned Subordinate Judge held that inasmuch as on the admissions of the plaintiff herself, her husband the 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 at the will, it could not be said that the plaintiff had established her prima facie right to maintain th suit as the heir of her husband.

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

7. 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.

8. In this appeal, it has been contended by Mr. Ramachandra Raju, the learned counsel for the ap* pellants that (i) 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; (ii) that in any event the sale is invalid, because there was no notice as required by Section 176 of the Indian Contract Act; (iii) that on tile 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 (iv) that the waiver relied on by the learned Subordinafe 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.

9. On the other hand, 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, the 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 a 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.

10. 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, 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 25-11-1948, the counsel for the plaintiff wrote to the 1st defendant-bank a communication (Ex. B-2) stating that R. K. N. G. Raju diet! 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 iegal representation tp 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 over-draft transactions covered by tide pledge of 9100 B-class shares in the Andhra Cement Company.

la 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 over-draft accounts by her husband and the pledge of 9100 B-Class shares in the Andlira Cement Company, a sum of Rs. 37,216-8-0 was due. The Bank requested that arrangements might be made for the payment of the debts and taking the delivery of the said shares.

11. On 17-12-1948, 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 C/o the Andhra Cement Company Ltd. This letter obviously did not reach the plaintiff as it was returned unserved. Thereupon the Bank wrote another letter (Ex. B-61 dated 5-1-1949 to her address at Rajahrnundry, 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.

12. On 7-1-1949, the counsel of the plaintiff from Madras wrote to the Bank asking for the particulars asked for hy 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-8) dated 9-2-1949. There was no reply by the plaintiff to the 1st defendant-Bank's letter dated 5-1-1949.

13. The 1st defendant-Bank thereupon would seem to have made enquiries with Somayajulu and Co., Slock 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,

14. On 25-3-1949, the 1st defendant-Bank sold the 9198, 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 adjustment of the loans, the Bank decided to realise the amounts due by the sale of the securities pledged and accordingly sold them at Rs. 6-5-0 per share. On 30-3-1949, 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.

15. On 5-4-1949, 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.

16. The present action was then instituted by the plaintiff on or about 20-4-1949 for the reliefs already mentioned.

17. 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, hut a mortgage. The relevant portion of the instrument (Ex. B-1) may he extracted :

'That failing payment on demand to you by us of the amount of such advances you shall be entitled, but not hound to sell or otherwise dispose of all or any of the said moveahle properties, marketable securities and goods by public auction or private contract in such manner and upon such term 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 shall 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.'

18. 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 300 page 226 of Vol 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 on essential element of the transaction. A mortgage conveys the whole legal interest in the chattels; a pledge or pawn conveys only a special properly, 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.'

19. The essential distinction, therefore, between a pledge and a mortgage is that unlike a pledgee a mortgagee acquires general property in the thing mortgaged subject to the right of redemption of the 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 retainer 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.

20. 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 Arjun Prasad v. Central Bank of India, (S) : AIR1956Pat32 ). 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 that circumstance alone, without more will mean that the transaction is one of mortgage. A pledge of shares can also be accompanied by blank transfers as in the case of Official Assignee, Bombay v. Madholal Sindhu, AIR 1917 Bom 217. In Elaya Nayar v. Krishna Pattar, AIR 1943 Mad 74, 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. In any view, it seems to us that this question as to the nature of the transaction cannot be considered at this stage, because the parties throughout treated the transaction as one of pledge. In Ex. B-8 the plaintiff's counsel referred to the transaction as a 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 warrant for the assumption that the 1st defendant-Bank used the expression 'pledge' by inadvertence.

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 1st issue framed at the trial is, 'What are the terms of the pledge'? The main ease 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 facts of this case there was a waiver by the pledger of the right to receive 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.

21. The term 'pledge' is defined in Section 172 of the Indian Contract Act as 'the bailment of goods as security for payment of a debt or performance of a promise'. The bailor is called the pawnor, and the bailee is called the pawnee.

22. Section 176 of the Act deals with the right of the pawnee or the pledgee in the case of default by the pledger. 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 rea^ sonable 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.'

23. On a plain reading of the section it seems to us that before exercising the power of sale the pawnee should give to the pledger reasonable notion 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 that finding 011 various grounds,

24. It is first contended that in the ease the waiver is not founded on an assent or affirmance of the sale by the pledger 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. Parthasarthy Iyengar, 18 Ind Cas 986 (Mad), 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 repressed. 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 pledger is ambiguous or uncertain. It seems to vis that the expression 'without reference to us' is wide enough to include notice.

25. But the more important argument of Mr. liamachandra Raju is that even assuming thai 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 the 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 to the terms of Section 176 would be a contract contrary inconsistent with the provisions of tbe Act within the meaning of Section 1 of the Contract Act.

26. There is considerable judicial authority in support of the above contention. In Co-operative Hindustan Bank Ltd. v. Surendra Nath Dey, AIR 1932 Cal 524 at p. 532, 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 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 AIR 1947 Bom 217 at p. 228, 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 Frederick Pollock, Sir Dinshah 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.'

27. This case was carried in appeal to the Federal Court. Their Lordships held by a majority that in view of the assent for sale of shares by the pledger and the acquiescence thereof by the Official Assignee the sale was good and the further questions argued heforc 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.

28. In Bharat Bank Ltd. v. Sheoji Prasad, AIR 1953 Pat 28S, 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.

29. In Hulas Kunwar v. Allahabad Bank Ltd., : AIR1958Cal644 , a Bench of the Calcutta High Court has held following the decision in AIR 1932 Cal 524 at p. 532, 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 AIR 1932 Cal 524 at pp. 525-532, the contract of pledge authorised 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.

30. When in an enactment, in some sections the expression 'subject to the contract' or 'in the absence of the contract to the contrary' are used end in. others not, it is a well settled principle of construction that the provisions of the latter class of sections are not subject to contracts to the contrary.

31. In Mohammed Slier Khan v. Swami Dayal, 1LR 44 All 185 : (AIR 1922 PC 17), 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 he no difficulty in passing one decree in both so framed as to give due effect to this right.' To the same effect is the observation of Srinivasan Ayyangar J., in Seeti Kutti v. Kunhi Pathumma, 1LR 40 Mad 1040 at p. 1062 : (AIR 1919 Mad 672 at p. 984) : '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.''

32. 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. Ramachandra Raju that at the time of enter-ing 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.

33. Mr. Somasundaram very strenuously contended before us that the right to receive notice 35 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.

34. In Wilson v. McIntosh, 1894 AC 129, the facts were that the respondent. Mclntosh 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 bo deemed to have lapsed unless the caveator took the proceedings in any court of competent jurisdiction to establish his title to the estate and gave 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 fooling 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 3apsed and obtained .1 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.

35. In Toronto Corporation v. Russell. 1908 AC 493, the facts were that in the city ot Toronto a land was advertised for sale under Ontorio Assessment Act of 1897 for arrears of taxes and after an adjournment was bought by the appellant. But before the sale the 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.

36. In Selwyn v. Garfit, (1888) 38 Ch D 273, the question of waiver did nut 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 Bowcn L. J.

37. In Griffiths v. Earl of Dudley, (1882) 9 QBD 357, the question was us to whether a workman could agree not to claim compensation for personal injuries under the Employer's 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.

38. A reference was also made to the decision of the Privy Council in Vellayan Chettiar v. Government of the Province of Madras, ILR 1948 Mad 214 : (AIR 1947 PC 197), 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 ease.

39. In Raja Chetty v. Jagannathadas, : AIR1950Mad284 , 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 landlord could well abridge his right.

40. 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 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 or public policy.'

41. 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 contract contrary to its terms. In this contention strong reliance was placed on the observation of Farwell J. in Soho Square Syndicate Ltd. v. E. Pollard and Co. Ltd., 1940-1 Ch 638 at p. C43, to the following effect :

'If if 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 position 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 he, 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.''

42. 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.

43. In Bowmaker, Ltd. v. Tabor, 1941-2 KB 1. 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 Farwell J., in the case earlier referred to.

44. 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 arc 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 pledgo to waive notice, still the pledgee is not relieved of his obligation to give notice before the sale.

45. 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 ot the waiver of such a notice by the pledger in Ex. B-1.

46. 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 in 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.,



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

The above gentleman died at Madras on 20th April 1948, leaving a will appointing his wife as executrix. In the said will he 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. 683/3, account 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 he highly obliged if you can furnish to me at the earliest opportunity the balance now standing to the credit of the abovenarned deceased together with accrued interest, if any.

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

47. 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 probate. On those facts the 1st question that emerges is whether the suit could be filed without obtaining the probate.

48. 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 :

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 the right is claimed, or has granted letters of administration with the will or with a copy of an authenticated copy of the will annexed.'

49. On behalf of the appellants it is contended that Section 213 of the Succession Act has no application to this case for two reasons : (1) 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 ber capacity as the heir of late R. K. N. G. Raju. We will now take up the first question.

50. 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 interrogatories were served on the plaintiff on 5-1-1950, under O. 12 R. 2, C. P. C. in these terms :

'The Andhra Bank Ltd., and others.


Notice to admit documents under O. XII, R. 3

C. P. C.


Sri Metlapati Koteswara Rao Pantulu Gam, B.A.B.L., Advocate for plaintiff, Vijayawada.

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

(1) Do you admit the execution of the will-nama by the plaintiff's husband in Madras?

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

The said notice has been filed in the court.'

These interrogatories were not answered,

51. On 14-12-1950, a notice was served on the counsel appearing for the plaintiff in these terms :

'O. S. No. 86 of 1949. Between :

Sri Rajah Kakarlapudi Venkata Sudarsana Sundara Narasayamma Garu..... Plaintiff.


The Andhra Bank Ltd., and Others.




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

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


K. Nagabhushana Rao

Advocate for 1st Defendant.


Received copy and batta of Re. 1/-,


M. Koteswararao,


52. The will was not produced. Even during the course of the arguments 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 he a bar for the institution of this suit.

53. 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 Narayandass v. Gulab Bi Bai, ILR 50 Mad 927 : (AIR 1927 Mad 1054) (FB), and Western India Insurance Co. Ltd. v. Asima Sirkar, AIR 1942 Cal 412. 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.'

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 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 Offg. 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 existence ot 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, ot 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 than the plaintiff has title under the will. This he cannot do by virtue of the provisions of Section 187.'

Anantakrtshna 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 him-self 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 xx xx

The general law would seem to he 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. A mere suggestion that there may he a third party with better title is nothing.'

54. To the same effect is the decision in AIR J942 Cal 412. 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 behalf is the executrix appointed under the will of her husband can maintain the present action as an heir as if on intestacy.

55. That the plaintiff was appointed as an executrix under the will of her husuand 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.'

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. Taylor, 1839-10 Ad and El 210 and Raja Rama v. Fakuruddin Sahib, 38 Mad LJ 210: (AIR 1930 Mad 218)). 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, 1914-2 Ch. 13 at p. 38).

56. 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, AIR 1926 Mad 434, a Full Bench of the Madras High Court held that in the case of a Hindu will executed in the mofussil 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 is later affirmed by the Privy Council in Venkata Subamma v. Ramayya, AIR 1932 PC 92. 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.

57. In Parlhasarathy Aiyar v. Subbaraya Gramany, AIR 1924 Mad 07 at p. 70, 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 ranted as non-existent and the property passing y intestacy.'

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 Higb Court in Parthasarathy Appa Rao v. Venkatadri Appa Rao, 43 Mad LJ 486 at p. 515 : (AIR 1922 Mad 457 at pp. 469-470). 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 executrix 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 or the acceptance of the plaintiff of her office as an executrix.

58. The following passage in Williams on the Law of Executors and Administrators (13th Edn. 44 para 60) is directly in point:

'Where a man who was named as one ot several executors, in answer to an inquiry who were the executors, wrote a letter saying that he and others were executors, this was held to afford sufficient evidence 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 and 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 half without a representative).'

59. The above passage is founded on two cases : Vickers v. Bell, (1863) 4 De G. J and Sm. 274 and Long and Feaver v. Symes and Hannam, (1832) 3 Hag Ecc 771 : 162 ER 1339. The facts of the 1st case are as follows : The defendant's solicitor wrote to the plaintiff's Solicitor in answer to a query 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 that letter was enough to indicate that there was an acceptance of the office of the executor.

60. In the second case ; (1832) 3 Hag Ecc 771 : 162 ER 1339, certain persons, Symes and Hennam published an advertisement in the paper that all persons who have any claim on the estate of late John Feaver 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.

61. In Jnanandra Nath v. Jitendra Nath, AIR 1928 Cal 275, a Bench of the Calcutta High Court has 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 election by acts which amount to an administration,'

One of the acts which amounts 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.

62. In view of these authorities, we are of opinion that the plaintiff had accepted the office of the executrix, and it is not open now to the appellants' counsel to contend that she did not accept the office, that the will is of no avail whatever and that she is entitled to file and sustain the action as an heir of her husband as if on intestacy.

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

64. 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 impugns 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 Dobay v. Bank of Bengal, ILR 19 Cal 322. 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 on 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 securities 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 he 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.'

65. In S. L. Ramaswamy v. M. S. A. P. L. Palaniappa, AIR 1930 Mad 364, 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.

66. In Cooverji v. Mawji, AIR 1937 Bom 26, 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 the conversion.

67. In : AIR1955Pat288 a Bench of the Patna High Court held that if the sale of the pawned article is wrongful, the pawnor has got the remedy to sue the pawnee for having converted his goods to his own use.

68. In AIR 1947 Bom 217 Chagla J., after a review of English authorities held as follows :

(i) 'that althoughthe 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 pledger in respect of an unlawful or unauthorised sale is in tort for damages actually sustained by him.' We are in accord with the view of Chagla J., that in case of an unauthorised sale by a Pledgee the relief that the pledgor can seek is to file a 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.

69. 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 scope of Section 42 of the Indian Specific Relief Act, (Vide the decision of the Privy Council in Sheoparsan Singha v. Ramnandan Prasad Singh, ILR 43 Cal 694; AIR 1916 PC 78). On this ground also, it seems to us that the suit should fail.

70. Mr. Kuppuswamy, 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 accompanied 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 decisions in Colonial Bank v. Cady and Williams, (1890) 15 AC 267, Fazal v. Mangaldas, ILR 46 Bom 489: (AIR 1922 Bom 303) and Abdul Vahed Abdul Karim v. Hasan Ali Alibhai, AIR 1926 Bom 338. The view of Kanga J., in ILR 46 Bom 489: (AIR 1922 Bom 303) was, however, dissented from by a Bench of the Bombay High Court in ILR 50 Bom 229: (AIR 192G Bom 338), 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.

71. For these reasons, we hold that the appealshould fail and it is accordingly dismissed with costs,one set.

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