D.P. Uniyal, J.
1. This appeal by the plaintiff arises under the following circumstances. The respondent had an overdraft account with the plaintiff Prabhat Bank, Ltd. since 1945. On 31st December 1946 the debit balance of the respondent rose to the extent of about Rs. 4,000 and on that date he executed a promissory note for a sum of Rs. 5,000 by way of security for repayment of the overdraft. On that very day the respondent executed a written agreement in favour of the appellant Bank and it was agreed that the respondent would be entitled to take advances upto the maximum of Rs. 5,000 upon his personal security, as well as collateral securities, to wit, stocks and shares pledged by the respondent with the appellant Bank. One of the terms of: the agreement was that the appellant Bank would be entitled to sell the securities without any notice to the respondent in the event of the loan not being repaid on demand. On 9-10-1947 the appellant Bank informed the respondent that his security had considerably deteriorated and that he should send Rs. 1,500 so that his account with the Bank may be closed.
On 5-8-1948 another letter was sent by the appellant Bank asking the respondent to call at the Bank in order to settle his cash-credit account with the said Bank. To this the respondent replied by his letter, dated 13-8-1948, saying that he may be allowed time up to the 15th September 1948 to pay up the amount. He further requested the appellant Bank to postpone the sale of securities till the 15th September 1948. The appellant Bank relying on the terms of the agreement, dated 31st December 1946 sold the snares pledged by the respondent and credited the proceeds to the account of the respondent. Despite the sale of the securities a sum of Rs. 1,760-6-3 was still outstanding against the respondent and hence the suit for recovery of that amount.
2. The respondent contested the suit, inter alia, on the ground that the agreement, dated 31-12-1946 was fraudulent in that his signatures had been obtained on a blank piece of paper, and that the sale of the securities conducted by the Bank was bogus and the price fetched was tar below the market value or the shares. He also pleaded bar of limitation.
3. Both the Courts below have found against the respondent on the question of the validity of the agreement, dated 31-124946. The Courts below held that the agreement had been executed by the respondent of his own free will and there was no fraud on the part of the appellant Bank in obtaining the said agreement. It was further held that the money drawn from the bank by the respondent far exceeded the securities and, as such, the appellant Bank could realise the money from the respondent by sale of the securities. On these findings the trial Court decreed the suit.
4. The lower appellate Court, however, came to the conclusion that the sate of the shares by the Bank was in contravention of 8. 176 of the Contract Act and, as such, was not binding on the respondent. It relied upon the decisions in the cases of Official Assignee, Bombay v. Madholal Sindhu, AIR 1947 Bom 217 and Bata Krishna Pramanik v. Bhawanipur Banking Corporation, Ltd. : AIR1932Cal521 , for holding that provisions of Section 176 of the Contract Act were mandatory and were subject to any contract to the contrary. The Court below came to the conclusion that the terms of the instrument of pledge giving unqualified power of sale to the appellant Bank was not consistent with the provisions of the Contract Act and, therefore, invalid. He accordingly dismissed the suit.
5. Two contentions were raised by the learned counsel before me. First, that the term in the agreement empowering the Bank to sell the securities for realising the debt due from the respondent being unqualified, it was not necessary to comply with the provisions of Section 176 of the Contract Act. Secondly, it was urged that the letter sent by the bank on 5-8-1948 asking the respondent to pay up the money due to the appellant, and the reply of the defendant, dated 13-8-1948 asking for time up to the 15th September, 1948 and requesting the postponement of the sale of securities clearly indicated that the respondent had notice of the intended sale of the securities pledged with the Bank. Consequently, so it was urged, the sale of the securities by the appellant Bank was legal and the suit for recovery of the balance was maintainable.
6. Section 176 of the Contract Act provides that if the pawner makes a default in payment of the debt in respect of which the goods were pledged, the pawner may bring a suit against the pawner upon the debt, or he may sell the thing pledged on giving the pawner reasonable notice or the same. The contention that notice of the contemplated sale to the pawner should be inferred from his letter dated 13-8-1948, cannot hold water inasmuch as the said letter does not disclose that a reasonable notice had been given by the pawnee to the pawner to sell the securities. A notice of the character contemplated by Section 176 cannot be implied. Such notice has to be clear and specific in language indicating the intention of the pawnee to dispose of the security. No such intention was disclosed by the Bank in any letter to the respondent.
7. As regards the terms of the agreement dated 31-12-1946 under which the pawnee had been authorised to sell the securities in case the credit balance of the debtor fell below the margin, it could not avail the Bank in acting contrary to law. An agreement of this character would be inconsistent with the provisions of the Contract Act and, as such, would be wholly void and unenforceable.
8. I am, therefore, clearly of the opinion that the sale of the securities by the appellant Bank without reasonable notice to the respondent was bad and was not binding on hint. What is contemplated by Section 176 is not merely a notice but a 'reasonable' notice, meaning thereby a notice of intended sale of the security by the creditor within a certain date so as to afford an opportunity to the debtor to pay up the amount within the time mentioned in the notice. No such notice was ever given by the appellant to the respondent. There can thus he no escape from the conclusion that the sale of the securities by the appellant was against law and not binding on the respondent. The conclusion reached by the lower appellate court was, therefore, legally sound.
9. I accordingly dismiss this appeal, butin the circumstances of this case make no orderas to costs of this appeal.