1. This is a Letters Patent Appeal against the judgment of Mr. Justice Seshagiri Ayyar in Seshappier v. Subramania Chettiar I.L.R. (1915) Mad. 783
2. The material facts are as follows:
3. On 19th May 1907, the first respondent entrusted a jewel to one Kolandaisami Pathar (the husband of the second respondent and the father of the third respondent) who undertook to sell it on commission. Kolandaisami pledged the jewel with the appellant who is a money-lender for Rs. 175 on 20th May 1907. Kolandaisami died two or three months afterwards without having redeemed the pledge. On 15th December 1909, the appellant took the jewel to the first respondent's shop and asked him to sell it for him. The first respondent then came to know that the jewel had been improperly pledged and demanded its return. The appellant having refused to return it, the first respondent brought a Small Cause Suit on 29th June 1911 for the return of the jewel or its value Rs. 400 and in answer to the suit, the appellant contended that he acted in good faith in advancing money on the pledge of the jewel and that he was entitled to recover from the plaintiff the amount Rs. 175 which he had advanced with interest. He further pleaded that the suit was barred by limitation. The Subordinate Judge gave the first respondent a decree against the appellant for the return of the jewel or its value.
4. The appellant filed a Civil Revision Petition which was dismissed.
5. Two questions were argued before Mr. Justice Seshagiri Ayyar:
(1) Whether the suit was barred by limitation?
(2) Whether the appellant had a right to be paid back the money Rs. 175 which he had advanced before he could be called upon to deliver up the jewel?
6. The learned Judge agreeing with the Subordinate Judge held that the article applicable was Article 48, Schedule I of the Limitation Act, and not Article 49, and that the suit having been brought within three years from the time (15th December 1909) when first respondent learnt that the jewel was in the appellant's possession was not barred by limitation.
7. We are of opinion that the learned Judge's decision on the question of limitation was right.
8. It is clear that the case was one of 'conversion.' The undertaking which Kolandaiswami gave to sell the jewel on commission, was not an unlawful one, and the property was not wrongfully taken from the owner's possession. It was only on 20th May 1907 when Kolandaiswami treated the property as his own and pledged it with the appellant, that he wrongfully converted it to his own use. Rameshar Chanbey v. Mata Bhikh I.L.R. (1883) All. 341 and Ram Lal v. Ghulam Hussain I.L.R. (1907) All. 579 go to show that where specific moveable property which was originally obtained lawfully is wrongfully detained, the proper article applicable is Article 48: see also Nandlal Thakersey v. The Bank of Bombay (1909) 11 Bom. L.R. 926 and Nandlal Thakersey v. The Bank of Bombay (1909) 12 Bom. L.R. 316 It remains to consider the more difficult question whether the appellant can claim to be paid back the money for which the jewel was pledged with him before he is required to deliver it to the owner.
9. Mr. Jayaram Ayyar for the appellant relies on. Section 178 of the Indian Contract Act, Three things are required by that section: viz., (1) possession on the part of the pawnor, (2) good faith on the part of the pawnee and (3) lawful acquisition on the part of the pawnor. It is clear, we think, that the appellant acted in good faith when he advanced Rs. 175 on the pledge of the jewel, and that he had no reason to suppose that the pawnor was acting improperly when he pledged the jewel. His conduct in taking the jewel to the first respondent and asking him to sell it indicates his bona fides. The second proviso to the section also does not apply as the article pledged had not been obtained from the lawful owner by means of 'an offence or fraud.' It has been held that to create a valid pledge under Section 178 of the Indian Contract Act, the pledger must be in 'juridical' possession of the goods as distinguished from mere custody. So a servant entrusted by his master with the custody of the goods during his absence, or a wife in charge of her husband's articles of jewellery as custodian on his behalf, cannot make a valid pledge under the section: see Greenwood v. Holquette (1873) 12 B.L.R. 42 Biddomoye Dabee Dabee v. Sittaram I.L.R. (1878) Calc. 497 and Seager v. Hukmakessa I.L.R. (1900) Bom. 458
10. The learned Judge observes that he was:
satisfied that the statement in the plaint that Kolandaiswami was given the jewel only for the purpose of showing it to intending purchasers had been established, and that the sale price was to be settled in the presence of the plaintiff.
11. With all deference to the learned Judge, we do not think that there is any legal evidence to justify his finding.
12. In paragraph 1 of the plaint, it is no doubt stated that Kolandaiswami received the jewel 'saying that he would show it and bring it back, and that if the purchaser liked the jewel he would settle the price in the presence of the plaintiff.'
13. The evidence of the first respondent does not, however, bear out this statement. In his evidence he says: 'Kolandaiswami used to sell jewels. I gave him the jewel to be sold. Kolandaiswami did not say how soon he would sell the jewel. He did not say with whom he had left the jewel. His commission was 6-1/4 per cent.' The first respondent says nothing in his evidence about the jewel being taken to be shown to intending purchasers or the price being settled in his presence. There is the following significant entry in first respondent's account book under date 19th May 1907: 'Debt to Kolandaiswami Pattar. To self one pair of Thodu set with English diamonds, Rs. 400.' We think that the evidence leads only to one conclusion, namely, that Kolandaiswami was an agent for the sale of the jewel, and that the arrangement was that he was to sell the jewel which was valued by the owner at Rs. 400 and receive his commission.
14. In Greenwood v. Holquette (1873) 12 B.L.R. 42 Couch, C.J., held that the possession meant by Section 178 of the Indian Contract Act was 'that kind of possession which a factor or agent has' and this view was accepted in Legeyt v. Harvey I.L.R. (1884) Bom. 501. We agree with the observations of Batchelor, J., in Nandlal Thakersey v. The Bank of Bombay : (1910)12BOMLR316 , that Section 178 and exception to Section 108 of the Contract Act deal with cases where the pledger has other than a limited interest and has lawful juridical possession 'unconnected with and independent of any interest therein' that is such juridical possession as a factor or agent has, in other words, such possession as is had by an agent entrusted as such, and ordinarily having as such agent, a power of sale or pledge. Reference may also be made to the judgment of Mr. Justice Subrahmanya Ayyar in Naganada Davay v. Bappu Chettiar (1904) 27 Mad. 424 where the learned Judge points out the distinction between Section 178 and Section 179. In the present case we think that Kolandaiswami who was entrusted with the jewel as an agent for sale, had such 'possession' as is contemplated by Section 178 of the Contract Act, and that the appellant being a pawnee acting in good faith, is entitled to the protection afforded by the section.
15. We accordingly hold that the appellant is entitled to he paid Rs. 175 and interest due till date of suit as claimed by him before he can be required to return the jewel. We therefore allow the appeal. The decree of the Subordinate Judge will be modified accordingly. First respondent must pay appellant's costs in all Courts. Two months' time from the receipt of records by the Subordinate Judge is granted to the plaintiff to pay up the amount due to the appellant for redeeming the jewels.