1992 (7) TMI 298

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....s liable to pay tax on the sale of unredeemed goods effected through auction if his annual turnover in such goods is not less than the minimum prescribed under section 5(5) of the Karnataka Sales Tax Act, 1957." 2.. It is contended on behalf of the petitioners that the State of Karnataka has enacted the Karnataka Pawn Brokers Act, 1961 (hereinafter referred to as "the Act") which provides for the regulation and control of the business of pawn brokers in the State of Karnataka; that in regard to unredeemed pledged articles the pawn broker has an option either to sue for the recovery of money in respect of which the goods were pledged or to sell the same as provided in section 176 of the Indian Contract Act, 1872. However, section 12 of th....

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....pon me the force of his submissions made on behalf of them. However, in my view, no detailed reference of the same is required. 4.. Explaining the rights available under section 176 of the Contract Act the Supreme Court in Lallan Prasad v. Rahmat Ali AIR 1967 SC 1322 stated as follows: "That section 176 deals with the rights of a pawnee and provides that in case of default by the pawner the pawnee has (1) the right to sue upon the debt and to retain the goods as collateral security, and (2) to sell the goods after reasonable notice of the intended sale to the pawner. Once the pawnee by virtue of his right under section 176 sells the goods the right of the pawner to redeem them is of course extinguished. But as aforesaid the pawnee is ....

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....e is held for the benefit of both the parties. The sale proceeds are the property of the pawner. The pawnee has a right to appropriate the sale proceeds or any portion thereof for satisfaction of his dues from the pawner.   5. Therefore, the legal position that emerges on the basis of section 176 of the Contract Act, section 12 of the Act and the decisions referred to above is that the pawnee has the right to sell the goods pledged in case of default in the repayment of the debt by the pawner. But that right can be exercised only in the manner provided in section 12 of the Act and subject to the conditions prescribed in rule 20 of the Rules framed under the Act. Whatever may be the nature of the transaction it is clear that a sale t....