1965 (1) TMI 80

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.... 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 accoun....

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....e 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., AIR 1932 Cal 521, 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 ....

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....ce 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 appellan....