1959 (3) TMI 76

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....ch he pledged his entire stock-in-trade with the Bank. (3) Shortly after the partition of the country Mr. Raikhi migrated to India. On 12-7-1948 he appeared in the Branch of the Bank at Delhi and stated that he had been able to retrieve a portion of the stock-in-trade from Lahore and that he was prepared to hypothecate the same with the Bank in lieu of a sum of Rs. 20,000/-which was still due from him. The Bank accepted the offer and he accordingly executed various documents, among others being a pronote in a sum of Rs. 20,000/- a letter of continuity hypothecating the goods which had been retrieved by him from Lahore and a balance confirmation slip admitting the balance due from him as Rs. 20,074/14/-. He also addressed a communication ....

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....ghts and liabilities of the creditor and the debtor, namely:     (a) the creditor may, if he is still in possession of the pledged property, realise the sum due to him by the sale of such property after giving to the debtor reasonable notice of the sale;     (b) ........     (c) ........     (d) .......     Explanation I. For the purposes of this section, the creditor shall be deemed to be in possession of the pledged property in any case in which the pledged property, although not delivered to him was delivered to a person authorised by him or was being held by the debtor on behalf of the creditor, and the ownership or possession thereof could not hav....

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.... to a third party without the express consent or permission of the creditor. This conclusion flows from the meaning which is assigned to the expression "hypothecation" by legal compilers and commentators. The civil law recognised two kinds of pledges viz. The "pignus" (pawn) in which the possession of the thing was actually delivered to the person for whose benefit the pledge was made, and "hypotheca" (hypothecation) in which the possession of the thing pledged remained with the debtor, the obligation resting in mere contract without delivery. In one case possession was actually delivered to the creditor or pawnee, in the other remained with the debtor. Hypothecation has been defined as a right which a creditor has over a thing belonging....