MIAN SAQIB NISAR, J.- The respondent-Bank filed a suit for recovery of Rs.11,330.85 against the appellants on account of money advanced to them. This suit was resisted by the appellants-defendants and out of the pleadings of the parties two issues were frame, which are as under:-
(1) Whether a sum of Rs. 11,330.85 is due to the plaintiff from the defendants. If not, what amount the defendants are liable to pay?
(2) Whether the plaintiff has sold the pledged goods.. If not, what is-its effect?
2. After recording of the evidence, Trial Court decreed the suit on 1.9.1972 in favour of the respondents. Appeal filed by the appellants was also dismissed vide judgment and decree dated 10.3.1977. Hence, this regular second appeal.
3. The learned counsel has contended that both the Courts below have misread the record, particularly, the contents of paragraph 4 of the plaint and the statement of P.W.1, lt is Argued that according to paragraph 4, respondent bank itself had acknowledged that the appellants had pledged rice stock as a security for the said loan, it is further stated that those have been released to appellants and inspite of the sale of said stock the appellants had not been able to reply this amount which has fallen short after the disposal of the said stock, in the written statement the appellants-defendants have vehemently controverted the above and have stated that the sale of the stock by the respondent bank is illegal and no-notice1 in this regard was given to them and that the rice stock has been sold for inadequate price due to which the appellants have suffered a loss. Anyhow, the appellants have not accepted the release of these stocks to them. The point urged is that by virtue of admission of pledge by the respondent, there can possibly be three situations, release to the appellants, sale of the goods by bank, the stocks still with the respondent.
From the evidence he has satisfied me that it is not a case of release of stocks as no proof has been brought on the record. Admittedly the stocks are not with the Bank, therefore, the only reasonable conclusion- is that these stocks have been sold by the Bank and the proceeds have been credited to the accounts of the appellants. The learned counsel for the respondent also admitted that the goods have been sold by the bank, in the light of the above it is argued that the respondent has sold these stocks without complying with the mandatory provisions of Section 176, of the Contract Act.
4. In view of Section 176 of the Contract Act it is the duty of the pawnee to keep the security intact so as in case of suit for recovery the same can be returned to the pawnee. However, if the pawnee in exercise of right wants to dispose of the pledged goods then a notice must be given to the pawnor as the pawnor's power of sale under Section 176 of the Contract Act is conditional on the notice being given to the pawnor and this notice is necessary before the goods are sold. The learned counsel in support of his contention has taken me through the statement of P.W.1, Manger of the Bank who is clear terms has accepted that he has no knowledge of any goods having been taken into possession by the Bank neither he has any knowledge that who had been selling the rice stocks and when. Reading this statement in the light of para 4 of the plaint it is an admitted and proven fact that the goods were pledged with the respondent bank and were sold in breach of Section 176. Further more nothing has been brought on record as to when sale of the stocks was made, what was the market value of these stocks at the relevant time and what exact amount has been received by the sale thereof. The leamed counsel for the appellants placed reliance on A.M.
Burq and another v. Central Exchange Bank Ltd. and others (PLD. 1966 (W.P.) Lahore 1) in which it has been held that the right of the pawnee (pledge) is either to bring a suit upon the debt or to sell the things pledged upon giving a reasonable notice of sale. Both these rights are concurrent and they are provided in Section 176 of the Contract Act. However, the pawnor must return the stocks on payment of debt by the pawnee, lt is further held that where the pawnee was not in possession of the property pledged to him as a security for the payment of the loan nor did he prove that it has been damaged or destroyed at the risk of the pawnor. The principle in equity is that the creditor is not entitled to recover the amount of his secured debt when he cannot return the security.
5. On the basis of the above judgment it has been argued that as the pledged stocks have been illegally sold which amount to misappropriation of the stocks, therefore, in equity the respondent is not entitled to recover the suit amount. Both the Courts below have miserably failed to consider this aspect of the matter and have proceeded on wrong assumption that the appellants' entire stocks were got released and sold by them. The statement of D.W.I relied in this behalf is result of misreading. Even otherwise, it is not possible that the bank would release the entire stocks without the settlement of its accounts, lt was for the bank to have produced documents showing release of the stocks.
6. The only argument of the learned counsel for the respondent is, that presumption of correctness is attached to the statement of accounts. This may be true, but it is rebuttable presumption and where the bank has not been able to account for the pledged goods no sanctity can be attached to the accounts statement.
7. Consequently I accept this appeal, set aside the judgments and decrees of both the Courts below and dismiss the suit filed by the bank. There shall be no order as to costs.