Contracts

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CONTRACTS

1. Pledge.
Morvi Mercantile Bank Ltd. and Anr v. Union of India (UOI) (AIR 1965 SC 1954)

Judges: J.R. Mudholkar, K. Subba Rao, R.S. Bachawat, Raghuvar Dayal and V.

Ramaswami, JJ.

Facts:



Certain goods were consigned to “self” from Bombay for transit to Okhla. The consignor endorsed the railway receipts to the appellant bank against an advance of Rs. 20,000.The goods were lost in transit and the consignment never reached Okhla.



Consequently, the bank as an endorsee of the railway receipts and pledgee of the goods sued the Railways for the loss of the goods which were worth Rs. 35,500.

Case History:



The trial court rejected the action.

•The appeal was heard by a Division Bench of the Bombay High Court. The

learned judges agreed with all the findings of the trial court but one: They held that the Bank, as endorsee of the said railway receipts, was entitled to sue for compensation for the loss suffered by it by reason of the loss of the consignments, but, as pledgees of the goods, it suffered the loss only to the extent of the loss of its security. On that view, the learned Judges gave a decree to the Bank for a sum of Rs. 20,000 advanced by it with interest and proportionate costs in both the Courts.



There were cross-appeals against this decision.

Issues:

(1) Whether the endorsement of a railway receipt constitutes as pledge in law.

(2) Whether the plaintiff would be entitled to recover the full value of the consignments amounting to Rs. 35,500/- or, as the High Court held, only the amount of Rs. 20,000/- with interest, i.e., the amount secured under the

pledges, even if the endorsement of a railway receipt for consideration does

constitute a pledge.

(3) Whether the Bank was the pledgee of the goods or was only the pledgee of the documents of title whereunder they could only keep the documents against payment by the consignee as contended on behalf of the...
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