BENARES BANK LTD Vs. PREM AND CO

JUDGEMENT

(1.) This is a plaintiff's appeal against a decree of the lower appellate Court confirming a decree of the Court of first instance dismissing the claim as against defendant 3, the contesting respondent in this appeal. The plaintiff bank brought a suit against Messrs. Prem & Co., Prem Nath Bhargava and Mt. Sheelwanti, the wife of Prem Nath Bhargava, claiming a sum of Rs. 2,745-6-3. The plaintiff bank also claimed that certain securities which had been lodged with them by Prem Nath Bhargava were liable to be sold in satisfaction of their claim. The learned Munsif decreed the claim against defendants 1 and 2 with costs but dismissed the claim as against Mt. Sheelwanti, defendant 3, with costs. On appeal the learned Civil Judge upheld the findings of the Munsif and dismissed the appeal. Against that decision, in so far as it concerns Mt. Sheelwanti, the plaintiff bank have appealed in second appeal to this Court. The facts of the case can be briefly stated as follows: Prem Nath Bhargava, defendant 2, was a customer of the plaintiff bank and had a current account thereat. On 25 April 1928 this current account was transferred to the name of Messrs. Prem & Co., defendant 1. Prem Nath Bhargava represented to the bank that he and his wife Mt. Sheelwanti were the proprietors of this firm and requested the bank to allow him to overdraw to the extent of Rs. 5,000. By way of security Prem Nath Bhargava deposited with the plaintiff bank a number of shares including 50 shares of the Central Bank of India owned by his wife Mt. Sheelwanti. Eventually the plaintiff bank brought these proceedings to recover the amount due on the overdraft, viz., Rs. 2,745-6-3, and also to enforce their charge on these shares.

(2.) It was contended in the Courts below that Mt. Sheelwanti was an actual partner or one of the proprietors of the firm Prem & Co., but both the Courts have held that she had no interest in the firm. There was ample evidence to support that finding and such is not challenged here before me. It was also contended that the shares in the Central Bank of India were not in fact the property of Mt. Sheelwanti and that she was merely a benamidar for her husband Prem Nath Bhargava. This plea was not raised in the plaint and the learned's Munsif refused to entertain it. The learned Judge also refused to consider this point and having regard to the fact that it was never pleaded, the decisions of the two Courts below cannot be effectively challenged before me. In any event it would have been extremely difficult for the plaintiff bank to have proved affirmatively that these shares were in fact the property of the husband Prem Nath Bhargava.

(3.) It was also contended that the shares were actually transferred by Mt. Sheelwanti to her husband or in any event that they were deposited by Prem Nath Bhargava with the consent of his wife and therefore that these shares could be sold to discharge the debt due from Prem Nath Bhargava. This issue was hotly contested in the lower Courts and it has been argued strenuously before me that in the circumstances of this case Mt. Sheelwanti had handed over these shares to her husband in order that they should be deposited by way of security to secure his overdraft. The share certificates had attached to them a transfer signed in blank by Mt. Sheelwanti and this would suggest that Mt. Sheelwanti handed these shares over to her husband in order that her husband might make use of them to secure his overdraft. On the other hand it must be remembered that Mt. Sheelwanti is a lady of no business experience and is in fact a pardanashin woman. In those circumstances the transaction must be examined carefully because it would be an easy matter for her husband to obtain these shares fraudulently from his wife and make use of them for his own purposes. Mt. Sheelwanti gave evidence and deposed on oath that these shares had been handed over to her husband merely for safe custody and that he had no authority of any kind to pledge them or deposit them or deal with them in any way. The Courts below have considered her evidence and have accepted it. I therefore have to consider whether or not these shares could be validly deposited as security with the bank by the husband when they had been handed over to the latter merely for safe custody. The appellant bank have relied upon Section 237, Contract Act. That section reads as follows: When an agent has, without authority, done acts or incurred obligations to third persons on behalf of his principal, the principal is bound by such acts or obligations if he has by his words or conduct induced such third persona to believe that such acts and obligations were within the scope of he agent's authority.