BANK OF RAJASTHAN V.

HAJARIMAL MILAP C. SURANA

LAW POINTS:
S.176 of Indian Contract Act:If the pawnor makes default in payment of
the debt, or performance, at the stipulated time of the promise, in respect
of which the goods were pledged, the pawnee may bring a suit against the
pawnor upon the debt or promise, and retain the goods pledged as a
collateral security; or he may sell the thing pledged, on giving the pawnor
reasonable notice of the sale.If the proceeds of such sale are less than the
amount due in respect of the debt or promise, the pawnor is still liable to
pay the balance.If the proceeds of the sale are greater than the amount so
due, the pawnee shall pay over the surplus to the pawnor.
FACTS AND ISSUES
FACTS:
The respondents (R) (Hajarimal Milap C. Surana) were indebted to the
appellants (A) (Bank of Rajasthan) and had deposited precious stones as
security. For the recovery of the debt, a suit had been filed in the court by A.
Pending the suit, the parties came to an agreement, for the enforcement of
which another suit was filed by A.
ISSUES:
Whether the second suit is maintainable since the first suit for recovery of
the debt was already pending?
Whether the precious stones constitute full and final settlement of the debt?
Whether the A claim to interest is justified.
DECISION
HELD:
Debts Recovery Tribunal:favoured R

Rejected As claim on two grounds; (a) Bank had taken the precious stones as full and final settlement (b)
Suit was barred under order 23 rule 1(4) of the CPC.
Appellate Tribunal(favoured R)
Recognized the second suit i.e. did not consider it barred on the basis of CPC provisions but dismissed the
appeal maintaining that the bank had taken the precious stones in full and final settlement of the debt.
SUPREME COURT(favoured A)

(Issue 1) The case was not for the recovery of the original debt but for the enforcement of the agreement
and as such not similar to the first suit.
(Issue 2) The precious stones did not constitute full and final settlement but were merely security as
expressly mentioned in clause 3 of the agreement.
(Issue 3) As claim to interest was justified as clause 2 of the agreement revealed that the bank had agreed
to charge any further interest.
Held: S.176 applicable; A was entitled to the recovery of the debt with interest.
HADLEY V. DROITWICH
CONSTRUCTIONCO.

FACTS:
P hired a crane to D with no obligation on them to maintain. The hirer (D)
undertook to put competent man in charge and carry out service. This man
never inspected the crane nor did carry out any servicing. One of the
hirers work-man was injured when the superstructure of the crane broke
away from its base and fell on him. He sued both D & P. D claimed that
they were entitled to be indemnified by P on the ground that P had been
negligent in providing them with a defective crane.
ISSUE: Whether P is under an obligation to indemnify D?
 Trial Court
Held both to be equally liable in negligence
P were in breach of the implied terms of the contract of hiring that the
crane would be fit for the purpose for which it was required and free from
defect.
COURT OF APPEAL:

SELLERS L.J.

Upheld the Trial Court on 1st point

The implied warranty as to fitness was qualified by the undertakings given by D to put a competent
man and oversee the maintenance and service of the crane. Neither condition was performed: the
warranty disappears, as the conditions were broken. The implied warranty could not survive a breach
of those undertakings by D and hence D was not entitled to be indemnified.
HARMAN L.J.

Concurred to Sellers and said that D could not shift the liability from their shoulders as it was due to
their own breach of duty towards their employee.
Mowbray v. Merryweather which says that in a case where A has been held liable to X, a stranger, for
negligent failure to take a certain precaution, he may recover over from someone with whom he has a
contract only if by that contract the other contracting party has warranted that he need not take any
care or there is no necessity to take the very precaution for the failure, is not applicable as there is no
such assurance from P in this case.
WINN L.J.

Concurred on all the points and said that there was no contractual obligation on P to maintain nor
could the implied warranty given by P possibly extend to an obligation that the crane would remain in
good working condition notwithstanding neglect or failure to examine and maintain it.
Thank You