http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5  

PETITIONER: RAMPRASAD S/O PRABHUDAYAL MATHUR VAISHYA

       Vs.

RESPONDENT: STATE OF MADHYA PRADESH & ANR.

DATE OF JUDGMENT: 07/10/1969

BENCH: HEGDE, K.S. BENCH: HEGDE, K.S. SHAH, J.C.

CITATION:  1970 AIR 1818            1970 SCR  (2) 677  1970 SCC  (3)  24

ACT: Contract Act (9 of 1872), ss. 148, 172 and 221-Pledge,  when can  be inferred-Agent’s lien on goods-When  arises-Practice and Procedure-Decreeing interest from date of suit till date of decree.

HEADNOTE: A  licence holder from the State for distribution of  grain, appointed the appellant as his commission agent for the sale of  the  grain.  The agreement provided that  the  appellant should be in possession of the grain purchased and  dispose: it of in accordance with the directions given by the licence holder.   Later  the State Government paid  to  the  licence holder, the price of the stock then in the possession of the appellant  and  took over the stock.  The  appellant,  while handing  over  the grain, informed the Government  that  the licence  holder  owed him money tinder  the  agreement.   He filed a suit to recover the amount from the State Government and  the son of the licence holder (the father  having  died meanwhile).  Though the plaint did not set out the basis  of the  claim  against the State the trial  court  decreed  the suit, against both defendants, but did not give any interest from the date of suit till date of decree.  In appeal by the State,  and cross-objections by the appellant  claiming  the interest,  the High Court set aside the decree  against  the State, but did not pass any order on the cross-objections. In appeal to this Court, the appellant claimed to be pledgee of the goods and that he had a lien over the goods. HELD  : (1) The agreement does not show that the  goods  had been pledged to the appellant. The  question  whether an agent can enforce his  lien  in  a particular case is a mixed question of law and facts.  As  a general  rule,  in order to have a lien an agent  must  have some possession, custody or control or disposing power in or over the subject-matter in which lien is claimed.  The  lien does  not  arise  where the possession of  the  property  is acquired by the, ’agent under a contract which expressly  or impliedly  shows  a  contrary  intention  or  where  it   is delivered to him for a particular purpose inconsistent  with the  existence  of  a lien.  Further, the lien  is  lost  by parting  with the possession, unless at the time of  parting

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5  

he expressly or impliedly reserved his right of lien, or the goods  were obtained from him by fraud or unlawful means  In the  present  case, from the mere fact  that  the  appellant informed  the Government that his principal owed him  money, while  voluntarily  parting possession with  the  goods,  it could  not  be  said  that  he  reserved  expressly  or   by implication  his  right of lien against the State,  if  any. [680 E-H; 681 B-D] Santi  Sahu  v.  Seogulam  Sahu A.I.R.  1958  Pat.  174  and Balmukand  v.Jagannath,  I.L.R.  XIII  Raj.  579,  held  not applicable. (2)  As  against  the second respondent, the  appellant  was entitled  to  the  principal amount decreed  and  the  lower courts  should have also decreed interest from date of  suit till date of decree. [681 F-F]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  2205  of 1966. 678 Appeal from the judgment and decree dated September 12, 1962 of  the  Madhya Pradesh High Court, Gwalior Bench  in  First Appeal No. 9 of 1959. J.   P. Goyal and S. N. Singh, for the appellant. I.   N. Shroff, for respondent No. 1. The Judgment of the Court was delivered by Hegde, J. This is an appeal by certificate under Art. 133(1) (a) of the Constitution.  The appellant is the plaintiff  in the  suit.  in the suit he claimed a sum of  Rs.  30,699/1/3 against  both the defendants.  The suit was decreed  by  the trial  court  against  the  defendants  in  a  sum  of   Rs. 22,634/4/- together with costs and interest from the date of the decree.  The State of Madhya Pradesh, the 1st  defendant in  the  suit  appealed  against  the  decree.   The  second defendant did not appeal against that decree.  The plaintiff filed  cross-objection  claiming interest on  the  principal amount  claimed from the date of the suit till decree.   The High Court allowed the appeal of the State and set aside the decree  against it; but it failed to pass any order  on  the cross-objection.   In  this appeal the appellant  seeks  not only  to get restored the trial court’s decree  against  the State  of  Madhya  Pradesh, he also wants  that  the  relief claimed by him in his cross-objection before the High  Court should be granted to him. The  facts  of  the  case lie  within  narrow  limits.   One Hetampal  Singh,  father of defendant No, 2  was  a  licence holder  for Gird District in the then State of  Gwalior  for distribution  of  grain.  He had entered into  an  agreement with  the appellant-plaintiff on October 14, 1942  (Ex.  1), whereunder  he  appointed the appellant  as  his  commission agent.  English translation of the said agreement reads thus :               "H. P. S. Jadhav               Thakur Sahab               Naya Bazar               Lashkar, Gwalior.                Hetampalsingh  Jadhav  son  of   Bhagwansingh               Jadhav  caste  Thakur, am a resident  of  Naya               Bazar, Lashkar.               I have taken contract for supplying grain seed               in  District Gird for which I need  money  for               bringing  every kind of grain  from  different               places.   Therefore  I appoint  Ramprasad  s/o

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5  

             Prabhudayal  caste Mathur Vaishya resident  of               Naya Bazar, Lashkar as my adhatia  (Commission               Agent) and settle the following terms               (1)   I shall pay interest at the rate, of Re.               1/  p.c. on the amount which will be  invested               by the Seth Sahab for this purpose.               679               (2)   I  shall pay commission at the  rate  of               Rs.  1/8/per cent on the goods which  will  be               brought  by  the Seth Sahab or  his  man  from               outside and I shall pay commission at the rate               of Re. 1/- per cent on the goods which will be               brought  by me from outside and for which  the               Seth Sahab will have only to get released  the               railway way bill.               (3)   1  shall  pay  the  whole  expenses   of               journey,  railway fare, allowance etc. of  the               person  who will go out on behalf of the  Seth               Sahab for bringing the goods.               (4)   The  whole  of the goods which  will  be               received   from  outside,  shall   remain   in               possession  of  the Seth Sahab.   The  account               thereof shall also remain with him. the,  Seth               Sahab  will have authority to supply  only  so               much  goods  as I would permit him  to  supply               i.e. he cannot supply goods to anybody of  his               own  accord.   The  expenses  which  will   be               incurred in keeping account and other expenses               of the shop shall be borne by the Seth  Sahab.               I shall pay only rent of the shop.               (5)   I shall be responsible for any  increase               or decrease in the goods.                         Sd./- HETAMPALSINGH JADHAV                                (In English)                                 14-10-42." In pursuance of the said agreement, the appellant  purchased considerable  stock  of  grain.  He  had  in  possession  on January 29, 1943. 4039 maunds 35 seers 4 chhatacks of  gram. According  to the appellant on that day Hetampal Singh  owed him  a sum of Rs. 19,228/9/6.  The possession of that  stock was taken over by the State Government on January 29 and 30, 1949.  The State Government paid the price of the said stock to  Hetampal Singh.  The appellant’s case is that the  State Government  is liable to reimburse him the money due to  him from  Hetampal  Singh.   Before the suit came  to  be  filed Hetampal  Singh  had died and hence ’he  2nd  defendant  was impleaded as his legal representative. The plaint filed by the plaintiff is a bald one.  It did not set out the right under which the plaintiff was claiming any relief  against the State.  In the course of the trial,  the plaintiff  asserted  that he was a pledgee of the  goods  in question.   No such case was pleaded in the plaint  nor  any issue  raised  in that regard.  The agreement  entered  into between the plaintiff and Hetampal Singh does not show  that the  goods  in question had been pledged to  the  plaintiff. The  agreement  provides  that the  appellant  shall  be  in possession of the goods purchased and dispose of the same in accordance with the directions given by Hetampal Singh.  The finding, 680 of  the  High  Court is that the grain was  removed  by  the Government from the possession of the appellant without  any force  or fraud and the appellant handed over that grain  to the  Government  in  response to a  communication  from  the Controller   of  Foodgrains.   At  no  stage  he  told   the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5  

Government that he was a pledgee of the goods.  The decision in  Santi  Sahu  vs.  Sheogulam Sahu(1); relied  on  by  the learned Counsel for the appellant is of no assistance to him because  the agreement relied on in that case is  materially different  from the one before us.  On an interpretation  of that  document  the  court came to the  conclusion  that  it constituted a bailment for security and that it is a  pledge within  the  meaning  of  s. 172 read with  s.  148  of  the Contract Act.  That is not the position here.  Therefore the High  Court was fully justied in rejecting the claim of  the appellant that he was a pledgee of the goods. The claim of the appellant was next tried to be supported on the  plea that he had a lien over the goods.  No  such  plea was  taken in the plaint.  An Agent no doubt has a  specific lien upon the principal’s property in his possession for his compensation  and expenses during the course of  the  agency with  reference  to  that  property.   Section  221  of  the Contract  Act provides that in the absence of a contract  to the  contrary, an agent is entitled to retain goods,  papers and  other  property, whether movable or immovable,  of  the principal  received by him, until the amount due to him  for commission,  disbursements  and services in respect  of  the same has been paid or accounted for to him.  An agent who is entitled to be reimbursed from the principal’s property  for the  expenses  incurred, advances made or  losses  sustained during  the  course of the agency or who is entitled  to  be compensated for his services has a lien upon the principal’s goods  or  property which comes lawfully in  his  possession during  the  course of the agency from which  the  right  to indemnity or compensation arises.  A purchasing agent has  a lien upon the principals goods in his possession upon  which he has paid money in purchasing.  As a general rule in order to have a lien, an agent must have some possession,  custody or control or disposing power in or over the subject  matter in which the lien is claimed.  The lien does not arise where the  possession  of the property is acquired  by  the  agent under a contract which expressly or impliedly shows contrary intention, or where it is delivered to him for a  particular purpose  inconsistent  with the existence of  lien  thereon. The  agent  has no lien over the property where  it  is  en- trusted  to him for a special purpose which is  inconsistent with the lien claimed.  Further the lien of ’an agent  being a  mere right to retain possession of the  property  subject thereto, is lost by parting with the possession of the goods unless  at  the  time  of  parting  with  them  he  reserved expressly  or  impliedly  his  right of  lien  or  they  are obtained from him by fraud or unlawful means. (1)  A.I.R. 1958 Pat 174 681 The  question  whether an agent can enforce his  lien  in  a particular  case  is  a mixed question  of  law  and  facts. Therefore in the absence of any specific plea, that question cannot  be gone into.  We do not know the  conditions  under which  Hetampal  Singh was appointed as  a  licence  holder. From  the  material on record, it is not clear  whether  the goods in question were taken possession of by the Government in  accordance with the conditions of the licence ranted  to Hetampal  Singh.   Therefore it is not  possible  to  decide whether  under  the circumstances of the present  case,  the plaintiff  could have enforced his lien against  the  State. It  is true that the plaintiff informed the Government  that Hetampal Singh owed to him about Rs. 20.000/-. But from that circumstance  we  cannot come to the conclusion  that  while voluntarily  parting  with the possession of the  goods,  he reserved  expressly or by implication his right of lien,  if

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5  

he  had  any.  We do not think that the rule  laid  down  in Balmukund  and  anr.  vs.  Jagannath(1)  relied  on  by  the learned Counsel for the appellant bears on the facts of this case.   Under  these  circumstances it is  not  possible  to uphold  the appellant’s claim against the State.   Therefore the  appeal fails so far as the State is concerned.   It  is accordingly  dismissed,  as against the 1st  defendant,  the State of Madhya Pradesh. But  coming  to the cross-objection filed by  the  appellant before  the  High  Court, the High  Court  appears  to  have completely  lost  sight of the same.  It did not  deal  with that  cross-objection  while disposing of the  appeal.   The trial  court  did  not give any  reason  for  rejecting  the plaintiff’s claim for interest on the principal amount  from the  date  of  the suit till the date of  the  decree.   The plaintiff  was entitled to interest on the principal  amount of Rs. 19,228/6/- at 41/2- per cent per annum from the  date of  the  suit  till  the date of  the  decree.   The  appeal succeeds  to that extent.  The decree of the trial court  as against the second defendant is modified to that extent.  In the  circumstances of the case we make no order as to  costs in this Court. V.P.S.                             Appeal allowed. (1) I.L.R.  XIII Raj. 579. 682