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PETITIONER:

CENTRAL NATIONAL BANK LTD.

Vs.

RESPONDENT:

UNITED INDUSTRIAL BANK LTD.

DATE OF JUDGMENT:

26/11/1953

BENCH:

MUKHERJEA, B.K.

BENCH:

MUKHERJEA, B.K.

BHAGWATI, NATWARLAL H.

JAGANNADHADAS, B.

CITATION:

1954 AIR 181 1954 SCR 391

ACT:

Indian Sale of Goods Act (III of 1930), s. 30(2)-Indian

Contract Act (IX of 1872), ss. 13, 14--Agreement to sell

goods-Buyer obtaining possession by fraud aithout paying

price-Rights of bona fide purchaser from buyer-"Consent"

meaning of.

HEADNOTE:

The word "consent" in s. 30(2) of the Indian Sale of Goods

Act means "agreeing on the same thing in the same sense" as

defined in s. 13 of the Indian Contract Act and does not

mean "free consent" as defined in s. 14. Therefore,

possession of goods which is obtained by a person from

another person who has agreed to sell them to him, would be

possession obtained "with the consent of the seller" within

the meaning of s. 30(2) of the Sale of Goods Act, even

though it was obtained by fraud, except where the fraud

committed is of such a character as would prevent there

being consent at all.

The fact that the fraud or deception practised by the

person obtaining possession is of such a character as to

make him guilty of a criminal offence would not make any

difference in the application of this principle.

A agreed to sell certain shares to B and sent the share

certificates and blank transfer deeds to the defendant bank

to deliver them to B on receiving payment of the price. The

bank

392

sent one of its clerks to B's office with these papers. The

clerk placed them on the table and allowed B to scrutinise

then but insisted on payment of the price before B took

them. B left his office with these documents saying that he

was going out to bring the money but disappeared and

subsequently pledged them with the plaintiff Held, that in

these circumstances B obtained possession of the shares

without the consent of A and that the plaintiff did not

acquire any title against the defendant bank or A.

Folkes v. King ([1923] 1 K.B. 282) and Lake v. Simmons

([1926] 2 K. B. 51) and Pearson v. Rose ([1950] 2 All E.R.

1027) relied on.

Cahn v. Pockett's Bristol Channel Steam Packet Co.

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([1899] 1 Q.B. 643), Oppenheimer v. Frazer ([1907] 2 K.B.

50) commented upon.

Judgment of the Calcutta High Court affirmed.

JUDGMENT:

CIVIL APPELLATE JURISDICTION Civil Appeal No. 32 of

1953.

Appeal from the Judgment and Decree dated the 12th March,

1951, of the High Court of judicature at Calcutta (Harries

C. J. and Banerjee J.) in Appeal from Original Decree dated

the 21st March, 1950, of the Calcutta High Court in its

ordinary original civil jurisdiction in Suit No. 1112 of

1946.

P. C. Mullick and A. K. Dutt for the appellant.

Sankar Banerjee (B. Das and S. N. Mukherji, with him)

for the respondent.

1953. November 26. The Judgment of the Court was

delivered by

MUKHERJEA J.-This appeal is directed against a judgment

and decree of an appellate bench of the Calcutta High Court

dated the 12th of March, 1951, reversing, on appeal, the

decision of a single Judge of that court passed in Suit No.

1112 of 1946.

The suit,. out of which this appeal arises, was commenced

by the Central National Bank Limited, the appellant before

us, in the Original Side of the Calcutta High Court, for a

declaration that the bank acquired the rights of a pledgee

in respect of two blocks Of shares in two companies, to wit,

the Indian Iron and Steel 'Company Ltd. and the Steel

Corporation of Bengal Ltd. and was e entitled to sell the

shares in enforcement of the pledge. There was a claim for

recovery of possession of these shares and also for,

393

damages alleged to have been suffered by the plaintiff by

reason of wrongful denial of its title by the defendant

Bank.

The shares, to which the dispute relates, are 800 in number

and admittedly they were the property of one Radhika Mohan

Bhuiya, the defendant No. 2 in the suit. Sometime in

February, 1946, Bhuiya agreed to sell these shares to one

Dwijendra Nath Mukherjee for the price of Rs. 38,562-8-0.

On 14th February, 1946, Bhuiya sent these shares along with

the relative transfer deeds to the defendant bank with

instructions to deliver over the share certificates and the

transfer deeds to the purchaser, against payment of the

entire consideration money stated above. On the 18th of

February following, the defendant bank directed one of its

officers, to wit, Nilkrishna Paul, to see Mukherjee at his

office and hand over to him the shares after receiving from

him a pay order for the sum of Rs. 38,562-8-0 signed by the

Punjab National Bank. In accordance with this direction,

Paul went to the ,office of Mukherjee and saw him at his

chamber at about 11 a.m. in the morning. Mukherjee asked

for the shares, but Paul refused to make over the share

certificates to him unless the pay order was given'

Mukherjee then said that he wanted to have a look at the

shares and the transfer deeds just to satisfy himself that

they were all right. After that Paul placed the shares and

the transfer deeds on the table. Mukherjee examined the

share certificates one after another and when he was about

to leave the chamber along with the share certificates and

the ranK transfer deeds, Paul raised an objection and asked

him not to go away without giving him the pay order.

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Mukherjee then said to Paul: "I am going out to get the pay

order ; it is ready. You take your seat ; I am coming."

With these words Mukherjee went out of his chamber and did

not return thereafter. It appears that he went straight to

the office of the plaintiff bank and pledged the shares with

it, taking an advance of Rs. 29,000 in terms of an agreement

which was previously arrived at between them. What happened

in substance was this : Mukherjee gave a cheque for Rs. 100

with which an

394

account in Ms name was opened for the first time with the

plaintiff bank, and the advance of Rs. 29,000 was given to

Mukherjee by way of overdraft on this current account.

Mukherjee also executed a promissory note for the said

amount in favour of the plaintiff. It is, the common case

of the parties that Mukherjee has not been heard of since

then and his present whereabouts are unknown. Coming now to

Paul, the defendant's, officer, after waiting vainly for

Mukherjee; he had no other alternative but to come back to

his office and inform his superior officer of all that had

happened. A complaint was then lodged with the police on

behalf of the defendant bank. The cheque, which was given

to the plaintiff by Mukherjee, was dishonored when it was

presented for payment. The plaintiff bank thereupon wrote a

letter to Mukherjee demanding payment of the loan at once

and threatening to sell the shares in case of default. As

no reply came from Mukherjee, the plaintiff sold these

shares through a broker named jalan. jalan took delivery of

the shares and gave the plaintiff a cheque for Rs. 16,000 in

part payment of the price. The payment of the cheque,

however, was stopped and the police, who had already taken

the matter in hand, took possession of the shares. As

Mukherjee could not be traced, a criminal case was started

against an alleged accomplice of his, named Shaw, but this

proved unsuccessful and Shaw was acquitted. The defendant

bank, who had paid the full price of these shares to Bhuiya,

then presented an application to the Magistrate, praying

that the shares might be returned to it on the ground of its

being the owner thereof. On getting information of this

application, the plaintiff bank instituted the present suit,

the allegation in substance being that the plaintiff being

the pledge of the shares was entitled, in law, to the

possession thereof.As has been stated already, Bhuiya,

having been paid off by the defendant bank, had no

further interest in the litigation. The fight was thus

entirely between the two banks.

It is not disputed that Mukherjee did not acquire any legal

title to the shares. There was only an agreement for sale

between him and Bhuiya, and under the

395

terms of,the contract the property in the shares could not

pass to him till the price was paid. The plaintiff bank,

therefore, Was not a pledgee of the shares from the real

owner. It rested its claim entirely upon the provision of

section 30(2) of the Indian Sale of Goods Act, the language

of which is as follows :-

"Where a person, having bought or agreed to buy goods,

obtains, with the consent of the seller, possession of the

goods or the documents of title to the goods, the delivery

or transfer by that person or by a mercantile agent acting

for him, of the goods or documents of title under any sale,

pledge or other disposition thereof to any person receiving

the same in good faith and without notice of any lien or

other right of the original seller in respect of the goods

shall have effect as if such lien or right did not exist."

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The plaintiff's case was that it received the shares by

way of pledge in good faith and without notice of any defect

in the title of Mukherjee who had agreed to purchase these

shares from Bhuiya and had actual possession of the same

with the consent of the seller. Consequently, the pledge

would be effective under the provision of section 30(2) of

the Sale of Goods Act in the same way as if the right of the

original seller did not exist.

The contention of the defendant bank on the other hand

was that Mukherjee was not in possession of the Shares with

the consent of the seller, nor was the plaintiff a bona

fide pledgee without notice of thedefect of title. The

whole controversy thus centeredround the point as to

whether on the facts that transpired in evidence, the

plaintiff bank was entitled to avail itself of the provision

of section 30(2) of the Indian Sale of Goods Act. Mr.

Justice Sarkar of the Calcutta High Court, who tried the

suit, decided this question in favour of the plaintiff. The

learned judge was of opinion that Mukherjee had obtained

possession of the shares with the consent of Bhuiya or

rather his agent, the bank officer, within the meaning of

section 30 (2), Indian Sale of Goods Act, and it was not at

all material for purposes of this sub-section that the

consent was

396

induced by fraud of Mukherjee or that his act amounted to an

offence of "larceny by trick" according to English law. It

was further found that the plaintiff acted in good faith

without notice of any defect of title; and ,in view of these

findings the trial judge decreed the plaintiff's suit.

There was an appeal by the defendant against this judgment

which was heard by a bench consisting of Trevor Harries C.

J. and Banerjee J. The learned judges allowed the appeal and

reversed the judgment of the trial court holding that the

defendant's agent never consented to Mukherjee's obtaining

possession of the shares as buyer. There was no intention

to give delivery at all. It was Mukherjee who took the

shares and bolted and "his act was as much theft as if he

had taken them out of Nilkrishna Paul's pocket." It is

against this decision that the present appeal has come

before us at the instance of the plaintiff and the point for

consideration is, whether the view taken by the appellate

bench of the High Court is right.

Mr. Mullick, who presented the appellant's case with

commendable fairness and ability, has argued before us that

on the facts of this case the appellate court ought to have

held that the plaintiff did acquire the rights of a pledgee

in respect to the disputed shares under the provision of

section 30 (2), Sale of Goods Act. There is no dispute,

he says, that there was a valid contract of sale

regarding these shares between Bhuiya, the real owner, and

Mukherjee; and that the plaintiff was a bona fide pledgee

from Mukherjee without notice of any other's rights has been

found as a fact by the trial Judge and this finding has not

been reversed in appeal. The only other thing necessary to

entitle the plaintiff to claim the protection of section 30

(2) of the Act is to show that Mukheriee obtained possession

of the shares with the consent of the seller or his agent,

and it is on this point alone that the courts below have'

taken divergent views. It is argued by the learned counsel

that the word " possession" used in the section means

nothing else but physical custody and whether there was

consent of

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the owner or not has to be determined with reference to the

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2definition of "consent" as given in section 13 of the

Indian Contract Act. If there was consent in fact, it is

immaterial that it was induced by fraud or misrepresentation

and in the determination of this matter, no principle of

criminal law' and much less the technicalities of the

English criminal law should be imported. On the facts the

learned counsel argues that the defendant's agent really

consented to part with the possession of the shares and

allow Mukherjee to have them, although he was duped by the

false promise given by Mukherjee which the latter never

intended to keep.

The propriety of the propositions of law put forward on

behalf of the appellants has not been, for the most part,.

controverted by Mr. Banerjee. who appeared for the defendant

respondent. The dispute between them, as we shall presently

see, is mainly on the point as to whether, on the facts of

the case, it could be held that Mukherjee got possession of

the shares with the consent of the defendant's agent. As,

however, the points of law have been discussed in the

judgments of the courts below and reference has been made by

the learned Judges to a number of English cases turning upon

analogous provisions in cognate statutes in England, we

think it proper to express our views shortly on the points

raised, just for the purpose of clearing up any doubt that

might exist regarding the meaning and implication of the

word "consent" as has been used in section 30 (2) of the

Sale of Goods Act. The two principal questions that require

consideration are first, whether the consent necessary under

section 30 (2) of the Sale of Goods Act must be a free

consent uninfluenced by fraud or false representation, and

:secondly, whether the existence of such consent is

negatived, as a matter of law, it a person of the requisite

description mentioned in the section obtains possession of

goods from the owner by trick or other deceitful means which

makes his act punishable as a crime. There is no decision

on these points by any High Court in. India and we have been

referred to a number of

398

cases decided by English courts where similar questions have

arisen in regard to the provisions of section 25 (2) of the

English Sale of Goods Act and section 2(1) of the Factors

Act which employ almost the same language with reference to

dispositions made by a purchaser or mercantile agent 'who

obtained possession of' goods with the consent of the real

owner. It is neither necessary nor desirable for our

purpose to enter into a. detailed. discussion of the English

cases that have been cited before us. We would only

examine, where necessary, the salient principles upon which

the leading pronouncements of the English judges purport to

be based and see whether they throw any light on the

questions that require consideration in this case.

We agree with the learned counsel on both sides that

the word "consent" as used in section 30 (2) of the Sale of

Goods Act means "agreeing on the same thinging the same

sense" as defined in section 13 of the Indian Contract Act.

There is no definition of "consent" in the Sale of Goods Act

itself, but section 2(15) of the Act definitely lays down

that the expressions used and not defined in the Act, but

which are defined in the Indian Contract Act, shall have the

same meaning as. has been assigned to them in the latter

Act. Section 14 of the Contract Act defines theexpression

"free consent" and a consent is tree when it is not caused

by coercion, under influence, fraud, misrepresentation or

mistake. A consent induced byfalse representation may not

be free, but it can nevertheless be real, and' ordinarily

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the effect of fraud or misrepresentation is to render a

transaction voidable only and not void. If an innocent

purchaser or pledgee obtains goods from the person in

possession thereof, whose possessory right is, defeasible on

the ground of fraud but had not actually been defeated at

the time when the transaction took place, there is no reason

why the rights of such innocent purchaser or pledgee should

not be protected. The, right in the possessor or bailee in

such circumstances is determinable no doubt but so long as

it is not determined it is sufficient to enable him to

create tide in,, favour of an innocent transferee for value

without

399

notice. This proposition is well recognised in English law

and seems to us to be well founded on principle. In Cahn v.

Pockett's Bristol Channel Steam Packet Company( 1), Collins

L. J. made the following oftquoted observation :-

"However fraudulent a person in actual custody may have

been, in obtaining the possession, provided it does not

amount to larceny by trick and however grossly he may abuse

confidence reposed in him, or violate the mandate under

which he got possession, he can, by his disposition, give a

good title to the purchaser."

The opinion of the learned judge in regard to the so-

called exception where there is a "larceny by trick" has

been the subject of much comment both favourable and adverse

in later cases as we shall see presently; but the main

proposition enunciated by him has never been disputed( 2 ).

The law on this point has been thus summed up by Denning L.

J. in Pearson v. Rose(3):

"The effect of fraud...... is as a rule only to make the

transaction voidable and not void, and if,. therefore, an

innocent purchaser has bought the goods before the

transaction is avoided the true owner cannot claim them

back. For instance, if a mercantile' agent should induce

the owner to pass the property to him by some false presence

as by giving him a worthless cheque, or should induce the

owner to entrust the property to him for display purposes,

by falsely pretending that he was in a large way of business

when he was not, then the owner cannot claim the goods back

from an innocent purchaser who has bought them in good faith

from the mercantile agent...... The consent may have been

obtained by fraud but, until avoided, it is a consent which

enables the Factors Act to operate."

Thus obtaining possession of goods by false pretences

does not exclude the operation of the Factors Act in

(1) [1899] 1 Q.B. 643 at 659.

(2) Vide the cases referred to by Scrutton L. J. in Folks

v. King [1923],

I K.B. 282 at 301.

(3) [1950] 2 All E.R. 1027 at 1032.

400

England and in our opinion it does not exclude the operation

of section 30(2) of the Sale of Goods Act in India.

The position, however, is entirely different if the fraud

committed is of such a character as would prevent there

being consent at all on the part of the owner to give

possession of the goods to a particular person. Thus A

might obtain possession of goods from the owner by falsely

representing himself to be B. In such cases the owner can

never have consented to the possession of goods by A; the

so-called consent being not a real consent is a totally void

thing in law. In Lake v. Simmons( 1) Lord Haldane made the

following observations while dealing with a similar point

"The appellant thought that he was dealing with a

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different person, the wife of Van der Borgh, and it was on

that footing alone that he parted with the goods. He never

intended to contract with the woman in question. It was by

deliberate fraud and trick that she got possession. There

was not the agreement of her mind with that of the seller

that was required in order to establish any contractual

right at all. The latter was entirely deceived as to the

identity of the person with whom he was transacting. In

circumstances such as these, I think that there was no con-

sensus ad idem."

The position, therefore, is that when the transfer of

possession is voidable merely by reason of its being induced

by fraud, which can be rescinded at the option Of the owner,

the consent which followed false representation is a

sufficient consent within the meaning Of section 30(2) of

the Sale of Goods Act. But where the fraud induced an error

regarding the identity of the person to whom or the property

in respect of which possession was given, the whole thing is

void and there is no consent in the sense of an agreement of

two persons on the same thing in the same sense.

The other question that requires consideration is, whether

it would make any difference in the application of the

principles stated above if the fraud or

(1) [1927] A. C. 487, 500.

401

deception, practised by a person in obtaining possession of

goods from the owner, is of such a character as to make him

guilty of a criminal offence ? Having regard to what has

been said above, this question should not present any

difficulty, had it not been for the fact that an amount of

complexity has been introduced into the subject by reason of

certain technical rules of the English criminal law. It is

to be remembered that what section 30(2) of the Sale of

Goods Act contemplates is that the buyer, to whom the

property in the goods sold has not passed as yet, must

obtain possession of the goods with the consent of the

seller before he can give a title to an innocent purchaser

or pledgee. There can be no dispute that to establish

consent of the owner of the goods, it is his state of mind

that is the only material thing for consideration and not

that of the receiver of the goods. Even if the owner was

induced to part with the goods by fraudulent

misrepresentation he must yet be held to have consented to

give possession ; and the fact that the receiver had a

dishonest intention or a preconcerted design to steal or

misappropriate the goods and actually misappropriated them,

may make him liable for a criminal offence, but the consent

of the owner actually given cannot be annulled thereby. In

order that a fraudulent receiver of goods must be punished'

criminally, the material thing is his dishonest intention ;

but as was said by Bankes L. J. in Folkes v. King(1), that

is altogether immaterial for the purpose of determining

whether there was consent on the part of the owner of the

goods under the Factors Act. "The two considerations,"

observed the learned judge, " should be kept entirely

distinct. To allow the one to be defeated by consideration

of the other is in my, opinion to sweep away a great part of

the protection which the Factors Act was intended to

provide." The same ratio, in our opinion, applies in regard

to the, provisions of the Sale of Goods Act.

As has been said already, obtaining of goods by, false

pretences does not negative consent of the owner

(1) [1923] 1 K.B. 282 at 297.

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of the goods for purposes of the English Factors Act. Even

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larceny by a bailee does not exclude consent according to

the English decisions. This means that if the owner allows

an agent to have his goods 'on hire or for repair and the

agent later on makes- up his mind to steal or misappropriate

them and sell them to another, the agent may be guilty of

larceny as bailee but the owner's consent to his possession

could not be affected thereby. But curiously enough in

English law a difference is made between larceny by bailee

and larceny by trick ; and if in the illustration given

above the agent instead of making up his mind subsequently

to steal the goods had that dishonest intention at the very

beginning when he got possession, he is guilty of "larceny

by trick" and the possession in law is deemed to remain with

the owner and he is regarded as "taking" without the owner's

consent. This apparently involves a legal fiction, for

although the goods are actually delivered over by the owner

to the accused person, yet because of the trick committed by

the latter the owner is still supposed to continue in

possession of the goods and the accused is held guilty of

larceny for taking possession of the goods against the will

of the owner. Ordinarily, the offence of larceny by trick,

according to the English law, can be committed in two ways:

first, where the owner of goods, being induced thereto by

trick, voluntarily parts with the possession of goods in

favour of the accused but does not intend to pass property

therein and the recipient has the animus furandi. Secondly,

when the accused contrives to get possession of goods by

representing himself to be some other person or by deceiving

the owner into thinking that he was delivering different

goods( 1). In the second class of cases, there is no

real consent on the part of the owner and when a larceny by

trick of this type is committed, it is well settled in

England that the operation of the Factors Act would be

excluded. The position under the Indian law is the same in

accordance with the principles explained above.

(1) Vide Whitehorn v. Davison [1911] 1 K.B. 463, 479.

403

With regard to the first category of cases,however, the

decisions of the English courts are not at all uniform. As

has been said already, Collins J. in Cahn v. Pockett's

Bristol Channel etc.(1) made the observation that "however

fraudulent a person in actual custody may have been in

obtaining possession, provided it did not amount to larceny

by trick...... he can by his disposition give a good title."

The observation as regards the exception in case of larceny

by trick, though it could not rank higher than an obiter,

was accepted as good law by the Court of Appeal in England

in Oppenheimer v. Frazer( 2 ). On the other hand, it was

held by Bankes L. J. and and Scrutton L. J. in Folkes v.

King(3) that when consent was In fact given by the owner of

the goods, it was immaterial that the receiver was guilty of

larceny by trick, and this view was approved of by the

majority of the Court of Appeal in Lake v. Simmons(4),

though Atkin L. J. delivered a dissenting judgment The

decision in Lake v. Simmons ( 4 ) was reversed by the House

of Lords(5) but their Lordships proceeded not on any

technical doctrine of criminal law but on the broad ground

which we have already discussed that there was a mistake

fatal to there being a consenting mind at all. The view

taken in Folkes v. King(3) has been approved of in the

recent decision of Pearson v. Rose( 6). Thus, to quote the

language of Lord Sumner, "there is a signal and indecisive

conflict of authoritative opinion on this point" (7). In

our opinion, the view taken in Folkes v. King(3 ) is the

proper view to take; and if, as was said by Scrutton L. J.

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in that case, the Parliament could not possibly have

intended to apply the artificial distinctions of criminal

law to a commercial transaction governed by the Factors Act,

there is still less justification for importing a

(1) [1899] 1 Q. B. 643 at 659.

(2) [1907] 2 K.B. 50.

(3) [1923] 1 K.B. 282.

(4) [1926] 2 K.B. 51.

(5) [1927] A.C. 487.

(6) [1950] 2 All E.R. 1027.

(7) Vide Lake v. Simmons [1927] A. C. 487 at 510.

404

highly technical rule of English criminal law which had its

origin' in a legal fiction devised by English Judges to

punish a thief, who would otherwise have escaped conviction,

into the provisions of the Indian Sale of Goods Act.

Whether there is consent or not has to be proved as a fact

in accordance with the principles of the law of contract and

when it is, proved to, exist, its existence cannot be

nullified by application of any rule of criminal law.

It is in the light of these principles that we would

proceed now to examine the facts of this case. The whole

question is, whether Mukherjee got possession of the shares

with the consent of the seller, and it is not disputed

that the consent of the defendant's clerk,who was acting as

the agent of the owner, would be as effective as the consent

of the owner himself.

As has been said already, Bhuiya sent the shares to the

defendant bank on the 14th of February, 1946. The letter

written by him to the defendant on that date concludes as

follows :

"I shall be highly obliged if you kindly realise the sum

of Rs. 38,562-8-0 as per the enclosed bill from Mr. D. N.

Mukherjee and deliver the shares to him and credit the

realised sum to my account No. 1 and oblige."

On the next day, that is to say on the 15th, Bhuiya

wrote to Mukherjee informing him that he had deposited in

the Barabazar branch of the United Industrial Bank, 300 iron

and 500 Steel Corporation shares and Mukherjee was requested

to take delivery of the shares against payment immediately.

On the 18th of February following, Nilkrishna Paul, an old

employee in the cash department of the defendant bank, was

directed by the head cashier to see Mukherjee at his office

for the purpose of collecting the money from him and

delivering over the shares. Sachindra Sen, an officer of

the defendant under whose advice Paul was sent to Mukherjee,

says in his deposition, that he definitely instructed Paul

not to deliver the shares unless he received payment. As

regards the mode of payment, Sen says that it was already

405

arranged between him and Mukherjee that instead of paying

the money in cash, he would give a pay order of the Punjab

National Bank, where he had an account, upon the defendant

bank. Sen told Paul to examine the pay order carefully and

to part with the shares only if he was satisfied about it;

otherwise, he should come back with the shares to the

office. Paul, who is the principal witness on behalf of

the' defendant, says in his deposition that the instruction

which he received was to deliver the shares after he

obtained the pay order. Paul saw Mukherjee at his office

chamber at about 1 1 a.m, on the 18th and on his telling

Mukherjee that he had come from the United Industrial Bank

to deliver over the shares, Mukherjee asked him to take his

seat. Mukherjee then asked for the shares. Paul told him

that he could not deliver the shares unless he was given the

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pay order. Mukherjee then said "I just want to have a look

at the shares and the papers only to see whether they are

all right or not." Upon this, Paul placed the shares on the

table. What happened afterwards is thus narrated by him in

his deposition :

"Then he was looking at the shares one after another.

When Mukherjee was about to leave the chamber, I told him

not to go away but to give me the pay order. He told me 'I

am going out, to get the pay order, it is ready, you take

your seat, I am coming.' Then he went out of the chamber."

It is quite clear that when Paul placed the share

certificates upon the table and allowed Mukherjee to

scrutinise them, he did not part with the possession of or

control over the shares. It is true that Mukherjee handled

the papers, but he did so in the presence -of Paul who was

sitting by his side in front of the same table. At the

most, Mukherjee could be said to have the barest physical

custody for the purpose of examining the papers. When

Mukherjee went out of the room with the shares in his hand,

he undoubtedly got possession of the shares ; but on the

evidence on the record, we do not think it possible to hold

that he got possession with the consent of Paul. The

evidence shows that Paul actually protested and objected to

4-93 S. C. India/59.

406

his going away with the shares without making any payment.

It is true that Mukherjee told Paul that he was going out

for getting the pay order, and would be coming back

immediately; but we cannot agree with Mr. Mullick that Paul

consented to Mukherjee's taking away the papers, relying on

the latter's promise to come back with the pay order.

Mukherjee gave Paul no opportunity whatsoever to express his

assent or dissent in this matter. In spite of Paul's

protest, lie bolted away with the papers asking Paul to

wait. Paul says in his deposition that he waited for 2 or 3

minutes, and when Mukherjee did not come back, he became

anxious and went out of the chamber towards the counter

where he found an old gentleman sitting. The gentleman told

him that Mukherjee was nowhere in the office. This shows

that Paul did not really rely upon the assurance of

Mukherjee , and did not allow Mukherjee to have possession

of the shares upon that assurance. It was against his

express desire that Mukherjee took the shares and left the

chamber with them and he had to wait for a minute or two as

he could not think of any other alternative open to him at

that juncture. Taking the evidence as a whole, we think

that the decision of the appellate bench of the High Court

is correct and that on the facts and circumstances of this

case it cannot be held that Mukherjee got possession of the

shares with the consent of Paul. The result, therefore, is

that the appeal is dismissed and the judgment of the appeal

court is affirmed. As both the plaintiff and the defendant

were innocent persons, who suffered on account of the fraud

of a third party, we direct that the parties shall bear

their own costs in all the courts.

Appeal dismissed.

Agent for the appellant: Sukumar Ghose.

Agent for the respondent: B. N. Ghose.

407