National University of Study and Research in Law, Ranchi [Roll No.

967]
Court Room Exercise (CRE), 2019

BEFORE THE HON’BLE SUPREME COURT OF INDIA

AT NEW DELHI

UNDER ARTICLE 133 OF THE CONSTITUTION OF INDIA

(CIVIL APPEAL NO._____/2019)

IN THE MATTER OF:

STATE BANK OF INDIA...............................................................................A PPELLANT

V.

SOHAN LAL DAS ……………………………………………………………R ESPONDENT 1

ROSHAN SAHA……………………………..……………………………….R ESPONDENT 2

MEMORANDUM ON THE BEHALF OF THE APPELLANT

AS SUBMITTED TO THE CHIEF JUSTICE & OTHER COMPANION JUDGES OF THE
HON’BLE SUPREME COURT OF INDIA

COUNSEL ON BEHALF OF THE APPELLANT

UDAY NARAYAN
SEMESTER- IIND (B)
ROLL NO.- 967

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 National University of Study and Research in Law, Ranchi [Roll No.967]
Court Room Exercise (CRE), 2019

TABLE OF CONTENTS

LIST OF ABBREVIATIONS…………………………………………………………………..…3

INDEX OF AUTHORITIES………………………………………………………………………4

STATEMENT OF JURISDICTION………………………………………………………………5

STATEMENTS OF FACTS…………..…………………………………………………………..6

STATEMENTS OF ISSUES……………………………………………………………………...8

SUMMARY OF ARGUMENT…………………………………………………………………...9

ARGUMENTS ADVANCED…………………………………………………………………...10

1. THE APPEAL FILED BY THE APPELLANT IS MAINTAINABLE…………..………10

2. THE BANK TOOK REASONABLE CARE TO LOOKS AFTER THE GOODS

PLEDGED AND WAS NOT NEGLIGENT ……………………………………………………11

(A) THE BANK WILL BE ALLOWED TO RECOVER THE AMOUNT FROM

SURETY………………………………………………………………………………...12
.

PRAYER…………………………………………………………………………………………14

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 National University of Study and Research in Law, Ranchi [Roll No.967]
Court Room Exercise (CRE), 2019

LIST OF ABBREVIATIONS

1. & AND
2. AIR ALL INDIA REPORTER
3. ART. ARTICLE
4. CO. COMPANY
6. GOVT. GOVERNMENT
7. LTD. LIMITED
8. ORS. OTHERS
9. P. PAGE
11. S/D- SIGNED
12. SC SUPREME COURT
13. SCC SUPREME COURT CASES
14. SEC. SECTION
15. U.O.I. UNION OF INDIA
16. U/A UNDER ARTICLE
17. V./VS. VERSUS
18. VOL. VOLUME
19.LIS. LAWSUIT

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 National University of Study and Research in Law, Ranchi [Roll No.967]
Court Room Exercise (CRE), 2019

INDEX OF AUTHORITES

STATUTES

1. THE INDIAN CONTRACT ACT,1872.

DYNAMIC LINKS

1. www.manupatra.com

2. www.scconline.com

3.

BOOKS REFERRED

1. Dr. Avtar Singh, Law of Contract and Specific Relief, (11th ed,2013), Eastern Book
Company, Lucknow)
2. Sir Fredrick Pollock & Sir Dirshaw Fardunji Mulla, The Indian Contract And Specific
Relief Acts(updated 14th ed.,2006), LexisNexis Vol I.
3. Sir Fredrick Pollock & Sir Dirshaw Fardunji Mulla, The Indian Contract And Specific
Relief Acts(updated 14th ed.,2006), LexisNexis Vol II.

CASES

1. Rajesh Kumar vs. The Rotary Eye Foundation Palampur (09.04.2019 - HPHC) :
MANU/HP/0284/2019

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 National University of Study and Research in Law, Ranchi [Roll No.967]
Court Room Exercise (CRE), 2019

STATEMENT OF JURISDICTION

The counsel representing the Appellant has endorsed their pleading before the Hon’ble Supreme
Court under Art. 133(1) (a)1 of the Constitution of India, 1950 in which the Hon’ble Court has
jurisdiction.

1
Article 133: Appellate jurisdiction of Supreme Court in appeals from High Courts in regard to civil matters -
[(1) An appeal shall lie to the Supreme Court from any judgment, decree or final order in a civil proceeding of a
High Court in the territory of India [if the High Court certifies under article 134A—] (a) that the case involves a
substantial question of law of general importance; and (b) that in the opinion of the High Court the said question
needs to be decided by the Supreme Court.] (2) Notwithstanding anything in article 132, any party appealing to the
Supreme Court under clause (1) may urge as one of the grounds in such appeal that a substantial question of law as
to the interpretation of this Constitution has been wrongly decided. (3) Notwithstanding anything in this article, no
appeal shall, unless Parliament by law otherwise provides, lie to the Supreme Court from the judgment, decree or
final order of one Judge of a High Court.
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 National University of Study and Research in Law, Ranchi [Roll No.967]
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STATEMENT OF FACTS

 Sohan Lal Das, hereinafter referred to as 'principal debtor', approached the Manager of
the Doranda Branch of State Bank of India seeking facility for cash credit upto
Rs.5,75,000/-. He submitted proposal form on September 10, 2017, offering to give
security for the cash credit by pledge of groundnut oil tins and also a personal guarantee
of one Roshan Saha. The pledged goods were kept in the godown in the compound of a
mill adjacent to bank under the lock and key of the Bank and the Bank had appointed a
Godown keeper to look after the goods pledged by theprincipal debtor.
 After obtaining the approval of the General Manager of the Bank cash credit facility to
the extent of Rs. 5,75,000/- was sanctioned against the pledge of approved goods under
the lock and key of the Bank and on personal guarantee of the surety. The principal
debtor executed a demand promissory note in favour of the Bank on September 16, 2017,
and on the same day the principal debtor also executed a demand promissory note in
favour of the surety which the surety endorsed in favour of the Bank.
 Along with the two demand promissory notes, simultaneously the surety executed a letter
of guarantee in favour of the Bank and the principal debtor executed a bond in favour of
the Bank. The principal debtor also passed letter of continuity of the bond and the
promissory note. Thereafter the principal debtor enjoyed the cash credit facility by
borrowing various amounts.
 By the end of February 2018 the principal debtor owed Rs. 5,76,368 in this account to the
Bank. Principal debtor died in November 2018. The Bank wrote to the surety letter dated
December 24,2018, calling upon him to pay the outstanding balance in cash credit
account of principal debtor as in the circumstances mentioned in the letter the balance
was required to be recovered from the surety. The goods pledged to the bank were found
to be missing from place where they were kept.
 The surety, contested the suit contending that the Bank had agreed to grant cash credit
facility to deceased principal debtor on the security of goods by way of pledge and that
though the goods were to be kept in the godown in the compound of a mill adjacent to
bank, but the godown was to be kept under the lock and key of the Bank. It was also
contended the principal debtor had all throughout pledged sufficien quantity of goods to

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provide full cover for the Bank's claim but the Bank either wrongfully lost the goods or
was negligent in retaining the goods within its custody or the Bank wrongfully parted
with the goods without the consent of the surety and, therefore, the surety was
discharged.
 The trial court found that there was negligence on the part of the Bank with regard to the
safe custody of the pledged oil tins but as the contract of guarantee entered into by the
surety with the Bank was independent of the pledge of goods given by the principal
debtor, the surety is not discharged from his liability under the guarantee. So observing
the trial court decreed the suit. The surety paid the entire amount demanded and appealed
to the High Court. The High Court held that the two promissory notes, one executed by
the principal debtor in favour of the Bank and another by the principal endorsed by the
surety to the Bank, and the letter favour of the Bank as also the bond executed Bank and
the letter of continuity executed by the principal debtor in favour of the Bank, all on
September 16, 2017, constituted one composite transaction and they evidenced that the
principal debtor had offered two securities, one the pledge of oil tins and another personal
guarantee of the surety. Due to loss of security and in view of combined operation of
sections 139 and 141 of the Indian Contract Act, the surety is discharged. Accordingly,
the appeal of the surety was allowed and the suit against him was dismissed.

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 National University of Study and Research in Law, Ranchi [Roll No.967]
Court Room Exercise (CRE), 2019

STATEMENTS OF ISSUES

ISSUE 1: WHETHER THE APPEAL FILED BY THE APPELLANT IS MAINTAINABLE.

ISSUE 2: WHETHER THE BANK TOOK REASONABLE CARE TO LOOKS AFTER THE
GOODS PLEDGED AND WAS NOT NEGLIGENT.

(A) WHETHER THE BANK WILL BE ALLOWED TO RECOVER THE AMOUNT

FROM SURETY.

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 National University of Study and Research in Law, Ranchi [Roll No.967]
Court Room Exercise (CRE), 2019

SUMMARY OF ARGUMENTS

1. THE APPEAL FILED BY THE APPELLANT IS MAINTAINABLE.

It is humbly submitted before the Hon’ble Court that the current appeal filed by the
Appellant is maintainable under Article 133(1)(a) of The Constitution of India, 1950.

2. THE BANK TOOK REASONABLE CARE TO LOOKS AFTER THE GOODS

PLEDGED AND WAS NOT NEGLIGENT.

It is humbly submitted before the Hon’ble Court that the bank took all reasonable care
and there was no negligence on the part of the bank.
The Bank was not negligent is performing their duty. They took as much care of goods as
a man of ordinary prudence would have taken care of similar goods of his own, under
similar circumstances, of same bulk, quality and value of the goods pledged.
The pledged goods, that were the groundnut oil tins, were kept in the godown in the
compound of mill adjacent to the Bank under the lock and key of the Bank and the Bank
had appointed a godown keeper to look after the goods pledged by the principal debtor.
This shows that there was no negligence on the part of the Bank regarding the safe
custody of the goods pledged and they took reasonable care.

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 National University of Study and Research in Law, Ranchi [Roll No.967]
Court Room Exercise (CRE), 2019

ARGUMENTS ADVANCED

1. THE CURRENT APPEAL IS MAINTAINABLE.

It is humbly submitted before the Hon’ble Court that the current appeal filed by the
Appellant is maintainable under Article 133(1)(a) of The Constitution of India, 1950.

‘Substantial question’ as defined in the case of Rajesh Kumar vs. The Rotary Eye Foundation
2
Palampur “A point of law which admits of no two opinions may be a proposition of law
but cannot be a substantial question of law. To be "substantial", a question of law must be
debatable, not previously settled by law of the land or a binding precedent, and must have a
material bearing on the decision of the case, if answered either way, in so far as the rights of
the parties before it are concerned. To be a question of law involving in the case there must
be first a foundation for it laid in the pleadings and the question should emerge from the
sustainable findings of fact arrived at by court of facts and it must be necessary to decide that
question of law for a just and proper decision of the case. An entirely new point raised for the
first time before the High Court is not a question involved in the case unless it goes to the
root of the matter. It will, therefore, depend on the facts and circumstance of each case
whether a question of law is a substantial one and involved in the case, or not; the paramount
overall consideration being the need for striking a judicious balance between the
indispensable obligation to do justice at all stages and impelling necessity of avoiding
prolongation in the life of any lis."

In the present appeal there is a substantial question as to whether the surety will be
discharged of his duty if the security is lost by the creditor even if the security and personal
surety were independent of each other. And hence this question satisfies Article 133(1)(a) of
the Constitution of India,1950 where ‘substantial question’ has been mentioned for appellate

2
Rajesh Kumar vs. The Rotary Eye Foundation Palampur (09.04.2019 - HPHC) : MANU/HP/0284/2019

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jurisdiction to be maintainable in the court. Hence the appeal is maintainable in the Hon’ble
Court.

2. THE BANK TOOK REASONABLE CARE TO LOOKS AFTER THE

GOODS PLEDGED AND WAS NOT NEGLIGENT.

It is humbly submitted before the Hon’ble Court that the bank took all reasonable care and
there was no negligence on the part of the bank.

The Bank was not negligent is performing their duty. They took as much care of goods as a
man of ordinary prudence would have taken care of similar goods of his own, under similar
circumstances, of same bulk, quality and value of the goods pledged.

If we see the legal definition of ‘Negligence, it signifies failure to exercise standard of care as
a reasonable man should have exercised in the circumstances. Negligence is a mode in which
many kinds of harms may be caused by not taking such adequate precautions.3 In Blyth v.
Birmingham Water Works Co., (1856) LR 11 Exch. 781; ALDERSON B., defined
Negligence as the omission to do something which a reasonable would do, or doing
something which a prudent or reasonable man would not do. 4

The pledged goods, that were the groundnut oil tins, were kept in the godown in the
compound of mill adjacent to the Bank under the lock and key of the Bank and the Bank had
appointed a godown keeper to look after the goods pledged by the principal debtor. There is
nothing more than this that a reasonable man could do to ensure safety of his own
goods..This shows that there was no negligence on the part of the Bank regarding the safe
custody of the goods pledged and they took reasonable care. And the goods being lost after
taking such care was an inevitable accident or we can say unforeseen circumstance.

3
http://www.legalservicesindia.com/article/1297/Negligence-As-A-Tort:-Meaning-Essentials-And-Defences.html
4
Blyth v. Birmingham Water Works Co., (1856) LR 11 Exch. 781
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(A) THE BANK WILL BE ALLOWED TO RECOVER THE AMOUNT FROM SURETY.

The pledged goods, that were the groundnut oil tins, were kept in the godown in the
compound of mill adjacent to the Bank under the lock and key of the Bank and the Bank had
appointed a godown keeper to look after the goods pledged by the principal debtor.

The Bank was not negligent is performing their duty. They took as much care of goods as a
man of ordinary prudence would have taken care of similar goods of his own, under similar
circumstances, of same bulk, quality and value of the goods pledged. Hence, they were
reasonable as well.

The groundnut oil tins were pledged on September 10, 2017. The principal debtor executed a
demand promissory note in favour of the Bank on September 16,2017, and on the same day
the principal debtor also executed a demand promissory note in favour of the surety which
the surety endorsed in favour of the Bank.

By the end of February 2018 the principal debtor owed Rs. 5,76,368 in this account to the
Bank. And the principal debtor died in November ,2018. The Bank wrote to the surety letter
dated December 24, 2018, calling upon him to pay the outstanding balance in cash credit
account of principal debtor as in the circumstances mentioned in the letter the balance was
required to be recovered from the surety.

If we look on to the dates – September 10, 2017 and December 24, 2018, we have a gap of
470 days( 15 months 14 days). And as per Department of Food & Public Distribution,
Government of India5, an unopened groundnut oil last for 12 months (365 days )and an
opened groundnut oil should be used before 7 months.
In the present case the time limitation of 365 days for groundnut oil tins had already crossed.
The value of the oil had already deteriorated and of no use and if the bank went on to selling
the goods pledged, the Bank would not have got the actual amount of the goods. And as
Section 1766 of the Indian Contract Act,1872 , talks about Pawnee’s right where pawnor

5
https://dfpd.gov.in/index.htm
6
Section 176 : Pawnee's right where pawnor makes default - If the pawnor makes default in payment of the debt,
or performance, at the stipulated time, or the promise, in respect of which the goods were pledged, the pawnee may
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makes default, the Bank were entitled to sell those goods for recovery of Rs. 5,76,368 and
as we know that the oil had lost its value or have crossed its expiration date, nobody would
have been ready to purchase it or the Bank would have not got the actual amount. By the
definition of Section 176 of the Indian Contract Act,1872, 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. Thus, if the bank would have sold the goods after giving notice, they would not have
got any amount or have got less amount and therefore it was the duty of the pawnor, Sohan
Lal Das to pay the balance due to the Bank. But as we know that Sohan Lal Das is deceased,
it was the duty of the surety to pay the amount. Hence, the surety will not be discharged here.
The surety will have to pay the amount of Rs. 5,76,368.

The surety will not be discharged of his duty as the Bank had taken reasonable care to keep
the pledged goods protected, and they were not negligent in their duty and also by definition
of Section 176 of the Indian Contract Act,1872, the security will have to pay the entire
amount of Rs.5,76,368.

bring as 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 that the amount so due, the pawnee shall pay over the surplus to the pawnor.
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PRAYER

IN THE LIGHT OF CASES CITED, ISSUES RAISED, ARGUMENTS ADVANCED AND AUTHORITIES CITED, IT
IS MOST HUMBLY PRAYED AND IMPLORED BEFORE THE HON’BLE COURT THAT IT MAY BE

GRACIOUSLY PLEASED TO ADJUDGE AND DECLARE :

 THE APPEAL FILED BY THE APPELLANT IS MAINTAINABLE.

 THE BANK TOOK REASONABLE CARE TO LOOKS AFTER THE GOODS
PLEDGED AND WAS NOT NEGLIGENT.
 THE SURETY IS NOT DISCHARGED FROM HIS DUTY AND HAVE TO PAY
RS.5,76,368 TO THE BANK.

AND/OR ALSO, PASS ANY OTHER ORDER THAT THE COURT MAY DEEM FIT TO MEET THE ENDS OF
EQUITY, JUSTICE AND GOOD CONSCIENCE.

For this act of Kindness, the respondent shall duty bound forever pray.

S/d- 29 TH May, 2019.

Counsel for Respondent.

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