THE BRITISH MACHINERY SUPPLIES CO., BY POWER-OF-AGENT AND BRANCH MANAGER, REVACHAND TECKWANI Vs. DEVARAJ AND ORS.

JUDGEMENT

(1.) AN interesting question of law arises in this revision petition, viz., whether the plaintiff, the owner of a sewing machine, who sold it under a Hire -Purchase agreement to the first defendant, could recover it from the third defendant who was a pledgee from the first defendant. The Courts below have dismissed the suit of the plaintiff, as far as the third defendant was concerned. The plaintiff has, therefore, preferred this revision petition contending that a decree should be passed against the third defendant also.

(2.) LEARNED Counsel for the petitioner contended that, as per the terms of the agreement, the first defendant had no right to pledge the sewing machine with the third defendant and therefore his client would be entitled to recover the machine from whomsoever it remained. Let us, therefore, consider the rights the first defendant would be entitled to in the goods during the subsistence of the Hire -purchase Agreement. Lord Macnaghten says in Tolhurst v. Associated Portland Cement Manufacturers (1900) Ltd., L.R. (1893) A.C. 414 .

(3.) IN all hire -purchase agreements, there is a dual nature, where a hirer can transfer the benefit of the hiring alone while retaining the option to purchase; or he can assign the option alone, remaining in possession of the goods until the hire -purchase price has been paid; or he can assign his entire rights under the agreement, in which case the assignee becomes entitled both to the use of the goods and to the option to purchase. Modern hire -purchase agreements invariably contain stringent conditions prohibiting assignment and enabling the owner to resume possession and terminate the hiring or the entire agreement in the event of breach. A prohibition against assignment must be so framed as to cover both the assignment of the benefit of the hiring and the transfer of the option to purchase. Thus a condition in the agreement that the hirer shall not sell the goods does not prohibit the hirer from assigning the benefit of hiring. The pledge by the hirer would not constitute a breach of the hire -purchase agreement, in the absence of a provision in the agreement expressly prohibiting the hirer from pledging or parting with possession of the goods. Even the provisions of the Contract Act save the pledgee at least to the extent of the pledgor's own interest in the goods. In this case, the petitioner himself stated that there was default in the payment of money. Once there was default in the payment of instalments of the hire -purchase agreement, the petitioner could have terminated the agreement, but he has not terminated the agreement, i.e., he has not exercised the right of termination. At the time of the pledge, the first defendant (hirer) had legal possession of the chattel and he had a right to the goods. In those circumstances, it is not possible for me to say that the first defendant had no right or interest in the goods when he pledged it to the third defendant. Further, there is absolutely no evidence to warrant the conclusion that the third defendant was aware that the first defendant was only a hirer and not the true owner of the sewing machine. The petitioner cannot ask the third defendant to return the sewing machine. He can only file a suit for damages for the payment of unpaid instalments by the first and second defendants for the balance of the unpaid instalments due and payable by the first defendant under the hire -purchase agreement. The plaintiff is not, therefore, entitled to recover the sewing machine from the third defendant.