Calcutta High Court
Manav Investment And Trading ... vs Dbs Bank India Limited on 11 April, 2022
ORDER SHEET
OC-1
APOT/66/2022
WITH CS/67/2022
IA NO:GA/1/2022
IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
ORIGINAL SIDE
IN THE MATTER OF:
MANAV INVESTMENT AND TRADING COMPANY LIMITED
VS.
DBS BANK INDIA LIMITED
..........
BEFORE:
The Hon'ble JUSTICE I. P. MUKERJI
The Hon'ble JUSTICE ANIRUDDHA ROY
Date : 11th April, 2022
Mr. Dhruvo Ghosh, Sr. Adv.,
Mr. Anirban Ray, Mr. Rajashi Dutta, Mr. V.V. Sastry,
Mr. Debjoyti Saha, Mr. Pankaj Agarwal,
Ms. Paramita Maity, Advs..for appellant.
Mr. Jishnu Saha, Sr. Adv.,
Mr. Sakabda Roy, Ms. Trisha Mukherjee, Advs...for respondent.
The Court : We do not want to keep this appeal pending. We have heard it
out, dispensing with all formalities.
The appellant is the pledgor of shares of Birla Tyres Ltd. [BTL] today, worth
about Rs.14 crores. These shares were pledged with the respondent bank to secure
their loan from the bank.
By a notice dated 23rd February, 2022 the appellant was given time to pay
Rs.15,87,50,000/- by noon of 16th March, 2022. In default, the respondent would
proceed to sell the shares. By another notice of the same date the appellant was
called upon to pay the entire outstanding amount of Rs.70,17,15,582.20 by noon of
16th March, 2022, failing which the remaining pledged shares would be sold.
The very short question which arises in this appeal is whether the notices of
invocation of the pledge dated 23rd February, 2022 can be construed as reasonable
notice to sell the pledged goods as provided in section 176 of the Indian Contract
Act, 1872 ?
Sections 176 and 177 of the said Act enact as follows :
"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 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.
177. Defaulting pawnor's right to redeem.--If a time is stipulated for the payment of the
debt, or performance of the promise, for which the pledge is made, and the pawnor makes
default in payment of the debt or performance of the promise at the stipulated time, he may
redeem the goods pledged at any subsequent time before the actual sale of them, but he
must, in that case, pay, in addition, any expenses which have arisen from his default."
Mr. Ghosh, learned senior counsel appearing for the appellant submitted
that by the aforesaid notices time was extended by the bank to make the aforesaid
payment by noon of 16th March, 2022. If payment was made by his client by that
time, it would be taken that the right to redeem had been exercised. If there was
failure reasonable time ought to have been given to the appellant from 16th March,
2022 to make the payment. By the above notices the respondent sought to
exercise their right of sale immediately upon the default of the appellant at noon of
16th March, 2022.
Sections 176 and 177 of the said Act recognizes two rights. The first is the
right of the pledgee to sell the article pledged upon reasonable notice to the
pledgor. This is independent of the right of the pledgor to redeem the goods pledged
at any point of time before sale is effected by the pledgee. In our view, the said two
notices issued by the pledgee/respondent are exercise of the first right and at the
same time an opportunity given by them to the pledgor to exercise the second right.
In other words, the notice is that the sale would be effected at any point of time
after noon of 16th March, 2022 and that the pledgor would have the option to
redeem the shares before that time. We find nothing wrong or irregular in the said
notices.
However, for whatever reasons the shares of the appellant are with the
respondent for some period of time. Since the complaint of the appellant/pledgor is
only with regard to the reasonableness of the notice and to be more specific the
length of the notice, we direct that provided the price of shares which is prevailing
today at this point of time [Rs.23.95] does not fall, the pledgee shall refrain from
selling the shares till 21 st April, 2022 to give an opportunity to the appellant for the
last time to redeem the pledged shares. If there is fall in the share price to Rs.23.50
or below, the respondent would be free to sell them in terms of the agreement
between the parties.
Provided further that if the appellant, at any point of time before the sale of
shares is able to furnish an automatically renewable bank guarantee of Rs.14
crores in favour of the respondent and to their satisfaction, the respondent would
refrain from giving effect to the earlier part of this order and retain the bank
guarantee with the pledged shares.
At this point of time Mr. Saha, learned senior counsel for the respondent
submits that his client be given the liberty of encashing the bank guarantee
furnished. We are of the view that encashment of the bank guarantee would
tantamount to granting the final relief in the suit or part of the final relief in the
suit. However, Mr. Saha's client would be at liberty to encash the bank guarantee
provided an automatically renewable counter guarantee of the same amount is
furnished with the learned Registrar, High Court, Original Side before encashment
of the bank guarantee furnished by the appellant.
Any observation made in this appeal shall be taken only as an observation
disposing of an interim application finally.
The impugned judgment and order is substantially affirmed and modified by
the above order.
The appeal and the stay application are disposed of accordingly.
(I. P. MUKERJI, J)
(ANIRUDDHA ROY , J)
pkd.
