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2018 (1) TMI 496 - HC - Indian LawsTransfer of the pledged securities - repayment of loan - bounced cheques - Held that - even if we assume that the sale of the pledged securities by defendant no.1 was illegal and that plaintiffs were entitled to redeem the pledged securities, they can do so only against payment of the entire amount outstanding to defendant No.1 as if the disputed sale did not occur and the sale proceeds were not appropriated towards plaintiffs debt - At no point in time did plaintiffs object to such sale or contend that the sale was illegal or invalid on account of want of notice. On the contrary, plaintiffs repeatedly asserted that defendant no.1 had become the owner of the shares and was free to deal with the shares as it pleased. Having taken this contention till the filing of the suit and in the suit itself and having actively affirmed the freedom of defendant no.1 to sell the shares, plaintiffs cannot be heard to contend that they have not received notice of such sale or that the sale is invalid on that alleged account. The law is well settled that no notice under Section 176 is even necessary where the pledgor was consulted or acquiesced in the sale. Sale of any pledged share in excess of what was only required to be sold to recover the amount due, would be illegal. It is well settled that the relief sought by parties should not be refused on technical and pedantic grounds. Once the substantive prayers and the cause for justice is borne out in the pleadings, then the Court would be fully within its jurisdiction to mould the reliefs and any technicality would not obstruct the course of justice - the Court can undoubtedly take note of changed circumstances and suitably mould the relief to be granted to the party concerned in order to mete out justice in the case. Suit stands decreed accordingly.
Issues Involved:
1. Agreement and understanding between the parties regarding the pledged securities. 2. Validity of the sale of pledged securities by the defendant. 3. Entitlement of the plaintiffs to redeem the pledged securities. 4. Calculation of the outstanding amount and interest. 5. Entitlement to additional shares and dividends due to alleged wrongful sale. Detailed Analysis: Issue 1: Agreement and Understanding Between the Parties - Plaintiffs’ Claim: Plaintiffs claimed an oral understanding with Mr. Sadashiv Rao of defendant no.1 that the pledged shares would be appropriated at a rate of ?310 per share, and accounts would be drawn accordingly. - Defendant’s Position: Defendant no.1 denied any such oral agreement and asserted that Mr. Sadashiv Rao was not authorized to enter into such an agreement. Issue 2: Validity of the Sale of Pledged Securities - Plaintiffs’ Argument: Plaintiffs argued that the sale of 1,61,450 shares by defendant no.1 was without notice and thus illegal. They contended that the notice dated 23rd February 1996 pertained only to the second loan and that defendant no.1 waived its right to sell by extending the repayment time. - Defendant’s Counter: Defendant no.1 maintained that both loans were treated as a single composite loan, and the notice dated 23rd February 1996, along with subsequent communications, constituted adequate notice for the sale of the pledged securities. Defendant no.1 argued that plaintiffs were aware of the sale and did not object to it at the time. Issue 3: Entitlement of the Plaintiffs to Redeem the Pledged Securities - Plaintiffs’ Stand: Plaintiffs abandoned their main plea and pressed for redemption, claiming they were ready and willing to repay the outstanding amount upon the return of the shares. - Court’s View: The court noted that the plaintiffs did not make any tender or offer of the outstanding amounts before filing the suit. The court held that plaintiffs could only redeem the pledged securities by paying the entire outstanding amount as if the disputed sale did not occur. Issue 4: Calculation of the Outstanding Amount and Interest - Plaintiffs’ Position: Plaintiffs argued that the interest should be calculated at 24% per annum simple interest, not at the 36% rate unilaterally decided by defendant no.1. - Defendant’s Calculation: Defendant no.1 provided a statement showing the amount payable and the number of shares sold based on 24% simple interest. The court found that defendant no.1 wrongfully detained shares by calculating interest at 36% per annum and selling more shares than required. Issue 5: Entitlement to Additional Shares and Dividends - Court’s Decision: The court held that plaintiffs were entitled to the shares with accretions and unearned dividends based on the excess shares sold by defendant no.1. The court directed defendant no.1 to deliver 11,49,680 fully paid equity shares or pay the equivalent value, along with ?5,80,87,582 towards unearned dividends, less the amount already paid. Conclusion: The court decreed in favor of the plaintiffs, ordering defendant no.1 to either deliver the equivalent shares or pay the value along with unearned dividends and interest at 24% per annum from the date of the decree until payment. The court emphasized that the plaintiffs were entitled to relief due to the wrongful sale of excess shares by defendant no.1.
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