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It is submitted that the plaintiff steps in the shoes of the defendant No.3, therefore, the plaintiff is directly interested and affected as a pawnor as it is the property of the plaintiff which is secured as debt.

b) Secondly, learned Senior counsel submitted that the defendant No. 1 may be right when it says that there is an event of default in not keeping the security cover of 200% as has been agreed in the agreement by the parties which entitles the defendant No. 1 to put the shares from escrow account to pledge and invoke the pledge, but the said invocation of the pledge by the defendant No. 1 has to be in accordance with the law and principles envisaged under the Indian Contract Act, 1872.

55. Therefore, the completeness of pledge when the facility agreement dated 12.7.2010 was entered into between the defendant No. 3 and defendant No. 1 becomes questionable one as at that time the ingredients of the valid pledge are not fulfilled either under section 172 or under section 178 of the Act and the consideration in the said agreement remains executory in nature which is the shares belonging to the plaintiff being the share holder. It is only when the plaintiff provides its assent and approval to such transaction by entering into the covenants with the parties in the Non disposal Escrow agreement, the shares of the shareholder/ plaintiff gets actually secured against the loan and the said transaction attains legal sanctity. The aspect of pledge or invocation of the pledge still remains a future event when the defendant No.1 can create a pledge in the event of the default.

72. At this stage, it becomes necessary to examine the submission advanced by the learned counsel for the defendant No. 1 that letters dated 27th June 2011 and 13th July 2011 wherein it calls upon the defendant No. 3 to comply the security cover failing which shall lead to invocation of pledge should be construed as notice. I am of the opinion that the said letters cannot be treated as notice under section 176 of the Act. It is due to two fold reasons, first being that it is the intimation or letter written by the defendant No. 1 to the defendant No. 3 for creation of pledge or invoking the pledge on the occurance of default which is separate and distinct from the act of the sale which happens after the creation of pledge. In the present case, the happening of default leads to both the events creation of pledge as well as it entitles the defendant No. 1 to effect the sales. Thus, the requirement under section 176 comes into play when the defendant No. 1 proceeds to sell the securities in the event of the default and not on the action of invocation of the pledge. Thus, if the said letters would have clearly spelt out that the defendant No. 1 is proceeding to sell particular amount of shares from the security, the same would have been construed as notice of sale. Secondly, there must be reasonable notice, ordinarily the pledgee issues the notice of sale for a reasonable time of sale in the event of the default by the pledgor. But in the present case, the defendant No. 1 attains the status of the pledgee only when he has invoked the pledge. Thus, thereafter, if the said pledgee or the defendant No.1 faces a default, he can issue notice to the defendant No.3 and plaintiff as they are co-pawners. Thus, the contention of the learned counsel for the defendant No. 1 cannot be acceded to.

b) The notice under section 176 of the Indian Contract Act, 1872 is mandatory so as to give ample and reasonable chance to the pledgor to make the redemption prior to the sale. Rather, the right to sale accrues only when the notice for sale is given although the remedies of pledge to file suit and other remedies prescribed under Section 176 are available without notice.

c) In the present case, the notice requirement comes into play only at the time of sale and not at the time of invocation of pledge.