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20. Learned Senior Counsel for the Petitioners, Mr. Vikram Nankani submits that the outbreak of Covid-19 Pandemic was entirely unprecedented and this adversely affected the business of the Petitioners which in turn impacted the performance of their obligations towards repayment of the loan. The fall in the Minimum-Security Margin/Cover is also solely attributable to Pandemic Covid-19. The said event was unforeseen and unprecedented on a Global scale. Respondent, unmindful of the prevailing circumstances, mechanically sent the Recall Notice and threatened invocation of the pledged shares, from time to time, in the months of March and April, 2020. It is further contended that on account of the Pandemic, there was a fall in the stock prices of the pledged shares, which was solely attributable to the overall tanking of the stock market. BSE Sensex had fallen by approximately 9,878.71 points in the month of March, 2020. As a consequence of the fall/crash of the stock market, the share price of the pledged shares also fell. In a normal scenario, the price per share of the remaining pledge shares held in FCL was within the range of Rs. 26.35 - 12.35/- per share; FRL was within the range of Rs. 325 - 282/- per share; and CCL was in the range of Rs. 28.10 - 18.20/- per share from 01.01.2020 to 28.02.2020. As on 24.04.2020, remaining pledged shares were trading on the BSE at a significantly lower price, per share and it is thus clear that the current stock prices were not true reflection of their underlying value. Respondent thus ought to have exercised restraint in selling the pledged shares. The sale of shares in such circumstances would lead to a further strain on the Petitioners in toping up the Security Margin.

42. As far as the objection under Section 176 of the Contract Act, 1872 is concerned, sale and pledge of dematerialized shares is governed by Regulation 58 of the SEBI (Depositories and Participants) Regulation, 1996 and there is no provision for prior notice. The only condition imposed on invocation of pledge by the pledgee under Regulation 58 (8) is the same being required to be „subject to the provisions of a pledge documents‟. Reliance is placed on the judgement in Tendril Financial Services Pvt. Ltd. & Ors. v. Namedi Leasing & Financial Ltd. & Ors. (2018 SCC OnLine Del 8142) and the judgement of the Division Bench of Bombay High Court in Pushpanjali Tie Up Pvt. Ltd. v. Renudevi Choudhary & Ors., (2014 SCC OnLine Bom 3661) in this regard.

71. In Transcon Skycity Pvt. Ltd. (supra), the admitted position was that there was no default till December, 2019. The declaration of the account as NPA was only to be after the expiry of the grace period for regularization, from the date of default, which would be 15.04.2020 and 15.05.2020. This case was, therefore, directly covered by the moratorium period mentioned in the RBI Circulars.

72. Section 176 of the Contract Act, 1872 gives the discretion to the pledgee to sell the pledged goods in the event of a default by the pledger. Certainly, it is in the interest of the lender to sell at a time when the market factors are good and maximum funds can be recovered, but again the commercial determination of when to sell, would always be in the domain of the pledgee. In Reliance Project (supra), Bombay High Court has held that stock market is a place where prices can vary from minute to minute on a given trading day. A small incident can trigger a market to collapse and it is unpredictable and speculative. No doubt that the lender is under a duty to take reasonable precautions to obtain the true market value on the day when he decides to sell, but certainly, the loan offered is the money of the lender and he is not required to consult the borrower as to the time and manner of sale. As rightly argued by Learned Senior Counsel for the Respondent, if the pledged shares are not invoked and sold and in future the value falls, then the Respondent would be answerable to its own stakeholders. Sale and pledge of dematerialized shares is governed by Regulation 58 of SEBI (Depositories and Participants) Regulations, 1996 corresponding to Regulation 79 in SEBI (Depositories and Participants) Regulations, 2018 and there is no requirement for prior notice for invocation of a pledge by the pledgee. This has been so held in the case of Tendril Financial Services (supra). Relying on Tendril Financial Services (supra), this Court in STCI Finance Ltd. v. Cedar Infonet Pvt. Ltd. & Ors. (2018 SCC OnLine Del 8841), held as under:

"25. I have since pronounced judgment in Tendril Financial Services Pvt. Ltd. supra reported as 2018 SCC OnLine Del 8142, on the applications for interim relief therein and have held:--
xxx xxx xxx E. I may however add, that a notice under Section 176 of Contract Act is in derogation of Regulation 58 supra. While Section 176 entitles the pledgee/pawnee to, on default by the pledgor/pawnor, sell the thing pledged, ―on giving the pawnor reasonable notice of the sale‖, Regulation 58(8) entitles the pledgee to, ―subject to the provisions of the pledge document‖, ―invoke the pledge‖ and mandates the depository to ―on such invocation‖ i.e. by the pledgee, ―register the pledgee as beneficial owner of such securities‖ i.e. the securities pledged and further mandates the depository to ―amend its records accordingly‖. There is no place for a prior notice under Section 176, in the scheme of Regulation 58(8). On the contrary, Regulation 58(9) requires the depository to, after so amending its records under Regulation 58(8), inform the participants of the pledgor and the pledgee of the same and mandates the said participants to inform the pledgor and the pledgee. Thus, (a) while Section 176 provides for a notice to pledgor prior to effecting sale, Regulation 58 provides for notice post invocation and on which invocation beneficial ownership of pledged shares changes from that of the pledgor to that of the pledgee and which is equivalent to sale under Section 176. To hold that a prior notice under Section 176 of Contract Act is also required in the case of pledge of dematerialised shares would interfere with transparency and certainty in the securities market, rendering fatal blow to the Depositories Act and Regulations and the object of enactment thereof.