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Showing contexts for: invocation of pledge in Stci Finance Ltd vs Cedar Infonet Pvt Ltd & Ors on 28 May, 2019Matching Fragments
4. On 08.05.2018 this court granted unconditional leave to defend to the defendants noting that defendant No.1 had availed financial assistance from the plaintiff and pledged with the plaintiff the shares held by the defendant Nos.1 and 2 in Tulip Telecom Ltd. The shares of pledged were in de- materialised from and the pledge was created in accordance with the Securities & Exchange Board of India(Depositories & Participant) Regulations, 1996. This court noted that the plaintiff as pledgeE/pawnee, on invocation of pledge and on transfer of the pledged shares from the account of the depository participant of the defendants to the account of the depository participant of the plaintiff was entitled to sell the shares at the then prevalent value thereof and to appropriate the sale proceeds in satisfaction of the amounts due to it from the defendants. The court hence concluded that an opportunity has to be given to the defendants to prove that the plaintiff, in spite of having invoked the pledge and being entitled to sell the pledged shares to satisfy the debt owed by the defendants, have not done so, is not entitled to recover the debt or the entire debt. The same constitutes a substantial defence, which if proved is likely to succeed and the defendants are thus entitled to unconditional leave to defend.
9. The learned senior counsel for the defendant states that the admitted fact is that the plaintiff has received share worth Rs.16.79 crores as part of pledge which stood transferred to the plaintiff. He relies upon the judgments of the Bombay High Court in the case of Jry Investment Pvt. Ltd. v. Deccan Leafine Services Ltd. & Ors., 2004 121 Comp. Cas. 12 (Bom) and M/s. SICPC India Pvt. Ltd. v. M/s. Brushman (India) Ltd, 2013 XAD (Delhi) 136 to contend that on invocation of the said pledged shares, the plaintiff was entitled to sell the shares and accordingly liability of the defendants would get correspondingly reduced by the said value of the pledge shares, which is amounting to Rs.16.79 crores.
10. In my opinion, there is no merit in the plea of the learned senior counsel for the defendants. This court had granted unconditional leave to defend to the defendants only based on the contentions raised by the learned counsel for the defendants. This is clear from the para 25 of the order dated 08.05.2019 of this Court, which reads as follows:
"25. I am at this stage unable to distinguish on facts, the present case from Tendril Financial Services Pvt. Ltd. supra. Once the liability of defendant no.l is disputed at this stage," the liability of defendants no.2 and 3 also cannot be said to be without any plausible defence. It has thus but to be held that the defence of the defendants, that the plaintiff as pledge/pawnee, on invocation of pledge-and on transfer of the pledged shares from the account of the depository participant of the defendants to the account of the depository participant of the plaintiff was entitled to sell the shares at the then prevalent value thereof and to appropriate the sale proceeds in satisfaction of the amounts due to it from the defendants, is such which within the meaning of IDBI Trusteeship Services Ltd. Vs. Hubtown Ltd. 2017 (1) SCC 568 entitles the defendants to leave to defend. Opportunity has to be given to the defendants to prove that the plaintiff, in spite of having invoked the pledge and being entitled to sell the pledged shares to satisfy the debt owed by the defendants, having not done so, is not entitled to recover the debt or the entire debt. The same constitutes a substantial defence, which if proved is likely to succeed and the defendants are thus entitled to unconditional leave to defend."