2015 (3) TMI 1371 - HC - Indian Laws

Court affirms loan agreement, dismisses alternative claim, grants money decree for pledged shares.

Rani Leasing & Finance Ltd. Versus Sanjay Khemani

Rani Leasing & Finance Ltd. Versus Sanjay Khemani - TMI Issues Involved:1. Existence of an agreement between the plaintiff and the defendant.2. Existence of an agreement as alleged by the defendant.3. Receipt of notice dated January 14, 2002, by the defendant.4. Entitlement of the plaintiff to sell the pledged shares.5. Entitlement of the plaintiff to the decree claimed.6. Receipt of letters dated February 7, 2001, and April 20, 2001, by the plaintiff.7. Other reliefs entitled to the plaintiff.Detailed Analysis:Issue 1: Existence of Agreement Between Plaintiff and DefendantThe plaintiff contended that it lent Rs. 1,10,00,000 to the defendant against the pledge of shares. The defendant admitted the loan but claimed to have repaid it. Evidence showed that the plaintiff advanced the sum between June 2000 and January 2001, and the defendant pledged shares as security. The defendant paid interest up to March 31, 2001. The plaintiff's ledger (Exhibit 'O') was used to substantiate the transactions. The court held that there was an agreement between the parties as stated in the plaintiff's paragraphs 1, 2, and 3. Thus, issue 1(a) was affirmed, and issue 1(b) was confirmed that the plaintiff lent the amount pursuant to such agreement.Issue 2: Existence of Agreement as Alleged by DefendantThe defendant's contention of an alternative agreement was dismissed. The court found no evidence supporting the defendant's claim of a different agreement. Issue 2 was answered in the negative and against the defendant.Issue 3: Receipt of Notice Dated January 14, 2002The plaintiff issued a demand letter on January 14, 2002, which the defendant claimed not to have received. The court found that the notice (Exhibit 'J') was sent via Speed Post to both the residential and office addresses of the defendant. The residential address envelope was marked 'not claimed,' and the office address envelopes were returned with endorsements indicating the office was closed. The court deemed the service of notice as valid, thus answering issue 3 in the affirmative and against the defendant.Issue 4: Plaintiff's Entitlement to Sell Pledged SharesThe plaintiff argued that under Sections 172 to 177 of the Contract Act, 1872, it was entitled to sell the pledged shares. The defendant contended that the plaintiff failed to mitigate damages under Section 73 of the Contract Act, 1872. The court referenced multiple cases (Sankaranarayana Iyer Saraswathy Amal, Racmann Auto (P) Ltd., Smt. Neela Ashok Naik & Anr.) affirming the pledgee's right to sell the pledged shares. The court found no evidence of improper sale or failure to mitigate damages. The shares were sold at market prices after reasonable notice. Thus, issue 4 was answered in the affirmative and in favor of the plaintiff.Issue 5 and 6: Entitlement to Decree and Receipt of LettersThe plaintiff sought a money decree after adjusting the sale proceeds of Rs. 8,55,400 from the principal amount of Rs. 1,10,00,000, leaving Rs. 1,01,44,600. The defendant presented letters dated February 7, 2001, and April 20, 2001, claiming they instructed the plaintiff to sell the shares. The court found no credible evidence that these letters were received by the plaintiff. The defendant failed to prove the letters' delivery, and the court dismissed the defendant's claim. Thus, the plaintiff was entitled to the decree for the outstanding amount with interest at 12% per annum from April 1, 2001, until realization. Issues 5 and 6 were answered in favor of the plaintiff.Issue 7: Other ReliefsThe plaintiff paid a court fee of Rs. 10,000 and was entitled to assessed costs of Rs. 20,000 from the defendant. The court decreed C.S. No. 113 of 2002 accordingly and directed the department to draw up and complete the decree expeditiously.