Pledged shares and insufficient stamping did not justify unconditional leave to defend; conditional leave was granted instead.

A pledged share enforcement clause transferring voting rights did not amount to sale or realization of the security, so the defendant could not demand deduction of the pledged shares' value from the debt in the absence of proof that the shares had been sold or value recovered. Objection that the loan, guarantee and pledge documents were insufficiently stamped was treated as a technical defect; the court could impound the instruments for stamp adjudication while dealing with the summary suit. Because liability was admitted at least to the extent of the principal and interest due, unconditional leave to defend was refused and only conditional leave, subject to deposit, was granted.

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Issues: (i) Whether the plea that the pledged shares were invoked and voting rights were transferred required deduction of the pledged shares' value from the debt before the suit could proceed. (ii) Whether the suit on the basis of the loan documents, guarantees and pledge agreement was barred or the defendant was entitled to unconditional leave to defend because those instruments were insufficiently stamped.

Issue (i): Whether the plea that the pledged shares were invoked and voting rights were transferred required deduction of the pledged shares' value from the debt before the suit could proceed.

Analysis: The pledge agreement provided that, on enforcement of the pledge, voting rights in the pledged securities would stand transferred to the plaintiff. That stipulation did not amount to sale of the pledged securities or realization of their value. The rule that a pawnee must give credit for sale proceeds applies only where the pledged security has in fact been sold or the pawnee is otherwise unable to redeliver the security after appropriation. No material showed that the pledged shares had been sold or that any value had been realized.

Conclusion: The plea did not defeat the suit and did not entitle the defendants to unconditional leave to defend.

Issue (ii): Whether the suit on the basis of the loan documents, guarantees and pledge agreement was barred or the defendant was entitled to unconditional leave to defend because those instruments were insufficiently stamped.

Analysis: An insufficiently stamped instrument is not an incurable defect. The Court applied the summary-suit procedure alongside the stamp law by impounding the documents and sending them for adjudication while considering leave to defend. The objection based on stamp deficiency was treated as technical and did not justify unconditional leave. Since the liability to the plaintiff was admitted at least to the extent of the principal borrowed and interest due, the defendant was not entitled to defend without conditions.

Conclusion: The defendants were granted only conditional leave to defend, subject to deposit, and the impugned documents were directed to be impounded for stamp adjudication.

Final Conclusion: The suit was not decreed at once, but the defendants were allowed to contest only after depositing the admitted amount, while the loan documents and related securities were impounded for stamp-duty adjudication.

Ratio Decidendi: In a summary suit, a defendant who admits liability to a substantial extent is not entitled to unconditional leave to defend merely because the instruments are said to be insufficiently stamped or because invocation of pledged securities has occurred without proof of sale or realization of value; the court may grant only conditional leave and simultaneously secure compliance with stamp law by impounding the documents.

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