Plaintiff fails to secure permanent injunction against bank selling pledged promoter shares under Section 176

Delhi HC dismissed plaintiff's application for permanent injunction restraining defendant bank from selling pledged promoter shares. Court found plaintiff failed to establish prima facie case and balance of convenience favored the bank. Despite ex parte interim order initially restraining sale, court noted bank had given reasonable notice under Section 176 of Indian Contracts Act following Supreme Court precedent in PTC India case. Plaintiff was informed of pledge invocation via NSDL message and received seven-day notice to clear outstanding liabilities. Court criticized plaintiff's improper service and failure to inform writ court of suit filing. Matter listed before Joint Registrar for further proceedings.

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Issues Involved:
1. Validity of the share pledge agreement and the number of shares pledged.
2. Whether sufficient notice was given by the defendant bank for the sale of pledged shares under Section 176 of the Indian Contracts Act, 1872.
3. Whether the LIC policies were assigned or merely had a lien created.
4. The plaintiff's conduct in obtaining an ex parte interim order.

Detailed Analysis:

1. Validity of the Share Pledge Agreement and the Number of Shares Pledged:
The plaintiff alleged that the schedules to the share pledge agreement were kept blank at the time of signing and later filled in by the defendant bank with incorrect information. However, the court found that the share pledge agreement dated 7th July 2021, clearly mentioned 19,79,549 shares of the defendant no.2 company pledged by the plaintiff, and this was duly signed by the plaintiff. The court did not find merit in the plaintiff's claim of forgery by the defendant bank to increase the number of pledged shares from 19,79,549 to 48,08,237.

2. Whether Sufficient Notice Was Given by the Defendant Bank for the Sale of Pledged Shares under Section 176 of the Indian Contracts Act, 1872:
The plaintiff contended that the defendant bank failed to provide reasonable notice for the sale of the pledged shares. The court acknowledged the requirement under Section 176 of the Indian Contracts Act, 1872, for a pawnee to give reasonable notice to the pawnor before selling the pledged goods. The Supreme Court's judgment in PTC India Financial Services Limited v. Venkateswarlu Kari and Anr. was cited, emphasizing that the notice should make the pawnor aware of the pawnee's intent to sell. The court found that the defendant bank's notice dated 15th September 2022, along with the intimation of invocation on 6th September 2022, constituted reasonable notice under Section 176.

3. Whether the LIC Policies Were Assigned or Merely Had a Lien Created:
The plaintiff argued that the two LIC policies were not assigned but only had a lien created. The court found that the LIC policies were indeed assigned to the defendant bank, as evidenced by the notices dated 3rd September 2022 and 12th September 2022. The court noted that the LIC policies were part of the notice issued under Section 13(2) of the SARFAESI Act and could not be the subject matter of the present suit due to Section 34 of the SARFAESI Act.

4. The Plaintiff's Conduct in Obtaining an Ex Parte Interim Order:
The court noted that the plaintiff filed the present suit and obtained an ex parte interim order without informing the writ court or the defendant bank's counsel about the suit. This was deemed a dishonest attempt to obtain an ex parte order behind the defendant bank's back. Consequently, the interim order dated 23rd September 2022 was vacated, and the plaintiff was burdened with costs of Rs. 1,00,000 to be paid to the defendant bank.

Conclusion:
The court concluded that the plaintiff failed to establish a prima facie case. The balance of convenience favored the defendant bank. The interim order dated 23rd September 2022 was vacated, and the plaintiff was ordered to pay costs of Rs. 1,00,000 to the defendant bank. The case was listed for further proceedings before the Joint Registrar on 11th January 2023.

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