Voting rights in pledged shares remain with the trustee after default unless the pledge is redeemed or invocation is withdrawn.

Share pledge and debenture trust arrangements provided that the pledgor's voting rights in pledged shares continued only until an event of default, after which the debenture trustee could exercise those rights. Once default had occurred and the pledge invocation had not been recalled, the pledgor could not regain voting rights merely because the debt was later restructured and the trust deed amended. The restructuring did not extinguish accrued contractual rights of the trustee, especially where the amendment preserved those rights and did not undo the earlier invocation. The pledgor had also not redeemed the pledged property by tendering the amount due. The trustee therefore remained entitled to vote the pledged shares.

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Issues: Whether the restructuring of the debt and subsequent amendment to the debenture trust arrangements cured the existing event of default so as to restore voting rights in the pledged shares to the pledgor.

Analysis: The share pledge agreement and the debenture trust deed expressly provided that the pledgor could exercise voting rights only until the occurrence of an event of default, and that upon such occurrence the debenture trustee would be entitled to exercise those rights in respect of the pledged shares. The Court found that an event of default had occurred, the invocation of pledge had not been recalled, and the appellant had not redeemed the pledged property by tendering the amount due. The subsequent restructuring of the debt did not erase the accrued contractual rights of the debenture trustee, particularly when the amendment protected the trustee's rights and did not undo the earlier invocation. The Court also noted that the appellant's cessation as director and the contractual terms governing default continued to support the trustee's entitlement.

Conclusion: The appellant was not entitled to re-claim voting rights in the pledged shares, and the debenture trustee remained entitled to exercise those rights; the appeal failed.

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