TaxTMI 
TaxTMI 
2015 (3) TMI 1371
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....dant to pledge further shares. The defendant however, did not do so. The defendant had paid interest up to March 31, 2001 with such payment being made on April 24, 2001. The plaintiff had, thereafter, issued a demand letter dated January 14, 2002. The defendant did not pay in spite of such demand. The plaintiff, thereafter, sold the pledged shares for the value of Rs. 8,55,400/-. The plaintiff claims decree for the balance amount from the defendant along with interest and costs. The defendant has filed its written statement. The defendant contends that, the transactions were had through a broker. The defendant had pledged shares to the plaintiff as security for the loans advanced. The defendant points out that, the shares pledged were actually transferred in the dematerialized account of the plaintiff by the defendant. The defendant by a letter February 7, 2001 had called upon the plaintiff to sell the shares pledged with it. The defendant was informed by the broker that the pledged shares were sold and that on payment of Rs. 1,68,000/- the account would stand squared up. The defendant had paid the said sum of Rs. 1,68,000/- by cheque on April 20, 2001 as full and final settlem....
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.... the plaintiff. The learned Senior Advocate for the defendant does not seriously dispute the nature of the transactions between the parties. He however contends that, Exhibit 'O' is a ledger of the plaintiff and that in view of Section 34 of the Indian Evidence Act, such ledger entry need not be looked into for the purpose of accepting the contention that the sum of Rs. 1,68,000/- paid by the defendant on April 20, 2001 was on account of interest. The nature of transactions between the parties is not disputed. The parties agree that the plaintiff had agreed to grant and did in fact grant a loan of Rs. 1,10,00,000/-to the defendant against the pledge of Himachal Futuristic Company Limited (HFCL) shares. The defendant had pledged the HFCL shares belonging to it with the plaintiff. However, the defendant had transferred the HFCL shares to the plaintiff by transferring such shares to the dematerialized account maintained by the plaintiff. The parties differ as to the rate of interest payable by the defendant to the plaintiff and as to whether or not the payment of Rs. 1,68,000/- made on April 20, 2001 by the defendant to the plaintiff was on account of full and final settlement o....
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....er on query from Court could not remember the reason as to why the office was closed on a working day. Exhibit 'J' was sought to be served on the defendant both at his residential address as well as at his office address by Speed Post with the acknowledgement due card. The plaintiff has established that the letter being Exhibit 'J' was duly despatched by Speed Post to the correct address of the defendant at his residential and office addresses. The defendant did not claim Exhibit 'J' at its residential address and the envelope addressed to the office address was not received by the defendant as its office had remained closed. The facts established allows a finding of deemed service of the notice dated January 14, 2002 on the defendant. In such circumstances, issue no. 3 is answered in the affirmative and against the defendant. So far as issue no. 4 is concerned, the learned Senior Advocate for the plaintiff relies upon Sections 172 to 177 of the Contract Act, 1872 and submits that, the plaintiff as the pledgee was entitled to sell the shares at a time of its choice. He contends that, a pledgee is not bound by the rigours of Section 73 of the Contract Act, 1872. In support of ....
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....ontention that the pawnee had no such right. On facts the appeal preferred was dismissed. In Racmann Auto (P) Ltd. (supra) one of the questions answered, in a suit for recovery of money by a bank against the pledgee was whether there was any legal duty cast on the bank to take any early steps for disposing of the pledged goods. Section 176 of the Contract Act, 1872 was considered. It was held that, it was in the discretion of the pawnee to sell the goods in case the pawnor makes default but if the pawnee does not exercise his discretion no blame can be put on the pawnee and the pawnee has a right to bring the suit for recovery of debt and retain the goods pledged as collateral security. The power of the pawnor to force the pawnee to sell the pledged goods without clearing the debt was doubted. In Smt. Neela Ashok Naik & Anr. (supra) again in a suit for recovery of money filed by a bank against pledge, the contention that Section 176 of the Contract Act, 1872 vests absolute discretion in the bank to retain the security and sue for the amount due or to adjust the security at the point of time at its discretion and sue the debtor for the balance amount came up for consideration. I....
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....n Auto (P) Ltd. (supra). Section 73 and Section 176 of the Contract Act, 1872 are as follows:- "73. Compensation for loss or damage caused by breach of contract.- When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach. Compensation for failure to discharge obligation resembling those created by contract.- When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract. Explanation.- In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by t....
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....aswathy Amal (supra) is of the view that, such notice under Section 176 of the Contract Act, 1872 only means an intimation of the intention to sell and not that, a sale should be arranged beforehand and due notice of all details given to the pawnor. Section 176 of the Contract Act, 1872 allows the pawnee to opt for the time of the sale. Section 177 of the Contract Act, 1872 allows the pawnor to redeem the thing pledged upon payment of the debt due. The pawnor has a right to have the pledge sold property and its sale proceeds applied to the debt due. In a given case where the pledgee can establish improper sale of the pledged good, he may claim damages. In the instant suit, the defendant has not been able to establish that the sale of the shares was done improperly or at a price not prevailing in the market at the material point of time. The defendant has also not been able to establish that it had called upon the plaintiff to sell the shares. In the present case, the shares pledged were sold in the stock market within the parameters of the quoted prices for the shares prevailing on the date of the sale. The defendant has not questioned the sale of the shares per se. The defendant....