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2013 (8) TMI 315 - HC - Companies LawPledgee’s and Pledgor’s Rights and duties u/s 176 - Whether the defence raised by the respondent was substantial - Section 176 of the Indian Contract Act,1872 deals with the pledgor’s and pledgee’s rights and duties which rule out the applicability of section 433 - Held that:- The defence taken by the respondent-company was substantial, had been taken in good faith and had prima facie merit deserving deeper examination - there was prima facie proof of the facts on which the defence rests - It was well settled that winding-up proceedings were not a means of recovering the debts due from a company. The defence based on Section 176 of the Contract Act was an after-thought and no such defence was taken at any point of time during the prolonged exchange of correspondence between the parties which shows the lack of bona fide on the part of the respondent - The provisions of the section were mandatory and cannot be over-ridden by any contract to the contrary - The section deals with the pledgee’s right where the pledgor makes default - Lallan Prasad v. Rahmat Ali [1966 (12) TMI 65 - SUPREME COURT] - It had been highlighted that where the pawnor repays the debt he was entitled to the return of the pawned goods - the pawnee cannot be permitted to get repayment of the debt as also retain the pawned goods and thus gain an unjust double advantage - There was nothing which would militate against the issue sought to be raised by the respondent in the case - Decided against petitioner.
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