TMI Blog2020 (3) TMI 488X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of the Contract Act and the pledgement of the dematerialized shares are only governed by Depositors and Regulations (58) (1) to (6) made thereunder and hence section 176 of the Contract Act will not apply in the present matter. The contention of the Corporate Debtor cannot be relied upon and it cannot be denied that they are liable to pay to the petitioner the amounts due upon them and here it is pertinent to note that the Corporate Debtor time and again requested the petitioner for restructuring of the loan amount. Therefore, it can be said that there was an acknowledgement of the debt by the Corporate Debtor. This Adjudicating Authority, on perusal of the documents filed by the Creditor, is of the view that the Corporate Debtor defaulted in repaying the loan availed. In the light of above facts and circumstances, the existence of debt and default is reasonably established by the petitioner/Financial Creditor as a major constituent for admission of a petition under section 7 of the I B Code. Therefore, the Application under sub-section (2) of section 7 is taken as complete, accordingly this Bench hereby admits this Petition - Petition admitted - moratorium declared. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 09/10/2018 at the Registered Office Address of the Corporate Debtor and if they failed to do so, proceeding would be initiated against them. To this notice the Corporate Debtor replied on 19/10/2018 wherein they have acknowledged the loan amount received, the non-payment on their part and also requested to consider the restructuring proposal already made on 22/12/2017. Their willingness to submit a fresh plan in view of the subsequent events and the present scenario was also mentioned therein. But despite of this, there was no payment made by the Corporate Debtor and the petitioner mentioned that therefore, this petition under section 7 was preferred by the them as they are of the view that there is a mismanagement of funds and therefore, it needs strong restructuring plan under the supervision of this Tribunal. 7. The petitioner submitted the following documents in support of their contentions which are as under: a. Copy of Certificate for ascertaining utilisation of Loan Proceeds (Valuation Reports/Auditors reports) b. Memorandum and Article of Association of Neptune Developers Ltd. c. Complete set of security documents executed to secure the Term Loans sanction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te value of the pledged shares with the petitioner before classifying the Corporate Debtor as NPA was approximately ₹ 52.14 Crores. It was mentioned by the Corporate Debtor that the petitioner not being able to re-deliver the pledged shares lodged with it for the specific purpose of securing the alleged facilities, the Corporate Debtor is liable to be discharged to such an extent. It is a well settled law that the right of the pawnee to sue on the debt assumes that the pawnee i.e. the petitioner herein is in a position to redeliver the security pledged, the pawnee cannot obtain a decree. The counsel further submitted that in absence of specific averments in respect of pledge security of shares in this petition, it can be safely presumed that the petitioner is not in a position to redeliver the security pledged with it and therefore, in such event the petitioner cannot have both the payments of the debt and also the security. At no point of time either the petitioner or pledgors received mandatory notice from the petitioner about sale of pledged shares and consequently in absence of such notice, sale if any is illegal. And therefore, the counsel contended that this petition is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir capacity as Pledgor agreed that if the loan and other money or any portion thereof remains unpaid, the petitioner is entitled to sell the pledged shares and accordingly had sold them amounting to ₹ 2,26,10,871/- and adjusted the sale proceeds towards the loan account of the Corporate Debtor thus taking all steps to protect the interest of the Corporate Debtor. 17. The counsel for the petitioner further mentioned that vide e-mails dated 06/10/2017 and 06/11/2017, they had already intimated to the Corporate Debtor about the particulars of sale of the pledged shares. Hence, no grievance shall be raised by the Corporate Debtor in this regard. 18. In reply to this rejoinder, the Corporate Debtor has filed his Sur-Rejoinder wherein they have repeated and reiterated that they had pledged shares in favour of the Petitioner Bank and the aggregate value of all the Pledged shares with them at the time of creation of pledge was approximately ₹ 52.14 Crores. Also, stress has been paid upon their previous contentions that they were not informed about their account slipping into NPA by the petitioner. It was further stated that the price of the pledged shares according to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re declaring the Corporate Debtor as NPA, many requests were made by the petitioner Bank to regularised their account and were categorically informed that if the outstanding is not paid, the Bank would be forced to take measures inter alia inclusive of the sale of the pledged shares. The Corporate Debtor vide letter dated 22/09/2017 which was received by the petitioner on 27/09/2017 requested for grant of more time to set the things right and also had asked for co-operation. 23. The counsel further submitted that upon request of the Corporate Debtor for deferring sale, the petitioner Bank had deferred the coercive steps genuinely for a short duration before commencing sale of the shares. Also, as mentioned by the Corporate Debtor that there were no high volumes of trading with regard to the pledged shares and hence a sudden selling spree of the said shares would have disastrous effect causing pandemonium of huge loss to the Corporate Debtor and hence the bank was forced to gradually offload the pledged shares without triggering the shares price to fall steeply. The counsel mentioned that if huge volumes of pledged shares are sold one at a time, the share prices will crash and al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the judgment in the matter of Tendril Financial Services (P.) Ltd. v. Namedi Leasing Finance Ltd. (2018 SCC OnLine Del 8142) wherein the Hon'ble High Court of Delhi held that Thus, (a) while section 176 provides for a notice to pledgor prior to effecting sale, Regulation 58 provides for notice post invocation and on which invocation beneficial ownership of pledged shares changes from that of the pledgor to that of the pledgee and which is equivalent to sale under section 176. To hold that a prior notice under section 176 of Contract Act is also required in the case of pledge of dematerialised shares would interfere with transparency and certainty in the securities market, rendering fatal blow to the Depositories Act and Regulations and the object of enactment thereof. In the light of the above, it can be safely concluded that the petitioner was not under an obligation to inform the Corporate Debtor before selling the shares pledged. Also, the pledged shares were all in DEMAT form and not in physical form. It is well settled principle by the judgments of various High Courts including the above cited judgment of the High Court of Delhi, that the pledged of dematerializ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y: (I) (a) the institution of suits or continuation of pending suits or proceedings against the Corporate Debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing of by the Corporate Debtor any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act); (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the Corporate Debtor. (II) That the supply of essential goods or services to the Corporate Debtor, if continuing, shall not be terminated or suspended or interrupted during moratorium period. (III) That the provisions of sub-section (1) of section 14 shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. (IV) That the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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