WORLD CREST ADVISORS LLP Vs. CATALYST TRUSTEESHIP LIMITED

JUDGEMENT

(1.) This application under Order VI Rule 17 of the Code of Civil Procedure, 1908 ("the Code") is taken out by the plaintiff/applicant for the amendment in the plaint. The plaintiff instituted the suit, inter alia, for a declaration that it is the owner of the suit shares, which were pledged by defendants - respondent Nos.4 to 9, with defendant - respondent No.1, and for consequential reliefs including restraint order against respondent Nos.1 and 2 from exercising any right in respect of the pledged securities.

(2.) The substance of the claim is that defendant No.2 - Bank had extended certain financial facilities to defendant Nos.4 to 9 and two other entities (borrowers). The borrowers executed eight Security Trustee Agreement with defendant No.1 - Security Trustee. The plaintiff provided security in respect of the financial facility advanced by defendant No.2 to the borrowers. Ten Unattested Deeds were got executed by defendant No.1 from the plaintiff and the borrowers. Pledge was created in favour of defendant No.1 of 44,00,54,852 shares held by the plaintiff in defendant No.3 Company ("suit shares").

(3.) Defendant No.1 issued notices of sale of the pledged security under Sec. 176 of the Indian Contract Act, 1872. Eventually, defendant No.1 transferred the suit shares to itself. Later on, defendant No.1 instead of selling the suit shares and recovering the debt for defendant No.2 Bank, transferred the suit shares to defendant No.2 Bank in violation of Sec. 172 of the Contract Act as well as the Security Trustee Agreement. Though the plaintiff continues to be the owner of the suit shares till the time the suit shares were not sold, defendant No.2 Bank threatened to exercise voting rights in respect of the suit shares in the Annual General Meeting ("AGM") of defendant No.3, which was to be held on 30/12/2021. Asserting that defendant No.2 Bank was entitled in law to either sale the shares and appropriate the sale proceeds or to institute a suit and retain the pledge shares as security, and was not at all entitled to exercise any other right qua the suit shares as if the general property in the suit shares was transferred to defendant Nos.1 and 2, the plaintiff approached the Court seeking declaration and consequential reliefs.