HARINARAYAN G BAJAJ Vs. RELIANCE CAPITAL LIMITED

JUDGEMENT

(1.) This suit was filed for a declaration that plaintiffs as pledgors and defendant no.1 as pledgee had reached an understanding for transfer of the pledged securities (shares of defendant no.2) in favour of defendant no.1 at an agreed sum and for payment over to plaintiffs, on accounts being taken, of the amount lying in excess after satisfaction of the outstanding dues. In the alternative, plaintiffs also sought reliefs in the nature of redemption of the pledged securities (shares of defendant no.2) on the basis that the sale thereof by defendant no.1 was null and void. Plaintiffs, however, abandoned their main case in its entirety and pressed only their alternative plea for redemption. No relief is sought against defendant no.2.

(2.) In or around July 1995, plaintiff no.1 approached defendant no.1 seeking a loan in a sum of Rs.5,00,00,000/ (Rupees Five Crores Only). The loan, admittedly, was sanctioned by defendant no.1 vide its letter dated 11th July, 1995 Exh. P1 , repayable in 8 months, i.e., on 12th March, 1996. Material terms are as set out hereinbelow:

(3.) Pursuant to the sanction letter, plaintiffs entered into an Agreement of Pledge dated 12th July, 1995 Exh. P2, to secure the said advance of Rs.5 Crores. Under this Agreement, plaintiffs pledged, in favour of defendant no.1, 2,00,000 shares of defendant no.2, Sesa Goa Ltd. (later name was changed to Sesa Sterlite Ltd.). Plaintiff no.1 also executed in favour of defendant no.1 a demand promissory note dated 12th July 1995 Exh.P6, for the said sum of Rs.5 Crores and a Power of Attorney of the same date, Exh.P7, whereby defendant no.1 was authorized to sell the pledged securities, as deemed fit. The clauses (which had few blanks) in the Agreement of Pledge, that are relevant for the present, are set out hereinbelow: