SHATZADI BEGUM SAHEBA Vs. GIRDHARILAL SANGHI

JUDGEMENT

(1.) This appeal by defendants 1 to 11 is directed against the judgment and decree in O.S. No. 53 of 1970 on the file of the Chief Judge, City Civil Court, Hyderabad. The plaintiffs, respondents 1 and 2 herein filed a suit for the recovery of a sum of Rupees 57,751-90 together with interest pendente lite until realization and costs against the estate of late Sri A.K. Babu Khan in the hands of defendants 1 to 11.

(2.) It is the case of the plaintiffs that late Sri A.K. Babu Khan pledged 2650 shares of the Hyderabad Construction Company Limited, Hyderabad through one Kapurachand Shrimal, Share and Stock Broker with Smt. Najeebunisa Begum to whom Sri Babu Khan had to pay Rs. 54,000. Sri A.K. Babu khan requested the plaintiffs 1 and 2 and one Sri Hargovind Bajjaj (who will be hereinafter referred to as the plaintiffs) who not being available to join the plaintiffs in filing the suit, has been impleaded as the 12th defendant, to redeem the said shares from Smt. Najeebunnisa Begum by paying Rs. 54,000 and to keep the said shares as pledge against the loan thus advanced to Sri A.K. Babu Khan. Accordingly, the plaintiffs paid Rs. 54,000 to Smt. Najeebunnisa Begum and redeemed the shares Sri A.K. Babu Khan, executed an agreement of pledge on 6/07/1965 marked Ex. A-1 in the suit. Incorporating the terms agreed upon between the parties, Sri A.K. Babu Khan executed a document on 6-7-1965 the salient terms of the said agreement are : (i) that the shares shall be lodged by the plaintiffs for transfer in their names : (ii) that Sri A.K. Babu Khan would redeem the shares at any time within two years on payment of the said amount without interest together with the amount of transfer fee ; (iii) that if the amount is not paid within two years, interest at 9% shall be charged for a period of one year; (iv) that if the amount is not paid, the plaintiffs shall be entitled to dispose of the said shares at the risk and responsibility of Sri A.K. Babu Khan after intimating him. Accordingly the plaintiffs redeemed the shares by paying Rs. 54,000 to Smt. Najeebunnisa Begum and got the shares transferred to their name. In spite of several demands, Sri A.K. Babu Khan and after his death, his legal heirs, defendants 1 to 11 herein failed to pay the amount due and redeem the pledged shares. When no reply was given to the lawyers notice dated 14/08/1969 the plaintiffs issued a further notice intimating the defendants that unless the shares are redeemed by payment of the amount due inclusive of interest, the shares would be sold at public auction on 10-4-1970 at the office of Sri B.C. Jain advocate and that the short fall, if any, would be recovered from them. A notice to that effect was published in the papers and hand-bills were also distributed intimating the share-brokers and intending purchasers about the proposed sale. But the defendants failed to pay the amount and redeem the shares. The shares were, therefore, sold at a public auction on 10-4-1970. After deducting the amount of Rs. 9,613-00 realised by the sale of the said 2650 shares, the principal amount and the interest due thereon at 9 per cent per annum from 6-7-1967 to 10-4-70 which comes to Rs. 67,751-00 is sought to be recovered from the estate of Sri A.K. Babu Khan in the hands of the defendants.

(3.) The defendants denied the plaint allegations for want of knowledge. They however, admit that Sri A.K. Babu Khan executed the agreement dated 6/07/1965. But they contended that the interpretation sought to be placed by the plaintiffs on the agreement is not correct. According to them, the transaction was not one of pledge but one of out and out sale with an option of repurchase being vested in Sri A.K. Babu Khan. They also pleaded that on the date of the agreement Sri A.K. Babu Khan was not the owner of the said shares and could not have created a valid pledge. A plea that the suit was barred by limitation was also raised. In the result, they prayed for the dismissal of the suit.