2016 (4) ABR 677

Bombay High Court

Hon'ble Judge(s): B. P. Colabawalla , J

(A) Contract Act (9 of 1872) S. 176 — Companies Act (1 of 1956), Ss 433, 434 — Winding up of company — Petition for — On ground that company is unable to pay debt — Shares were pledged by respondent company with petitioner — Respondent company filing suit for damages against petitioner and making counter claim on ground that though petitioner informed respondent that they will sell shares pledged with them they sold only few shares — Had they sold all shares on that date they would have realised far more than what was due — However debt was not crystallized on date of sale of few shares — Those shares were sold not due to default of respondent but due to short fall in margin — Subsequent to sale of those shares petitioner received freezing order from Economic Offences wing — Petitioner thereafter could not sell remaining shares for recovery of debt that became due only thereafter — Defence of bona fide cross claim of damages not acceptable — Petition for winding up of company allowed (Paras 17 to 20, 22, to 26)

(B) Contract Act (9 of 1872) S. 176 — Rights of pawnee — When pawnor makes default — Pawnee can sell goods pledged once pawnor makes default — And not prior to it As the S. 176 clearly stipulates, if the pawnor makes default in payment of debt, or performance, at stipulated time, of promise, in respect of which the goods were pledged, the pawnee may (i) bring a suit against the pawnor upon the debt or promise, and retain the goods pledged as a collateral security; or (ii) he may sell the goods pledged, on giving the pawnor reasonable notice of the sale. If the proceeds of such sale are less than the amount due in respect of the debt or promise, the pawnor is still liable to pay the balance. If the proceeds of the sale are greater than the amount so due, the pawnee shall pay over the surplus to the pawnor. Pawnee can sell the goods pledged once the pawnor makes a default in payment of debt. Prior thereto, the pawnee has no right to sell pledged goods.