Ashok Kriplani v. Shiva Texyarn Ltd.

1. By this petition, filed under Article 227 of the Constitution of India the defendant in the suit impugns the order of the trial court dated 1.10.2013 which has refused to allow the amendment of the counter-claim so as to convert the expression ‘pledge of the shares’ into ‘mortgage of the shares’.

2. On behalf of the petitioner/defendant it is argued before this Court that if the shares are given as security as mortgage, then, the security of the mortgaged shares results in the shares becoming an immovable property. 2014:DHC:4333

3. In support of the arguments that the shares become immovable property when given as a mortgage, reliance is placed upon a Division Bench judgment of Andhra Pradesh High Court in the case of Shatzadi Begum Saheba and others Vs. Girdharilal Sanghi and others AIR 1976 AP 273.

4. I have carefully gone through the judgment in the case of Shatzadi Begum (supra). In the said judgment, it is mentioned that if shares are given as security, the transaction is called a mortgage and it is not observed in this judgment that shares become immovable property. All that is observed in the judgment in the case of Shatzadi Begum (supra) is that shares given as security can be classified either as a mortgage or pledge depending on the agreement as to whether the shares can or cannot be transferred in the name of the creditor ie if shares can be transferred in the name of the creditor and he can enjoy the benefit of the shares, then the transaction is a mortgage and otherwise the transaction will continue to remain a pledge. The relevant observations in the judgment in the case of Shatzadi Begum (supra) are contained in the following portions of the Head Note A of the judgment and which reads as under:- “The main point of distinction between a pledge and a mortgage is that the right of enjoyment of the property is not given to a pledge, that right vests in a mortgage. As the said transaction was something more than the right to enjoyment and the rights of the parties were governed by the terms of the agreement, the transaction was a mortgage and not a pledge. The transferees enjoyed certain rights with respect to the shares which were given in their possession. Something more than mere delivery of shares with blank forms was intended by the parties the right to enjoyment of the shares was bestowed on the plaintiffs which is inconsistent with an agreement of pledge: and consistent with mortgage.”

5. A reading of the aforesaid portion nowhere shows that if the transaction is mortgage of shares, then the shares become immovable property. Obviously, shares cannot become immovable property because shares are very much movable property and continue to be movable.

6. I note that it was argued on behalf of the petitioner that the aspect of the mortgage and the shares being immovable property is being raised because of lesser court fee as payable with respect to mortgage as also the fact that there is a different period of limitation for mortgage and as compared to pledge. So far as the aspect of court fee is concerned, that is an aspect which has nothing to do with respect to grant or denial of the amendment. Amendment has been denied on the ground that petitioner/defendant had specifically taken up a case that the shares were pledged and not that the shares were mortgaged. Once that is so the amendment which will in fact amount to withdrawing of admissions that the shares were pledged and not mortgaged cannot be granted.

7. Accordingly, I do not find anything wrong in the impugned order of the trial court declining amendment which would have the effect of withdrawing specific admissions made by the petitioner/defendant that the shares were pledge and not that the shares were mortgaged.

8. So far as the issue of limitation is concerned, once the shares are taken as pledged shares in terms of the existing averments made in the counter-claim whatever is the limitation with respect to pledging of the shares will come into effect.

9. Dismissed.

SEPTEMBER 02, 2014 VALMIKI J. MEHTA, J. ib