The main legal point established in the judgment is the entitlement of the respondents to conditional leave to defend subject to the deposit of an amount of Rs 34 crores, in accordance with the Code of Civil Procedure, 1908.

ORDER

1. Leave granted.

2. This appeal arises from a judgment and order of a learned Single Judge of the Delhi High Court dated 8 May 2018 in a summary suit under Order 37 of the Code of Civil Procedure, 1908 ("CPC"). By the order impugned in appeal, the respondents who are the defendants have been granted unconditional leave to defend the suit.

3. The facts as they are material for the disposal of the present appeal lie in a narrow frame.

4. The appellant, by a 'loan facility agreement' dated 17 November 2010 agreed to grant a loan to the first respondent in the amount of Rs 50 crores for a term of twelve months with interest at the rate of 12% per annum, payable monthly. A deed of guarantee was executed by the second respondent.

5. In March 2011, the first respondent pledged 1,42,62,000 shares of Tulip Telecom Ltd., a sister concern of the first respondent managed and controlled by the second respondent. The shares were pledged on different dates between March 2011 and September 2012. Since 2013, Tulip Telecom Ltd. is in liquidation. A provisional liquidator has been appointed on 12 February 2015.

6. The loan was disbursed by the appellant in two tranches: the first tranche of Rs 25 crores was disbursed on 4 March 2011 while the second representing the balance of Rs 25 crores was disbursed in equal amounts of Rs 12.5 crores on 30 November 2011 and 31 December 2011.

7. The first respondent executed an acknowledgment of debt and securities on 20 November 2011. The first tranche was renewed by a sanction letter dated 5 March 2012 for a period of twelve months on a revised rate of interest of 14% p.a. with monthly rests, subject to the execution of security documents. The case of the appellant is that the pledged shares recorded a steep decline in value.

8. On 27 August 2012, the appellant invoked the pledge of 27,000 shares in terms of the loan agreement. The case of the appellant is that on 7 September 2012, a joint lenders meeting was held of the parent company, Tulip Telecom Ltd., whose shares had been pledged. The first and second respondent requested the borrowers, including the appellant, to place the selling of the pledged shares on hold and offered additional security. On 1 October 2012, the appellant agreed to accept a second charge on certain immovable property situated at Vasant Vihar, New Delhi belonging to the second and third respondents subject to an NOC from the first charge holder, HDFC Ltd. and the execution of joint guarantees by the second and third respondents.

9. The appellant invoked the pledge of 39,82,000 shares on 3 October 2012. On 5 October 2012, soon after the invocation of the pledge, the first respondent passed a Board resolution requesting the second and third respondents to furnish collateral security by way of a second charge on the mortgaged asset. Following the grant of an NOC by the fourth respondent, the second and third respondents executed a joint guarantee on 19 October 2012.

10. According to the appellant, all the lenders on the request of the second respondent agreed on 25 January 2013 not to place the pledged shares for sale. The loan was renewed by the appellant on 5 February 2013 for a period of six months at a revised rate of interest of 15% with monthly rests. This was secured by the execution of an acknowledgment of debt of securities dated 8 February 2013. There was a further renewal of the loan facility on 18 November 2013 for a period of two years. On 3 March 2014 this was secured by the execution of another acknowledgment on the part of the first respondent.

11. The appellant issued demand notices on 19 May 2014 and 23 July 2014. The first respondent, while admitting its liability on 23 July 2014, sought time to make payment towards overdue interest. The account of the first respondent was classified as NPA on 1 August 2014. On 2 September 2014 and 15 September 2014, the appellant issued a loan recall notice calling upon the respondents to pay a sum of Rs 55,22,05,107 due as