JUDGMENT :

Sanjiv Khanna, J.

The primary legal issue which arises for consideration in this appeal is whether the DEPOSITORIES ACT , 1996 read with the Regulation 58 of the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996¹[For short, 1996 Regulations'] has the legal effect of overwriting the provisions relating to the contracts of pledge under the Indian CONTRACT ACT , 1872²[For short, ' CONTRACT ACT '.] and the common law as applicable in India. To facilitate analysis, this judgment has been divided into sections as follows:

A. Factual background of the case

B. Relevant provisions of the CONTRACT ACT

C. Analysis of case laws under the CONTRACT ACT :

(i) What is pledge and the legal difference between ownership, pledge and mortgage

(ii) Pawnee has a special and not general right in the pledged property

(iii) Accretion on pawned goods

(iv) Notice of sale by pawnor and his right to sale

(v) Sale of the pledged goods by the pawnee to self

D. Effect and Purpose of the DEPOSITORIES ACT , 1996 and the Securities and Exchange Board of India (Depositories and Participants) Regulation 1996

E. Effect of the DEPOSITORIES ACT , 1996 and the Securities and Exchange Board of India (Depositories and Participants) Regulation, 1996 on the pledge under the CONTRACT ACT , 1872

F. Four decisions

G. Analysis of facts and application of law of pledge to the facts of this case

H. Conclusion

A.Factual background of the case

2.1 The appellant - PTC India Financial Services Limited, ³[Hereinafter referred to as "PIFSL".] is an existing company under the COMPANIES ACT , 2013. It is a wholly-owned subsidiary of PTC India Limited, which in 1999 was promoted by four public sector undertakings, namely, NTPC Limited, Power Finance Corporation Limited, NHPC Limited, and Power Grid Corporation of India Limited. PIFSL is registered with the Reserve Bank of India⁴[Hereinafter referred to as "RBI".] as a Non-Banking Finance Company⁵[Hereinafter referred to as "NBFC".] and classified as an Infrastructure Finance Company. ⁶[Hereinafter referred to as "IFC".] The principal business of PIFSL is to invest in power and energy sector projects in India.

2.2 PIFSL, by way of a Bridge Loan Agreement dated 10th March 2014, had advanced a loan of Rs. 125 crores to NSL Nagapatnam Power and Infratech Limited. ⁷[Hereinafter referred to as "NNPIL" or "Corporate Debtor".] As per Clause 3.1.1 of the Bridge Loan Agreement, the loan is required to be secured. In accordance with sub-clause (6) of Clause 3.1.1, on 10th March 2014 thereof, the second respondent, Mandava Holdings Private Limited, ⁸[Hereinafter referred to as "MHPL".] executed a Pledge Deed in favour of PIFSL, thereby, pledging 31,80,678 shares, equivalent to 26% of the shares of NSL Energy Ventures Private Limited. ⁹[Hereinafter referred to as "NEVPL".] NNPIL and NEVPL are subsidiaries of MHPL.

2.3 On 17th November 2017, the Corporate Debtor filed a petition invoking Section 10 of the Insolvency and Bankruptcy Code , 2016¹⁰[For short, 'IBC.] before the National Company Law Tribunal, Hyderabad, ¹¹[Hereinafter referred to as "Adjudicating Authority".] initiating the corporate insolvency resolution process. The petition was admitted under Section 10 (4) of the IBC on 18th January 2018. Mr. Venkateswarlu Kari, respondent No. 1, was appointed as the Interim Resolution Professional¹² [Hereinafter referred to as "IRP".]

2.4 On 28th December 2017, PIFSL issued a notice under the Pledge Deed apprising MHPL on the defaults on the part of Corporate Debtor and that if the debt due was not discharged within seven days, PIFSL would exercise the rights in terms of the Pledge Deed.

2.5 On 16th January 2018, as the debt remained unpaid, PIFSL wrote to the Depository Participant invoking its rights in terms of Clause 6.1 of the Pledge Deed. Acting on the request, the Depository Participant has accorded PIFSL the status of 'beneficial owner' of 31,80,678 pledged shares of NEVPL.

2.6 On 23rd January 2018, PIF