The main legal point established in the judgment is the application of the Indian Contract Act, 1872, particularly sections 172, 173, 176, and 177, in the context of recovery of money in loan transactions involving pledged shares.

SANKAR ACHARYYA, J.

1. Same defendant/appellant has preferred these two appeals against two separate judgements dated March 19, 2015 read with orders of correction passed on 7th April, 2015 by learned Single Judge of this High Court and the decrees drawn up and signed in C.S. 113 of 2002, which was filed by plaintiff Rani Leasing and Finance Limited and in C.S. 114 of 2002, which was filed by plaintiff NPR Finance Limited. These two appeals were heard together and for the sake of convenience and brevity taken up together for disposal by this single judgement.

2. Plaintiffs in both the suits alleged commercial transactions between the parties and prayed for recovery of money with interest against defendant.

3. There is no dispute that plaintiff of C.S. 113 of 2002 advanced loan of Rs.1,10,00,000/- to the defendant/appellant against his pledging 10,400 shares of HFCL and plaintiff of C.S. 114 of 2002 advanced loan of Rs.6,25,00,000/- to the defendant/appellant against his pledging 61,500 shares of HFCL. It is also not disputed that appellant paid Rs. 2,00,00,000/- and interest up to March 2001 to the plaintiff of C.S. 114 of 2002. The defendant/appellant paid interest up to March 2001 to the plaintiff of C.S. 113 of 2002. Admittedly, value of shares of HFCL was diminishing.

4. Plaintiffs claimed in both the suits that the defendant/appellant was requested by plaintiffs of each suit to pledge further shares of adequate value against the loan but defendant failed to do so. Further claim of the plaintiffs in each suit is that after giving notice dated 14th January, 2002, plaintiff of C.S. 113 of 2002 recovered Rs.8,55,400/- only by selling the pledged shares and plaintiff of C.S. 114 of 2002 recovered Rs.50,84,413/- only by selling the pledged shares. After adjustment of such sale proceeds in C.S. 113 of 2002 there was outstanding dues of Rs.1,19,00,456/- including interest calculated up to 19th February, 2002 and in C.S. 114 of 2002 there was outstanding dues of Rs.4,37,24,227/- including interest calculated up to 27th January, 2002. Both the said amounts with further accrued interest are payable by defendant/appellant to plaintiffs/ respondents.

5. The defendant/appellant has not disputed the amounts paid by him as stated in the plaints of the two suits and has not claimed payment of any further amount by him against the two loan transactions. Specific case of the defendant in substance in the suits is that the plaintiffs offered money for investment to defendant as loan against security of shares through one Gobind Prasad Kedia @ G.P. Kedia, a broker to which the defendant agreed and took loan of Rs.6,25,00,000/- from NPR Finance Limited and Rs.1,10,00,000/- from Rani Leasing and Finance Limited pledging shares of matching value to secure the loan. Further case of the defendant is that he sent letter dated 7.2.2001 to Rani Leasing and Finance Limited and letter dated 14.2.2001 to NPR Finance Limited through said G.P Kedia requesting to sell 10,400 shares and 61,500 shares respectively to realise the outstanding dues intimating that defendant would not be liable for any loss by reason of plaintiffs’ holding on the shares any longer. Despite receipt of said letters by G.P Kedia on behalf of plaintiffs, the shares were not sold by said two companies. G.P. Kedia informed the defendant on 8.2.2001 that Rani Leasing and Finance Limited credited a sum of Rs.1,00,722,400/- (perhaps, the amount would be 10722400/-) was credited to the account of defendant when the value of each share of HFCL was Rs.1031/- and the said amount was adjusted and liquidated against principal loan. NPR Finance Limited insisted the defendant on 1.3.2001 for payment of Rs.2,00,00,000/- so that the pledged shares and said payment would fully match the loan amount and accordingly defendant paid that amount to said plaintiff of C.S. 114 of 2002 and the loan account was fully squared up taking into value of 61,500 shares of HFCL at the rate of Rs.682.30 p. per