Point of law : An agreement under which the pawnee bank has been authorised to sell the securities pledged with it without notice to the pawner in case the credit balance of the pawner fell below the margin, cannot avail the pawnee in acting contrary to law. Such an agreement would be inconsistent with the provisions of the Contract Act, and therefore, would be wholly void and unenforceable. Consequently, the sale of the securities by the pawnee bank without giving reasonable notice to the pawner is bad and not binding on him. What Section 176 contemplates is not merely a notice but a reasonable notice, of intended sale of the security by the creditor within a certain date so as to afford an opportunity to the debtor to pay up the amount within the time mentioned in the notice.

JUDGMENT :

1. The present Appeal from Order has been filed by the appellant – Finance Company (Original Defendant) challenging the legality and validity of the order dated 14.02.2013 passed by the learned Principal Senior Civil Judge, Nadiad upon Exh.-5 application in Regular Civil Suit No.71 of 2011, whereby the learned Principal Civil Judge was pleased to allow the application Exh.-5 filed by the respondent herein (Original Plaintiff) directing the appellant herein not to take the possession of the disputed motor truck of the respondent till the final disposal of the suit.

2. The brief facts leading to the present Appeal from order are that the appellant – Finance Company is a Limited Company registered under the Companies Act and doing the business of providing finance and had entered into loan-cum-hypothecation agreement with the respondent herein who had taken loan from the appellant herein by an agreement No.NADIAD00053/002 dated 31.05.2010 for purchasing the vehicle bearing Registration No.GJ-7-Y-6697 and it was agreed by the respondent that he shall pay one installment of Rs.11,454/- and 36 installments of Rs.10,454/-. The said loan was required to be paid in 36 installments. According to the appellant, the respondent has not paid the installments regularly. There was default on the part of the respondent and therefore, he filed a suit before the trial court.

3. In support of the case, learned advocate for the appellant finance company has contended that trial court has not properly appreciated the facts and pleadings that the vehicle purchased by the plaintiff by taking vehicle loan from the defendants i.e. appellants herein and entered into an agreement and also agreed with the terms and conditions of the same. It is also contended that the trial court has erred in coming to the conclusion that the defendants cannot take possession of the vehicle when the plaintiff failed to make the payment since long. It is further contended that the defendants have appeared and have filed their reply along with the relevant documents and also drawn the attention of the trial court regarding condition of arbitration when dispute has been arise. It is also contended that the trial court has not considered the contention taken by the appellant in their reply to injunction application and also stated that the plaintiff has made payment of Rs.30,500/- only and has failed to make the payment of installments as per the agreement clause and conditions. It is also contended that the plaintiff has suppressed material facts and has not come before the court with clean hands and when there is arbitration clause, the court has no jurisdiction, however, the trial court has not considered the said fact. It is also contended that the trial court has stated that the order remain in force till final disposal or any new order under the settlement procedure before the arbitration court or the compromise as per the willful settlement before this court during the Lok-adalat and the defendants are prevented to seize the vehicle forcefully without any due procedure of law and without permission of any competent court or without the order of this court in future during pendency of the suit or arbitration proceedings. It is lastly contended that without making regular payment of the installments, how such kind of injunction may be granted when the plaintiff has already entered into agreement for purchase of vehicle and get an amount and purchased the vehicle and using the same and by using the vehicle, they are gaining an amount, but the said aspect has not been dealt with by the trial court.

4. Heard learned advocate for the appellant – Finance Company at length through video conferencing. Though served, the respondent No.1 has chosen not to appear.

5. It appears from the record that the trial court has observed that the plaintiff has challenged the loan account and the illegal penal interest and it has also observed that the defendant has not tried to submit