0

FRESHERS’ POOL 2017-18

IN THE HONOURABLE HIGH COURT OF MAHARASHTRA

Writ Petition filed under Article 226 of the Constitution of the State of Dhanbad
WP No. ____ of 2017

IN THE MATTER BETWEEN

Mr. Aashik Kumar and ors. …..Petitioner

versus

State of Dhanbad ….Respondent No. 1

State Bank of Indusland ….Respondent No. 2

MEMORANDUM ON BEHALF OF THE PETITIONER

[This Memorandum has been prepared for the Petitioner and is humbly submitted to the
Hon’ble Judges of the High Court of Maharashtra]
 Page 1
FRESHERS’ POOL

TABLE OF CONTENTS

INDEX OF AUTHORITIES .................................................................................................... 2

STATEMENT OF JURISDICTION .......................................................................................... 4
STATEMENT OF FACTS ...................................................................................................... 5
STATEMENT OF ISSUES ..................................................................................................... 6
SUMMARY OF ARGUMENTS ............................................................................................. 7
ARGUMENTS ADVANCED .................................................................................................. 9
I. WHETHER THE WRIT PETITION IS MAINTAINABLE BEFORE THE BOMBAY HIGH COURT AND
WHETHER THE JURISDICTION OF THE COURTS OF MUMBAI IS OUSTED BY OPERATION OF
CLAUSE A.7.8 AND A.7.9? ......................................................................................................... 9
1.1 That the Respondent is a State under Article 12 of Indian Constitution: ................................ 9
1.2 That there has been arbitrary rejection of applications violates article 14 and 19: .............. 11
1.3 That the jurisdiction of the Mumbai High Court is not ousted by the application of the
exclusive jurisdiction clause of the agreement. ........................................................................... 14
II.WHETHER THERE HAS BEEN ANY DEFICIENCY OF SERVICE ON PART OF STATE BANK OF
INDUSLAND? ......................................................................................................................... 16
2.1 The bank rejected the loan application arbitrarily and without reason: ........................ 18
2.2 Mishandling of documents:............................................................................................. 19
2.3 That there has been delay in processing of documents: ....................................................... 19
III. WHETHER THERE HAS BEEN A ‘DISHONOUR OF CHEQUE’ BY THE DEBTORS UNDER SECTION
138 OF THE ‘NEGOTIABLE INSTRUMENTS ACT’? IF YES, THEN WHETHER THE PROCEDURE HAS
BEEN DULY COMPLIED BY STATE BANK OF INDUSLAND? ......................................................... 20
3.1. That the Post-dated Cheque is a Bill of Exchange and not a Cheque ................................... 21
3.2 That the Dishonour of Cheque given as Collateral Security is not an offence under Section
138 of the Negotiable Instruments Act, 1881 .............................................................................. 22
3.3That the Procedure has not been duly complied by the Respondent .................................... 24
IV. WHETHER THE INVOCATION OF PLEDGE IS IN CONTRAVENTION OF DHANBAD CONTRACT
ACT, 1872?............................................................................................................................. 25
4.1 That a Sale made by the Pledgee to Himself is Void .............................................................. 25
4.2 That the pawnee is required to give the pawnor a reasonable notice of the sale ................ 26
4.3 That the pawnor was not granted the right to redeem the shares granted as collateral
security ......................................................................................................................................... 28
PRAYER .......................................................................................................................... 30

WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER

 Page 2
FRESHERS’ POOL

INDEX OF AUTHORITIES

Statues
Companies Act, 2013 ................................................................................................................. 9
INDIAN CONST., 1950 .......................................................................................................... 10
Indian Contract Act, 1872 ........................................................................................................ 27
Supreme Court Cases
Ajay Hasia v. Khalid Mujib, 1981 SCR (2) 79 ................................................................... - 10 -
Bachan Singh v. State of Punjab,1982 AIR 1325, 1983 SCR ( .......................................... - 14 -
E.P. Royappa v. State of Tamil Nadu and Another 1974 SCR (2) 348 .............................. - 14 -
E.P. Royappa V. State of Tamil Nadu and Anr. (AIR1974SC555 ...................................... - 12 -
Hakam Singh v. Gammon (India) Ltd 1971 AIR 740, 1971 SCR (3) 314 .......................... - 17 -
Indus Airways Pvt. Ltd. v. Magnum Aviation Pvt. Ltd. AIR 2014 AC 1347. ..................... - 25 -
Kamlesh Kumar vs. State of Bihar, MANU/SC/1275/2013 ............................................... - 25 -
Minerva Mills Ltd. & Others v. Union of India and Others, 1980 AIR 1789, 1981 SCR (1)
206................................................................................................................................... - 14 -
Mohammad Shujat Ali and Ors. v. Union of India (UOI) and Ors., AIR 1974 SC 1631... - 12 -
Negotiable Instruments Act, 1881. ..................................................................................... - 22 -
Patel Roadways Ltd. V. Prasad Training Co ( AIR 1992 SC 1514). ................................. - 17 -
R.D. Shetty v. The International Airport Authority of India and Ors. (1979) 1 S.C.R.1042 - 10
-
Ramana Dayaram Shetty v. The International Airport Authority of India(AIR1979SC1628 ... -
12 -
Ramana Dayaram Shetty VS The International Airport Authority Of India And ORS
,AIR1979SC1628 ............................................................................................................ - 11 -
State of West Bengal v. Anwar Ali Sarkar AIR 1952 SC 75............................................... - 13 -

High Court Cases

Co-op Hindustan Bank Ltd. v. Surendra Nath Dey AIR 1932 Cal .......................................... 26
Hulas Kunwar v. Allahabad Bank Ltd AIR 1958 Cal 644 ....................................................... 26
Laxmi Narain vs. State Bank of India AIR 1969 Pat.385. ....................................................... 25
Prabhat Bank Ltd. and Anr. v. Babu Ram AIR 1966 All 134 ................................................. 26
Suresh v. Muthoot Finance Ltd. AIR 2015 Ker 276 ................................................................ 26

WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER

 Page 3
FRESHERS’ POOL
The Official Assgnee vs. Madholal Sindhu AIR 1947 Bom 217. ............................................ 26
Visa Energy Ventures Ltd. vs. Il & Fs Financial Services Ltd. Ors AIR 2015 Cal 241 .......... 27

WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER

 Page 4
FRESHERS’ POOL

STATEMENT OF JURISDICTION

THE APPELLANT HAS APPROACHED THE COURT IN PURSUANCE OF A WRIT

PETITION FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA.

The Appellant humbly submits to the jurisdiction of this Hon’ble Court

WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER

 Page 5
FRESHERS’ POOL

STATEMENT OF FACTS

1. In the year 2015 in State of Dhanbad, Wassepur Party won Parliamentary elections for
Lower House and Raji Paji became the PM
2. Government launched a ‘Jan Dhan Trann Yojna’ scheme which provided personal/home
loans at drastically lower rates to lower income groups. the State Bank of Indusland,
which had 51% shares being held by State, shall be one of the nationalised banks to
provide these loans. The Bank has a single branch in Bhopal .
3. Bank retained full discretion to determine eligibility in three weeks. Bank made
applicants deposit two post-dated cheques for an amount equal to the principal amount.
4. The agreement(a form of a contract) had the following dispute resolution clauses:
A.7.8- Dispute Resolution- in the case of any dispute arbitration will be taken as a
method of resolution the seat and venue of which was fixed to be in Delhi which will
be governed by the Arbitrations and Conciliations Act,1996.
A.7.9- Jurisdiction- Any dispute arising out of this Agreement shall be brought
exclusively in the courts of Delhi.
5. There were some instances where the loan amount was denied by SBI to some applicants
‘arbitrarily’ and ‘without reason’. Mr.NLIU-Glory, one of the aggrieved applicants filed a
complaint in the Consumer Disputes Redressal Forum, Mumbai for deficiency of service.
6. Around 6 lakh pawnees pledged their shares of Company FloorMart in favour of SBI.
The owners registered as Beneficial Owners with NSDL. SBI moved the post-dated
cheques two days before the date on the cheque. SBI issued a statutory notice, 40 days
from the date of return of memorandum. Notice was not complied and after 15 days, SBI
initiated prosecution against the debtors.
7. On dishonour of cheques, NSDL registered SBI as the beneficial owner on invocation of
pledge. Subsequently, SBI withdrewing participation from NSDL, stood the ultimate
owner. ‘Mr. Anonymous Fresher’ complained before UGC, the SEBI of Dhanbad,
alleging it to be in violation of Dhanbad Contract Act, 1872.
8. Mr. Aashik Kumar filed a writ petition against SBI and State of Dhanbad before the High
Court of Maharashtra, Bombay Bench alleging violation of fundamental right to equality,
and freedom of profession under Article 19. The High Court clubbed the pending cases
before itself for effective determination.
-The matter is slated to be heard on 7th and 8th October, 2017-

WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER

 Page 6
FRESHERS’ POOL

STATEMENT OF ISSUES

WHETHER THE WRIT PETITION IS MAINTAINABLE BEFORE THE BOMBAY

HIGH COURT AND WHETHER THE JURISDICTION OF THE COURTS OF
MUMBAI IS OUSTED BY OPERATION OF CLAUSE A7.8 AND A7.9?

II

WHETHER THERE HAS BEEN ANY DEFICIENCY OF SERVICE ON PART OF

SBI?

III

WHETHER THERE HAS BEEN A ‘DISHONOUR OF CHEQUE’ BY THE

DEBTORS UNDER SECTION 138 OF THE ‘NEGOTIABLE INSTRUMENTS ACT’?
IF YES, THEN WHETHER THE PROCEDURE HAS BEEN DULY COMPLIED
WITH BY THE SBI?

IV

WHETHER THE INVOCATION OF PLEDGE IS IN CONTRAVENTION OF

DHANBAD CONTRACT ACT, 1872?

WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER

 Page 7
FRESHERS’ POOL

SUMMARY OF ARGUMENTS

1. WHETHER THE WRIT PETITION IS MAINTAINABLE BEFORE THE

BOMBAY HIGH COURT AND WHETHER THE JURISDICTION OF THE
COURTS OF MUMBAI IS OUSTED BY OPERATION OF CLAUSE A.7.8 AND

A.7.9? 


It is humbly submitted before the Hon’ble court that the writ petition filed is
maintainable as it violates Art. 14 and Art. 19 of the Indian Constitution as there is no
reasonable classification and the action qualifies to be unreasonable. Furthermore, the
jurisdiction of the High Court is not ousted by operation of Clause A.7.8 and A.7.9 as
the jurisdiction of a court arises from the place where the cause of action has arisen.

2. WHETHER THERE HAS BEEN ANY DEFICIENCY OF SERVICE ON PART

OF SBI? 


It is respectfully submitted before the Hon’ble court that, in the instant matter, the
Respondent is involved in deficiency of service. The discretion that the Respondent had
exercised was not on bonafide terms and Respondent had rejected the application
‘arbitrarily’ and ‘without reason’, as a result of which some applicants could not avail
the facility of loan in times of need. The Respondent was also involved in the
mishandling of documents and took unreasonably long time to process the loan
documents only waiting to be rejected. The arbitrary rejection of loan application,
mishandling of documents and further delay in processing of documents are the
grounds on which deficiency of service is proven.

3. WHETHER THERE HAS BEEN A ‘DISHONOUR OF CHEQUE’ BY THE

DEBTORS UNDER SECTION 138 OF THE ‘NEGOTIABLE INSTRUMENTS
ACT’? IF YES, THEN WHETHER THE PROCEDURE HAS BEEN DULY
COMPLIED BY STATE BANK OF INDUSLAND?
It is most respectfully submitted before the Honourable court that, in the instant matter,
there is no dishonour of cheque under section 138 of the Negotiable Instruments Act,
1881 due to absence of legal obligation or debt or liability at the time of the withdrawal
of the cheque. In addition, the Respondent has failed to follow the procedure mandated
WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER
 Page 8
FRESHERS’ POOL
by the Negotiable Instruments Act, 1881.

4. WHETHER THE INVOCATION OF PLEDGE IS IN CONTRAVENTION OF

THE DHANBAD CONTRACT ACT, 1872?
It is reverently submitted that the Respondent’s invocation of pledge is in contravention
of the Dhanbad Contract Act, 1872, since the Respondent cannot become the ultimate
owner of the shares on invocation of pledge. The Appellant was not given a reasonable
notice of the sale of the pledge which is mandated by section 176 of the Dhanbad
Contract Act, 1872. Also, the right to redeem the shares under section 177 of the said
Act has been violated.

WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER

 Page 9
FRESHERS’ POOL

ARGUMENTS ADVANCED
1. WHETHER THE WRIT PETITION IS MAINTAINABLE BEFORE THE BOMBAY
HIGH COURT AND WHETHER THE JURISDICTION OF THE COURTS OF

MUMBAI IS OUSTED BY OPERATION OF CLAUSE A.7.8 AND A.7.9? 


It is humbly submitted before the Hon’ble Court that the writ petition filed is
maintainable as it violates Article 14 and Article 19 of the Indian Constitution, as there
is no reasonable classification and the action qualifies to be arbitrary. Furthermore, the
jurisdiction of the High Court is not ousted by operation of Clauses A.7.8 and A.7.9 as
the jurisdiction of a court arises from the place where the cause of action has arisen.

1.1 That the Respondent is a State under Article 12 of Indian Constitution:

1.1.1 Article 12 in the Constitution of India 1950 defines the state.
In this part the state includes the Government and Parliament of India and the
government and the legislature of each of the states and all local or other authorities
within the territory of India or under control of the Government of India.
1.1.2 The Supreme Court in the Ajay Hasia v. Khalid Mujib1case also laid down the principle
for defining the state as under the Constitution of India. The supreme court extended
and interpreted the meaning of state as under ‘other authorities’. The state can therefore
include corporations under the category of ‘other authorities’ wherever Government is
acting under its agency or instrumentality of the corporation.
1.1.3 It is humbly submitted before this court that when a corporation is regarded as an
‘authority’ within the meaning of article 12 a similar consideration in R.D. Shetty v.
The International Airport Authority of India and Ors.2 gains significance. There, in a
unanimous judgement of three judges delivered by one of them (Bhagwati,J) the
Supreme Court pointed out:
“It was in pursuance of the Government of India Resolution on Industrial Policy dated
6th April, 1948 that corporations were created by Government for setting up and

1
Ajay Hasia v. Khalid Mujib, 1981 SCR (2) 79.

2
R.D. Shetty v. The International Airport Authority of India and Ors. (1979) 1 S.C.R.1042.
WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER
 Page 10
FRESHERS’ POOL
management of public enterprises and carrying out other public functions. The
corporations acting as instrumentality or agency of Government would obviously be
subject to the same limitations in the field of constitutional and administrative law as a
Government itself, though in the eye of the law, they would be distinct and independent
legal entities. If Government acting through its officers is subject to certain
constitutional and public law limitations, it must follow a fortiori that Government
acting through instrumentality or agency of corporations should be subject to the same
limitations.”
1.1.4 A “Government company” is defined as “any company in which not less than 51% of
the paid-up share capital is held by the Central Government, or by any State
Government or Governments, or partly by the Central Government and partly by one or
more State Governments, and includes a company which is a subsidiary company of
such a Government company”.3

1.1.5 The Supreme Court in the Ramana Dayaram Shetty VS The International Airport
Authority Of India And ORS4 dealt majorly with the issue of a government company
being a state.
1.1.6 The Supreme court enumerated the following five factors
(i) The source of the share capital;
(ii) The extent of State Control over the Corporation and whether it is “deep and
pervasive”;
(iii) Whether the functions of the Corporation has a monopoly status;
(iv) Whether the functions of Corporation are of public importance and closely related
to governmental functions; and
(v) Whether, what belonged to a Government Department formerly was transferred to
the Corporation.
1.1.7 One of the consequences of the above test of agency or instrumentality was that the
Government Companies as under Section 2(45) of the Companies Act, 1956 were
started to be regarded as State as given under Article 12 of the Constitution.
1.1.8 In the instant case, it is put forward that the Respo (SBI) has 51%of its shares being
held by the Government and therefore by the factor of source of share capital ,as was

3
Section 2(45) of the Companies Act,2013.
4
Ramana Dayaram Shetty VS The International Airport Authority Of India And ORS ,AIR1979SC1628.
WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER
 Page 11
FRESHERS’ POOL
presented by the Supreme court of India in the Ramana Dayaram Shetty v. The
International Airport Authority of India, the State Bank of Indusland is an agency or
instrumentality of the government. These agency or instrumentality of the government
is an extended measure under the ‘other authorities’ as mentioned while defining state
under article 12 of the Indian Constitution. It is a well established fact that the
corporations acting as instrumentality or agency of Government would obviously be
subjected to the same limitations in the field of constitutional and administrative law as
a Government5. Therefore it will be equally bound by the basic obligation to obey the
constitutional mandate of the fundamental rights enshrined in Part III of the constitution
as a state.
1.1.9 Therefore, it is submitted before this court that state bank of Indusland is a state under
article 12 of the Indian constitution and therefore has the basic obligation to fulfil the
fundamental rights as mentioned in part III of the Indian constitution.

1.2 That arbitrary rejection of applications violates article 14 and 19:

1.2.1 It is respectfully submitted before this Hon’ble Court that, in the instant matter, there is
no reasonable classification made with regard to the class of people. The state has not
provided with any reason and has ‘arbitrarily’ rejected the applications of some class of
people i.e. there is a lack of the basis of classification. Further, article 14 of the
constitution of India covers under it two aspects, viz. it permits reasonable
classification which is found on intelligible differentia and has a rational relation to the
objects sought to be achieved. Article 14 strikes at arbitrariness of state action and
ensure fairness and equality.
1.2.2 Article 14 ensures to every person equality before law and equal protection of law 6.The
classifications made by the State must accordingly be reasonable. 7 it should ensure that
persons or things similarly situated are all similarly treated. The constitution under
article 14 forbids discrimination and arbitrariness of state action.8 What Article 14
forbids is class legislation but it does not forbid reasonable classification. The
classification however must not be “arbitrary, artificial or evasive” but must be based

5
Ramana Dayaram Shetty v. The International Airport Authority of India(AIR1979SC1628).
6
Article 14 of the INDIAN CONST., 1950

7
Mohammad Shujat Ali and Ors. v. Union of India (UOI) and Ors., AIR 1974 SC 1631.
8
E.P. Royappa V. State of Tamil Nadu and Anr. (AIR1974SC555).
WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER
 Page 12
FRESHERS’ POOL
on some real and substantial bearing a just and reasonable relation to the object sought
to be achieved by the legislation or executive action.
1.2.3 It is humbly submitted before this court, in the instant case, that the classification made
is not based on any reason. The loan amount was denied by the Respondent ‘without
any reason’ and ‘arbitrarily’. The Respondent also retained the sole discretion to reject
and accept the application which depicts arbitrariness on account of the state. The
action of the state here was not based on reason or judgement but on personal will or
discretion without regard to rules or standards which can be classified under arbitrary
action of the state. The creation of class must be on well-founded principles which
implies the two-fold requirements which was given by Justice S.K. Das in State of
West Bengal v. Anwar Ali Sarkar9
Classification to be reasonable must fulfil the following conditions:
 Firstly, the classification must be founded on the intelligible differentia which
distinguishes persons or thing that are grouped together from others left out of the
group.
 Secondly, the differentia must have a rational relation to the object sought to be
achieved by the act.
A violation of the said doctrine would amount to arbitrariness under Article14.

1.2.4 In keeping with this reasonable classification adopted for the exercise of Art.14 to
avoid injustice, it may be stated that the Respondent has a duty under Art.14 to accept
or reject applications on the basis of standardised criteria to ensure that it is fair,
reasonable and in consonance with the object of the scheme
1.2.5 It is submitted that the ‘Jan Dhan Trann Yojna’ scheme was initiated to provide loans
to lower income groups at drastically lower rates and sought to achieve the objective of
benefiting the low income groups.10 However, there were instances where the loan
amount was rejected by the SBI without any reason and arbitrarily.
1.2.6 The bank has clearly not followed the pre-determined criteria and therefore it is
contended that the actions of the Respondent violates article 14 of the Constitution as
they breach the doctrine of reasonable classification. It is humbly submitted before the

9
State of West Bengal v. Anwar Ali Sarkar AIR 1952 SC 75.

10
page1 Paragraph 2 Moot Proposition.
WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER
 Page 13
FRESHERS’ POOL
Hon’ble court that the contentions of arbitrariness on part of the Respondent be
examined and appropriate actions be taken.
1.2.7 It is humbly submitted before the Hon’ble court that the Respondent’s action of
returning the documents of an applicant on grounds of the applicant ‘not working in an
eligible profession’ violates Article 19(1)(g).11
1.2.8 Where the action imposes restrictions on the fundamental rights of a citizen the onus to
justify the restriction is on the State. It is also submitted that if the statute imposes
restrictions on trade or business which are unfair, unreasonable and arbitrary, besides
infringing Article 14 of the Constitution, the same would also be violative of Article
19 as well. In this connection, the principles laid down by the Supreme Court in E.P.
Royappa v. State of Tamil Nadu and Another12 ; Ramana dayaram Shetty v. The
International Airport Authority of India and Others13 ; Bachan Singh v. State of
Punjab14; Minerva Mills Ltd. & Others v. Union of India and Others15 . If we may say
so with respect, the propositions and principles brought to our notice by means of the
above decisions are unassailable and sufficient to prove that the state cannot get away
with the violation of these fundamental rights.
1.2.9 The rejection of loans for the reason of applicant not working in an eligible profession
is wrong and violates Article 19(1)(g). The proposition used by the Respondent to issue
loans under Jan Dhan Trann Yojana is not right. The scheme aims to provide loans at
drastically lower rates to lower income groups therefore, the contention of the
Respondent of giving loans only to those working in an ‘eligible profession’ is not right
since the scheme itself involves those of the lower income class.
1.2.10 The action of the Respondent cannot be covered under the exceptions and limitations
imposed under Art. 19(2) and 19(6). These freedoms are not absolute but are subject to
few regulations.
But the judiciary has the power to test the validity on two grounds
1. whether the restriction is reasonable, or
2. whether it is for the purpose mentioned in the clause under which the restriction is
being imposed.

11
Page 2, para 1 Moot Proposition.
12
E.P. Royappa v. State of Tamil Nadu and Another 1974 SCR (2) 348.
13
Ramana dayaram Shetty v. The International Airport Authority of India and Others ,1979 AIR 1628, 1979
SCR (3)1014.
14
Bachan Singh v. State of Punjab,1982 AIR 1325, 1983 SCR (1) 145.
15
Minerva Mills Ltd. & Others v. Union of India and Others, 1980 AIR 1789, 1981 SCR (1) 206.
WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER
 Page 14
FRESHERS’ POOL
1.2.11 It is humbly submitted before the Hon’ble Court that, in the instant case, the restriction
imposed, which violates Art.19(g), is beyond being called reasonable. The loan
applications have been rejected arbitrarily and in some instance, because of applicant
for loan not working in an eligible profession. This defeats the purpose of the scheme,
which is to provide loans at lower rates to lower income groups. The rejection of
applications of loan for reason of not working in an eligible profession, without
mentioning what an eligible profession is, also depicts arbitrariness on part of the
Respondent. Additionally no purpose has been provided under which the restriction has
been imposed and therefore it is a valid ground to prove that the action of the
Respondent violates the fundamental rights.
1.2.12 It is hence, submitted to the court that actions by the Respondent violates Fundamental
Rights mentioned under Art. 14 and 19. Hence the write petition is maintainable in the
Bombay High Court under Art. 226 of the Constitution of India.

1.3 That the jurisdiction of the Mumbai High Court is not ousted by the application
of the exclusive jurisdiction clause of the agreement.
It is humbly submitted before this court that, in the instant case, the jurisdiction of the
Mumbai High Court is not ousted by the application of the exclusive jurisdiction clause
of the agreement. The Court continues to have the jurisdiction because the cause of
action arose in Mumbai. At best it can be concluded by this court that the Courts in
Mumbai and Bhopal have the jurisdiction in view of the material placed on record. As
far as exclusive jurisdiction of Delhi is concerned, it is humbly submitted that any cause
of action has never arisen in any part of Delhi.
1.3.1 A. Bhopal
According to section 20(a) of the Civil Procedure Code every suit shall be instituted in
a Court within the local limits of whose jurisdiction—
(a) The defendant, or each of the defendants where there are more than one, at the time
of the commencement of the Suit, actually and voluntarily resides, or carries on
business, or personally works for gain; or
(b) any of the defendants, where there are more than one, at the time of the
commencement of the suit, actually and voluntarily resides, or carries on business, or
personally works for gain, provided that in such case either the leave of the Court is
WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER
 Page 15
FRESHERS’ POOL
given, or the defendants who do not reside, or carry on business, or personally work for
gain, as aforesaid, acquiesce in such institution; or
(c) the cause of action, wholly or in part, arises.
1.3.2 it is humbly submitted before this Hon’ble Court that section 20(a) applies to
such corporation or company which has its sole office at a particular place and in such
an eventuality Courts, within whose jurisdiction such sole office is situated, will have
the jurisdiction, whether the company is actually carrying on business from there or not.
In the instant case, the Respondent was having its only branch in Bhopal, Madhya
Pradesh. Therefore, according to section 20(a) courts having territorial jurisdiction in
Bhopal shall have jurisdiction to try and entertain the present suit.
1.3.3 B. Mumbai
Under section 20(c) of the Code of Civil Procedure subject to the limitation stated
therefore, every suit shall be instituted in a court within the local limits of whose
jurisdiction the cause of action, wholly or in part arises.
In suits arising out of contract the cause of action arises within the meaning of this
section at any of the following places, namely:-
(1) The place where the contract was made;
(2) the place where the contract was to be performed or performance thereof completed;
(3) the place where in performance of the contract any money to which the suit relates
was expressly or impliedly payable.
Even though this explanation has been omitted from the Act but still it is a guiding
factor.
1.3.4 It is humbly submitted before the Hon’ble Court that, in the instant case, the loan
agreement is a standard contract.16
(a) The contract was made in Mumbai.
(b) The contract was to be performed in Mumbai
(c) The performance of the contract was scheduled in Mumbai.
It can therefore be seen that the cause of action arose in Mumbai and therefore, the
courts having territorial jurisdiction in Mumbai shall also have the jurisdiction to try
and entertain the present suit.17

16
Page 1, para 4 of the Moot Proposition.
17
sec20(c) CPC,1908.
WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER
 Page 16
FRESHERS’ POOL
1.3.5 That it cannot be conferred to Delhi even by consent
It is humbly submitted before the Hon’ble Court that the parties cannot by private agreement
confer upon a court jurisdiction which it does not possess.18It is specifically forbidden that an
agreement cannot confer jurisdiction on the court which has no jurisdiction at all to entertain
such suit.19;20.
1.3.6 In the instant case, the agreement has exclusively conferred the jurisdiction on the Delhi High
Court even though no cause of action arose there. It therefore, violates the Supreme Court
rulings and also the Civil Procedure Code and hence can be said to be against the public
policy. Every agreement of which the object or consideration is unlawful is void. Hence there
can be no doubt that an agreement to oust absolutely the jurisdiction of the Court will be
unlawful and void being against the public policy.21 Ex dolo malo non oritur actio. If
therefore it is found in this case that Clause A.7.9 has absolutely ousted the jurisdiction of the
Court it would be against public policy.
1.3.7 Therefore, it is humbly submitted to this court that only courts having jurisdiction on Mumbai
and Bhopal have the jurisdiction to try and entertain this suit and that the exclusive
jurisdiction clause would not apply on facts, as the courts in Delhi would have no jurisdiction
at all. It, therefore, determined that Mumbai being the first Court that was approached would
have jurisdiction in the matter.

2.WHETHER THERE HAS BEEN ANY DEFICIENCY OF SERVICE ON PART OF

STATE BANK OF INDUSLAND?
It is respectfully submitted before the Hon’ble court that, in the instant matter, there is
deficiency of service by the Respondent. The discretion that the Respondent had exercised
was not on bonafide terms and the Respondent had rejected the application ‘arbitrarily’ and
‘without reason’, as a result of which some applicants could not avail the facility of loan in
times of need. The Respondent was also involved in the mishandling of documents and took
unreasonably long time to process the loan documents only waiting to be rejected. The
arbitrary rejection of loan application, mishandling of documents and further delay in
processing of documents are the grounds on which deficiency of service could be proved.

18
sec 28 ICA 1872
19
Patel Roadways Ltd. V. Prasad Training Co ( AIR 1992 SC 1514).
20
Hakam Singh v. Gammon (India) Ltd 1971 AIR 740, 1971 SCR (3) 314.
21
sec. 23 of the ICA1872.
WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER
 Page 17
FRESHERS’ POOL
A. The petitioner-appellant is an eligible consumer under consumer protection act 1986
A. The term ‘service’ means service of any description and includes the provision of
facilities in connection with banking, financing, insurance, transport, processing, supply of
electrical or other energy etc. but does not include the rendering of any service free of charge
or under a contract of personal service. 22
B. Deficiency of service means any fault, imperfection, shortcoming or inadequacy in the
quality, nature and manner of performance which is required to be maintained by or under
any law for the time being in force or has been undertaken to be performed by a person in
pursuance of a contract or otherwise in relation to any service.23
C. The term consumer as a person belonging to any of the following category –
a) One who buys the goods for a consideration which has been paid or promised or partly
paid and partly promised under any system of deferred payment.
b) One who hires or avails of any service or services including any beneficiary thereof or a
consideration which has been paid or promised or partly paid and partly promised or under
any system of deferred payment
c) It includes a user or beneficiary of goods or services other than the person who actually
buys goods or hires/avails services where such use is made with the approval of purchase or
hire.24
In the instant case, the service by the State Bank of Indusland includes the provision of
facilities in connection with banking and financing and thus falls under the definition of
service as given under Section 2(1)(o) of the Consumer Protection Act 1986. Also the manner
in which the Respondent exercised its discretion to determine eligibility is arbitrary and on
non-bonafide grounds.
considering the definitions it can be said that the applicant can be labelled as a consumer as
one who hires or avails of any service or services including beneficiary thereof or a
consideration which has been paid or promised or partly paid and partly promised or under
any system of deferred payment. Therefore, the applicant for loan is a consumer and hence
can bring a complaint under the Consumer Protection Act 1986. Concluding that the
applicant for loan is very much eligible to bring an action against the bank for deficiency in
service. All qualifications required to be a consumer are fulfilled

22
Sec. 2(1)(o) CPA,1986.
23
Sec 2(1)(g) CPA,1986.
24
Section 2(1)(d) Consumer Protection Act,1986.
WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER
 Page 18
FRESHERS’ POOL
2.1 The bank rejected the loan application arbitrarily and without reason:
2.1.1 The eligibility of parties to any credit assistance, viability of the project and
continuation of the credit facilities or the operation of the account by any party, are within the
discretion of the financial institution/bank depending upon various factors like financial
discipline and past history of borrower and his ability to pay the loan, only if such discretion
is exercised bonafide.25 The exercise of the discretionary powers of the bank in determining
the eligibility should be on bonafide grounds, if not then the same can be said to be an
adequate ground to prove deficiency in service.

2.1.2 It is an established fair practice for lenders that in the case of all borrowers seeking loans, the
bank would endeavour to convey in writing, the main reason/reasons which, in the opinion of
the bank after due consideration, have led to rejection of the loan applications which the bank
in the instant case abstained from doing and arbitrarily rejected the loan applications.
2.1.3 The financial services provider should make every effort to ensure that the contracts or
agreements it frames are transparent, easily understood by and well communicated to, the
common person. The product’s price, the associated risks, the terms and conditions that
govern use over the product’s life cycle and the responsibilities of the customer and financial
service provider, should be clearly disclosed. The customer should not be subject to unfair
business or marketing practices, coercive contractual terms or misleading representations26
(mention the authority.)
2.1.4 It is humbly submitted before this Hon’ble Court that the arbitrary rejection of applications of
loan by the State Bank of Indusland cannot be qualified as bonafide as the same does not
ensure any action inline of the objective of the ‘Jan Dhan Trann Yojna’ and also falls against

the established fair practice of lenders. The objective of the scheme was to give

personal/home loans at drastically lower rates to lower income group, however, if the loan
applications are rejected by the bank arbitrarily and without giving any reason then it can be
said that the discretion exercised by the bank is not on bonafide terms and the same amounts
to deficiency in service.

25
Reserve Bank of India guidelines on application for grant of loan.
26
Charter of Consumer Rights, Reserve Bank of India.
WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER
 Page 19
FRESHERS’ POOL
Mishandling of documents:
2.2.1 It is submitted before the Hon’ble court that State Bank of Indusland is
responsible for deficiency in service as there were instances of mishandling of
documents by the bank officials.27

2.1.5 The term ‘deficiency’ means any fault, imperfection, shortcoming or inadequacy in the
quality, nature and manner of performance which is required to be maintained by or
under any law for the time being in force or has been undertaken to be performed by a
person in pursuance of a contract or otherwise in relation to any service.28 To examine
if there is any deficiency in service it has to be seen whether there has been any fault,
imperfection, shortcoming or inadequacy in the performance of the service by the
Bank.
2.1.6 It is also established that the Bank has no right to tamper with the personal documents
of its customers. Customers’ personal information should be kept confidential unless
they have offered specific consent to the financial services provider or such information
is required to be provided under the law or it is provided for a mandated business
purpose (for example, to credit information companies). The customer should be
informed upfront about likely mandated business purposes. Customers have the right to
protection from all kinds of communications, electronic or otherwise, which infringe
upon their privacy.29(give with authority)
2.1.7 In the instant case the mishandling of the documents, which were submitted by the
applicant for loan to the bank, does constitute a shortcoming and inadequacy in the
nature and manner of performance which was required to be maintained by the banking
authorities. The nature and manner in which the function of processing of documents
by the State Bank of Indusland was done was one with imperfection, shortcoming and
inadequacy.

2.3 That there has been delay in processing of documents:

2.3.1 It is humbly submitted before the Hon’ble court that, in the instant case, the bank
delayed the processing of documents which further resulted in the delay in providing of
loan benefits as a result of which a number of applicants could not avail the facility in

27
Page 2 paragraph 1 of the Moot Proposition.
28
Section 2(1)(g) of the Consumer Protection Act 1986
29
Charter of Consumer Rights, Reserve Bank of India.
WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER
 Page 20
FRESHERS’ POOL
times of need.

2.3.2 Banks are required to carry out necessary due-diligence on the loan application before
arriving at credit decisions, while keeping in mind that timely and adequate availability
of credit is important . Hence, banks are required to delineate the procedure for loan
approval, with proper timelines and a mechanism for monitoring applications that are
pending for a long-time.
2.3.3 It is well established that complaints can be lodged by the consumer in relation to
delays in sanction, disbursement or non-observance of prescribed time schedule for
disposal of loan applications.30In the instant case, the State Bank of Indusland is
involved in delay of processing of documents and hence this can be used as a valid
ground to bring a complaint against the bank.
2.3.4 It is humbly submitted before the Hon’ble court that, in the instant case, it cannot be
ignored that the delay in processing of the applications was done with computerisation
and digitalisation of bank processes in place. It is not a reasonable argument that the
processing had to delayed or slowed down for fulfilling the object of the ‘Jan Dhan
Trann Yojna’ because the same could have been achieved within reasonable time with
the existing digital framework in place.

III. WHETHER THERE HAS BEEN A ‘DISHONOUR OF CHEQUE’ BY THE

DEBTORS UNDER SECTION 138 OF THE ‘NEGOTIABLE INSTRUMENTS ACT’?
IF YES, THEN WHETHER THE PROCEDURE HAS BEEN DULY COMPLIED BY
STATE BANK OF INDUSLAND?
It is respectfully submitted before this Honourable Court that, in the instant matter,
there hasn’t been a dishonour of cheque by the debtors under Section 138 of the
Negotiable Instruments Act, 1881 (hereinafter referred to as the “NI Act”). This is a
three-pronged argument. Firstly, the post-dated cheques issued two days before the date
on the cheque are invalid. Secondly, insufficient funds in the accounts of the debtors
are not a reasonable ground for dishonour. Thirdly, the procedure defined under the
said section of the Act has not been duly complied with by the Respondent.

30
Banking Ombudsman Scheme, 2006.
WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER
 Page 21
FRESHERS’ POOL
3.1. That the Post-dated Cheque is a Bill of Exchange and not a Cheque
3.1.1 As per the Act,31 “a cheque is a bill of exchange drawn on a specified banker and not
expressed to be payable otherwise than on demand and it includes the electronic image
of a truncated cheque and a cheque in the electronic form.” It is a settled law that a
cheque does not become invalid merely because of the reason that it is ante-dated or
post-dated.
3.1.2 According to the Halsbury’s Laws of England,32
“Post-dated cheques are not invalid, but the banker should not pay such a cheque if
presented before the date it bears. If, therefore, a cheque dated on a Sunday is
presented on the previous business day, it should be returned with the answer ‘post-
dated’.”
In light of the above law, a post-dated cheque is only a bill of exchange till the date
scribed on the face of the cheque, however, it becomes a cheque from the date scribed
on the face of the cheque. A post-dated cheque is deemed to have been drawn on the
date it bears and the six months’ period for the purposes of Section 138 is to be
reckoned from that date.
3.1.3 In the case of Anil Kumar Sawhney v. Gulshan Rai33 ,the Hon’ble Supreme Court has
laid down that-
“For an offence to be made out under the substantive provisions of section 138 of
the NI Act, 1881, it is mandatory that the cheque is presented to the bank within a
period of six months from the date on which it is drawn or within the period of its
validity, whichever is earlier. When a post-dated cheque is written or drawn, it is
only a bill of exchange and as such the provisions of section 138(a) are not
applicable to the said instruments. Till the time the cheque is returned by the bank
unpaid, no offence under section 138 is made out. It is only when the post-dated
cheque becomes a "cheque", with effect from the date shown on the face of the said
cheque, that the provisions of section 138 come into play. The net result is that a
post-dated cheque remains a bill of exchange till the date written on it. With effect
from the date shown on the face of the sale cheque it becomes a "cheque" under the
Act and the provisions of section 138(a) would squarely be attracted.”

31
Section 6 of the Negotiable Instruments Act, 1881.
32
Fourth Edition; Volume: 3(1); p.143.
33
Anil Kumar Sawhney v. Gulshan Rai [1993] LW (Crl.) 641; [1994] 79 Comp Cas 150.
WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER
 Page 22
FRESHERS’ POOL
The period of three months, therefore, has to be reckoned from the date mentioned
on the face of the cheques. As the Apex Court has pointed out, section 138 has to
be construed with reference to context. If the object of bringing the said provision
on the statute has to be fulfilled, then the only interpretation which can be given to
clause (a) of the proviso to section 138 of the Act is that a post-dated cheque shall
be deemed to have been drawn on the date it bears.
3.1.4 In the instant case, the officials of the Respondent received information that funds
in accounts of the Appellants were insufficient to repay the loan amount and as a
preventive measure, it moved the post-dated cheques two days before the date on
the cheque.34 Hence the post-dated cheque issued before the date it bears is invalid.

3.2 That The Dishonour Of Cheque Given As Collateral Security Is Not An Offence
Under Section 138 Of The Negotiable Instruments Act, 1881
3.2.1 It is the humble submission of the Petitioner-Appellants that Section 138 of the
Negotiable Instruments Act, 1881 states that
“Where any cheque drawn by a person on an account maintained by him with a banker
for payment of any amount of money to another person from out of that account for the
discharge, in whole or in part, of any debt or other liability, is returned by the bank
unpaid, either because of the amount standing to the credit of that account is
insufficient to honour the cheque or that it exceeds the amount arranged to be paid from
that account by an agreement made with that bank, such person shall be deemed to have
committed an offence and shall, without prejudice to any other provisions of this Act,
be punished with imprisonment for a term which may be extended to two years, or with
fine which may extend to twice the amount of the cheque, or with both.”
Provided that nothing contained in this section shall apply unless-
3.2.1.1 The cheque has been presented to the bank within a period of six months from
the date on which it is drawn or within the period of its validity, whichever is earlier;
3.2.1.2 The payee or the holder in due course of the cheque, as the case may be,
makes a demand for the payment of the said amount of money by giving a notice in
writing, to the drawer of the cheque, within thirty days of the receipt of information by
him from the bank regarding the return of the cheque as unpaid; and

34
Page 2, Para 4 of the Moot Proposition.
WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER
 Page 23
FRESHERS’ POOL
3.2.1.3 The drawer of such cheque fails to make the payment of the said amount of
money to the payee or, as the case may be, to the holder in due course of the cheque,
within fifteen days of the receipt of the said notice.

3.2.2 It is a humble submission that of the offence of cheque bounce, or the conditions for the
offence under this section being made out are:
3.2.2.1 First, the cheque should have been issued for the discharge of any debt or
liability. Thus, if the cheque is issued for some earlier debt the offence under this
35
section may be attracted. Moreover, the Explanation to Section 138 clarifies that
“debt or other liability” means a legally enforceable debt or other liability. On the other
hand, if the cheque is issued for any other purpose, for example, for giving a gift or
donation to another person, offence under this section will not be attracted.
3.2.2.2 Second, the cheque should have been returned by the bank unpaid, either due
to the insufficiency of funds or that it is more than the amount arranged to be paid from
the account by an agreement made with that bank. However, if the cheque is returned
unpaid for some other reason(s), offence under the section may not be attracted.
3.2.2.3 The third condition is that the cheque must have been presented to the bank
within a period of three months from the date on which it is drawn or within the period
of its validity, whichever is earlier. This condition is obvious since a cheque, if it is
presented to the bank after the period of its validity or after 3 months, will be invalid
only due to that reason and will thus be returned merely because of that reason without
there being any fault on the part of the drawer of the cheque.
3.2.3 If all the above-mentioned 3 conditions are satisfied, then the offence under section 138
of the N.I. Act is made out. In the instant case the post-dated cheques were deposited by
the applicants for a total amount equal to the principal amount as per the loan taken
under the ‘Jan Dhan Trann Yojna’. This was the standard market practice in the State of
Dhanbad.36 The SBI received information that funds in accounts of the applicants were
insufficient to repay the loan. The cheques were returned by the respective branches
with the information memorandum stating insufficiency of funds.37 This happened two
days before the cheque was supposed to be drawn and hence no liability arises under
the Section.

35
Section 138 of the Negotiable Instruments Act, 1881.
36
Page 1, Para 2 of the Moot Proposition.
37
Page 2, Para 4 of the Moot Proposition.
WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER
 Page 24
FRESHERS’ POOL

3.2.4 It is humbly submitted that in the case of Indus Airways Pvt. Ltd. v. Magnum Aviation

Pvt. Ltd38 the Supreme Court held that to attract an offence under Section 138, there
should be legally enforceable debt or other liability subsisting on the date of withdrawal
of the cheque. The payment by cheque in the nature of advance payment indicates that
at the time of withdrawal of cheque, there was no existing liability.
3.2.5 It is reverently submitted that the offence under dishonour of cheque has not been
committed by the debtors in the State of Dhanbad.

3.2 That the Procedure has not been duly complied by the Respondent
3.3.1 It is humbly submitted that as per the said section of the N.I. Act, 1881 the procedure to
be followed when a cheque is dishonoured by the Bank for insufficiency of funds is: The
payee or the holder in due course of the cheque, as the case may be, makes a demand for the
payment of the said amount of money by giving a notice in writing, to the drawer of the
cheque, within thirty days of the receipt of information by him from the bank regarding the
return of the cheque as unpaid; and the drawer of such cheque fails to make the payment of
the said amount of money to the payee or, as the case may be, to the holder in due course of
the cheque, within fifteen days of the receipt of the said notice.
39
3.3.2 The N.I. Act provides that no court shall take cognizance of any offence punishable
under the section except upon a complaint, in writing, made by the payee or, as the
case may be by the holder in due course and such complaint is made within one month
of the date on which the cause of action arises under clause (c) of the proviso to Section
138.
3.3.3 The presentation of the cheque and dishonour thereof within the period of its validity or
a period of three months is one of the three requirements that constitutes “cause of
action” within the meaning of Sections 138 and 142 (b) of the N.I. Act, an expression
that is more commonly used in civil law than in penal statutes.
3.3.4 A similar case is that of Kamlesh Kumar v. State of Bihar40, the Supreme Court bench
of Justice Radha Krishnan and Justice Sikri has held that
“Though the holder or payee of the cheque has the right to present the same any
number of times for encashment during the period of its validity, non-issuance of notice
within the limitation prescribed would render the complaint as non-maintainable.”

38
Indus Airways Pvt. Ltd. v. Magnum Aviation Pvt. Ltd. AIR 2014 AC 1347.
39
Section 142 of the Negotiable Act, 1881.
40
Kamlesh Kumar vs. State of Bihar, MANU/SC/1275/2013.
WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER
 Page 25
FRESHERS’ POOL
In this case, the cheque was presented on 10.11.2008. The complainant however sent
the legal notice on 17.12.2008 i.e. much after the expiry of the 30 days. It was clear
from the complaint itself that the complainant had gone to the bank for encashment on
10.11.2008 but the cheque was not honoured due to the unavailability of the balance in
the account. Despite receipt of information about the dishonour of cheque on
10.11.2008 itself, the complainant did not send the legal notice within 30 days
therefrom. In this regard, the Supreme Court, in the above judgement, held that “The
complaint is not maintainable since it is barred by limitation.”
3.3.5 It is reverently submitted that in the instant case, since the Respondent was burdened
with processing the applications, it issued a statutory notice, 40 days from the date of
return of memorandum to the concerned debtors seeking the standard loan amount to
be cleared.41 But section 138 proviso (b) talks about the limitation period and states that
the notice given to the drawer should not exceed the 30 day period from the date of
receipt of the instruction from the bank. It took 40 days to issue the notice however the
maximum limit is 30 days. Hence the Respondent was lagging behind in informing the
debtors and complying with the provisions.

IV. WHETHER THE INVOCATION OF PLEDGE IS IN CONTRAVENTION OF

DHANBAD CONTRACT ACT, 1872?
It is humbly submitted that the invocation of pledge can be reasonably interpreted to be
in contravention of the Dhanbad Contract Act, 1872 (hereinafter referred to as the
“Act”). This has been argued on the following grounds. Firstly, a sale made by the
pledgee to himself is void. Secondly, before making the sale, the pawnee is required to
give to the pawnor a reasonable notice of his intention to sale. Lastly, the pawnor was
not granted the right to redeem the shares given as collateral security.

4.1 That a Sale made by the Pledgee to Himself is Void

4.1.1 It is humbly submitted that as per Section 17342 of the Act, the pawnee may retain the
goods pledged, not only for a payment of a debt or the performance of the promise, but
also for the interest of the debt, and all necessary expenses incurred by him in respect of
the possession or for the preservation of the goods pledged.

41
Page 2, Para 4 of the Moot Proposition.
42
Section 173 of the Indian Contract Act, 1872.
WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER
 Page 26
FRESHERS’ POOL
4.1.2 According to Story’s definition,
“a pledge or pawn is a bailment of personal property as a security for debt or
engagement.”43
The pledgee therefore has no title to the property deposited, but merely possession
thereof, the general property remaining in the pledger.
4.1.3 In the case of Neikram Bobay v. Bank of Bengal 44 the judges laid down that a sale by a
pledgee to himself of securities pledged is void; but that it does not put an end to the
pledge, and the pledger is bound by re-sales duly affected by the pledgee to third
persons after such abortive sales to himself.
4.1.4 The pawnee not being the legal owner cannot foreclose; he has only power to sell. The
power to sell the shares is granted through an implied authority from the owner.45
According to the maxim, nemo dat quod non habet, literally meaning “no one gives
what he doesn’t have” is a legal rule, sometimes called the nemo dat rule, which states
that the purchase of a possession from someone who has no ownership right to it, then
it denies the purchaser of any ownership title. The Respondent cannot be granted the
ownership rights when the National Securities and Depository Limited (NSDL) itself
does not own the shares but is merely the holder of shares given as collateral security
under the debt or mere legal obligation.
4.1.5 In the instant case, after the invocation of pledge, the Respondent withdrew its
participation from NSDL and closed its account as a result of which it now stood the
ultimate owner of the shares46. This is in contravention of Section 173 of the Act, 1872.
It is therefore pleaded that the Respondent should not be regarded as the Owner of the
shares.

4.2 That the pawnee is required to give the pawnor a reasonable notice of the sale
4.2.1 As per Section 17647, If the pawnor makes default in payment of the debt or
performance at the stipulated time, of the promise, in respect of which the goods were
pledged, the pawnee may bring a suit against the pawnor upon the debt or the promise

43
Story, Bailments, 5th Ed., sec. 286.
44
Neikram Bobay v. Bank of Bengal (1891) L.R. 19 I. A. 60.
45
Laxmi Narain vs. State Bank of India AIR 1969 Pat.385.
46
Page 2, Para 5 Moot Proposition.
47
Section 176 of the Dhanbad Contract Act, 1872.
WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER
 Page 27
FRESHERS’ POOL
and retain the goods pledged as a collateral security; or he may sell the thing pledged,
on giving the pawnor reasonable notice of the sale.” 48

4.2.2 The pawnor should be granted a reasonable notice of his intention to sale. The
requirement of ‘reasonable notice’ is a statutory obligation and, therefore, cannot be
excluded by a contract to the contrary. The notice should be ‘reasonable’ which means
that it should notify the pawnor of the intended sale of the security made within a
certain date. The purpose is to give an opportunity to the debtor to pay the amount
mentioned by that specified date.49
4.2.3 The applicability and sweep of this section is not eclipsed by the phrase “in the absence
of a contract to the contrary.” The notice that is to be given to the pledger of the
intended sale by the pledgee is a special protection which the statue has given to the
pledger and parties cannot agree that in the case of any pledge, the pledgee may sell the
pledged articles without notice to the pledger. The proper interpretation to be put on
this section is to hold that notwithstanding any contract to the contrary, notice has to be
given and the notice that is given should be a ‘reasonable notice of sale’.50
4.2.4 It is humbly submitted that notice under Section 176 cannot be implied. It must be clear
and specific and must indicate the intention of the pawnee to dispose of the security.
The sale of the securities by the Respondent Bank without reasonable notice to the
respondent was bad and was not binding on him.51
4.2.5 In the case of The Official Assignee vs. Madholal Sindhu52 it was held that the pawnee
is bound to seek notification or a notice to the pawnor even if the instrument of pledge
contains an unconditional power of sale. In the instant case, although the Respondent
reserved the right to sell off the security in an event of default and satisfy the debt 53 but
this unconditional power does not give him the right to not give a notice to the pawnor.
4.2.6 It is reverently submitted that the provisions of Section 176 relating to a reasonable notice
of sale are mandatory and supersede any contract to the contrary.54 It is a well settled law
that the notice before sale is a condition precedent.55

48
Section 176 of the Indian Contract Act, 1872.
49
Business Law by Satish Mathur.
50
Co-op Hindustan Bank Ltd. v. Surendra Nath Dey AIR 1932 Cal 524.
51
Prabhat Bank Ltd. and Anr. v. Babu Ram AIR 1966 All 134.
52
The Official Assgnee vs. Madholal Sindhu AIR 1947 Bom 217.
53
Page 1, Para 3 Moot Proposition.
54
Hulas Kunwar v. Allahabad Bank Ltd AIR 1958 Cal 644.
55
Suresh v. Muthoot Finance Ltd. AIR 2015 Ker 276.
WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER
 Page 28
FRESHERS’ POOL
4.2.7 It is the humble submission of the Petitioner- that as per the facts, “subsequently, the
Respondent withdrew its participation from National Securities and Depository Limited
(NSDL) and closed its account”56.This indicates that the pawnor had no first-hand
knowledge as to the sale being conducted or the beneficial owner’s withdrawal of the
shares from the NSDL. Since a ‘reasonable notice’ was not given on part of the
pawnee, the sale is invalid.

4.3 That the pawnor was not granted the right to redeem the shares granted as
collateral security
4.3.1 Section 177 states that if a time is stipulated for the payment of a debt or performance
of the promise for which the pledge is made, and the pawnor makes default in payment
of the debt or performance of the promise at the stipulated time, he may redeem the
goods pledged at any subsequent time before the actual sale of them; but he must, in
that case, pay, in addition, any expense which have arisen from his default.57
4.3.2 A reading of the section shows that the right to redeem can be exercised right up to the
time when the actual sale of the goods pledged takes place58. It is axiomatic that the
sale should be in conformity with the provisions of Section 176 of the Contract Act. It
is humbly submitted that the judges of the Bombay High Court, in Official Assignee v.
Madholal Sindhu held that if the sale is not in conformity with Section 176 of the
Contract Act, the equity of redemption in the pawnor will not be extinguished.
4.3.3 In case of Visa Energy Ventures Ltd. vs. Il & Fs Financial Services Ltd. Ors.59 it was
held that
“On consideration of the agreements forming part of the record, it appears that
before the sale of the pledged securities, the pledgee would be required to give a
notice in writing of not less than seven days to the pledger which clearly shows
that the intention was to give an opportunity to the borrower to redeem the pledge
within the aforesaid time. This is in conformity with sections 176 and 177 of
the Indian Contract Act.”

56
Para 5, Page 2 Moot Proposition.
57
Section 176 of the Indian Contract Act, 1872.
58
Suresh v. Muthoot Finance Ltd. AIR 2015 Ker 276.
59
Visa Energy Ventures Ltd. vs. Il & Fs Financial Services Ltd. Ors AIR 2015 Cal 241
WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER
 Page 29
FRESHERS’ POOL
4.3.4 It is a humble submission that the right to redeem has not been granted to the
Petitioner-Appellants as per Section 177 of the Indian Contract Act, 1872. As per
the facts, when the pawnor’s cheques were dishonoured, they had committed a
default in repayment of loan amount as a consequence of which the Respondent
informed NSDL of the same and the depository then registered the Respondent as
the beneficial owner of the pledged shares on invocation of pledge60. The
Respondent after withdrawal of participation became the ultimate owner of the
shares. The right to redeem the shares was not granted to the Petitioners as per
Sections 176 and 177 of the Dhanbad Contract Act, 1872.

60
Page 2, Para 2 Moot Proposition.
WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER
 Page 30
FRESHERS’ POOL

PRAYER

WHEREFORE, IN THE LIGHT OF THE ISSUES RAISED, ARGUMENTS ADVANCED,

REASONS GIVEN AND AUTHORITIES CITED, THIS HON’BLE COURT MAY BE
PLEASED TO:

HOLD: THAT THE WRIT PETITION IS MAINTAINABLE IN THE BOMBAY HIGH

COURT AND THE JURISDICTION OF THE COURTS OF MUMBAI IS NOT OUSTED
BY THE EXCLUSIVE JURISDICTION CLAUSE

HOLD: THAT THERE IS DEFICIENCY OF SERVICE ON PART OF RESPONDENT.

HOLD: THAT THERE WAS NO DISHONOUR OF CHEQUE AND THE PROCEDURE

WAS NOT COMPLIED BY THE RESPONDENT.

HOLD: THAT THE INVOCATION OF PLEDGE IS IN CONTRAVENTION OF THE

DHANBAD CONTRACT ACT, 1872

DISMISS: THE PETITION.

AND ANY OTHER RELIEF THAT THIS HON’BLE COURT MAY BE PLEASED TO
GRANT IN THE INTERESTS OF JUSTICE, EQUITY AND GOOD CONSCIENCE,
ALL OF WHICH IS RESPECTFULLY SUBMITTED.

Sd/-

COUNSELS FOR THE PETITIONER

WRITTEN SUBMISSION ON BEHALF OF THE PETITIONER