Legal Question in Banking Law in

One of my friend had taken loan from bank on security of shares. On diminution in value of shares in a falling market, bank issued letter that either he regularise the account or else bank will sell out shares. He didnot reply nor bank sold shares. Bank filed suit for recovery. During pendency of suit, without permission from court, bank sold out shares.

Had the bank sold out shares after issue of letter within a reasonable time there would have been surplus in the account. had the bank held the shares there would have been surplus. Bank sold out shares in extreme low market.What is the legal position of the case now.


Asked on 9/18/10, 6:33 am

2 Answers from Attorneys
Vishwa Arya Arya & Co.

the bank could not have sold the shares once the matter was subjudice. You may file your counter claim against the bank in the same matter of the bank.

Read more
Answered on 9/18/10, 9:25 am
J. Radhakrishnan independent Practice

The Bank is entitled to exercise its right of selling the shares when you have failed to pay up the amount after demand. Inspite of the pendency of the suit, the Bank is entitled to exercise its rights as pledgee. If the Bank has not gone through the route of auction on your failure to pay up the amount, you can counter claim against the Bank for having caused loss by disposing off the shares by private treaty.

Read more
Answered on 9/18/10, 8:29 pm


Related Questions & Answers

More Banking Law questions and answers in