The Supreme Court in the case of Infrastructure Leasing and Financial Services Ltd. Vs. B.P.L. Ltd., MANU/SC/0018/2015 : (2015) 3 SCC 363, has held that as per Section 176 of the Act when the pawnor makes default in making the payment, the pawnee may bring a suit upon the debt or promise and retain the good(s) pledged as a collateral security. A pawnee has both collateral and concurrent rights and can institute a suit for the purpose of realization of the said debt or promise while retaining the goods as a collateral security. Section 176 also makes it clear that it is the discretion of the pawnee and it gives an option to him and merely because pawnee has filed a suit for recovery, that would not affect or destroy the charge or the right of the pawnee in respect of the pledged goods or the collateral security. Thus, it is within the domain of discretion of pawneee to file a suit for recovery of a debt and yet retain the collateral security or pledged goods.
IN THE HIGH COURT OF MADHYA PRADESH (GWALIOR BENCH)
First Appeal Nos. 144/2007, 444, 166 and 167/2006
Decided On: 21.04.2016
Vijay & Sons and Ors.
Vs.
Shivpuri Guna Kshetriya Gramin Bank and Ors.
Hon'ble Judges/Coram:
Alok Aradhe and Vivek Agarwal, JJ.
Citation: AIR 2017(NOC)56 MP
