Page 111 - DCOM103_COMMERCIAL_LAW

Commercial Law

Notes 3. In case of sale, the pledgor is entitled to receive from the pledgee any surplus that may
remain with him after the debt is completely paid off.
4. The pledgor has a right to claim any accruals to the goods pledged.
5. If any loss is caused to the goods because of mishandling or negligence on the part of the
pledgee, the pledgor has a right to claim the same.

11.3.4 Duties of a Pledgor

There are number of duties of a pledgor. These are:
1. He must disclose to the pledgee any material faults or extraordinary risks in the goods to
which the pledgee may be exposed.

2. He is responsible to meet any extraordinary expenditure incurred by the pledgee for the
preservation of the goods.
3. Where the pledgee has exercised his right of sale of goods, any shortfall has to be made
good by the pledgor.
4. He is liable for any loss caused to the pledgee because of defects in his (pledgor’s) title to
the goods.

Task X, a warehouseman, was entrusted with certain goods for safe custody. X had
taken reasonable precautions for the safety of the goods by providing a safe building, safe
locks and a competent watchman. But the goods were lost due to the negligence of the
watchman who probably did not lock or watch properly. X denies his liability urging that
there was no negligence on his part. Decide the question of X’s liability. [Hint: X is liable to
compensate the bailer for the negligence of X’s servant.].

Case Study Pfi zer’s

t would have been business as usual at multinational drug-maker Pfi zer’s annual
shareholder meeting, but for a dissenting LIC representative who opposed two enabling
Iproposals to increase the salary of the managing director and the commission of two
Indian non-executive directors, respectively.

LIC totally holds 14.38 per cent in Pfizer, and the LIC representative told that he was
communicating the decision taken by the corporation. He was, however, unable to give
reasons behind the decision. Market observers indicated that LIC could push for a poll on
the proposal, given its equity holding.

One of the enabling resolutions was regarding Pfizer’s Managing Director in India, Mr.
Kewal Handa’s salary, proposing that it be increased from its 2007-level of ` 1.80 crores to
a maximum of ` 2.50 crores a year.
The other enabling resolution was with reference to resident non-executive directors Mr.
R.A. Shah and Mr. Pradip Shah, seeking to raise their commission, at the rate of one per

cent of the company’s profit, up to ` 50 lakh a year.
The company explained that the commission for non-executive directors was upped to ` 20

lakhs a year in 2004, effective for a five-year period starting December 2003.
Contd...

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