(1) If a
debt has been taken having pledged any goods as a collateral for its
payment and makes a default in payment of the debt or interest of
the debt, if any, within the specified period, the person who has
taken the collateral may initiate the right to take legal action to
recover the debt in accordance with law, by selling or auctioning
the collateral so given at the prevailing market price or transfer the
ownership of such security in his or her name subject to law, if such
sale or auction cannot be made.
(2) If the goods pledged as collateral are sold at a price
lesser than the amount recoverable by the person who has taken the
collateral from the borrower under sub-section (1), such a person
shall be entitled to recover the shortfall amount from the other
assets of the borrower, and the collateral is sold at a price higher
than the amount to be recovered, the excess amount shall be
returned to the borrower.
(3) Notwithstanding anything containing in sub-sections
(1) and (2), the person who has given the goods as collateral may
take back his or her goods at any time by paying the debt and
interest thereon and other amounts, if any, due and payable prior to
the sale of the pledged goods or the transfer of ownership thereof.
Provided that the person who has given the collateral shall
also be liable to bear additional liability arising to the goods
pledged from his or her failure to pay the amount within the
specified period.
(4) If a deposit is taken as a security for the performance
of a promise and the promise is not performed or completed within
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the specified time, the goods pledged as deposit may be used for the
performance of the promise or the expenses incurred in such
performance may be recovered from such goods.
(5) If the promise cannot be performed from the goods
pledged as deposit, such shortfall amount may be recovered from
the other assets of the borrower.