Pledge or hypothecation of securities held in a depository
Section 12 of the Depositories Act, 1996 deals with pledge or hypothecation of securities held in a depository. Subject to such regulations and bye-laws, as may be made in this behalf, a beneficial owner may with the previous approval of the depository create a pledge or hypothecation in respect of a security owned by him through a depository. The Act came into force on 20 Sep 1995.
(1) Subject to such regulations and bye-laws, as may be made in this behalf, a beneficial owner may with the previous approval of the depository create a pledge or hypothecation in respect of a security owned by him through a depository.
(2) Every beneficial owner shall give intimation of such pledge or hypothecation to the depository and such depository shall thereupon make entries in its records accordingly.
(3) Any entry in the records of a depository under sub-section (2) shall be evidence of a pledge or hypothecation.
Section 12, The Depositories Act, 1996 (Act 22 of 1996).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
Referred to by 1
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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State Bank of India v. Viceroy Hotels Ltd.
Court's Decision & Legal Precedent
Final Order order-1.pdf body dated April 27, 2017 (DATE-CHECK FP on cited IA 21.06.2016 date; body ends April 27, 2017 — ACCEPT). Suresh Kumar Kait & Gudiseva Shyam Prasad JJ. dismiss bank CMA: holding shares as collateral for a different project without valid s.12 pledge/hypothecation violates Depositories Act s.12; follows Pushpanjali. Map Depositories 12.
On this section: Holding demat shares as collateral for a different loan without valid s.12 pledge violates the Act — follows Pushpanjali.
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Pushpanjali Tie Up Pvt. Ltd. v. Renudevi Choudhary
Court's Decision & Legal Precedent
Final Order order-2.pdf 2014-06-12 DATE VERIFIED (Vazifdar & Colabawalla JJ.). Depositories Act s.12 pledge/hypothecation is mandatory — beneficial owner must intimate depository; unintimated alleged pledge cannot bind third party without notice. Map Depositories 12.
On this section: s.12 pledge/hypothecation mandatory — intimation to depository required; unintimated pledge cannot bind third party.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Questions about Section 12
What have the courts held on Section 12 of the Depositories Act?
State Bank of India v. Viceroy Hotels Ltd. (27 Apr 2017) is the leading judgment on this section among those set out below: Holding demat shares as collateral for a different loan without valid s.12 pledge violates the Act — follows Pushpanjali. Another 1 judgment on this section is set out below. They run from 2014 to 2017.
How do I find court cases under Section 12 of the Depositories Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Depositories Act 1996 12, section 12 Depositories Act 1996, section 12 of the Depositories Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 2 reported judgments on this section are set out on this page, beginning with State Bank of India v. Viceroy Hotels Ltd. (27 Apr 2017).
What should I read with Section 12 of the Depositories Act, and has it changed?
1 other provision in this corpus refers back to it.
When did Section 12 of the Depositories Act come into force?
Section 12 of the Depositories Act, cited as Depositories Act 1996 12, came into force on 20 Sep 1995, having been enacted on 10 Aug 1996. It is in force as at the date shown on this page.
Other sections of this Act
- 19-IB. Recovery of amounts590 words
- 19-IC. Continuance of proceedings382 words
- 26. Power of depositories to make bye-laws377 words
- 2. Definitions349 words
- 19H. Power to adjudicate314 words
- 23A. Appeal to Securities Appellate Tribunal284 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 14 Oct 2026. This page is not a substitute for legal advice.