* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ RFA (OS) 21/1996
% Date of decision: 12.02.2009
CANARA BANK ...APPELLANT
Through: None.
Versus
M/s M.K.INDUSTRIES AND ORS. ...RESPONDENT
Through: None for R-1 and R-2.
Mr.N.Menon, Advocate for R-3.
CORAM:
HON'BLE MR. JUSTICE SANJAY KISHAN KAUL
HON'BLE MR. JUSTICE SUDERSHAN KUMAR MISRA, J.
1. Whether the Reporters of local papers may be allowed to see the judgment? No
2. To be referred to Reporter or not? No
3. Whether the judgment should be reported in the Digest? No SANJAY KISHAN KAUL, J. (Oral)
1. The appellant bank filed a suit for recovery of Rs.5,43,472.00 against the defendants with the allegation that respondent No.2 herein was the sole proprietor of the first respondent and had imported "Brass Scrap Honey" from Holland under OGL. A revision in the custom duty had arisen which was challenged by respondents 1 & 2 by filing a writ petition before this Court and the Court had directed RFA(OS) 21/1996 Page 1 of 7 stay of the differential duty on furnishing a bank guarantee for a sum of Rs.3,75,000.00, being 50 per cent of the differential amount.
2. In order to obtain the said bank guarantee respondents 1 & 2 along with the third respondent approached the appellant bank and in view of the documents executed by the respondents, the appellant bank issued the bank guarantee with 10 per cent margin money. Respondent No.3 deposited the sum of Rs.37,500.00, being the 10 per cent margin money with the appellant bank.
3. The writ petition ultimately did not succeed resulting in the invocation of the bank guarantee and the appellant bank making the payment of Rs.3,75,000.00 to the President of India through the Collector of Customs. Only 10 per cent of the margin money was available with the bank and the respondents failed to deposit the balance amount along with interest accrued thereon resulting in the filing of the suit.
4. The appellant claimed that it was entitled to interest @ 17.5 per cent per annum on the amount of Rs.3,75,000.00, being the contractual rate of interest. Respondents 1 & 2 did not even appear and were proceeded ex parte while respondent No.3 filed the written statement. Respondent No.3 sought to set up defences that it is only at the request of some relatives that he had furnished the margin money and that he did not know the first two respondents. RFA(OS) 21/1996 Page 2 of 7
5. On the pleadings of the parties, the following issues were framed:
"1. Whether the plaint has been signed, verified and the suit instituted by a duty authorized person?
2. Whether the defendant No.3 is not liable for the suit amount?
3. What rate of interest the plaintiff is entitled to charge?
4. To what amount, if any the plaintiff is entitled and from whom?
5. Relief."
6. The appellant examined one witness while respondent No.3 failed to produce any witness. The findings on the issues are in favour of the appellant and the suit was accordingly decreed in terms of the impugned judgement and decree dated 18.9.1995 for the sum of Rs.5,43.472.00 (which included interest of 17 per cent per annum) along with 12 per cent interest from the date of filing of the suit till the date of realization. The appellant is aggrieved by the impugned judgement and decree whereby only 12 per cent interest has been granted pendente lite and future contrary to the commercial documents.
7. We have perused the impugned judgement and decree. The findings on issue No.3 are as under: "ISSUE No.3 The plaintiff has claimed interest at the rate of 17.5 per cent per annum with quarterly rest. PW-1 in the statement says that Reserve Bank of India's prevailing rate of interest at that time was 17 per RFA(OS) 21/1996 Page 3 of 7 cent per annum and presently the rate of interest is 19 per cent per annum. There is no rebuttal to the statement nor there is anything in the cross- examination which may show that the defendant is not liable to pay interest at the aforesaid rate. I, therefore, hold that defendant is liable to pay interest at the rate of 17 per cent per annum on the aforesaid amount of Rs.3,75,000/-."
8. The aforesaid findings, thus, show that the learned single Judge finds that the rate of interest is 17 per cent per annum as per the RBI guidelines and that the appellant is entitled to the said interest rate on the principal amount of Rs.3,75,000.00. However, while passing the judgement and decree the interest rate had been reduced to 12 per cent per annum for pendente lite and future interest.
9. The grounds of appeal show that the grievance of the appellant is that once the interest rates are established as fixed by the Reserve Bank of India for nationalized/commercial banks and a debtor is held liable to pay interest, there is no reason why a lower rate of interest should be fixed for the pendente lite and future period. It is also pleaded that the suit was pending for quite some time and the appellant bank had been deprived of the money. During this period of time there has also been inflation and decrease in the value of rupee.
10. We find merit in the aforesaid contention raised in the grounds of appeal. The transaction in question is a purely commercial transaction whereby the bank guarantee was furnished. In fact, the bank showed consideration by not RFA(OS) 21/1996 Page 4 of 7 keeping a 100 per cent margin money but granted the bank guarantee at 10 per cent margin money. Once the bank guarantee was invoked and paid and the said payment was not in dispute, there was no reason for the respondents not to remit the amount due to the appellant bank.
11. Respondents 1 & 2 did not even appear to contest the suit. The liability of respondent No.3 has been discussed while giving the findings on issue No.2. The deposit receipt given by respondent No.3 along with covering letter would amount to admitted lien on the bank for the said receipt. Respondent No.3 also executed a letter of guarantee agreeing to pay the demand, which would otherwise be made in case respondents 1 & 2 failed to clear the outstanding.
12. The plea raised by respondent No.3 that the bank guarantee has been paid beyond time has been negated.
13. We may also notice that respondent No.3 filed cross-
objections without payment of court fee. These cross- objections in the form of CM No.683/1997, were, however, dismissed on 4.10.1999 on account of the fact that despite the indulgence being shown to the said respondent to pay court fee the same had not been paid. The plea of respondent No.3 that he was not liable to pay court fee already stood negated even earlier.
RFA(OS) 21/1996 Page 5 of 7
14. We also find from the order sheet that on 7.3.2007 learned counsel for the appellant had stated that he was pressing the appeal only against respondent No.3.
15. In the impugned order we find no cogent reason why in a purely commercial transaction the appellant bank should be deprived of the commercial rate of interest agreed to between the parties whether for the past, pendente lite or future. The same principle would apply for the pendente lite and future period as for the past. Since the learned single Judge has already held interest @ 17 per cent per annum for the past, we consider it appropriate that the same rate of interest should be payable for the pendente lite and future period. This finding of interest rate for the past is not on a mere whim of the learned single Judge but is based on a categorical finding on issue No.3 taking into account the statement of PW-1 that the prevailing rate of interest at that time was 17 per cent per annum and, in fact, had reached 19 per cent per annum at the time of the judgement. There was no rebuttal to this statement nor had any worthwhile cross-examination being carried out which could have given rise to a different conclusion.
16. In view of the aforesaid, we set aside the judgement and decree dated 18.9.1995 to the extent that the rate of interest for the pendente lite and future period was restricted to 12 per cent per annum and hold that the RFA(OS) 21/1996 Page 6 of 7 appellant is entitled to interest @ 17 per cent per annum even for this period being from the date of filing of the suit till the date of realization, but this benefit would be available only against respondent No.3 in view of the statement recorded on 7.3.2007 of the learned counsel for the appellant. The judgement and decree qua respondents 1 & 2 stands affirmed since the appellant had given up the challenge to the impugned judgement and decree against the said respondents.
17. The appeal is accordingly allowed leaving the parties to bear their own costs. We have not awarded costs as none has appeared for the appellant.
SANJAY KISHAN KAUL, J.
FEBRUARY 12, 2009 SUDERSHAN KUMAR MISRA, J. b'nesh RFA(OS) 21/1996 Page 7 of 7