Bansal Commodities & Ors vs Rakesh Kumar Aggarwal & Anr
2009 Latest Caselaw 3562 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI


+                  CS(OS) 1128/2004


%                        Date of decision: 4th September, 2009


BANSAL COMMODITIES & ORS                                ....Plaintiffs
                         Through: Mr. Mohinder Rana, Advocate

                                 Versus

RAKESH KUMAR AGGARWAL & ANR                            ... Defendants
                         Through: Mr V.N. Jha, Advocate for the defendant
                                  No.1.
                                  Defendant No.2 ex parte.


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.    Whether reporters of Local papers may
      be allowed to see the judgment?                  No

2.    To be referred to the reporter or not?           No

3.    Whether the judgment should be reported          No
      in the Digest?


RAJIV SAHAI ENDLAW, J.

1. The suit is essentially for Rs 50,40,000/- together with interest

thereon at 18% per annum from 28th April, 1989 till the date of

payment. It is the case of the plaintiffs that the plaintiff No.1, a

registered partnership firm of which the plaintiffs 2 and 3 are the

partners, was trading in non-ferrous alloys; that the defendant No.1

Shri Rakesh Kumar Aggarwal was also trading in the same goods in

several names, namely, M/s Popular Industries, M/s Prominent

Enterprises, M/s Manoj Metal Industries and M/s Jasoria Industries;

that in or about January, 1989 the plaintiffs desired to purchase 58

metric tonnes of copper alloy and negotiations ensued with the

defendant No.1 who agreed to sell the same to the plaintiffs for a

total price of Rs 49.03 lacs; that the plaintiffs at the asking of the

defendant No.1 got issued pay orders for a total sum of Rs 49.03 lacs

in the aforesaid four names in which the defendant No.1 was

carrying on business; that the defendant No.1 assured delivery of

copper alloy within 30 days and also agreed to pay interest on the

amount received by him @ of 18% per annum.; that the defendant

No.1 however failed to deliver copper alloy to the plaintiffs though

confirmed the monies received from the plaintiffs in his accounts for

the period ending 31st March, 1989; that on 26th April, 1989 the

defendant No.1 handed 7 pay orders to the plaintiffs for aggregate

sum of Rs 50.40 lacs issued by Punjab National Bank, Mal Road

Branch, Delhi i.e., Rs 49.03 lacs received together with interest due

till then - the said pay orders were drawn in favour of M/s Hindustan

Copper Limited; the plaintiffs were to approach Hindustan Copper

Limited with the said pay orders and collect the base metal copper

which could be converted into copper alloy.

2. It is further the case of the plaintiffs that the authorized

officers under the Income Tax Act conducted search and seizure

operation at the residential and business premises of the defendant

No.1 on 27th April, 1989; in the course of the said operation the

preparation of the pay orders aforesaid for Rs 50.40 lacs from the

accounts on 26th April, 1989 was found; the Income Tax Officials on

28th April, 1989 itself passed an order effecting deemed seizure with

respect to the 7 pay orders for Rs 50.40 lacs and served the same on

the Manager, Punjab National Bank; however, the original pay

orders were in the control and possession of the plaintiffs; in the

circumstances the plaintiffs did not present the pay orders for

payment and on the contrary approached the Income Tax Authorities

with respect the same. At this stage, it is not necessary to refer to

the proceedings thereafter.

3. In the present suit, besides the defendant No.1, the

Commissioner of Income Tax -XIII, Vikas Bhavan, I.P. Estate has

been impleaded as the defendant No.2.

4. Upon notice of the suit being issued to both defendants,

written statements came to be filed. It may be recorded that the

defendant No.1 had filed IA.No.6704/2004 under Order 7 Rule 11 of

the CPC but it was dismissed on 18th April, 2006. On 28th July, 2006

none appeared for the defendants and both the defendants were

proceeded against ex parte and the plaintiffs directed to file affidavit

by way of evidence. The written statement of the defendant No.1, in

fact, was filed thereafter and there is no order taking the same on

record. The plaintiffs filed affidavit by way of evidence and which

was tendered before the court on 26th March, 2008. No attempt was

made by the defendants for cross examination of the witness of the

plaintiffs. The plaintiffs closed their ex parte evidence.

5. The defendant No.1 applied for setting aside of the ex parte.

The said application itself was dismissed in default. An application

was filed for restoration of the said application. During the hearing

of the said application, on 11th September, 2008 it was deemed

expedient to record the statement of the defendant No.1. The

statement of the defendant No.1 was recorded on 18th September,

2008. Thereafter on 7th November, 2008 the application filed by the

defendant No.1 for restoration of the application for setting aside the

order proceeding ex parte against him, was dismissed. The

defendant No.1 preferred FAO(OS)460/2008 against the said order

and which was also dismissed on 26th November, 2008.

SLP.No.31529-31531/2008 preferred to the Supreme Court was

dismissed on 17th December, 2008.

6. Final arguments in the suit have been heard from the counsel

for the plaintiffs as well as counsel for the defendant No.1. They

have also filed synopsis of their submissions.

7. In the circumstances aforesaid no issues were framed in the

suit. Arguments of the defendant No.1 against the suit have been

confined to the aspect of limitation, the suit having been instituted in

this court on 14th July, 2004. In this regard it may also be stated that

the plaintiffs alongwith the suit filed an application being

IA.No.7753/2004 under Section 14 of the Limitation Act. This court

vide order dated 18th April, 2006 on the said application held that the

same could be decided only after evidence. Hence while considering

the question whether the suit is within time or not, the aspect of

Section 14 shall also be considered. It may also be recorded that

alongwith the suit, IA.No.7752/2004 under Section 80(2) of the CPC

was also filed, which was allowed on 18th April, 2006.

8. The plaintiffs have examined the plaintiff No.2. He has, inter

alia, proved that the plaintiff No.1 is a registered partnership firm

and the plaintiffs 2 and 3 are its registered partners.

9. The evidence of the said witness of the plaintiffs qua the

transaction aforesaid with the defendant No.1 remains unrebutted.

Thus the same is to be believed and the plaintiffs would be entitled

to the decree for recovery of money against the defendant No.1 save

for the aspect of limitation. This court while considering the

application of the defendant No.1 for setting aside of the ex parte

had also as aforesaid on 18th September, 2008 examined the

defendant No.1. From the said examination also, the liability of the

defendant No.1 for the money claimed is established.

10. Thus the only question remaining to be examined is whether

the suit is within time or not and if not within time, whether the

plaintiffs are entitled to the benefit of Section 14 of the Limitation

Act and whether the plaintiffs are entitled to any reliefs against the

defendant No.2 as claimed.

11. The witness of the plaintiffs has proved that pursuant to the

order dated 28th April, 1989 of the Income Tax Officials of seizure

with respect to 7 pay orders for the total sum of Rs 50.40 lacs, the

plaintiffs made a representation dated 24th May, 1989 to the Income

Tax Authorities (Exhibit PW1/19); the witness of the plaintiffs has

further proved that the defendant No.1 on 23rd June, 1989 stated

before the Assistant Director of Investigation of the Income Tax

Department that the pay orders aforesaid had been given by him to

the plaintiffs; the plaintiffs have proved as Exhibits PW1/20 and

PW1/20A the order of the Assistant Commissioner of Income Tax

including the amount of the said pay orders in the income of the

defendant No.1.

12. The plaintiffs have proved as Exhibits PW1/21 and PW1/21A

the objections dated 22nd September, 1989 filed by them against the

order of seizure of the pay orders, which were in the physical

custody of the plaintiffs; it was the case of the plaintiffs in the said

representation, reminders with respect whereto have been

collectively proved as Exhibit PW1/22, that the said pay orders as on

the date of the search and seizure operation were not the assets of

the defendant No.1 and could not be seized.

13. The plaintiffs have proved as Exhibits PW1/23 and PW1/24 the

orders of the Commissioner of Income Tax on the

objection/representation aforesaid of the plaintiffs directing

inspection of the books of accounts of the plaintiffs to verify the

transaction claimed by the plaintiffs with the defendant No.1 and

upon being satisfied of the same vacating the order of seizure.

14. It is further in evidence of the plaintiffs that inspite of the

aforesaid order, Income Tax Authorities did not write to the bank

revoking the earlier order and as such the plaintiffs could not realise

the monies under the pay orders. The plaintiffs thereafter preferred

writ petition No.1253/1990 in this court. However, the same was

dismissed vide order dated 28th August, 1990 (Exhibit PW1/33) for

the reason that as long as the assessment in the name of the

defendant or his alias was not set aside, the question of payment of

the amount to the plaintiffs did not arise. It is further in evidence of

the plaintiffs that the said assessment in the name of the alias of the

defendant No.1 was set aside by order dated 21st November, 1990

(Exhibit PW1/34) of the Commissioner of Income Tax (Appeals).

15. The plaintiffs preferred a Special Leave Petition to the

Supreme Court against the dismissal of their writ petition aforesaid.

The said Special Leave Petition was disposed of on 7th February,

1992 with the direction to the CIT to dispose of the application filed

by the plaintiffs afresh. The CIT however vide order dated 4th July,

1992 dismissed the application of the plaintiffs and on 12th January,

1993 also issued notice (Exhibit PW1/39) to the Punjab National

Bank to deposit the sum of Rs 50.40 lacs of the aforesaid pay orders

with the Income Tax Department. It is the unrebutted statement of

the witness of the plaintiff that the Punjab National Bank on 15 th

March, 1993 deposited the said amount of Rs 50.40 lacs in the

account of the Income Tax Department.

16. It is further the evidence of the plaintiffs that the plaintiffs

thereafter made representation to the Member (Investigation) CBDT

to reconsider the application of the plaintiffs but the same was

declined on 15th March, 1994.

17. The plaintiffs again filed writ petition No.3738/1994 in this

court with respect to the seizure of the aforesaid pay orders. The

witness of the plaintiff has deposed that the CIT in its reply to the

said writ petition for the first time took a stand that the pay orders at

the time of the deemed seizure were with the defendant No.1. The

witness of the plaintiffs has in this regard proved as Exhibits

PW1/47, PW1/48, PW1/20, PW1/49 to 58, PW1/36, the various

statements/correspondence in which the defendant No.1 had

admitted the case aforesaid of the plaintiffs with respect to the

transaction with the defendant No.1. The plaintiffs also rely upon

the order dated 29th June, 1999 (PW1/62) of the Settlement

Commission inter alia holding that the said pay orders belonged to

the plaintiffs and could not be treated as an asset of or belonging to

the defendant No.1 and allowing it's deduction as a liability.

18. It is further the case of the plaintiffs that the defendant No.1

filed Civil Writ Petition no.5082/1999 in this court in which the

defendant No.2 filed a counter affidavit reiterating that the said pay

orders were not seized but were put under deemed seizure; that the

case of the defendant No.1 throughout had been that the pay orders

had been issued to the plaintiffs in refund of the monies received

from them and that the amount of the said pay orders had not been

adjusted against the tax liability of the defendant No.1. This court

vide order dated 15th November, 2000 (in Civil Writ Petition

No.5082/1999) partly remanded back the matter to the Settlement

Commission with the direction that the acceptability of the plaintiffs

claim would be decided in writ petition 3738/1994 preferred by the

plaintiffs and pending till then.

19. The Settlement Commission passed a fresh order dated 6th

August, 2002 and directed that the amount of Rs 50.40 lacs was

subject matter of writ petition No. 3738/1994 preferred by the

plaintiffs and set aside the part of the earlier order of the said

Commission holding the said amount to be belonging to the

plaintiffs. The said amount was thus held to be the asset of the

defendant no.1 and the defendant No.1 was held entitled to claim

corresponding liability with interest of the amount, if any, payable to

the plaintiffs.

20. The plaintiffs upon learning of the aforesaid order represented

to the Settlement Commission on 26th August, 2002. Thereafter the

defendant No.1 filed writ petition No.7030/2002 in this court for

refund of the said sum of Rs 50.40 lacs in its favour. The stand of

the Income Tax Department in response to the said writ petition was

that the said sum of Rs 50.40 lacs had already been adjusted towards

tax liability. This writ petition was disposed of on 25th March, 2003

recording the stand of the Income Tax Department that they were

ready and willing to deposit and refund the amount in this court but

in view of the conflicting claims of the plaintiffs and the defendant

No.1 they should be protected. This court permitted the defendant

No.1 to withdraw the amount from the Income Tax Department

subject to furnishing security. The writ petition No.3738/1994 filed

by the plaintiffs came up for disposal on 20th May, 2004 when it was

ordered that the Income Tax Department not disburse the amount of

the pay orders for a period of eight weeks and in view of the

conflicting claims, the parties were relegated to the civil court for

sorting out their disputes. It may be stated that the plaintiffs had not

impleaded the defendant No.1 as a party to the said writ petition;

however, the defendant No.1 had applied for being impleaded as a

party thereto and the said application was pending till the date of

disposal of the writ petition; this court in the order disposing of the

writ petition noticed the submission of the defendant No.1 that the

writ petition was liable to be dismissed; the question of limitation

was also raised before the Division Bench of this court on 20 th May,

2004. The Division Bench however held that "it goes without saying

that the party was agitating the cause before this court under a bona

fide belief that this court will pass an appropriate relief but as the

parties are now being relegated to the civil court, the question of

limitation could not arise. It goes without saying that if the

petitioner approaches the civil court the observations made by the

Income Tax Department or the Settlement Commission with regard

to the title over the said 7 pay orders will not bind the parties and

will be decided by the civil court independently".

21. To complete the narrative, it may also be recorded that the

defendant No.1 preferred SLP No. 2694/2004 to the Supreme Court

against the aforesaid order. However, the same was disposed of vide

order dated 18th August, 2005 holding "since the petitioner was not

made a party to the proceedings, before the impugned order was

passed we do not entertain this petition as the order does not affect

his rights".

22. After the disposal of their Writ Petition No.3738/1994

aforesaid, the plaintiffs instituted the present suit along with an

application for interim relief. Vide order dated 19th July, 2004, the

statement of the counsel for the defendant No.1 that he would not

approach the defendant No.2 i.e. the Income Tax Authority for

refund subject to the defendant No.2 being directed to deposit the

amount in the court was accepted. Though there is no order

thereafter directing the defendant No.2 to deposit the amount in the

court, the status as on that day continues. Thus, the money of the

aforesaid pay orders is still lying with the Income Tax Authorities.

23. The defendant No.2 though ex parte has in its written

statement inter alia stated that its position in this suit is that of a

garnishee i.e. to whom it should refund the money; it was further

averred that the question of refund, if any, to the defendant No.1

was subject to the liability of the defendant No.1 to the Income Tax

Department.

24. Thus it follows that if the controversy between the plaintiffs

and the defendant No.1 is decided in favour of the plaintiffs, the

defendant No.2 is to reimburse / refund the monies to the plaintiffs.

Though the defendant No.1 in its written statement has controverted

the claim of the plaintiffs, as aforesaid in the face of the defendant

No.1 having not contested the suit, the ex parte evidence of the

plaintiff is to be believed. The plaintiffs have proved having given

pay orders for Rs.49.03 lacs to the defendant No.1 and of the pay

orders for Rs.50.40 lacs having been handed over by defendant No.1

to the plaintiffs in lieu thereof, together with interest.

25. Coming back to the question of limitation, the counsel for the

defendant No.1 has contended:

i. that the plaintiffs are not entitled to the exclusion of any

time under Section 14 of the Limitation Act because the

defendant No.1 was not a party to the writ petition

No.3738/1994 and the plaintiffs had vehemently opposed

the impleadment of the defendant No.1 therein; that the

plaintiffs had not filed any case against the defendant

No.1 prior to this suit; that the earlier proceedings had

not failed due to defect of jurisdiction; that the relief

sought in the writ petition and the suit were entirely

different.

ii. that the plaintiffs had not produced any evidence that

they were prosecuting any case against the defendant

No.1 before a wrong forum.

iii. that the plaintiffs had not explained the time lag of 60

days between the disposal of the writ petition on 20th

May, 2004 and institution of this suit on 14th July, 2004;

that the plaintiffs are also not entitled to any benefit of

Section 18 of the Limitation Act inasmuch as neither had

the defendant No.1 acknowledged any liability and even

if there was any, the same was upto 1990 only and the

suit filed in the year 2000 is barred by time.

26. The counsel for the defendant No.1 has also relied upon:

(a) Consolidated Engineering Enterprises Vs Member

Secretary, Irrigation Department (2008) 7 SCC 169 laying down

the conditions to be satisfied for applicability of Section 14 of the

Limitation Act; and b) J.C. Budhraja Vs. Chairman Orissa Mining

Corpn. 2008 (2) SCC 444 on acknowledgement of liability within the

meaning of Section 18 of the Limitation Act.

The counsel for plaintiff during oral submissions also relied on

c) Deena Vs. Bharat Singh (2002) 6 SCC 336 laying down that

time taken in proceeding without impleading necessary party, cannot

be excluded under Section 14 of the Limitation Act.

27. Per contra the counsel for the plaintiff has urged that the

defendant No.1 acknowledged the liability from time to time and

never denied his liability.

Reliance is placed upon, a) J.C. Budhraja aforesaid on the

extension of limitation by acknowledgment;

(b) Food Corporation of India Vs Assam State Cooperative Marketing & Consumer Federation Ltd (2004) 12 SCC 360;

(c) Prabhakaran Vs M Azhagiri Pillai (2006) 4 SCC 484;

(d) Syndicate Bank Vs R. Veeranna (2003) 2 SCC 15;

(e) Hiralal v. Badkulal AIR 1953 SC 225;

all on Section 18 of the Limitation Act.

Qua Section 14 of the Limitation Act, reliance is placed on -

(f) Raghunath Das v. Gokal Chand AIR 1958 SC 827;

g) Union of India Vs West Coast Paper Mills Ltd (2004) 3 SCC 458 and;

h)     Nrityamani Dassi Vs L Chandra Sen AIR 1916
       Privy Council 96.

The counsel for plaintiffs during oral submissions also referred

to -

j) Damodaran Pillai Vs. South Indian Bank Ltd. (2005) 7 SCC

300, though not on Section 14 but in support of proposition that

knowledge of proceeding even without being a party thereto is

sufficient.

28. From the order dated 20th May, 2004 in writ petition

3738/1994 it stands established that the defendant No.2 had no

claims over the said monies if the same were found to be belonging

to the plaintiffs. The defendant No.2 has in its written statement

also taken the same stand. Though a plea is taken that the question

of validity of the order of seizure could not be adjudicated before the

Civil Court, however, that is not the question which falls for

adjudication in the present proceedings. The said question was

raised by the plaintiffs in the writ petition No. 3738/1994 preferred

by them. Upon the said writ petition being disposed of with the

direction that the release/refund was dependent upon the

adjudication of the lis between the plaintiffs and the defendant No.1,

it stands adjudicated that if at all the stand of the defendant No.1 is

to be negated, there was no objection of the defendant No.2 to

release of the monies to the plaintiffs.

29. The counsels have addressed the aspect of limitation, treating

the suit as only for recovery of money by the plaintiffs. However, this

aspect looses sight of the admitted fact that the "said money"

already stood paid by the defendant No.1 to the plaintiffs in the form

of Pay Orders, though in the name of M/s Hindustan Copper Ltd.;

however the plaintiffs on presentment of said Pay Orders to M/s

Hindustan Copper Ltd., could obtain the base metal copper of the

value thereof. Thus the said Pay Orders, in the hands of the plaintiffs

were as good as cash. However, the worth thereof could not be

realized by the plaintiffs owing to intervening events aforesaid. Now,

as aforesaid, the said intervening event has ceased and this suit has

been necessitated only because of the dispute raised by the

defendant No.1 and the writ court finding such dispute to be not

capable of adjudication in the writ proceedings. That dispute also as

aforesaid has been decided against the defendant No.1. There is

thus no impediment to the release of the monies in the form of Pay

Orders to the plaintiffs and in my view, no question of limitation as

raised, treating the suit as simple suit for recovery of money arises.

30. On the proposition that delivery of Pay Order is as good as

payment in cash, I find,

a. The Supreme Court in Sohan Singh Vs. Sarwan Singh

(1996) 5 SCC 759 found that the agreement for payment

of sale consideration of immovable property in cash to

have been performed on tender of Pay Order/Bank Draft

for the amount. It was held, it was as good as cash in

hand;

b. The Division Bench of this court in Kohli Housing and

Development Pvt. Ltd. Vs. Convenience Enterprises

Pvt. Ltd. MANU/DE/1286/2009 also held that a Pay

Order/Bank Draft/Banker's Cheque is issued after

debiting a party's account - it is almost as good as cash;

in that case, consideration was held to have passed

between parties to compromise on delivery of Pay Orders

and the plea of failure of consideration for the reason of

return as unpaid of the Pay Orders for a technical defect

was negatived;

      c.     A single judge of the Andhra Pradesh High Court, in

             Santhi        Enterprises       Vs.      Texmaco        Ltd.

MANU/AP/0803/2005 held that once a Banker's Cheque

is given and the said Banker's Cheque is dishonoured,

there will be a claim on the Bank who issued the same -

that there could be no question of dishonour of a

Banker's Cheque - unless the amount is deposited in the

Bank, no Bank will issue the Demand Draft or Banker's

Cheque - that being so, it cannot be said that the said

amount was not equated with cash - under the Banking

Regulations, the Banker's Cheque as well as Demand

Draft is as good as cash;

d. Lastly, the Rajasthan High Court in Radhey Shyam

Gupta Vs. CIT MANU/RH/0291/1998 held that where a

Demand Draft in the name of assessee was seized by the

Income Tax Department, even though not encashed,

upon the appeal being decided in favour of the assessee,

the amount of the Demand Draft is refundable by the

Department to the assessee, together with simple

interest at 15% p.a., under Sections 237, 240 & 244 (1A)

of the Income Tax Act. While holding so, it was held that

it made no difference whether cash or Demand Draft was

seized, because Demand Draft was as good as cash and if

any such Demand Draft is kept in office and not

encashed, the Department is liable to pay interest.

31. Once it is held that on delivery of Pay Orders by defendant

No.1 to the plaintiffs, the money stood paid by the defendant No.1 to

the plaintiffs, by depositing in the bank account of the defendant

No.1, if the defendant No.1 thereafter contends that it was not

releasable to the plaintiffs from the Bank, it was for the defendant

No.1 to initiate appropriate action in this regard. Not only has the

defendant No.1 not taken any action, in this suit also, it neither filed

the written statement in time, nor cross examined plaintiffs' witness

or led any evidence of own. In these circumstances, it cannot be said

that this suit wherein plaintiffs, in aid of realization of the amount of

the Pay Orders have inter-alia sought declaration of their rights and

other ancillary reliefs.

32. Thus, the cause of action as far as for release/recovery of Rs

50.40 lacs is concerned was the action of the defendant No.2 of

deemed seizure and not of denial of the defendant No.1 of the same.

For redressal of the said cause of action, the plaintiffs took the

remedy by filing the writ petition aforesaid. The said writ petition

was not dismissed as being barred by time or latches. On the

contrary, it was disposed of with the order dated 20th May, 2004

aforesaid. The plaintiffs may have been entitled to the order against

the defendant No.2 in the writ petition, but for the dispute raised by

defendant No.1.

33. Seen I this light, together with dicta of Supreme Court in

West Coast Paper Mills Ltd. (Supra) of Section 14 Limitation Act

to be liberally construed, it cannot be said that the plaintiffs were

not diligently prosecuting their claims with respect to the said

monies. The writ petition remained pending in this court for long.

The question of impleading the defendant No.1 as party thereto, at

the time of institution thereof did not arise in view of the then stand

of the defendant No.1 qua the said monies. The defendant No.1,

when started controverting the claim of the plaintiffs, applied for

impleadment in the said proceedings. This court cannot also ignore

the fact that the writ petition was disposed of on 20th May, 2004 with

observations qua limitation. The defendant No.1 was represented

before the court then. Had the writ court not felt that the limitation

will not come in the way of plaintiffs, the order may have been

different. It is also significant that the plea recorded of defendant

No.1 in the said order is on the merits of the writ petition and not

qua limitation. Of course the defendant No.1 preferred Special Leave

Petition to the Supreme Court against the said order. However, the

observations in the order dismissing the Special Leave Petition are in

the absence of the plaintiffs and cannot be said to be an adjudication.

The fact remains that the Special Leave Petition was dismissed.

34. Thus I find that the question of the claim for the principal

amount of Rs 50.40 lacs being barred by time does not arise. The

plaintiffs are thus entitled to a decree from this court of declaration

that the said amounts belong to the plaintiffs and the defendant no.1

has no claim over the same and for the defendant No.2 to release the

said amounts in favour of the plaintiffs.

35. The next question which arises is of interest. The plaintiffs

have been deprived of the said monies for over 20 years. The said

monies w.e.f. 15th March, 1993 when the same were received by the

defendant No.2 from the Punjab National Bank have been retained

by the defendant No.2. The defendant No.2 in fact could have had

the monies transferred to it earlier. However since the

representations of plaintiffs were pending earlier, liability of interest

till then is not fastened on defendant No.2. According to me the

defendant No.2 having enjoyed the monies ought to pay interest

thereon. The question is at what rate? According to me the

defendant No.1 should pay interest on the said monies at the rate at

which it pays on the refund of income tax allowed by it. As per

Radhey Shyam Gupta (Supra) and even otherwise, the defendant

No.2 is directed to pay interest on the said sum to the plaintiffs at

15% p.a. from the date of receipt of monies in its accounts and till

the date of refund thereof.

36. The plaintiffs have established that contractually they are

entitled to interest at the rate of 18% per annum. The interest

allowed as aforesaid is less than that. However, the claim of the

plaintiffs for differential in interest can be only for three years prior

to the institution of the suit and thereafter only. Thus, a decree for

interest in favour of the plaintiffs and against the defendant No.1 on

the principal sum of Rs.50,40,000/- at the differential rate of 3% per

annum is passed w.e.f. three years prior to the institution of the suit

and till the date of release of the monies to the plaintiffs by the

defendant No.2.

37. I may notice that the defendant No.1 is held liable for such

interest also on the ground that the defendant No.1 after having

initially admitted the said monies to be belonging to the plaintiffs is

found to have, in malafide fashion, started disputing the entitlement

of the plaintiffs and which has resulted in the plaintiffs being not

able to recover/realizes the monies till date.

38. The claim of the plaintiffs for damages against the defendants

(prayer f) is dismissed. Though the defendant No.1 is found to have

taken a false stand in written statement filed in this court and also in

his statement in oath recorded in this court, I refrain from

proceeding against him in the hope that he will not flog this litigation

further.

39. The plaintiffs are also entitled to costs of this suit from the

defendant No.1. Counsels fee assessed at Rs 50,000/-. Decree sheet

be drawn up.

RAJIV SAHAI ENDLAW (JUDGE) September 4th, 2009 M