Jaypee Bros. Medical Publishers ... vs The Bank Of India & Anr.
2011 Latest Caselaw 875 Del

         THE HIGH COURT OF DELHI AT NEW DELHI

%                     Judgment Reserved on:   09.02.2011
                      Judgment Pronounced on: 14.2.2011

+           CS(OS) No. 1148/1995

JAYPEE BROS. MEDICAL
PUBLISHERS P. LTD.                              .....PLAINTIFF

                            - versus -

THE BANK OF INDIA & ANR.                     .....DEFENDANTS

Advocates who appeared in this case:
For the Plaintiff:      Mr Sanjay Bhatt, Adv.
For the Defendant:      Mr A.B.Dial, Sr. Adv. with
                        Ms Sumati Anand, Adv.
CORAM:-
HON'BLE MR JUSTICE V.K. JAIN

1.

Whether Reporters of local papers may be allowed to see the judgment? Yes

2. To be referred to the Reporter or not? Yes

3. Whether the judgment should be reported Yes in Digest?

V.K. JAIN, J

1. This is a suit for recovery of Rs 25,75,186/-. It is

alleged in the plaint that the plaintiff-company vide 8 letters

dated 10th July, 1992 invited offer from defendant No.1 for

forward foreign exchange contracts. No offer for the rate of

foreign exchange was communicated to the plaintiff. On 14 th

July, 1992, Mr S.K. Gupta of defendant No. 1 informed the

plaintiff that the rate of Pound St. would be in the region of

Rs 61 to 62 which was not acceptable to the plaintiff.

Accordingly, the plaintiff refused to enter into forward

foreign exchange contract with the defendant on 14 th July,

1992. It is further alleged that on 16th July, 1992, Asaf Ali

Road Branch of defendant-Bank of India forwarded its

counter offer to the plaintiff, offering varying rates of foreign

exchange, which were materially different from the rates

prevailing on that date. The plaintiff, therefore, returned

back the counter offer to the defendant with the

endorsement "refused and returned". It is also alleged that

vide its letter dated 19th August, 1992, the plaintiff

requested defendant No. 1 for release of Pound 4283.43 to

it, in respect of two invoices of M/s Excel Logistics DMS

Kent. Form A-1 was also forwarded to the Bank along with

the letter. A pay order for the aforesaid sum was released

by the defendant to the plaintiff on the same date, though

no Debit-Advice was received by it.

2. It is further alleged that on 28.9.1992, the

defendant advised the plaintiff that in the context of its

letters dated 10.7.1992 it had already entered into seven

contracts and that they proposed to keep margins of

difference in the rates of pounds coming to about Rs.3 lacs

and asked the plaintiff to arrange for the same. This,

however, was immediately refuted by the plaintiff. On

15.10.1992, the defendant purported to record that it had

debited plaintiff‟s account with Rs.2.40 lacs and had kept

the same as margin. A further sum of Rs.60,000/- was also

demanded from the plaintiff. On 2.11.1992, the defendant

further purported to record that it intended to keep a

margin of about Rs.4.5 lacs and the plaintiff was required to

furnish a further margin of Rs.2 lacs. It was also recorded

that they would cancel the contracts on due dates and

charge swap costs to the plaintiff. On 25.11.1992, a sum of

Rs.2 lacs was transferred from the current account of the

plaintiff maintained with Ansari Road Branch of bank

against an internal communication issued by its Asaf Ali

Branch. The defendant bank vide its letter dated

25.11.1992 purported to recover a sum of Rs.282419/-.

The plaintiff sent a notice to the defendants calling upon

them to pay, to the plaintiff the amount of Rs.722959/-

which they had unilaterally debited in its account, along

with interest thereon. Since the defendant failed to make

payment in terms of the notice and also failed to return the

documents of the plaintiff lying with it, a complaint under

Section 21(a)(1) of Consumer Protection Act, 1986, was filed

by the plaintiff against the defendant. The complaint was,

however, dismissed holding that the appropriate remedy

was by way of a civil suit. The plaintiff is now accordingly

claiming the aforesaid sum of Rs.722959/-debited from its

account. The plaintiff has also claimed a sum of

Rs.1363952.97 towards compensation on account of

difference in the rate of foreign exchange. The plaintiff has

also sought a declaration that a sum of Rs.488275/- is due

to it from the defendant, being the difference in the rate of

currency between 10.7.1992 and 18.12.1992, on account of

wrongfully withholding of foreign exchange documents,

airway bill invoices etc. Another declaration sought by the

plaintiff is that the defendants are liable to pay pendente lite

and future interest to the plaintiff with quarterly interest.

3. The defendant has contested the suit. It has

denied that the plaintiff had invited offer for forward foreign

exchange contract, vide its letter dated 10.7.1992 and has

claimed that in fact the plaintiff had instructed forward

booking of foreign exchange vide its aforesaid letters. It is

also stated that the rates of foreign currency are never

mentioned in such letters and the rates vary from day to

day or from even hour to hour. It is further alleged that the

forward booking of foreign exchange was confirmed by Asaf

Ali Road branch to the Overseas branch of defendant bank

on the same date. It is alleged that as per the procedure,

the Exchange Dealers Cell of the bank prepares

confirmation notes of forward sale contracts which have

printed serial numbers and preparation of such contract

notes takes a few days. These confirmation notes are then

forwarded to the concerned branch which forwards them to

the customer for his signature on the original stamped copy

of the contract note. According to the defendant, on receipt

of confirmation notes by Asaf Ali Road Branch they were

forwarded to the plaintiff vide letter dated 24.7.1992 who

retained the same and assured to return them in due

course, but failed to do so. It is also alleged that the

confirmation note is intended only to record the transaction.

As regards contract note No.197, it is alleged that the

plaintiff brought it to the notice of the bank on 7.8.1992

that though it had taken the contract for US Dollars, the

bank had erroneously booked it for pound sterling 3710.18.

The matter was immediately taken up with Foreign

Exchange Dealers Cell and the contract was cancelled

without debiting any cost to the plaintiff. The original duly

stamped contract note No.197 was returned by the plaintiff

to the bank. As regards contract No.200, it is alleged that

pound sterling 4283.43 were utilized by the plaintiff on

18.8.1992 at the contractual rate and demand draft for the

remittance, along with the bank advice debiting the

plaintiff‟s account at the contract rate was duly collected by

the representative of the plaintiff on 20.08.1992. As regards

the amount of commission in respect of contract note

No.200, it is alleged that as per FEDAI Rules, the

commission charges for import bill amounted to Rs.640/-,

which were recovered from the plaintiff and this amount

was reflected its debit advice given to it. It is also alleged

that the particulars of foreign exchange contracts were

submitted to Reserve Bank of India in the R-Return filed by

the defendant. It is claimed that the bank had a lien in

respect of money held on account of plaintiff in any branch

of the bank and it was in exercise of this lien that the money

was transferred from Ansari Road Branch to Asaf Ali Road

Branch of the Bank.

4. The following issues are framed on the pleadings of

the parties:-

(i) Whether there was any contract of forward foreign exchange between the plaintiff and the defendant? If so whether the defendant could not debit the amount in question?

(ii) If yes, whether the foreign exchange rate prevalent on July 10, 1992 was to be applied by the defendant?

(iii) Whether the plaintiff is entitled to the reliefs claimed?

Issue No.1 & 2 : The plaintiff has produced one

witness, its Managing Director Jitender P.Vij whereas the

defendants have produced two witnesses namely Mr. Ravi

Bhatia who was Deputy Manager with the defendant bank

before he took voluntary retirement and was posted at its

Asaf Ali Road Branch w.e.f. 27.9.1992 and Mr. S.K.Gupta,

Deputy Chief Manager who also took retirement and was

working at Asaf Ali Branch from 1.7.1989 to 8.8.1992. In

his affidavit, Mr. Jitender P.Vij has stated that vide eight

letters Ex.PW-1/A (colly), the plaintiff company invited offer

for forward foreign exchange contracts in respect of various

invoices which were due on various dates. He has further

stated that on 14.7.1992, Mr. S.K.Gupta of defendant Bank

informed him that the rate would be in the region of Rs.61

to Rs.62 per pound, which was not acceptable to them and,

therefore, they refused to enter into a forward exchange

contract. He has further stated that on 16.7.1992, the Asaf

Ali Road Branch of the Bank forwarded its counter offer to

the plaintiff on varying rates of foreign exchange, vide

counter offer Ex.PW-1/B. Since the rates were different

from the rates prevailing on 16.7.1992 and the rates

prevailing on 10.7.1992, the notes were returned to the

manager of the defendant with the endorsement "refused

and returned". He has further stated that under RBI foreign

exchange Manual and in accordance with practice, the

banks forward contracts which are duly stamped and are

called confirmation, seeking acceptance of the customer by

way of a confirmation letter addressed by him to the Branch

that he had bought a foreign exchange of a specified amount

and at a specified rate along with particulars of delivery.

This witness has further stated that no contract for further

foreign exchange came into being as no rate of foreign

exchange was mentioned in the correspondence dated

10.7.1992. According to him, the letter Ex.PW-1/C and D

were sent by the plaintiff to the defendant on 16.7.1992 and

29.7.1992 respectively. He further stated that the plaintiff

sent a letter dated 19.8.1992 seeking release of Pound

Sterling 4283.43 to the accounts of Excel Logistic DMS Ever

Limited in relation to their invoices for which payment had

to be made. Form A-1 was also forwarded to the bank along

with the letter. He stated that the plaintiff, did not receive

debit advice upon the issuance of draft for Pound Sterling

4283.43 and subsequently it was informed that commission

of Rs.640/- was quoted for that draft. According to him, as

per the bank, bank charges would be a commission of

Rs.100/-, if delivery is being taken against a forward

exchange contract.

5. In his affidavit by way of evidence Mr. Ravi Bhatia

has stated that vide eight letters dated 10th July 1992, the

plaintiff had directed and authorized the Bank to book the

foreign currency during the delivery period mentioned in the

letters. He has further stated that the rate of exchange of a

particular currency varies from day to day and even from

hour to hour and the importer who wants to book forward

foreign currency has to enquire the rate of foreign exchange

from the bank, this, according to him, was the reason why

rate of foreign currency was not mentioned in the letters of

the plaintiff dated 10th July 1992. He has further stated

that an importer wishing to enter into a contract has to

submit import documents such as copies of invoice,

AWB/BL and customs certified exchange control copy of Bill

of Entry and the plaintiff had submitted these documents

along with the letters dated 10th July 1992. He has further

stated that on receipt of written instructions from the

plaintiff to enter into forward booking contracts, the bank

booked foreign exchange accordingly and confirmed the

same to the plaintiff on telephone. According to him

booking of the contracts was confirmed by Asaf Ali Road

Branch Bank to Overseas Branch Bank vide eight letters

dated 16th July 1992, office copies of which are Ex.DW-1/9

to Ex.DW-1/16. He has further stated that these contracts

were duly reflected in the fortnightly R-Return dated 31st

July 1992 submitted by the defendant bank to RBI as per

Exchange Control Regulations‟. A copy of the R-Return is

Ex.DW-1/17. He has further stated that on receipt of

confirmation notes by Asaf Ali Road Branch of the Bank, the

same were forwarded to the plaintiff vide covering letter

dated 24th July 1992. The plaintiff retained those

confirmatory notes and assured to return them in due

course. He has further stated that confirmation note

No.200 was utilized by the plaintiff for pound sterling

4283.43 on 19th August 1992 at the contractual rate and

demand draft for the remittance along with the bank advice

debiting plaintiff‟s account at the contracted rate was duly

collected by the representative of the plaintiff on 20 th August

1992. He has also identified the signature of Mr. R.

Srivastava, representative of the plaintiff company in the

hand delivery book of the bank, with respect to receipt of

original draft along with the debit advice. He has further

stated that the plaintiff had given duly verified signature of

Mr. Srivastava to the bank. He has further stated that the

utilization of contract No.200 by the plaintiff was reflected

in the R-Return filed by the defendant for the fortnight

ending 31st August 1992, a copy of which is Ex.DW-1/21.

According to this witness, the demand draft was issued at

the contract rate and not at the current spot rate prevailing

on 19th August 1992. He has further stated that as per

FEDAI rules, the commission charges for this transaction

amounted to Rs.640/-, which were recovered from the

plaintiff and were reflected in Debit-Advice.

6. Mr. Ravi Bhatia has further stated that he along

with Mr. S.K. Gupta had visited the office of the plaintiff on

30th July 1992 when Mr. Gupta took him there while

introducing him to important customers of the bank. He

claimed that the letters dated 16th July 1992 and 29th July

1992, stated to be written by the plaintiff to the bank, were

forgeries and were never received by the bank. According to

him, the letter of the plaintiff dated 5th October 1992 was

received by the bank on 19th October 1992, whereas the

letter of the plaintiff bearing the date of 15th October 1992

was received in the envelope Ex.D-7 after the bank had

written the letter dated 15th October 1992 to the plaintiff.

He has further stated that no request was made by

the plaintiff till 17th December 1992 for return of the

documents submitted to the bank and for the first time

such a request was made on 18th December 1992 and the

documents were collected from the bank on 19th December

1992. He stated that without documents, which the

plaintiff had left with the bank till 19 th December 1992,

foreign exchange could not have been arranged for it for

payment to the foreign suppliers.

7. In his affidavit by way of evidence Mr.

S.K. Gupta has corroborated the deposition of Mr. Ravi

Bhatia and has stated that booking of the contracts was

confirmed by him to the plaintiff on telephone and that on

30th July 1992 he had visited the office of the plaintiff to

introduce Mr. Ravi Bhatia to the important customers of the

bank.

8. The main dispute between the parties is as to

whether vide letters dated 10th July 1992, the plaintiff had

entered into contracts with the defendant for forward

booking of foreign exchange or it had only invited offer from

the bank for this purpose. A forward exchange contract is

an agreement between a bank and another party for sale or

purchase of a specified quantity of stated foreign currency

on a rate of exchange fixed at the time of making the

contract. The delivery date as well as the amount of the

currency is also fixed at the time of the agreement. Once

such a contract is entered into, it is binding on the parties

and in case the party agreeing to purchase foreign exchange

or sell it to the bank commits default in performance of its

contractual obligation, the bank is entitled to close the

agreement and recover the difference between the

contracted rate and the rate prevailing on the date of close

out from that party. It has come in the deposition of the

bank officer and is otherwise not in dispute that the rate of

foreign exchange even for forward booking vary not only on

day to day, but on hour to hour basis. If the case setup by

the plaintiff is accepted, it would mean that the rates for

forward booking of foreign exchange were invited by it on

10th July 1992 and were quoted by the defendant bank on

14th July 1992. Considering the very nature of such

transaction, this could never have been the case. If a

person wants quotation for forward booking of foreign

exchange, he obviously wants the rates prevailing for such

bookings as on the date of inviting offers. No bank can

respond to such an invitation and the wait for a response

from the customer, for the simple reason that the rates

prevailing at the time they are quoted by the bank may no

more be valid by the time the offer is accepted and the

acceptance is conveyed by the importer to the bank. If the

bank, for example, quotes rates of Rs.80/- for a pound

sterling on date „X‟, the prevailing rate for such a contract

on the due date at the time the quotation given by the bank

is accepted by the importer and the acceptance is conveyed

to the bank may be Rs.81/- and the bank may have to incur

loss in case it provides foreign exchange at the rate quoted

by it to the importer. No bank is likely to adopt such a

method for forward booking of foreign exchange.

9. No evidence has been led by the plaintiff to show

that either the defendant bank or any other bank enters

into a transaction for an advance booking of foreign

exchange in the manner claimed by the plaintiff. In these

circumstances, I see no reason to reject the plea taken by

the defendant that in transactions of this nature, the rate of

foreign exchange which varies from hour to hour can be

given and is actually given by the bank to the importer only

on telephone and is required to be accepted or rejected as

the case may be, there and then, on the telephone itself,

though written confirmation of the acceptance, given on

phone, may come later, in due course. Therefore, the case

setup by the plaintiff in this regard is inherently improbable

and, therefore, cannot be accepted.

10. Exhibit D-1/1 to D-1/8 are the 8 letters written by

the plaintiff to the defendant on 10th July, 1998. Para 2 of

these letters contains an express request to the defendant

for forward booking of the foreign exchange mentioned in

the letter and also contains an undertaking to make

payment on due dates which are stated in the letters. By no

stretch and no reasoning can any of these letters be said to

be an invitation to offer for forward booking of a foreign

exchange. These letters are plain and simple request to the

bank for forward booking of the amount of foreign currency

stated therein and no other interpretation can possible be

given to them. In the face of unambiguous request

contained in these letters, it is not possibly to accept the

case set up by the plaintiff as regards the nature of these

documents.

11. Copies of the invoices of the exporter, photocopies

of airway bills and most importantly exchange control copy

of bill of entry were enclosed to these letters. There could

have been no reason or logic behind enclosing these letters

to an invitation asking for offer for providing foreign

exchange in future. If offers are invited, the person inviting

the offer cannot be sure whether he would be accepting the

offer or not. If the offer is not acceptable to him, it has to be

rejected by him. Therefore, there would be no occasion for

him to send such documents including all important

exchange control copy of bill of entry along with a letter

inviting offer for forward booking of foreign exchange. He

will send these documents only at the time of placing a firm

order for advance booking of foreign exchange. Another

important aspect in this regard is that though the case of

the plaintiff is that the rates quoted by the defendant bank

were rejected by it on 14th July, 1992, these documents

were allowed to remain lying with the bank and were never

demanded by the plaintiff at any time prior to 18th

December, 1992. There could have been no reason for the

plaintiff to keep these documents with the defendant bank

despite rejection of the rates quoted by it on 16 th July, 1992,

particularly when it was not possible for the plaintiff to

arrange foreign exchange from other sources, in the absence

of exchange control copy of the bill of entry. This is yet

another circumstance, which shows that, in fact, the

plaintiff had taken forward booking of foreign exchange with

the defendant bank and that is why these important

documents were not demanded back from the bank.

12. It was pointed out by learned counsel for the

plaintiff that no rate of the foreign exchange has been

mentioned in Exhibit DW1/1 to DW1/8 which shows that

no order for forward booking of foreign exchange was placed

with the bank. I, however, find no merit in this contention.

It has come in the deposition of Mr. S.K. Gupta that the rate

of foreign exchange was conveyed to the plaintiff on

telephone and was accepted by it. Even otherwise, as noted

earlier, in a transaction for forward booking of foreign

change, it is not possible for a bank to quote a firm rate of

foreign exchange, which keeps on varying from hour to hour

and even minute to minute basis.

13. The case of the plaintiff is that the rate offered to it

by the defendant bank on 14th July, 1992 was refused by it

on the same date and it had also written a letter to the

defendant bank in this regard on the same date. There is a

specific averment to this effect in para 5 of the replication.

However, the plaintiff has not placed on record any copy of

the letter alleged to have been written to the defendant bank

on 14th July, 1992 and when Mr. S.K. Gupta came in the

witness box, no suggestion was given to him that the

plaintiff had alleged to have written a letter to him on 14th

July, 1992 rejecting the rates of foreign exchange quoted

verbally by him on that date. This clearly shows that the

plea set up by the plaintiff in this regard is totally false and

no rate was quoted to it on 14th July, 1992.

14. Exhibit PW1/B(Colly) are the photocopies of the

confirmation notes dated 16th July, 1992 alleged to have

been refused and returned by the plaintiff to the messenger

of the defendant on the same date. The case of the

defendant is that these letters except in respect of contract

No.197 were never returned to it by the plaintiff. It has

come in the deposition of the bank officers that these

confirmation notes were received by the Asaf Ali Road

Branch of the bank from its Overseas Branch, which was

dealing in foreign exchange, only on 24 th July, 1992 and

they were forwarded to the plaintiff on the same date.

Exhibit DW1/18 is the forwarding letter whereby these

confirmation notes were sent by the Asaf Ali Road Branch of

the defendant bank to the plaintiff company. Exhibit DW-

1/9 to DW-1/16 are copies of the inter office memos

whereby the forward sale contracts were sent by the Asaf Ali

Road Branch to the Overseas Branch of the bank informing

it that they had scrutinized the documentary evidence and

was thoroughly satisfied regarding genuineness of the

transaction for which forward cover had been applied for

and that the transaction was in conformity with the

exchange control regulations. Since the confirmation notes

have been issued by the overseas branch of the bank as is

evident from a bare perusal of the document, it is unlikely

that they would have been received by the Asaf Ali Road

Branch from the Overseas Branch on the very same date on

which it had requested issue of forward sale contracts.

Another important circumstance in this regard is that there

is no acknowledgment taken by the plaintiff from the

defendant in confirmation of having returned these notes to

the bank. The case of the plaintiff is that these

confirmation notes were returned to the bank official, who

had brought them, after retaining their photocopies.

However, at no stage before the bank asked the plaintiff to

arrange Rs.3 lakhs on account of difference in foreign

exchange rates, did the plaintiff ever write to the defendant

bank informing it that the confirmation notes had been

returned to the official, who had brought them to the office

of the plaintiff company. Yet another material aspect in this

regard is that the plaintiff has not filed any copy of the

confirmation note with respect to contract No.197, which

admittedly was got cancelled by the plaintiff on account of

the defendant bank having booked the foreign exchange in

Pound Sterling, though the request of the plaintiff was for

forward booking of US dollars. Had the plaintiff returned all

the confirmation notes on 16 th July, 1992, after retaining

their photocopies, it would have been having with it copy of

confirmation note in respect of contract No.197 as well. The

failure of the plaintiff to file a copy of confirmation note in

respect of contract No.197 indicates that it had not returned

any of the confirmation note except the confirmation note in

respect of contract No.197 to the defendant and that is why

it was able to file the copies of all of them except contract

No.197.

15. A perusal of the confirmation notes for forward

booking of foreign exchange shows that this document is

confirmation of a contract, which has already been taken

from the bank. Vide these notes, the importer confirms

having bought the foreign exchange mentioned in the

document from the bank at the rate and on the dates

mentioned therein. Issue of these confirmation notes by the

overseas branch of the bank is yet another indicator that in

fact the rate of foreign exchange was conveyed to the

plaintiff on telephone as stated by the bank officers and was

accepted by it and that is why, vide office memos dated 16th

July, 1992, Asaf Ali Road Branch of the bank requested its

overseas branch to issue forward sale contracts to the

plaintiff company and confirmation notes dated 16 th July,

1992 were accordingly issued by the overseas branch of the

bank and were sent to the plaintiff company for signing

them and returning them to the bank. Had the plaintiff not

booked foreign exchange with the defendant bank, there

would have been no occasion for its Asaf Ali Road Branch to

request the overseas branch to issue forward contracts and

consequently the overseas branch would not have issued

the confirmation notes dated 16th July, 1992 and sent them

to the Asaf Ali Road Branch for obtaining signatures of the

importer on them.

16. The case of the plaintiff is that it had written two

letters, one dated 16th July, 1992 and the other dated 29th

July, 1992 to the bank, informing that they were not

interested in forward booking of exchange. The plaintiff has

not produced any proof of having dispatched the letter dated

16th July, 1992, a copy of which is Exhibit PW-1/C to the

defendant bank. Since the bank had expressly denied

receipt of any such letter and had claimed that these letters

had been forged by the plaintiff, it was obligatory for the

plaintiff company to prove the dispatch and service of these

letters. The failure of the plaintiff to file any proof even of

having dispatched the letter dated 16th July, 1992 to the

bank leads to the inference that no such letter was ever sent

to the bank. The letter dated 29th July, 1992 is alleged to

have been sent under a certificate of posting. The plaintiff

company has its office at Ansari Road, Darya Ganj, New

Delhi. The Asaf Ali Road Branch of the defendant bank is

quite near to Ansari Road. The letter dated 29 th July, 1992

was an important letter since the plaintiff company was

seeking to confirm to the defendant bank that it was not

interested in forward booking of foreign exchange. No

reason has been given by the plaintiff for not sending such

an important letter to the bank either by hand or by

registered post. In the absence of any explanation for not

sending such an important letter either by hand or by

registered post and the bank having not received this letter,

it is very difficult to accept that the letter dated 29 th July,

1992 was ever sent by the plaintiff company to the bank. It

is more so when there is no proof of dispatch of the earlier

letter dated 16th July, 1992, which finds mentioned in the

letter dated 29th July, 1992. It is worth noting that neither

letters dated 16th July, 1992 nor 29th July, 1992 has been

set up in the replication, which contains reference only to a

letter alleged to have written on 14 th July, 1992.

17. Admittedly, the plaintiff wrote a letter dated 19th

August, 1992 (Exhibit PW1/E) to the defendant bank,

enclosing Form A-1 and requesting the bank to issue draft

for Pound Sterling 4283.43 in favour of the exporter M/s

Exel Logistics DMS Ltd. Admittedly, the amount of Pound

Sterling 4283.43 was paid to the plaintiff vide demand draft

Exhibit PW-1/G. The case of the plaintiff is that this foreign

exchange was purchased by it from the defendant against

spot rate whereas the case of the defendant is that it was

one of the contracts made with the bank on 10 th July, 1992

for forward booking of foreign exchange. There is absolutely

no indication of any spot rate or spot purchase in this letter.

Rather, the letter refers to three documents, which had

already been submitted to the bank viz. copies of invoices,

copy of airways bill and Bill of Entry (exchange control copy)

which had already been submitted to the bank, along with

the letter dated 10th July, 1992. Therefore, in the

background of letters written and documents submitted to

the bank on 10th July, 1992, the impression one gets from a

reading of the letter dated 19th August, 1992 is that the

plaintiff company was seeking to avail foreign exchange,

which it had purchased in advance vide its letter dated 10 th

July, 1992. Another important aspect in this regard is that

the foreign exchange to the plaintiff pursuant to the letter

dated 19th August, 1992 was provided at the contractual

rate mentioned in the confirmation note dated 16th July,

1992. Had this foreign exchange been purchased against

spot rate, the bank would have charged the rate prevailing

on the date of the providing foreign exchange and not the

rate mentioned in the confirmation note dated 16th July,

1992 in respect of contract No.200, which was the contract,

subject matter of this transaction. Yet another important

aspect in this regard is that the bank has charged a sum of

Rs.640/- from the plaintiff company in respect of this

transaction. The case of the plaintiff is that in the case of

forward contract, the bank charges a flat commission of

Rs.100/- and, therefore, charging Rs.640/- clearly indicates

that it was a transaction of purchase of foreign exchange at

spot rate and was not a case of purchase of foreign

exchange against a forward contract. The plaintiff has not

produced any evidence to prove that the bank was required

to charge a flat fee of Rs.100/- in respect of sale of foreign

exchange against a forward contract. On the other hand,

copy of the foreign exchange manual filed by the defendant

bank shows that the prescribed charges in respect of

forward contract is minimum Rs.250 per contract. The

bank has charged more than Rs.250/- and, therefore, it

cannot be said that it has not levied charges prescribed in

respect of a forward contract. The first letter of the plaintiff

disputing forward booking of foreign exchange, received by

the defendant bank is the letter dated 5 th October, 1992,

which is Exhibit D-4. This letter was dispatched to the

bank on 16th October, 1992, as is evident from the envelop

Exhibit D-5. The second letter received by the bank in this

regard is the letter Exhibit D-6, which purports to be written

on 15th October, 1992 but was actually dispatched only on

30th October, 1992 as would be evident from the postal

stamp affixed on the envelop Exhibit D-7 in which it was

sent to the defendant bank. These envelopes have been

admitted by PW-1 in his cross-examination. The plaintiff

has not given any explanation for dispatching the letters

dated 5th October, 1992 on 16th October, 1992 and 15th

October, 1992 on 30th October, 1992. The obvious inference

is that the plaintiff has ante dated these letters. This

become important since the defendant bank vide its letter

dated 28th September, 1992, which is Exhibit DW1/23,

informed the plaintiff that the value of Pound Sterling

against the Rupee had gone down and, therefore, it was

proposed to keep a margin of difference in the two rates,

which came to around Rs.3 lakhs. The plaintiff was

requested to immediately arrange to provide funds in its

account to enable the bank to keep the margin. In this

letter, there was reference to all the 8 contracts except

contract note No.197, which admittedly the plaintiff had got

cancelled. It is quite obvious that by ante-dating the letter

dated 5th October, 1992, the plaintiff wanted to show that it

had denied the contracts even before receipt of the letter

dated 28th September, 1992 from the bank. This is yet

another circumstance, which indicates that the forward

contracts were actually taken by the plaintiff and on

account of value of the Pound Sterling against Rupee having

gone down and the bank asking it to provide a margin of

Rs.3 lakhs on this ground, the plaintiff company, in order to

wriggle out of its contractual obligation, ante-dated the

letter so that it does not have to pay the margin money to

the bank. In fact, the letter of the bank dated 28 th

September, 1992 was followed by letters dated 12th October,

1992 and letter dated 15th October, 1992, which is exhibit

DW1/25, written before receipt of the ante dated letter

Exhibit D-4 from the plaintiff company.

18. The rate of foreign exchange mentioned in Exhibit

DW1/8, which is the contract relating to Pound Sterling

4283.43 is at the rate of 1.6780 and same is the rate

mentioned in the advice, which was delivered to the plaintiff

along with the demand draft dated 19th August, 1992 and is

an admitted document having been admitted on 13 th

August, 1997. During cross-examination of DW-1, it was

suggested to him by the plaintiff that the spot rate on

19.8.1992 was 1.7130, which clearly indicates that the spot

rate was not applied by the defendant while issuing a draft

for pound sterling 4283.43 to the plaintiff company on

19.8.1992. Though the plaintiff has disputed the receipt of

advice from the bank, the plea taken in this regard is

patently false since not only a combined photocopy of advice

and demand draft was admitted on 13th August, 1997, the

acknowledgement made by Mr. R. Srivastava, authorized

representative of the plaintiff in the Hand Delivery Book of

the Bank Exhibit DW1/20 on 20 th August 1992 also shows

that the advice was delivered to Mr. Srivastava along with

the demand draft. The signatures of Mr. Srivastava on the

Hand Delivery Book Exhibit DW1/20, has been proved by

DW-1 Mr. Ravi Bhatia, who has stated that since Mr.

Srivastava was regularly coming to the bank on behalf of the

plaintiff and was receiving papers/documents etc. and

writing and signing in this regard in his presence, he was in

a position to identify his handwriting and signatures. D-9 is

the letter of the plaintiff company on which Mr. Srivastava

acknowledged receipt of this Exchange Control copies of

Bills of Entry which the plaintiff company had submitted to

the defendant bank on 10 th July, 1992 and is an admitted

document. I have compared the signatures at page 3 of the

Hand Delivery Book with his signatures on Exhbit D-9 as

provided in Section 73 of the Evidence Act, which provides

that in order to ascertain whether a signature, writing or

seal is that of the person by whom it purports to have been

written or made, any signature, writing or seal admitted or

proved to the satisfaction of the Court to have been written

or made by that person may be compared with the one

which is to be proved. It appears to me that both the

signatures have been made by one and the same person.

The power of the Court to make such a comparison was

upheld in Sukhwinder Singh & Others versus State of

Punjab, 1994 (5) SCC 152, Ashok Kumar Uttam Chand

Shah v. Patel Mohmad Asmal Chanchad, AIR 1999 Guj.

108       and         Satish   Jayanthilal   Shah   v.      Pankaj

Mashruwala, (1997) 2 Crimes 203 (Guj.).                  Thus, the

signatures of Mr. Srivastava has been duly proved by DW-1,

Mr. Ravi Bhatia, who being a person acquainted with the

signatures of Mr. Srivastava, was competent to give an

opinion in this regard in view of the provisions contained in

Section 47 of the Evidence Act, which to the extent it is

relevant provides that a person is said to be acquainted with

the handwriting of another person when he has seen that

person write. This opinion finds confirmation not only from

the comparison by the Court but also from other facts and

circumstances of the case.

19. It was contended by learned counsel for the

plaintiff that since recording of the rate of exchange was a

mandatory requirement of a forward contract and that has

not been given in Exhibits DW1/1 to DW1/8, these

documents do not fulfill the requirement of a forward

contract. As stated earlier, by the very nature of such

transaction, the rate of exchange cannot be incorporated in

the request made by the importer to the bank for forward

booking of foreign exchange and the rate of foreign exchange

on account of its continuous fluctuation, can be given only

on telephone. It has come in the cross-examination of

DW-1 and DW-2 that the order for the advance purchase of

foreign exchange was received from the plaintiff company on

16.7.1992 and on the same date, the rate of foreign

exchange on the dates on which the foreign exchange was

required by the plaintiff was conveyed on telephone after

ascertaining the same from the Oversees branch of the

bank, which was requested to prepare the contract notes in

terms of the order placed by the plaintiff company with the

bank. Of course, the bank is required to reduce all the

terms and conditions of the forward contract into writing

and the particulars such as contract amount, parties to the

contract, rate of exchange and delivery dates are necessarily

required to be given in such a document. The bank duly

complied with these requirements by preparing and sending

the confirmation notes, which admittedly were received by

the plaintiff, though the case of the plaintiff is that these

notes were received by it on 16th July, 1992 and were

returned on the same date along with an endorsement of

refusal, whereas the case of the defendant is that these

notes were sent to the plaintiff only on 24th July, 1992 and

none of them except the confirmation note in respect of

contract No. 197 was returned to it by the plaintiff.

Therefore, there is no escape from the conclusion that the

plaintiff had actually entered into an agreement with the

defendant bank for purchase of foreign exchange on the

dates mentioned in the letters dated 10th July, 1992, which

also contained the name of the exporter, the amount of

foreign exchange as well as the dates on which the foreign

exchange was required by the plaintiff. The only particular

not given in this document was rate of exchange, which was

provided to the plaintiff on telephone and was later

incorporated in the confirmation note sent to the plaintiff on

24th July, 1992.

20. The defendant is a Nationalized Bank and DW-1 as

well as DW-2 were bank officials, who have since retired

from the service of the bank. Had the plaintiff not taken

forward contract for purchase of foreign exchange, there

could have been no reason for them to forward the letters

dated 10th July, 1992 received from the plaintiff company to

the overseas branch of the bank and request it to issue the

forward sale contract in respect of the imports proposed to

be made by the plaintiff company. They had nothing to gain

by preparing false documents in this regard and making

false deposition in the Court, more so when they have since

retired from the service of the bank. The plaintiff does not

allege any mala fide on the part of the bank officers and the

relations between the plaintiff and the bank were quite

cordial till the letter dated 28th September, 1992 was written

by the bank to the plaintiff requiring it to arrange Rs.3

lakhs towards margin. This is also evident from the fact

that on 19th August, 1992, the plaintiff purchased foreign

exchange from the defendant bank though it claims to have

made the purchase on spot rate whereas the case of the

defendant is that the purchase was made against the

forward sale contract in respect of contract note No.200.

21. It has also come in the deposition of the bank

officers that the sale of foreign exchange amounting to

Pound Sterling 4283.43 was also reflected in the fortnightly

return called R-Return, which the bank had submitted to

the Reserve Bank of india for the fortnight ending 31 st

August, 1992 Exhibit DW-1/21 and 31st July, 1992, which

is Exhibit DW1/17. The cancellation of the forward

contracts was also notified by the defendant to the Reserve

Bank of India and was reflected in R-Returns dated 13th

November, 1992 and 15th December, 1992, copies of which

are Exhibit DW1/37 and DW1/38.

22. For the reasons given in the preceding paragraphs,

I hold that the plaintiff had taken 8 forward contracts from

the defendant bank for advance purchase of foreign

exchange for the amounts mentioned in Exhibits DW-1/1 to

DW-1/8 and the foreign exchange was to be availed during

the period noted in these documents. Since the plaintiff

company failed to avail the foreign exchange, subject matter

of the forward sale contracts taken by it, the bank was

entitled in law to close the contract and deduct the amount

of margin/difference from the funds available with it in the

account of the plaintiff company. This is not the case of the

plaintiff that the amount deducted by the defendant bank

was more than the amount, which ought to have been

deducted in terms of the forward contracts taken by it. The

case of the plaintiff is that it never took the forward

contracts from the defendant bank. Since it has been

proved that the plaintiff company had actually taken

contracts for advance purchase of foreign exchange, no fault

can be found that the deductions made by the defendant

bank from the funds available with it. The issue is decided

in favour of the defendant.

23. Issue No.3

In view of my findings on issue nos. 1 and 2, the

plaintiff is not entitled to any relief.

ORDER

The suit is hereby dismissed with costs. Decree

sheet be prepared accordingly.

(V.K. JAIN) JUDGE

FEBRUARY 14, 2011 bg/sn/ag/vkm