Transport Corporation Of India ... vs Reserve Bank Of India & Anr
2017 Latest Caselaw 4416 Del

$~10
* IN THE HIGH COURT OF DELHI AT NEW DELHI
%                                         Judgment delivered on: 24.08.2017

+       CS(OS) 361/2012
TRANSPORT CORPORATION OF INDIA LTD                                     ..... Plaintiff
                                          versus

RESERVE BANK OF INDIA & ANR                                         ..... Defendants
Advocates who appeared in this case:

For the Petitioner        :        Ms. Divya Kapur, Advocate.

For the Respondents       :        Mr. Sandeep Sethi, Sr. Advocate with Mr. Neeraj
                                   Yadav, Mr. Davesh Bhatia, Mr. Saurabh Kumar and Ms.
                                   Shweta Priyadarshini,

CORAM:-
HON'BLE MR JUSTICE SANJEEV SACHDEVA

                                     JUDGMENT

24.08.2017 SANJEEV SACHDEVA, J. (ORAL)

OA No.32/2017 in CS(OS) 361/2012

1. This is a chamber appeal, filed by the plaintiff, impugning order dated 25.10.2016, passed by the Joint Registrar in IA No.11635/2016, whereby, the application, filed by the plaintiff, under Order XI Rule 1 of the Code of Civil Procedure, for leave to deliver interrogatories on the defendant No.2, has been rejected.

2. The plaintiff had sought to administer the following

interrogatories on the defendant No.2:-

"a) Has Defendant No. 2 executed transactions with any other counterparty where Mr. Soumya Dutta/Eforexindia has been involved in any manner?

b) Has Defendant No. 2 addressed and/ or copied Mr. Soumya Dutta/ Eforexindia on emails other than relating to the Plaintiff?

executed with other counterparties involving either Mr. Soumya Dutta or Eforexindia?

d) How many transactions have been facilitated by Soumya Dutta for and on behalf of Defendant No. 2 Bank?

executed with other counterparties where Mr. Soumya Dutta and/or Eforexindia has facilitated/ brokered/ consulted the transaction?

f) Has any representative or official of Defendant No. 2, including the Managing Director, met/ interacted with Mr. Soumya Dutta and/or Eforexindia, other than in respect of the transaction with the Plaintiff?

g) Has Respondent No. 2 executed any agreement with Mr. Soumya Dutta and/or Eforexindia?"

3. By the impugned order dated 25.10.2016, learned Joint Registrar has dismissed the application, inter alia, holding as under:-

"3. Issue No. 8A reads as "whether defendant no.2 is liable for fraud for deceit in respect of USD/CHF transaction dated 20.09.2007? OPP". There is no

reference to Mr. Soumya Dutta and Eforexindia. The issue is confined to defendant No.2. Plaintiff claimed that it was not a sophisticated market player and in response it is stated in paragraph 25 of the preliminary objection in the written statement that plaintiff was advised by Eforexindia of which Mr. Soumya Dutta is the MD. The claims made by M/s. Eforexindia on its website regarding the expertise of Mr. Soumya Dutta are also mentioned. In response to this paragraph, plaintiff has stated in the replication that Mr. Soumya Duta and Eforexindia were actually agents of defendant No.2 while they were ostensibly advising the plaintiff. It is not the case of the plaintiff that M/s. Eforexindia approached it as agent of defendant No.2 to sell the financial product in question. In the plaint, no averment was made about Mr. Soumya Dutta and M/s. Eforexindia. In the replication also, vague allegation has been made. Mr. Soumya Dutta and M/s. Eforexindia are not parties to the suit. In lA No.1872/2016 moved by defendant No.2, one of the questions pertained to the payments made by the plaintiff to Mr. Soumya Dutta and / or to M/s. Eforexindia. lA No. 1872/2016 was allowed by this court vide order dated 23.09.2016 along with lA No. 25111/2015 moved by the plaintiff. The request for discovery of the document by defendant No.2 in his lA in respect of payments made by plaintiff to Mr. Soumya Dutta / M/s. Eforexindia was relevant in view of the contention of the plaintiff that it was not a sophisticated market player and it could not understand nature of the transaction. M/s. Eforexindia is providing financial services and it is possible that it might have provided the services in respect of other transactions also with defendant No.2. This fact itself does not show that Mr. Soumya Dutta and M/s. Eforexindia were cahoots with defendant No.2. The interrogatories are not relevant for fair disposal of the case. Accordingly, lA is dismissed."

4. The rationale behind the order of the learned Joint Registrar is that the interrogatories are not relevant for fair disposal of the case. Reference is also drawn to the issue No.8A by the learned Joint Registrar, which is to the effect as to whether defendant No.2 is liable for fraud or deceit in respect of the transaction dated 20.09.2007 entered into between the plaintiff and the defendant No.2.

5. Learned counsel for the plaintiff has contended that the plaintiff had entered into a transaction with the defendant No.2, consequent to which, an illegal demand was raised by the defendant, which had to be met by the plaintiff. The plaintiff therefore seeks recovery of the said amount.

6. It is the case of defendant No.2 that the transaction between the plaintiff and the defendant No.2 was entered into after the plaintiff had taken advice from one Mr. Soumya Dutta and Eforexindia.

7. The contention of the plaintiff is that Mr. Soumya Dutta and Eforexindia had acted as agents of the defendant No.2 and had, thus, convinced the plaintiff to make the investments, which, ultimately, resulted in the plaintiff having to make the payments to the defendant, recovery of which is sought in these proceedings.

8. The case of the plaintiff is that the defendant No.2 had committed a fraud and deceit and in cahoots with Mr. Soumya Dutta and Eforexindia, induced the plaintiff to enter into the said transaction.

9. The defence of the defendant is that the plaintiff entered into the transaction after taking expert advice and the plaintiff was well informed prior to entering into the transaction.

10. To determine whether the interrogatories raised are relevant for the purposes of the disposal of the suit, we would need to refer to some of the pleadings of the parties.

11. The plaintiff, in the plaint, has, inter alia, averred as under:-

"6. In 2006 Defendant No. 2 bank, acting through its agents, advised the plaintiff company that since interest costs in India are significant, the Plaintiff should consider entering into Foreign Exchange Derivative transactions to reduce its interest burden. Defendant No. 2 Bank acting through its agents, advised the Plaintiff Company that this was a methodology being recommended by various banks and was being adopted by all sophisticated companies to reduce the interest costs. Defendant No. 2, acting through its agents, advised the plaintiff that if it notionally swaps its rupee loan into Swiss Francs (CHF), it would get the advantage of reduced borrowing costs and therefore interest savings of 2% per annum.

7. The Defendant No. 2 bank, acting through its agents, advised the Plaintiff company that as per RBI guidelines, the Plaintiff company would be required to adopt a risk management policy in the form provided to them..........

***** ***** *****

11. ......The Defendant No. 2 bank, either directly, or acting through its agents, did not advise the Plaintiff and actively concealed from the plaintiff, that the transaction not only exposed the Plaintiff to a huge risk of loss but also that the said loss would be a corresponding gain for defendant No. 2 Bank. The defendant bank actively concealed, for its own benefit, the true nature and risks of the inherent transaction.

12 ...... The defendant no. 2 bank while acting, directly and through its agents, as an advisor was also a counter party to the transaction thus having gross conflict of interest.

13. Defendant No. 2 bank fraudulently induced and deceived, through its agents, the Plaintiff to enter into the aforesaid transaction the true nature of which, it has subsequently become clear as follows:........"

12. The defendant No.2, in the written statement, inter alia, has stated as under:-

"25. Further, it is pertinent to note that the Plaintiff was being advised by M/s. Eforexindia, while entering into the said transaction. It is pertinent to note that the said organization claims to be providing a platform for corporate, exporters, importers and individuals to manage their foreign exchange risk in an effective manner as well to provide an economical pathway to real time prices and financial news. It is pertinent to note that as per the website of M/s. Eforexindia, i.e., http://eforexindia.com, it was promoted by Mr. Soumya Dutta in 1994 who continues to officiate as the Chief Executive and the Managing Director of M/s. Eforexindia. Besides claiming that Mr. Dutta has more than twenty years of active inter-bank dealing experience

as Treasury Heads of various banks, he is also on the faculty of various Educational Institutions both in India and abroad. Pertinently, it has also been claimed that Mr. Dutta is widely regarded as an authority in structured products and derivatives and is on the board of advisors for many companies in India and the United States of America. It is pertinent to note that Mr. Dutta was also present for all the meetings that the officials of the Plaintiff had with the officials of the Defendant No.2 and further he also corresponded with the Defendant No.2 on behalf of the Plaintiff, apart from being marked on copy of almost all the correspondences between the Plaintiff and the Defendant No.2.

26. Therefore, it does not lie in the mouth of the Plaintiff to state that it did not understand the true nature of the transaction and that it was not aware of the risks involved in such a transaction. ......

***** ***** *****

35. .......It is pertinent to reiterate here that the Plaintiff has materially concealed from this Hon'ble Court that it was being advised by its own advisors/consultants, M/s. Eforexindia, the officials of which were present for most meetings and were a party to most correspondences exchanged between the Defendant No.2 and the Plaintiff.

***** ***** *****

Parawise reply 11 and 12- .......In any case, the Plaintiff was being advised by MJs. Eforexindia, for these transactions in question, who claim to have vast experience in such transactions. ......

Parawise reply 13- ......Infact, it is also denied that the Defendant No.2 acted through agents for the transactions

in question. It is submitted that the Plaintiff is a sophisticated market participant who approached the Defendant No.2 through its advisors/ consultants M/s. Eforexindia. Infact it is submitted that the Plaintiff's advisors/consultants were present for all the meetings that the Plaintiff had with the Defendant No.2 and were also marked on copy of almost all the correspondence exchanged between the Plaintiff and the Defendant No.2. It is further submitted that these advisors/consultants of the Plaintiff claim itself to provide professional advisory services specializing in 'Currency Hedging and Forecasting' to its clients.......

Parawise reply 14-- .....However, it is denied that the Defendant No.2 has deceived the Plaintiff to enter into the aforesaid transaction as it was the decision of the Plaintiff to enter into the said transaction basis the recommendation/advise of M/s, Eforexindia and Plaintiff's own commercial judgment.... "

13. In response to the written statement, the plaintiff, in its replication, has stated as under:-

"25. ........ It is submitted that Mr. Soumya Dutta and Eforexindia were actually the agents of the Defendant No. 2 while ostensibly advising the Plaintiff herein. It is submitted that Mr. Soumya Dutta and the Defendant No. 2, in cahoots with each other, advised and misled the Plaintiff into entering into the grossly unconscionable transactions for their mutual benefit. It is submitted that this Hon'ble Court direct the Defendant No. 2 Bank to furnish information relating to the various transactions that have been executed by it where Mr. Soumya Dutta/ Eforexindia has been a part of the transaction or any

other dealings with them, including any amount paid to Mr. Soumya Dutta by Defendant No. 2.

***** ***** *****

35. ......Furthermore, it is denied that the Plaintiff was being advised by Eforexindia. It is submitted that Eforexindia and Mr. Soumya Dutta were agents of Defendant No. 2 and both parties, acted in cahoots to fraudulently induce the Plaintiff herein to enter into a grossly unconscionable transaction......

***** ***** *****

Parawise reply - 6. ........It is denied that it was infact the Plaintiff, through its advisors/consultants, who approached the Defendant No.2 to discuss the various banking products that the Defendant No.2 could provide to the Plaintiff for minimizing the cost of the Plaintiff in relation to borrowing made by the Plaintiff in INR. It is submitted that Defendant No. 2 acted through agents including its employees such as Ms. Swati Dakalia as also its agent Mr. Soumya Dutta /Eforexindia. It is submitted that Defendant No. 2 and its agents advised the Plaintiff that since interest costs in India are significant, the Plaintiff should enter into foreign exchange derivatives transactions. It is denied that the Plaintiff approached the Defendant. It is submitted that it was the Defendant no. 2, its employees and agents who were advising the Plaintiff about financial and banking products and misled Plaintiff about the risks involved.

Parawise reply - 7. ........It is denied that the Defendant No. 2 never acted through employees and agents including Swati Dakalia and Mr. Soumya Dutta/Eforexindia. ......

***** ***** *****

Parawise reply - 11. ........It is denied that Defendant No.2 was not acting in the fiduciary capacity or was not acting as the agent of the Plaintiff. On the contrary, Defendant No. 2 was statutorily mandated to act in a fiduciary capacity. It is submitted that Mr. Soumya Dutta and Eforexindia were actually acting as the agents of the Defendant No. 2 while ostensibly advising the Plaintiff herein. It is submitted that Mr. Soumya Dutta and the Defendant No. 2, in cahoots with each other, advised and misled the Plaintiff into entering into the grossly unconscionable transactions for their mutual benefit. It is submitted that this Hon'ble Court direct the Defendant No. 2 Bank to furnish information relating to the various transactions that have been executed by it where Mr. Soumya Dutta/ Eforexindia has been a part of the transaction or any other dealings with them, including any amount paid to Mr. Soumya Dutta by Defendant No. 2.1t is further denied that any loss to Plaintiff under the transaction with Defendant No. 2 would also be a loss for Defendant No. 2 towards the Inter-Bank counterpart and vice versa. It is submitted that Defendant No. 2 should be put to strict proof thereof

***** ***** *****

Parawise reply- 15. ....... It is further denied that the Plaintiff was being advised by professional advisory services. It is submitted that Mr. Soumya Dutta and Eforexindia were actually the agents of the Defendant No. 2 while ostensibly advising the Plaintiff herein. It is submitted that Mr. Soumya Dutta and the Defendant No. 2, in cahoots with each other, advised and misled the Plaintiff into entering into the grossly unconscionable transactions for their mutual benefit. It is submitted that this Hon'ble Court may direct the Defendant No. 2 Bank to furnish information relating to the various transactions that have been executed by it where Mr.

Soumya Dutta/ Eforexindia has been a part of the transaction or any other dealings with them, including any amount paid to Mr. Soumya Dutta by Defendant No.

2.

14. On the pleadings of the parties, following issues were framed on 24.08.2015:-

1. Whether the USD/CHF transaction dated 20.09.2007 is voidable at the option of the plaintiff (under Section 19 and/or Section 19A of the Indian Contract Act? OPP

2. Whether defendant No.2 is liable to the plaintiff for an amount of Rs.6,92,55,342/- with interest, from the date of payment? OPP

3. Whether the Banking Licencee of defendant No.2 is liable to be cancelled by defendantNo.1? OPP

4. Whether the USD/CHF transaction dated 20.09.2007 is void under Section23 and/or Section 24 of the Indian Contract Act? OPP

5. Whether the present suit is barred by limitation? OPD"

6. Whether this Court has no territorial jurisdiction to adjudicate the present suit? OPD

7. Whether there is accord and satisfaction achieved in respect of the transactions in issue or, discharge of the contract by virtue of performance of obligations undertaken therein or, by mutual agreement? OPD

8. Whether the transaction was conducted in pursuance to the ISDA agreement dated 06.-9.2007 and the deal confirmation dated 20.09.2007? OPP

15. On 28.09.2015, an additional issue, as under, has been framed:-

8A. Whether defendant No.2 is liable for fraud or deceit in respect of the USD/CHF transaction dated 20th September, 2007? OPP

16. The case set up by the plaintiff in the plaint is that the defendant No.2 acted through its agents and advised the plaintiff to enter into the said transaction. The contention is that the full and complete disclosure was not made and there were certain information which was concealed and the plaintiff was not informed about the true nature and risks of the transaction.

17. The defence of the defendant, inter alia, is that the plaintiff was advised by M/s. Eforexindia, at the time of entering into the transaction. M/s. Eforexindia is promoted by Mr. Soumya Dutta, who is the Chief Executive and the Managing Director thereof. It is contended that the plaintiff approached the defendant No. 2 through its Advisor/Consultant - M/s. Eforexindia, whose representatives were present for all the meetings.

18. In response to the defence raised by the defendant, the plaintiff, in the replication, has specifically contended that M/s. Eforexindia was acting as the agent of the defendant No.2 and Mr. Soumya Dutta and the defendant No.2, in cahoots with each other, advised and misled the plaintiff into entering into the said transaction for their

mutual benefits.

19. The plaintiff, by the above referred interrogatories, seeks to establish that Mr. Soumya Dutta and Eforexindia were acting as the agents for the defendant No.2 in other transactions with other entities also and also acted as agents for the defendant No.2 in the transaction with the plaintiff. It is, for this purpose, that the above referred interrogatories are sought to be administered.

20. The Court is not, at this stage, to examine as to what would be the impact of the answer of the interrogatories. The Court, at the stage of administration of interrogatories, has to only consider whether the answer to the interrogatories would have some bearings on the issues involved in the case and as to whether they relate to any matter in question to the suit. The law with regard to the interrogatories is well settled.

21. The provisions of Order XI of the CPC are intended to curtail evidence thereby expediting trial of suit, saving time of the Court and costs of litigation to the parties. They have to be liberally used and parties have to be encouraged to use them in the course of trial. One of the great objects of interrogatories when properly administered has always been to save evidence that is to diminish the burden of proof which was otherwise on the plaintiff. Their object is not merely to discover facts which will inform the plaintiff as to evidence to be obtained, but also to save the expense of proving a part on the case.

Interrogatories are not limited to giving the plaintiff a knowledge on that which he does not already know but include the getting an admission of anything which he has to prove on any issue which is raised between him and the defendant. (Ref: Attorney-General vs. Gashill (1882) 20 Ch. 519). Order XI gives a party a right to interrogate with a view to obtaining an admission from his opponent of everything which is material and relevant to the issue raised on the pleadings. The object is to obtain an admission from the opponent which will make the burden of proof easier than it otherwise would have been. Interrogatories are admissible which go to support the applicant's case or to impeach or destroy the opponent's case. (Ref: Plymouth Mutual Co-op. Society vs. Traders Publishing Association (1906) 1 LJ 415.) 1

22. Answers to the interrogatories would lead to reduction in the time taken by the court in recording cross examination and help in crystallizing the cross examination. The pleadings may not sufficiently disclose the nature of the parties case and in order to make good the deficiencies, this rule has been enacted. The court should not be hyper-technical at the stage of serving the interrogatories. The only defence to service of interrogatories can be when the same do not relate to the matter in question or are scandalous.2

A.K. Aggarwal vs. Shanti Devi 1996 RLR 60

Canara Bank vs. Rajiv Tyagi & Associates & Anr. (2010) 166 DLT 523

23. Administering of Interrogatories is to be encouraged as it is a means of obtaining admissions of parties and tends to shorten litigation. As a general rule the Interrogatory should be allowed, whether the answer to them would either strengthen the case of the party administering them or to destroy the case of the adversary. The court should not be hyper-technical at the stage of the service of the Interrogatories. This rule is to be used liberally whenever it could shorten the litigation and serve the interest of justice.3

24. When the interrogatories proposed to be administered are examined in the light of the above referred legal propositions, it is clear that answer to the interrogatories may have the effect of shortening the litigation.

25. One of the questions in controversy is as to whether Mr. Soumya Dutta and Eforexindia were acting as the agents of the Plaintiff or of Defendant No. 2. The Plaintiff by the interrogatories seek to solicit inter alia admissions from defendant No. 2 that it had entered into transactions with Mr. Soumya Dutta and Eforexindia and they had facilitated/brokered several transactions for and on behalf of Defendant No. 2 and Defendant No. 2 and Mr. Soumya Dutta and Eforexindia had also entered into agreements.

Smt. Sharda Dhir vs. Sh. Ashok Kumar Makhija and Ors. (2002) 99 DLT 350

26. The interrogatories are thus relevant to the issues at hand and the answer to the same may help the plaintiff in discharging the onus placed on the plaintiff of some of the issues.

27. The Joint Registrar has, clearly erred in not appreciating that the interrogatories are relevant for the fair disposal of the case and has incorrectly dismissed the application. At the stage of administering interrogatories, the Court is not to examine the merits of the case of the parties, as has been done by the Joint Registrar. The inquiry is limited to ascertain as to whether the interrogatories are relevant for the purpose of disposal of the suit or not.

28. In view of the above, the appeal is allowed to the extent that it seeks setting aside of order dated 25.10.2016, whereby the application of the Plaintiff (IA 11635/2016) under Order XI rule 1 CPC was dismissed. The application is allowed.

29. Defendant No.2 is directed to answer the interrogatories by filing an affidavit in terms of Order XI. The affidavit shall be filed within a period of four weeks from today.

30. Since, the appeal has been allowed and order dated 25.10.2016 has been set aside, the alternative prayer made by the plaintiff, seeking setting aside of order dated 23.09.2016, to the extent that the said order allowed IA 1872/2016, filed by the defendant No.2, becomes infructuous and is rejected as such.

IA No.5896/2017 (for condonation of delay)

This is an application on behalf of the defendant No.2 seeking condonation of delay in filing the Chamber appeal being OA No.81/2017. This appeal is filed against order dated 21.02.2017. It is contended that the order was not available on the website till the end of March 2017 and thereafter Counsel for the defendant No.2 had to take instructions for the purposes of filing an appeal. It is contended that, it is on these grounds that the delay in filing the appeal took place.

For the reasons stated in the application, the application is allowed. The delay in filing the appeal is condoned.

OA No.81/2017 in CS(OS) No.361/2012

Issue notice. Notice is accepted by the learned counsel appearing for the plaintiff.

List for consideration on 30.10.2017.

SANJEEV SACHDEVA, J AUGUST 24, 2017 st