Delhi High Court
Bank Of Baroda vs M/S Bhargava Commercial (P) ... on 16 November, 2017
IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 16.11.2017
W.P. (C) 4418/2017
BANK OF BARODA ..... Petitioner
Through: None
versus
M/S BHARGAVA COMMERCIAL (P) LIMITED & ORS. ..... Respondents
Through: Ms. Pankhuri Malik, Advocate.
Mr. Rajiv Kapur and Mr. Priyash
Sharma, Advocates for State Bank of
India/respondent No. 3.
CORAM:
HON'BLE MR. JUSTICE SIDDHARTH MRIDUL
HON'BLE MS. JUSTICE DEEPA SHARMA
SIDDHARTH MRIDUL, J (ORAL)
1. None appears on behalf of the petitioner. Learned counsel for the
petitioner has been praying for time to obtain instructions from the latter qua
the prosecution of the present petition for the last few dates of hearing.
2. The present petition essentially assails the order dated 6th January,
2017 in Appeal No. 411/2015 titled as 'M/s Bhargava Commercial (P)
Limited vs. Bank of Baroda & Ors.'; arising out of OA No. 35/2009 (Delhi
DRT-III), whereby, the learned Debts Recovery Appellate Tribunal, Delhi
(hereinafter referred to as 'DRAT') allowed the appeal filed on behalf of M/s
Bhargava Commercial (P) Limited, respondent No. 1 herein and set-aside the
recovery certificate issued against the said party. Consequently, it was
directed that the respondent No. 1 would also be entitled to receive back the
money, which it had deposited before the learned DRAT as a condition
precedent for the entertainment of its appeal.
3. A perusal of the impugned order dated 6th January, 2017, reveals that
M/s Presstech Litho (P) Limited purchased, the respondent No. 2 herein
purchased goods from respondent No. 1 herein and ensured payment of the
price of the said goods, by way of a Letter of Credit issued by the State Bank
of India, Noida Branch. It transpires that the State Bank of India, however,
failed to honour the said Letter of Credit to the account of respondent No. 2
on account of negligence on the part of the officials of the Bank of Baroda,
the petitioner herein, in not presenting the same to the issuing Bank, namely,
State Bank of India within the period of its validity. The learned DRAT,
therefore, found as follows:-
"I am, however, not at all convinced with these submissions of
the learned counsel for the Bank of Baroda. This is a simple case
of sale purchase of goods between the appellant as the supplier of
goods and respondent No. 2 as the buyer and the payment of the
price of goods was ensured to the appellant by respondent No. 2
by way of an LC which it had got issued from its banker, State
Bank of India, Noida. State Bank of India however failed to
honour its LC and that was admittedly on account of the
negligence on the part of the officials of Bank of Baroda in not
presenting the LC to State Bank of India within its validity period
and for that act of negligence on the part of officials of Bank of
Baroda the appellant could not be made to suffer under the legal
position regarding the LC transactions which is internationally
recognized and unless some fraud is attributed to the seller and
buyer of goods the bank which has to make payment to the
supplier of goods under an LC cannot refuse to make payment
which of course it was made by Bank of Baroda in the present
case but after making payment it is demanding back that payment
from the seller/beneficiary not on account of any fraud having
played by the seller but because the LC issuing bank had refused
to honour the LC for which decision of State Bank of India the
appellant cannot be blamed and made to suffer and if the claim of
Bank of Baroda's claim against the appellant is to be allowed the
appellant will suffer on two counts, firstly, by delivering goods to
respondent No. 2 and secondly by being called upon to make the
payment of the price of the sold goods to Bank of Baroda also.
That is not permissible under the well settled legal guidelines
governing the LC transactions involving two banks.
It may be observed here that when hearing was going on
before this appeal Bank of Baroda had made an offer to the
appellant to close this legal battle in case the appellant was
willing to pay the amount of about Rs. Six lacs which the
appellant had deposited with this tribunal towards compliance of
the condition of pre-deposit for the entertainment of this appeal
but that offer was not accepted by the appellant since that would
also have amounted to unjustified financial burden upon the
appellant for no fault of its Counsel for the appellant had rightly
submitted that this kind of offer should have been made to State
Bank of India as a banker to banker co-operation or should have
recovered the money from its own officials who were responsible
for non-presentation of the LC to State Bank of India in time.
In the facts and circumstances of the case it also becomes
clear that the amount of Rs.19,08,086/- was not paid to the
appellant on the basis of a Bill discounting facility as was sought
to be urged by the counsel for Bank of Baroda. Normally
whenever money is paid by any Bank to its customer after
purchasing some cheque for the period during which it remains
under clearance process or Bill is discounted that is done on
payment of some charges/commission and the Bank does not
extend that facility for free. In the present case full Bill amount
was paid to the appellant and negatives the case of the Bank of
Baroda that money was paid to the appellant under Bill
discounting facility. In fact the Bank of Baroda had placed on
request a form signed by the appellant on 08.09.2007 in respect
of the Bank discounting facility to be sanctioned. Since the
payment had already been made to the appellant on 06.09.2007
this bank form also negatives the case that payment was made to
the appellant under Bill discounting facility.
As far as the reliance placed on the promissory note
allegedly executed by the appellant in favour of Bank of Baroda
is concerned, I am of the view that this Bank cannot succeed
even on the strength of that document since it has always been
the case of Bank of Baroda that it was to get its money from State
Bank of India at first instance and then from respondent No. 2
(buyer of goods). It was never its case that immediately on the
refusal of State Bank of India to make the payment that appellant
herein had become liable to pay to it on the basis of the
promissory note for Rs.19,08,086/-. If at all, if the claim of the
Bank of Baroda was based on the Bill discounting facility and
promissory note, it would not have demanded its money from
State Bank of India and then from respondent No. 2 and these
two defendants would not have been impleaded also in the OA.
That cause of action subsequently on being converted into a
cause of action based on the Bill discounting facility and
promissory note was thus not the genuine cause of action for
filing of petition under Section 19 of the RDDBFI Act by Bank
of Baroda but an illusory cause of action devised only to base an
unjustified claim against the seller of goods and as an attempt to
get some relief by misleading the tribunal and in which attempt it
has succeeded before the tribunal below. The learned Presiding
Officer Mr. Ashish Kalia ought to have gone behind the
sentences written in the Bank's petition to find out if the cause of
action pleaded was a real one or not instead of passing a routine
order simply saying that on the basis of documents exhibited by
the Bank its case stood proved as if defence of a defendant has no
importance at all and in this case the Presiding Officer has not
even referred to the plea raised by the appellant that being the
seller of the goods on the strength of an LC issued by State Bank
of India in its favour requiring Bank of India to make the
payment of Rs.19,08,086/- it could not be fastened with any
financial liability because of State Bank of India having refused
to honour its own LC which even as per the own case of Bank of
India having refused to honour its own LC which even as per the
own case of Bank of Baroda was due to inadvertent failure of its
own employees to present the same to the issuing Bank within
the validity period of the LC. Thus the impugned order cannot be
said to have been passed by the Presiding Officer by applying his
judicial mind and if I may so this is not the first order coming to
the notice before this tribunal passed by the same Presiding
Officer which can be unhesitatingly said to have been passed in a
most casual and mechanical manner. But this tribunal cannot
approve of the decision of the DRT rendered without paying any
attention to the stand of the appellant in its written statement that
payment having been made to it under an LC no money could be
claimed back from it, if the issuing Bank had justifiably or
unjustifiably refused to honour its LC.
For the aforesaid reasons, this appeal is allowed. The
impugned order of the DRT whereby a recovery certificate was
issue against the appellant is set aside. Since the respondent No.
2 which chose not to contest even the O.A or to file any appeal
against the final order of the DRT, the impugned judgment qua
him will, however, remain unaltered. Consequently, the appellant
shall also be now entitled to get back the money which it had
deposited with this Tribunal as condition precedent for the
entertainment of its appeal. As and when any application is
moved by the appellant for the release of that money which, if
lying deposited in a Fixed Deposit, the same shall be got released
and pay to the appellant with interest accrued on the initial
amount of deposit."
4. A perusal of the above extracted paragraphs would show that in the
considered view of the learned DRAT, the petitioner was negligent in
recouping the amount represented by the said Letter of Credit on account of
its failure to present the same to the issuing bank within the period of its
validity and that the respondent No. 2 could not be made to suffer the
consequences of their act of omission.
5 Be that as it may, since none appears on behalf of the petitioner, the
petition is dismissed in default and disposed off accordingly.
SIDDHARTH MRIDUL, J
DEEPA SHARMA, J
NOVEMBER 16, 2017
rs
