Sri. Subhramanya Bhat vs Rec Limited
2024 Latest Caselaw 12282 Kant

Karnataka High Court

Sri. Subhramanya Bhat vs Rec Limited on 4 June, 2024

Author: M. Nagaprasanna

Bench: M. Nagaprasanna

                           1



Reserved on   : 24.04.2024
Pronounced on : 04.06.2024


      IN THE HIGH COURT OF KARNATAKA AT BENGALURU

           DATED THIS THE 04TH DAY OF JUNE, 2024

                          BEFORE

        THE HON'BLE MR. JUSTICE M. NAGAPRASANNA

        WRIT PETITION No.20490 OF 2023 (GM - RES)

BETWEEN:

1 . SRI. SUBHRAMANYA BHAT
    S/O LATE S.NARAYAN BHAT
    AGED ABOUT 72 YEARS
    EXECUTOR OF THE ESTATE OF
    LATE K.KUPPUSWAMY
    NO.48, MILLER TANK BUND ROAD
    BENGALURU - 560 052.

2 . SRI. N.KANNAN
    S/O LATE S.NARAYANAN
    AGED ABOUT 73 YEARS
    EXECUTOR OF THE ESTATE OF
    LATE K.KUPPUSWAMY
    NO.48, MILLER TANK BUND ROAD
    BENGALURU - 560 052.
                                            ... PETITIONERS

(BY SRI. DHANANJAY V.JOSHI, SENIOR ADVOCATE FOR
    SRI. H.V.SHYAME GOWDA, ADVOCATE)
                           2




AND:

REC LIMITED
(FORMERLY RURAL ELECTRIFICATION
CORPORATION LIMITED)
A GOVERNMENT OF INDIA ENTERPRISE
REPRESENTED BY ITS MANAGING DIRECTOR
CORPORATE OFFICE AT: PLOT NO. I-4
NEAR IFFCO CHOWK
METRO STATION, SECTOR - 29
GURUGRAM - 122 001, (HARYANA)

ALSO AT
NO. 1/5, REGIONAL OFFICE
ULSOOR ROAD, BENGALURU - 560 042.
                                           ... RESPONDENT

(BY SRI. KEERTI KUMAR, ADVOCATE)

     THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO DIRECT THE
RESPONDENT TO RELEASE AND HANDOVER A SUM OF
RS.7,70,93,625/- (RUPEES SEVEN CRORE SEVENTY LAKHS NINETY
THREE THOUSAND SIX TWENTY FIVE ONLY) BEING THE MATURITY
VALUE OF 6450 BONDS OUT OF TOTAL 8000 BONDS, TO THE
PETITIONERS ALONG WITH INTEREST AT 12 PERCENT PER ANNUM
FROM 31.07.2009 UNTIL PAYMENT AND ETC.,



     THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 24.04.2024, COMING ON FOR PRONOUNCEMENT
THIS DAY, THE COURT MADE THE FOLLOWING:-
                                  3



                                ORDER

The petitioners are before this Court seeking a direction by

issuance of a writ in the nature of mandamus directing the

respondent to release a sum of `7,70,93,625/- being the maturity

value of 6450 bonds out of total 8000 bonds in favour of the

petitioners along with interest at 12% per annum from 31-07-2009

till date.

2. Heard Sri Dhananjay V.Joshi, learned senior counsel

appearing for the petitioners and Sri Keerti Kumar, learned counsel

appearing for the respondent.

3. Facts, in brief, adumbrated are as follows:-

One K.Kuppuswamy sold a portion of the property on Millar

Tank Bund Road, Bengaluru and deposited the proceeds of such

sale amounting to `8/- crores in 54EC capital gains tax exemption

bonds of the respondent/Rural Electrification Corporation Limited

('the Corporation' for short) and the remaining `3/- crores was

deposited in a fixed deposit with the Canara Bank and the said

depositor had nominated the same in favour of few beneficiaries.

On 27-09-2006 K.Kuppuswamy executes a registered Will

bequeathing all his movable and immovable properties to certain

beneficiaries. On 04-03-2007 K.Kuppuswamy dies. On the death of

K.Kuppuswamy, K. Rajaiah, brother of late K.Kuppuswamy is said

to have filed a suit for injunction against the respondent, in which

status quo order comes to be passed by the civil Court in

O.S.No.25660 of 2007. A second suit comes to be filed by the very

same person seeking a decree of administration of the entire estate

of K.Kuppuswamy in O.S.No.25413 of 2008. On 08-04-2008, the

concerned Court by a common order on I.A.Nos. 1 and 2 in

O.S.No.25660 of 2007 modifies the earlier order, by directing

release of the amount to the nominees. A third suit comes to be

filed by the brother of K.Kuppuswamy for partition arraigning other

family members in O.S.No.25632 of 2008, in which an interlocutory

application was filed to restrain the respondent from releasing any

amount that is in deposit belonging to K.Kuppuswamy. The

concerned Court, by its order dated 11-04-2008, restrained the

Banks/defendants Nos. 10 - 12 i.e., Canara Bank, Syndicate Bank

and State Bank of Mysore from releasing the amount in favour of

any person. The amount with the respondent remained right from

2004.

4. The concerned Court, on 19-09-2022, rejects

O.S.No.25660 of 2007 on the score that there was no cause of

action at all. The second suit filed in O.S.No.25413 of 208 also is

dismissed on 27-02-2023. The concerned Court further holds that

the Will of K.Kuppuswamy need not be probated as it is registered

in the State of Karnataka. On 01-07-2023 one of the beneficiaries

of the Will S.Rajalakshmi submits a representation to the

respondent to disburse bonds amount. The petitioners also being

beneficiaries, submit a representation, bringing it to the notice of

the respondent with regard to suits being dismissed. The

respondent, for the first time replied on 01-08-2023, asking the

petitioners to obtain probate of the Will dated 27-09-2006. This is

contrary to the order passed by the concerned Court and settled

principle of law. It is, therefore, the petitioners are before this

Court seeking a direction by issuance of a writ in the nature of

mandamus as sought supra.

5. The learned senior counsel Sri Dhananjay V.Joshi

representing the petitioners would vehemently contend that

K.Kuppuswamy had executed a Will way back in the year 2006. The

Will did contain the factum of 8000 bonds being deposited under

the Capital Gains Tax Exemption Scheme with the Corporation.

After the death of K.Kuppuswamythough there were plethora of

correspondences between the petitioners and the respondent, the

amount equivalent to the bonds is not released in favour of the

petitioners. The plea put up by the respondent/Corporation is that

proceedings were pending before the competent civil Court. The

learned senior counsel would contend that the proceedings have

now ended in favour of the petitioners. There was no stay or

injunction granted by the competent Court throughout the

proceedings. The amount has been held with the respondent. The

amount is not a meager one as it is `7,19,66,718/-.

5.1. Though pursuant to the direction of this Court deposit of

the said amount is made before the Registry of this Court, the

learned senior counsel would submit that the petitioners are

entitled to interest at the bank's rate, as it would have earned

interest in the deposit that was before the Corporation. The

Corporation has utilized the funds that were in deposit for over 15

years now and if no interest is awarded, it would amount to unjust

enrichment on the part of the respondent and huge loss to the

petitioners. The respondent being a State under Article 12 of the

Constitution of India cannot shy away from payment of interest in

the facts of the case.

6. Per contra, the learned counsel Sri Keerti Kumar

representing the respondent would admit that the amount has now

become payable to the petitioners and, therefore, in terms of the

direction of this Court, the entire amount/the principal amount has

been deposited before this Court. He would submit that there was a

tassel between the members of the family. The Will under which

the petitioners claim the amount was subject matter of challenge

before the civil Court in three suits. Two suits have ended as on

date and in one of the suits there was an injunction for a limited

period. Therefore, the Corporation thought it fit to withhold release

of the amount on account of pendency of the suit. Now that the

suits are dismissed, the petitioners become entitled to the amount,

but the respondent should not be saddled with interest is his

submission. The learned counsel would submit that from the date of

dismissal of the suit on 27-02-2023 till the date of deposit before

this Court, the petitioners perhaps could claim interest and not any

date anterior to it due to the pendency of litigation between the

members of the family. He would, therefore, contend that the

interest be denied to the petitioners,while the principal amount

deposited before this Court be released in their favour. The

objection is to the same effect.

7. I have given my anxious consideration to the submissions

made by the respective learned counsel and have perused the

material on record.

8. The facts narrated hereinabove, though not in dispute, to

consider the claim of the petitioners for interest on the amount that

is now deposited before this Court, a re-look of the facts qua the

dates and events would become necessary. Late K.Kuppuswamy

sells a portion of certain property and deposited proceeds of the

sale amount of `8/- crores with the respondent/Corporation under

theREC Capital Gains Exemption Bonds. The said K.Kuppuswamy

then executes a Will on 27-09-2006 in which a clear indication was

made that he has invested the sale amount in Capital Gains Tax

Exemption Bonds and the beneficiaries, on the maturity upon the

death of the executant i.e., K.Kuppuswamy, would be the

petitioners. The contents of the Will insofar as indication about the

investment and beneficiaries thereto are as follows:

"54EC CAPITAL GAINS TAX EXEMPTION BONDS-SERIES IV

I have invested in the 54EC Capital Gains tax Exemption Bonds Series IV of Rural Electrification Corporation Limited. Out of these bonds, I have nominated the following persons with whom such nominated bonds shall vest upon my death. For convenience sake these Bonds are mentioned as REC in the following paragraphs wherever they are mentioned.

(a) Out of natural love and affection I bequeath a sum of Rs.1 Crore (Rupees One Crore Only) to R.S.Gayatri, D/o.Sri.R.Sadagopan, presently known as Gayatri Thamizharasan residing at No.48, Miller Tank Bund Road, Bangalore 560052. I have already nominated two of my Capital Gains Tax Exemption Bonds of REC of Rs.50 lakhs each (Rupees Fifty Lakhs Only) bearing Distinctive Nos.from 000338120 to 000338619 in Bond No.0002298 and Distinctive Nos. from 000338620 to 000339119 in Bond No.0002299 in the name of R.S.Gayatri.

(b) Out of my natural love and affection, I bequeath a sum of Rs.1 Crore (Rupees One Crore Only) to my younger brother Sri.K.Rajalah. I have already nominated two of my Capital Gains Tax Exemption Bonds of REC of Rs.50 lakhs each (Rupees Fifty Lakhs Only) bearing Distinctive Nos.

000336620 to 000337119 in Bond No.0002295 and Distinctive Nos.000337620 to 000338119 in Bond No.0002297 in the name of Sri.K.Rajaiah.

(c) Out of natural love and affection, I bequeath a sum of Rs.50 lakhs (Rupees Fifty Lakhs Only) to Sri.R.Vijaykrishna, S/o.Sri.K.Rajaiah. I have already nominated one of my Capital Gains Tax Exemption Bonds of REC bearing Distinctive Nos.000339620 to 000340119 in Bond Nos.2301 in the name of Sri.R.Vijaykrishna.

(d) Out of natural love and affection, I bequeath a sum of Rs.5 lakhs (Rupees Five Lakhs Only) to Chi.Shravan Krishna, S/o.Sri.Vijaykrishna. I have already nominated one of my Capital Gains Tax Exemption Bonds of REC bearing Distinctive Nos. 000342520 to 000342569 in Bond No.0002311 in the name of Chi.Shravan Krishna.

(e) I bequeath a sum of Rs.50 lakhs (Rupees Fifty Lakhs Only) to Sri. Rajarajeshwari Dewasthanam Trust. The money for the above Dewasthanam Trust shall be paid out of my Capital Gains Tax Exemption Bonds bearing Distinctive Nos.000339120 to 000339619 in Bond No.0002300 and I hereby Instruct my Executors if necessary to obtain the necessary Succession Letter from the Competent Court, produce the same to the REC, and handover the relevant Bond to Sri. Rajarajeshwari Dewasthanam Trust, Kenchenahalli, Bangalore in the most appropriate manner. For the purposes of REC, this Will may be treated as the necessary evidence for concluding the title of Succession for handing over the REC Bond. As the REC does not permit the nomination in the name of a Trust, I bequeath the Bond through this Will. This amount of Rs.50 lakhs (Rupees Fifty Lakhs Only) shall be paid to the above Trust only upon receiving a Commitment Letter from the above Trust about performing certain obligations which are given' under the Powers of the Executors hereinbelow in Clause (e) Paragraph 18. I hereby Instruct my Executors to act upon this direction strictly.

(f) I bequeath a sum of Rs. 5 lakhs (Rupees Five Lakhs Only) to Smt. Rajalakshmi residing at No.48, Miller Tank Bund Road, Bangalore 560052. I have already nominated one of

my Capital Gains Tax Exemption Bonds of REC bearing Distinctive Nos. 000342420 to 000342469 in Bond No.0002309 in the name of Smt. S.Rajalakshmi.

(g) I bequeath a sum of Rs.1 lakh (Rupees One Lakh Only) to Sri.S.Natarajan S/o.Late Sri.Subramania Pillai aged about 68 years and residing at No.20-A, Andar Main Road, Kulitalal, Trichy District 639104. I have already nominated one of my Capital Gains Tax Exemption Bonds of REC bearing distinctive Nos. 000342620 Το 000342619 in Bond No.0002316 in the name of Sri.S.Natarajan. This amount is my acknowledgement of his service as an Executor of this Will after my death.

(h) I bequeath a sum of Rs.1 lakh (Rupees One Lakh Only) to Sri.Subramanya Bhat S/o.Late Sri.S.Narayana Bhat aged about 59 years and residing at Flat No,.271, Singapore Garden, Gubbalala Gate, Kanakapura Main Road, Bangalore 560062. I have already nominated one of my Capital Gains Tax Exemption Bonds of REC bearing distinctive Nos.000342600 to 000342609 in Bond No.0002315 in the name of Sri. Subramanya Bhat. This amount is my acknowledgement of his service as an Executor of this Will after my death."

After about 7 months of execution of the Will K.Kuppuswamy dies

on 04-03-2007. The bonds were yet to mature by that time. The

Will supra made these petitioners also beneficiaries of the bonds of

K.Kuppuswamy. On 31-07-2009 the bonds come to mature for

payment. The date of maturity is found in a bond appended to the

petition. It was for a period of five years from the date of

allotment. Between the date of death and the maturity of the

bonds the litigation springs.

9. In a suit in O.S.No.25660 of 2007 filed by one K.Rajaiah,

brother of K.Kuppuswamy the concerned Court passes an ex-parte

order of status quo regarding disbursement of any amount on the

bonds and the respondent/Corporation was also directed to keep

the bonds amount in a nationalized Bank which could fetch interest.

The order passed by the concerned Court reads as follows:-

"Heard the Counsel for plaintiff and perused record. Counsel for plaintiff has filed copies of certain documents with memo.

Looking to the averment in the affidavit sworn to in support of the I.A and the documents produced, it appear that interim arrangement is required to be made. Such interim arrangement not only show safe guard the interest of defendant but also plaintiff. In the event of not making interim arrangement it appears that the plaintiff would be put irreparable loss in the event of plaintiff obtaining decree in the end

Therefore following orders are passed:

Order

Defendants 1 and 2 till next date are directed to maintain status, qua in the matter of dispersment of any amount on the bonds or any interest, dividend what so ever and restrained from dispatching any intimation to defendants 3 to 5 and to other beneficiary without the

leave of the court. Defendants could come forward in keeping that amount in a Nationalised bank which could fetch interest.

2) Issue emergent notice of I.A. 1 and suit summons and orders of status quo to the defendants through court and RPAD by 21.4.2007

3) Plaintiff is directed to comply with the mandatory provision of order 39 R 3(a) CPC before processes are issued."

(Emphasis added)

The direction of the concerned Court was unequivocal. It is to the

Corporation to come forward to keep the amount in a nationalized

Bank which could fetch interest. Therefore, the amount, on maturity

of bonds, began to earn interest then itself. The order was passed

by the concerned Court on 23-03-2007. On 08-04-2008 the order

of status quo granted on 23-03-2007 was modified and the

respondent/Corporation was directed to maintain proper account of

dividend interest which would become payable to the beneficiaries

or nominees. The order dated 8-04-2008 reads as follows:

"ORDER

IAs-I and II are disposed-off as under:

Order of Status-quo passed on 23.3.2007 is modified. Defendants-1 and 2 are directed to maintain proper accounts of dividend, interest etc., disbursed to other defendants and beneficiaries or nominees in

respect of the suit schedule bonds and produce the said accounts before this court as and when they disburse such dividend and interest on the schedule bonds. This order shall remain in force till disposal of this suit.

2) No order as to costs."

(Emphasis added)

The said suit was pending before the concerned Court for close to

15 years. On 19-09-2022 the suit in O.S.No.25660 of 2007 comes

to be dismissed. The suit is dismissed for non-disclosure of cause of

action exercising suo motu power under Order VII Rule 11(a) of the

CPC by the concerned Court. A decree is accordingly drawn on

dismissal of the plaint. This ended one set of proceedings.

10. Another suit had been filed by the same brother of

K.Kuppuswamy in O.S.No.25413 of 2008. This suit also comes to be

dismissed on 27-02-2023. No order of injunction whatsoever was

granted in the said suit against any of the respondents therein. A

third suit for partition was filed between the members of the family

in O.S.No.25632 of 2008 in which all other Banks were parties but

not the respondent/Corporation. Therefore, pendency of the

existing suit cannot be projected as an impediment by the

Corporation to release the amount of bonds along with interest to

these petitioners.

11. The learned counsel for the respondent has projected that

the petitioners have kept quiet for 15 years and have not

demanded release of either the amount or the interest. Therefore,

they are not entitled to interest on the deposit. I decline to accept

the same. On 16-05-2008 itself, i.e. 15 years ago, a legal notice is

caused upon the Corporation by the petitioners for release of the

amount of bonds. The said legal notice reads as follows:

       "B.S.JAYADEV, LLB,                             16.05.2008
      ADVOCATE
      48/1, MILLER TANK BUND ROAD,
      BANGALORE-560 052

      TO:

      The Registrar
      RCMC Share Registry (P) Ltd.,
      1515, 1ST Floor, Bhisham Pitamah Marg,

Kotla Mubarakpur, (Near South Extension) New Delhi-110 003.

Sir,

Under instructions of my client Smt. R.S.Gayatri W/o Sri.D. Tamizharasan, I issue this notice to you and state as follows:

1. You are aware that Late Sri.K.Kuppu Swamy Naidu, Chairman/Managing Director of the Chamundesware Studio and Laboratory (P) Ltd., had during his life time invested a sum of Rs. 8 Crores with you for purchasing of the Capital Gains Bonds. He had specifically purchased the bonds in his name and nominated several persons as beneficiaries of the amounts specified therein. In consonance with the conditions of the Bonds you are liable to release the interest annually.

2. My client represents that unfortunately Shri. K. Rajaiah one of the beneficiaries had filed a suit in OS: 25660/2007 in parte interim order of status quo. In view of this status quo you had withheld the payment of the interest due. Now by an order dated 07-04-2008 the same court which had issued the order of status quo had modified the same. It has said that you have to disburse the amounts as demanded by the nominees-beneficiaries. As and when you make the said disbursal you have to submit accounts to the court. As a matter of fact in the proceedings before the court in the said suit as a party defendant you are also represented by an Advocate. A copy of the order is produced herewith.

3. My client has approached you on 26.03.2007 with a request to redeem the bond along with up-to-

date interest. The relevant original Bond was also sent to you for redemption vide the above letter and the name was acknowledged by you. It is unfortunate for reasons and considerations totally extraneous, you and your officials in the Corporation have been trying to delay to disburse the amount without any reasonable excuse. As a Corporation I expected you and your officials to act strictly according to the terms of the deposit and you have no right to withhold the same making extraneous demands.

4. I request you to consider it appropriate to redeem the bond and make immediate disbursal of the amount to my client justly due to her. On your failure to do so and submit your account to the Court my client has to painfully resort to some action to enforce her rights against you.

Thanking you,

Yours faithfully.

Sd/-

B.S.JAYADEV"

(Emphasis added)

The petitioners claimed release of amount along with up-to-date

interest on 16-05-2008 itself. Therefore, it cannot be said that

there was no demand made by these petitioners. On 13-10-2008 all

the three beneficiaries of the Will sought release of the amount of

bonds from the hands of the Corporation. The communication to the

Corporation reads as follows:

"To, 13.10.2008 RCMC Share Registry Private Limited 1515, (1st Floor), Bhishm Pitamah Marg Kotla Mubarkpur, (Near South Extension) NEW DELHI - 110 003

Dear Sir

Sub: Transmission of Shares - Estate of Late K.Kuppuswamy

Ref: Your letter Ref No.REC/FIN/BONDS/6618 dated 27.04.2007

With reference to the above, we the Executors of Estate of Late K.Kuppuswamy wish to state as follows :-

Whereas Late K.Kuppuswamy had invested a sum of Rs.8,00,00,000/- (Rupees Eight Crores Only) in REC 54, EC Capital Gain Tax Exemption Bonds Series III, 8000 Debenture of Rs.10,000/- each

Whereas K.Kuppuswamy had expired on 04.03.2007. Copy of the death certificate duly attested as True Copy by the Notary is annexed herewith as ANNEXURE No.1

Whereas Late K.Kuppuswamy had executed a Registered Will as Document No.212/06-07 dated 27.09.2006. Certified copy of the will obtained from the Sub Registrar, Shivajinagar Bangalore is annexed herewith as ANNEXURE No.2

Whereas Late K.Kuppuswamy had nominated during his lifetime and bequeathed Bonds to certain beneficiaries as Nominees as per details annexed herewith as ANNEXURE No.3. Also there are certain Bonds which were not nominated but earmarked to be transmitted to certain persons as per ANNEXURE No.3 attached herewith.

Whereas Late K.Kuppuswamy had given instructions to the Executors through his Registered Will that certain payments has to be made out of the un-nominated Bonds which is stated in Page No.14 (e) & (j), Paragraph 18 & 15 (Page Nos.18 & 19) of Registered Will. Un-nominated Bonds 15 Nos. equivalent is 5,380 bonds of Rs.10,000/-

each of Rs.5,38,00,000/- as per ANNEXURE Nos.3A & 4 is attached herewith.

Whereas Sri.K.Rajaiah has filed O.S.Nos.25660 of 2007 against

1. RCMC Share Registry Private Limited

2. Rural Electrification Corporation Limited

3. Sri. Natarajan, Executor of the Estate of Late K.Kuppuswamy

4. Sri.Subrahmanya Bhat, Executor of the Estate of Late K.Kuppuswamy

5. Sri.N.Kannan, Executor of the Estate of Late K.Kuppuswamy

The Hon'ble Court of the XIII Additional City Civil Judge, Bangalore had passed common orders in I.A. Nos. I and II passing necessary Order (modification) issuing necessary directions to disburse dividend, Interest etc., a certified copy of the Court order is marked herewith as ANNEXURE No.4 and the earlier interim order of "Status Quo" also stands vacated as on date

We further hereby authorize S.B.I., St.Marks Road Branch, Bangalore to deliver the original Bonds and please issue pay orders in their favour.

We also like to request you not to insist for obtaining a Succession Certificate, Probate or Letter of Administration due to the following reasons

1. Succession Act (30 of 1925) Section 213, 57, for obtaining/producing probate or letters of administration for getting rights of Executor of Gazettee recognized does not operate against Indian Christian, - Section 213 does not discriminate on basis of Religion in accordance with decision reported in AIR 2001 SC 1151 in clearance pair and others V/s.Union Bank of India

2. Besides that the Testator Late K.Kuppuswamy was residing at Bangalore in the State of Karnataka which is not among the three Presidency Towns as stated in Section 313 of the Indian Succession Act, 1925. Therefore the Executors of Estate of Late K.Kuppuswamy need not obtain probate/letter of administration.

We request you to kindly transmit the unnominated bonds in favour of State Bank of India, St.Marks Road Branch, Bangalore at the earliest.

Thanking you Yours faithfully"

(Emphasis added)

Despite this, there was no release of bonds amount or any reply

from the Corporation. On 08-08-2019, one of the beneficiaries

Smt.S.Rajalakshmi, again makes a request for release of the

amount of bonds. The communication reads as follows:

     "From:                                       08/08/2019
     S. Rajalakshmi
     No. 48/1, Millers Tank Bund Road,
     Bangalore- 560052.

     To,
     The Chairman and Managing Director

Rural Electrification Corporation Ltd Core - 4 Scope Complex No.7, Lodhi Road New Delhi 110 003

Dear Sir

Sub: Redemption of REC Bonds

Ref: REC Bond No. 0002309 Distinctive Nos. From 000342420 to 000342469. - REC54EC Bonds Series IV.

With reference to the above, I wish to state that Late Sri.K.Kuppuswamy had during his life time made investments in the REC bonds Series IV to the extent of Rs.8.00 crores and had nominated me 50 nos. of the bonds as stated above as the beneficiary. I further wish to state that the said nominations made by late K.Kuppuswamy had been registered by you in your records and the same was not rescinded. The said Sri.K. Kuppuswamy had demised on 04th March 2007. I further wish to state that Late K.Kuppuswamy had during his life time had executed a registered will dtd 27th September 2006 wherein he had confirmed that I would be the sole beneficiary of the aforesaid nominated bond amount.

I wish to state that the said bonds had matured and was due for redemption as early as 2009 itself. I had surrendered the original bonds together with all the necessary papers sought by you during 2007 itself.

I regret to state that till date the said amount accrued out of the bonds together with the interest had not been received by me till date even though a decade had passed. I further wish to state that there was a clear direction from the Hon'ble City Civil Court in O.S.No.25660 of 2007 directing you to pay the interest and the principal amount to the beneficiaries. However till date you have failed to comply with the orders of the Hon'ble Court.

I hereby request you to forthwith redeem the bond amount together with the interest accrued thereon to my designated bank account. All the necessary papers are already available with you.

Kindly acknowledge the receipt of the letter.

Thanking you Yours faithfully

Sd/-

S.RAJALAKSHMI."

(Emphasis added)

It is only then for the first time in 13 years, a reply comes from the

hands of the Corporation on 20-08-2019. The reply reads as

follows:

"Mrs.S Rajalakshmi No.48/1, Millers Tank Bund Road Bangalore - 560052

Subject: Claiming of payments on bonds held in the name of Late Mr. K Kuppuswamy

Ref: Case No.O S 25660/2007 filed by K Rajaiah Vs. REC & Others

Dear Sir/Madam,

This has reference to your letter dated 08.08.2019 alongwith submission of other documents on the above subject matter.

In this connection, we wish to inform you that the case is still in the court of Addl. City Civil and Sessions Judge, Mayo Hall and FTC and there is no final order as on date. You are requested to provide us the final order from the Hon'ble Court to enable us to consider your request."

(Emphasis added)

Therefore, the Corporation took 13 long years to reply to the claim

made by these petitioners. To this one of the beneficiaries

Smt. S.Rajalakshmi brings it to the notice of the Corporation that

the suit has been dismissed, by enclosing copy of the judgment of

the Court. The communication dated 28-09-2022 reads as follows:

"The Chairman & Managing Director Rural Electrification Corporation Ltd., Core-4, Scope Complex No.7, Lodhi Road New Delhi 110 003

Sir

Ref: REC BOND NO.0002309 - Distinctive Nos.

From000342420- 000342469 - In the name of Sri K. Kuppu Swamy - Nominated in my favour. My various correspondance with your office - last one being dated 08/08/2019 - Reply received from your office bearing No. REC/FIN/BONDS/2630/19/8422/DATED 20/08/2019.

As directed by your office vide the above letter, we are pleased to enclose a copy of The court order in OS/25660/2007 which is attached herewith for your perusal.

Kindly redeem the nominated bond and credit the proceeds to my designated bank Account. Kindly let me know whether a fresh application for redemption with bank Details are required in this regard.

I can forward the certified copy of the said order alongwith the fresh application Once the order is obtained from the court.

With Regards

Sd/-

S.RAJALAKSHΜΙ

Encl: Copy of court order in OS/25660/2007"

(Emphasis added)

Another representation is made seeking release of the amount.

Though the clock goes on ticking, the amount was not released in

spite of the suits filed against these petitioners had come to be

rejected. In O.S.No.25660 of 2007 the Corporation was a party.

The direction given to the Corporation was to come forward to keep

the amount of bonds in an interest earning account of the

nationalized Bank. Therefore, the bonds had to earn interest right

from 2007.

12. The subject writ petition is preferred on 07-09-2023 by

the petitioners, getting exhausted of submitting representations

after representations, all of which go unheeded. A strange reply

comes from the Corporation on 01-08-2023. The relevant portion

of the reply reads as follows:

".... .... ...

7. In respect of payment of redemption amount to the executor(s), it is submitted that your claim is based on the will dated 27.09.2006. Such claims are governed by the terms of the Information Memorandum (IM) which have been agreed upon by and between REC Limited and Late Sh. K. Kuppuswamy. The relevant provisions of the IM are as under-

"SUCCESSION"

In the event of demise of the sole holder/last survivor of the bonds, in case of joint holders, REC will recognize the executor or administrator of deceased bondholder, or the holder of the succession certificate or other legal

representative as having title to the bonds. REC shall not be bound to recognize such executor, administrator, or holder of succession certificate, unless such executor or administrators obtains probate or letter of administration or such holder is the holder of succession certificate or other legal representation, as the case may be, from a Court of India having jurisdiction over the matter."

Accordingly, as per the IM, the executors were requested vide letter dated 27 April, 2007 to send the probated will to enable us to consider the request for release of redemption amount. As on date, probated will have not been produced/submitted by the executors with regard to the bonds in issue.

In view of above, you are once again requested to obtain and submit probate in respect of will dated 27.09.2006 as per the terms of the IM."

(Emphasis added)

The Corporation directs the Will to be probated. Perhaps the

Corporation is unaware of the settled principle of law that Wills

executed in the jurisdiction of the State of Karnataka need no

probation. Therefore, the reason projected is only a ruse to get over

the interest that the Corporation was at all times obliged to pay.

This Court on 21-12-2023 has passed the following order:

"Learned counsel appearing for the respondent seeks time to file statement of objections.

Heard the learned Senior counsel, Sri. Dhananjay Joshi appearing for the petitioners.

Learned Senior counsel taking this Court through the documents appended to the petition submits that the bond that

has matured way back in the year 2009 is yet to be made over to the petitioners on one pretext or the other.

Therefore, the respondent, in the event would fail to convince the Court of they are withholding the bond, will have to pay interest which would be determined at a later point in time to the amount that is to be transferred to the petitioners.

List the matter on 17.01.2024."

In compliance thereof, an amount of `7,19,66,718/- is deposited by

the Corporation before this Court. What remains now is only the

claim of interest. If interest is not paid to the petitioners, it would

undoubtedly become unjust enrichment on the part of the

Corporation. Looking from any angle, the Corporation cannot

escape payment of interest.

13. The learned counsel for the respondent projects that the

respondent/Corporation is a State under Article 12 of the

Constitution of India and, therefore, interest should not be saddled

on it, as it amounts to payment of interest from public money. This

submission is noted only to be rejected. For 15 long years, the

Corporation has kept the deposit to itself without any justifiable

reasons. The deposit comes about only on 28-02-2024. Therefore,

the Corporation cannot escape the liability of payment of interest on

the amount so deposited before this Court which was the amount

that the petitioners are entitled to get at all times. The projection

of public money being paid to the petitioners is only a bogey to

escape interest, as the amount held with a private lender or a State

under Article 12, would have definitely earned interest, which

benefit the Corporation has already taken for the last 15 years on

the said deposit. Therefore, the petitioners are entitled to the

interest on the deposit. The petition thus, succeeds.

14. For the aforesaid reasons, the following:

ORDER

(i) Writ Petition is allowed.

(ii) The amount in deposit before this Court viz., `7,19,66,718/- be released in favour of the petitioners within 2 weeks from the date of receipt of a copy of this order, after due verification of the credentials of the claimants.

(iii) The respondent/Corporation is liable to pay interest on the bonds from the date of their maturity till the date

the deposit was made before this Court i.e., on 28-02-2024 at 9% per annum.

(iv) This order shall be complied with within a period of 4 weeks from the date of receipt of a copy of this order, failing which, the petitioners would become entitled to interest at 12% per annum.

I.A.No.1 of 2024 also stands disposed, as a consequence.

Sd/-

JUDGE

bkp CT:SS