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2006 DIGILAW 2172 (DEL)

STANDARD CHARTERED BANK v. PURE DRINKS LTD.

2006-11-24

B.N.CHATURVEDI, MUKUL MUDGAL

body2006
MUKUL MUDGAL, J. ( 1 ) THESE two appeals bearing numbers FAO (OS) 110/1999 and FAO (OS) 216/1999 arise out of orders dated 8-4-1999 and 6-5-1999 respectively in Suit No. 2311/1993. The main question that emerges from the present appeals is whether a bank is directed to keep specified amounts in fixed deposit following an order of this Court and has been enjoying the benefits thereof is entitled to pay interest for the utilisation of the said amount. ( 2 ) BY the order dated 8-4-1999, the appellant-bank was directed to deposit in the court Rs. 2. 57 crores with interest within two weeks from the date of the order. ( 3 ) THE order dated 6-5-1999 was passed on an IA No. 6937/1994, under S. 151, c. P. C. made by the appellant for recall of an order dated 9-5-1994 whereby the amount lying frozen with the appellant-Bank was directed to be kept in fixed deposit for a period of 90 days. The said amounts have been lying with the appellant-bank since 9-10-1993 in the form of bank drafts and the bank has been enjoying the benefit of the same since then. ( 4 ) IN view of commonality of basic issue involved in the twin appeals, a composite order is being passed. ( 5 ) THE material facts, sans unnecessary details, relevant for disposal of these appeals are that Pure Drinks Limited, respondent no. 1 /original plaintiff No. 1 and Pure drinks (Calcutta) Limited, respondent No. 2/original plaintiff No, 2 were maintaining their Account No. 014/13/24874 and 014/13/23237 respectively with the appellant-Bank (defendant No. 6 ). The respondent No. 1 deposited in their said account with the appellant-Bank a bank draft for Rs. 2. 07 crores drawn on Grindlays Bank. Similarly, a bank draft of Rs. 50,00,000/- drawn on grindlays Bank was deposited by respondent No. 2 in their account, Both the bank drafts were encashed and credited in the respective accounts of respondents 1 and 2. On individual letters of request dated 9-10-1993 from respondents 1 and 2, 11 and 17 drafts respectively were issued by the appellant-Bank in favour of the parties named in the letters to the debit of current accounts of the respondents 1 and 2 and delivered to them on 11-10-1993. ( 6 ) THE respondents 1 and 2 along with one Mrs. ( 6 ) THE respondents 1 and 2 along with one Mrs. Harjeet Kaur, R-3 on 11-10-1993 filed a suit against respondents 4 to 7 and grindlays Bank claiming reliefs of declaration and injunction wherein on an application (IA No. 9064/1993) being made later by respondents 1 to 3, the appellant-Bank was impleaded as defendant No. 6. ( 7 ) IN the suit, respondents 1 to 3 made an IA No. 9065/1993 under O. 39, Rr. 1 and 2 and sought a restraint against the appellant-Bank from encashing, till further orders, any of the aforesaid bank drafts issued by it and an interim order was passed thereon accordingly. ( 8 ) ON 9-5-1994, another interim order was passed directing that the amount lying frozen with the appellant-Bank shall be kept in a fixed deposit for a period of 90 days. This order was further discussed in a subsequent order dated 20-5-1994, where the court observed that pending a reply and further orders, the order dated 9-5-1994 shall stand and Standard Chartered Bank was directed to hold in fixed deposit whatever amount was available with it out of the amounts mentioned in earlier orders dated 13-10-199 and 26-10-1993. The appellant sought recall of this order dated 9-5-1994 by filing an IA No. 4786/1994 on 19-4-1994. ( 9 ) ON 4-3-1999, the appellant-bank was directed to deposit in the Court the balance in the said two accounts and the appellant, in compliance, deposited the same by way of two pay orders in the sum of Rs. 13,03,419. 92 and Rs, 11, 44, 232 respectively, with the Registrar of this Court on 27-3-1999. On the appeal being taken up for hearing on 8-4-1999, yet another order, which is impugned in FAO (OS) 110/1999, came to be passed directing the appellant-Bank to deposit the draft amounts with interest within two weeks. The order dated 8-4-1999 restrained the appellant-Bank from encashing the bank drafts drawn on grindlays Bank for Rs. 2. 07 crores and Rs. 50 lakhs respectively. On 9-5-1994, the court clearly directed that the amounts frozen with the appellant-Bank shall be kept in a fixed deposit for a period of 90 days. Since the aforesaid amounts had been lying with the appellant Bank since 9-10-1993, the order dated 8-4-1999 directed the appellant-Bank to deposit the said amounts with interest accrued thereon with the Registrar of this Court. Since the aforesaid amounts had been lying with the appellant Bank since 9-10-1993, the order dated 8-4-1999 directed the appellant-Bank to deposit the said amounts with interest accrued thereon with the Registrar of this Court. ( 10 ) THE order of the learned single Judge dated 8-4-1999 is reproduced below : "learned counsel appearing for the plaintiffs and defendants 1 and 4 submit that rs. 2. 07 crores and Rs. 50 lakhs were deposited with the defendant No. 6, Standard chartered Bank, Parliament Street, New delhi. This Court on 11-10-1993 while granting an ex parte injunction restrained defendant No. 5 from encashing the bank drafts drawn on the said Bank for Rs. 2. 07 crores and Rs. 50 lakhs respectively. The order of 11-10-1993 was passed against defendant no. 5, Grindlays Bank but later on when the plaintiff learnt that the amounts were in fact deposited with the Standard Chartered Bank then at the request of the plaintiffs the Bank was impleaded as defendant no. 6 and the Court in its order dated 13-10-1993 restrained defendant No. 6 from encashing the bank drafts. This order was passed in the presence of the learned counsel for the Standard Chartered Bank. On 9-5-1994 this Court clearly directed that amounts frozen with the Standard chartered Bank shall be kept in fixed deposit for 90 days, Learned counsel for the plaintiffs and defendants 1 and 4 submit that the aforesaid amounts have been lying with the Standard Chartered Bank since 9-10-1993. This is not controverted by the learned counsel appearing for the Bank. Learned counsel for the Standard Chartered bank submitted that these amounts are lying with the bank in the form of Bank drafts. The parties are trying to resolve this matter amicably. In this view of the matter on consideration of the relevant facts and circumstances, I deem it appropriate to direct standard Chartered Bank to deposit the aforesaid amounts along with interest with the Registrar of the Court within two weeks from today. To ensure compliance of this order, the matter shall be posted before the Registrar of this Court on 19-4-1999. To ensure compliance of this order, the matter shall be posted before the Registrar of this Court on 19-4-1999. " ( 11 ) DURING the pendency of FAO (OS)110/1999, an order was passed on 26-4-1999 requesting the learned single Judge to dispose of IA No. 6937/1994 and pursuant thereto the aforesaid application along with IA No. 4786/1994 was taken up and disposed of by the learned single Judge by an order dated 6-5-1999 being the subject-matter of FAO (OS) 216/1999. The learned single Judge in his order dated 6-5-1999 inter alia held as follows : a. The orders dated 9-5-1994, 20-5-1994 and other orders passed during the pendency of the proceedings were extremely clear and were passed in the presence of the counsel appearing for Standard Chartered bank. Except for filing and the pendency of the review applications (IA 6937/94) none of the orders were either varied or stayed. b. There is a specific provision in the CPC for filing review applications under O. 47, r. 1 and such an application for review needs to be filed within 30 days of passing of the order. In the instant case, the review application was filed under S. 151 of the c. P. C. and such an application cannot be used to defeat the specific provisions of the limitation. Accordingly, the application for review (IA 6937/94) was dismissed on the ground of limitation. c. Even on merits while examining the said application for review, it was held that according to the orders dated 9-5-1994 and 20-5-1994 the bank had to place the amount in the fixed deposit for a period of 90 days, though a review application was filed, the orders of this Court were neither varied nor stayed. The application therefore did not have any substance on merits as well. d, There was no error apparent on the face of the record and the review application was accordingly dismissed. Accordingly ia 4788/94 was also dismissed. e. Standard Chartered Bank was directed to deposit the remaining bank draft amount along with interest with the Registrar of this court and the Registrar was directed to deposit the entire amount in a nationalised bank by creating a short-term deposit of six months which was to be renewed from time to time till contrary orders were received. f. That these amounts were not to be disbursed until the claims of the beneficiaries were fully settled. f. That these amounts were not to be disbursed until the claims of the beneficiaries were fully settled. ( 12 ) THIS appeal is therefore against the impugned order dated 6-5-1999 whereby the learned single Judge dismissed IA 6937/94 and IA 4786/94 in suit 2311 of 1993 and the appellant-Bank was directed to deposit the remaining draft amount along with interest thereon forthwith with the Registrar of this Court and the Registrar was directed to deposit the entire amount with a nationalised bank by creating a short term deposit of six months to be renewed from time to time till contrary orders were received. There was no stay by a superior court in a challenge to the said order of the learned single Judge dated 6-5-1999 and the bank therefore is still clearly in possession of the said amounts. ( 13 ) THE learned senior counsel for the appellant-Bank Shri Tiku has inter alia submitted as follows : a. That the earlier pending application IA 5786/94 filed on 19th May, 1994 was filed within time and while IA 6937/94 was dismissed on account of being barred by time, ia 4786/94 was incorrectly dismissed on the same account even though it had been moved within the limitation period. b. That the learned single Judge failed to observe that the order dated 13th October, 1993, 9th May, 1994 and 20th May, 1994 were interim orders liable to be set aside on the principles laid down in the Judgments in Pt. Sidh Nath Shukla v. Punjab National bank of India (MR 1960 All 238); Tukaram bapuji Nigam v, Belgaum Bank Ltd. ( AIR 1976 Bom 185 ); Manik Ratan Guin v. Prakash Chandra ( AIR 1955 Cal 338 ) and raghavendrasingh Bhadoria v. State Bank of Indore (1993 Bank Jou 176) : ( AIR 1992 MP 148 ). C. That the learned single Judge failed to observe that the appellant-Bank has no legal liability to pay the interest at the instance of the plaintiffs having had no interest in the bank drafts which completely vested with the beneficiaries. ( 14 ) IT is thus clear that the said amounts of Rs. 2. 57 crores and Rs. C. That the learned single Judge failed to observe that the appellant-Bank has no legal liability to pay the interest at the instance of the plaintiffs having had no interest in the bank drafts which completely vested with the beneficiaries. ( 14 ) IT is thus clear that the said amounts of Rs. 2. 57 crores and Rs. 50 lakhs have been lying down the appellant-bank since 9-10-1993 and the bank has been consistently refusing to comply with the order dated 8-4-1999 and subsequently 9-5-1999 without the directions losing their efficacy since the orders were not stayed by any superior Court or reviewed or modified. ( 15 ) WE have noted that the review application dismissed by the impugned order of 9-5-1999 was pending for almost five years and the order-sheets indicates that no efforts whatsoever were made by the appellant to get this application disposed of. Even when this Court passed the orders dated 8-4-1999 and 24-3-1999, neither any reference nor any request was made to this Court to dispose of the said application for review. ( 16 ) IN fact, no request was made to expedite the disposal of IA 4786/94 either since the order of the learned Division Bench dated 26-4-1999 directing the matter to be listed before the learned single Judge was only with respect to IA 6937/94. It was only when a request for disposal of IA 4786/94 along with IA 6937/94 was made, then both the applications for review were taken up and disposed of together. ( 17 ) WHILE IA 6937/94 was dismissed on grounds of limitation, it has been submitted by the appellants that IA 4786/94 was filed within the period oflimitation. We have examined the applications and the replies filed on record and find no fault in the reasoning of the learned single Judge in disposing off the applications. Notwithstanding the issue of limitation, even on merits we feel the application for review is unsustainable. There was no stay of any Court on the Order dated 9-5-1999 and consequently the order was not complied with by the appellant bank for no valid reason. ( 18 ) WE have also perused the judgments which have been relied on by the learned counsel for the appellant and are in agreement with the single Judge's finding that the cited decisions are not relevant to the instant case. The decision in Pt. ( 18 ) WE have also perused the judgments which have been relied on by the learned counsel for the appellant and are in agreement with the single Judge's finding that the cited decisions are not relevant to the instant case. The decision in Pt. Sidh Nath shukla v. Punjab National Bank of India ( AIR 1960 All 238 ) deals with drafts being of the same nature as a bill of exchange and states that before the draft is handed over to the beneficiary, the buyer of draft can get the same cancelled at the bank and instruct the bank that the amount involved be paid back to him. The decision in Manik Ratan Guin v. Prakash Chandra ( AIR 1955 Cal 338 ) dealt with a claim under Section 231 of Companies Act, 1913 in which the petitioner's claim for amount due on hundi with interest was allowed by Subordinate Court and was subsequently transferred by the payee bank. The appeal against the said order was dismissed. In the case of Tukaram Bapuji Nigam v. The belgaum Bank Ltd. ( AIR 1976 Bom 185 ), the circumstances in which the purchaser of a draft could ask the issuing bank to stop payment to the payee were analysed. ( 19 ) WE fell that the above-discussed judgments do not deal with the issue of payment of interest and render no support whatsoever, to the basic contention of the appellant-bank that they are not liable to pay interest on the remaining bank draft amount. In fact, the relevant principles for award of interest are to be found in the Judgment of the Hon'ble Supreme Court in the case of secretary. Irrigation Department, Government of Orissa v. G. C. Roy, (1992) 1 SCC 508 : ( AIR 1992 SC 732 ) wherein the following principle was laid down. "43 (i) a person deprived of the use of money to which he is legitimately entitled has a right to be compensated for the deprivation, call it by any name. It may be called interest, compensation or damages. " the above principle fully applies to the facts of the present case. "43 (i) a person deprived of the use of money to which he is legitimately entitled has a right to be compensated for the deprivation, call it by any name. It may be called interest, compensation or damages. " the above principle fully applies to the facts of the present case. ( 20 ) THE records of this case reveal that the said amounts have been lying with the appellant-bank since 9-10-1993 and the bank has been consistently absolving itself of its responsibility to pay interest for thirteen years by invoking unjustifiable grounds leading to this avoidable litigation. This is in spite of an order of this Court dated 8-4-1999 and subsequent directions on 6-5-1999 to deposit the said amounts with interest. The appellant-bank has with impunity chosen to disregard this order on the basis of a belated review petition which was not taken up for years. We are satisfied thus that there is no reason whatsoever for us to interfere with impugned judgment of the learned single Judge. ( 21 ) ACCORDINGLY, this appeal is dismissed with costs which we quantify at Rs. 20,000/-which should be paid to the respondents in this Court by the appellant within three weeks from today. The amount deposited along with the accrued interest pursuant to the impugned judgment shall be paid to the respondents on or before 21st December. 2006 by the Registry. ( 22 ) ACCORDINGLY, all pending applications also stand disposed of. Order accordingly.