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2015 DIGILAW 315 (CAL)

Ajai Prakash Lohia v. Axis Bank Ltd.

2015-04-06

JOYMALYA BAGCHI, MANJULA CHELLUR

body2015
JUDGMENT : 1. The appellant herein was the plaintiff in Civil Suit No.398 of 2000. He approached the Court complaining mis-appropriation of fixed deposit amount by the respondent bank, which was offered as collateral security by the father of the appellant, that is, Mr. Navrang Rai Lohia. 2. According to the appellant, the defendant no.2 herein, that is, the respondent-defendant no.2 herein, approached the first respondent bank for financial assistance in respect of Ad-hoc Export Packing Credit limit of Rs. 16 Crores and credit facility and the consortium agreement limit of Rs. 9.80 Crores (Export packing of Rs. 3.90 Crores plus Export Bill Discounting for Rs. 5.90 Crores). It is also admitted that such collateral security was towards non-refund facilities to the extent of Rs. 5.50 Crores as well. It is their contention that a bank guarantee was also executed by the first respondent bank in favour of Customs and Central Excise authority towards the obligations of the defendant no.3 before the Learned Single Judge. 3. It is contended on behalf of the appellant that at the request of the second defendant borrower, Late Navrang Rai Lohia pledged his NRE term deposits value of Rs. 15,33,88,279/- with the first respondent bank for creation of the collateral security towards credit facilities offered to four companies, that is, 1) M/s. Uniworth Limited, formerly Woolworth (India) Limited, 2) Queowrth India Limited, 3) Aditya Shroff, and 4) M/s. Texprint Overseas Limited. 4. According to the appellants, there was express undertaking and declaration by Late Navrang Rai Lohia that the aforesaid collateral security by NRE term deposit was only towards specific and exclusive loans limiting them only to the above Rs. 4 Crores and the transaction referred to. The security was way back in 1996 and after the maturity of the NRE term deposit the loan automatically stood extinguished. As could be seen from October, 1999 onwards, there seems to be other financial assistance after liquidation of 1996 loan amount. 5. The dispute is with regard to the offer of securities from October, 1999 onwards. The first letter dated 12.10.99 by Late Navrang Rai Lohia addressed to the General Manager of the first respondent bank refers to pledging of FCNR deposits worth USD 37,45,220.59 as security for granting two credit facilities, that is, Rs. 10 Crores by way of ad-hoc EPC limit in respect of M/s. Uniworth Limited and Rs. The first letter dated 12.10.99 by Late Navrang Rai Lohia addressed to the General Manager of the first respondent bank refers to pledging of FCNR deposits worth USD 37,45,220.59 as security for granting two credit facilities, that is, Rs. 10 Crores by way of ad-hoc EPC limit in respect of M/s. Uniworth Limited and Rs. 5.68 Crores by way of bank guarantee so far as Texprint Overseas Limited. The letter further says that late Mr. Lohia authorised the bank to place a lien on all above referred deposits aggregating to USD 37,45,220.59, which was already in the custody of the first respondent bank for granting the above two loans. It also in unequivocal term says he undertakes not to withdraw the deposit to the extent of loan remaining unpaid and the fixed deposits may be released to him as and when the loans are discharged. 6. According to the appellants, one deposit for USD 13,31,084.44 was never given to the custody of the first respondent bank and there was no intention of Late Navrang Rai Lohia to create security on this deposit also. According to the plaintiffs/appellants, the second respondent company borrower liquidated its limit in respect of the Ad-hoc Export Credit Packing of Rs. 10 Crores between 1998 to 1999 and the bank guarantee furnished in favour of Customs was also cancelled and released by the Commissioner of Customs, on 11.1.2000 Texprint Overseas Limited sought release of the lien on the deposit receipts but the first respondent bank instead of returning and refunding the maturity value of the encashed FCNRDR (Deposits) on 13.4.2000 with a maturity value of Rs. 8.20 Crore and on 11.9.2000 with a maturity value of Rs. 9.28 Crore refused the request. Therefore, late Mr. Lohia was constrained to file a suit for recovery of FCNRDR (Deposits) USD 24,14,182.15 and appropriate an amount equivalent in Indian currency to US Dollar instead of deposit for Rs. 13,31,034.44 along with interest etc. According to the appellants, there was a clear admission on the part of the respondent bank in the written statement filed therein and paragraph 15 of the application under Section 19 of DRT proceedings, invoking the provisions under Order 12, Rule 6, seeking judgment on alleged admission. 13,31,034.44 along with interest etc. According to the appellants, there was a clear admission on the part of the respondent bank in the written statement filed therein and paragraph 15 of the application under Section 19 of DRT proceedings, invoking the provisions under Order 12, Rule 6, seeking judgment on alleged admission. The Learned Single Judge, according to the appellants, rightly opined that plaintiff was able to make out a strong prima facie case but however, did not allow the application opining that for a judgment upon admission, such admission has to be clear and unequivocal but the evidence brought on record by the plaintiffs cannot be said to be the admission by the bank to return the amount claimed by the plaintiffs. 7. Aggrieved by the same the appellants are before us contending that the very purpose of judgment on admission is to eliminate delay when admissions are unambiguous. Therefore the discretion of passing the judgment was provided under Order 12, Rule 6, which is not properly exercised by the Learned Single Judge. It is further contended the suit relates to 2000 wherein the defendant bank wrongfully and illegally encashed the maturity value of the aforesaid deposits. Therefore, in order to avoid further considerable delay, such judgment on admission ought to have been passed. 8. Mr. S.N. Mookerji, learned Senior Counsel arguing for the appellants, places reliance on paragraph 9 of the affidavit-in-opposition and paragraph 4 in the reply, which is a reply to paragraph 4 of the application filed under Order 12, Rule 6. According to learned Senior Counsel, when loan facilities against a specific and exclusive collateral securities are created which are duly specified and if admission is made by the creditor regarding such satisfaction, even in case of implied admission, a judgment on admission under Order 12, Rule 6 can be delivered and in the present case having found that the case of the plaintiff is strong on the face of the record, the Learned Judge ought to have passed the said judgment on admission. He places reliance on (2007) 7 SCC 120 , paragraphs 11 to 14. 9. As against this, the Learned Senior Counsel Mr. He places reliance on (2007) 7 SCC 120 , paragraphs 11 to 14. 9. As against this, the Learned Senior Counsel Mr. A.K. Chatterjee, arguing for the respondent creditor contends that if the material on record indicates that there is a triable issue, there cannot be any judgment on admission and in order to pass a judgment on admission there has to be clear, unambiguous and unequivocal admission irrespective whether it is express or implied. He took us through the several papers, original suit proceedings, part of correspondences between the parties prior to executing collateral security and pleadings under Section 19 proceedings before DRT. He also refers to two judgments, one reported in JT 2011(11) SC 222, in the case of Himani Alloys Ltd. v. Tata Steel Ltd., para 10 and another reported in AIR 2003 Bombay 369, in the case of Western Coalfields Ltd. v. M/s. Swati Industries. 10. We have gone through these two judgments. The admitted facts in the present case are that by virtue of the letter dated 12.10.99, at page 56 in Vol.1 there was a clear intention on the part of Late Lohia to offer NRE fixed deposits belonging to him as collateral security and the value of the fixed deposits were USD 37 Lacs odd, as stated above. The material on record also clearly indicates such collateral security was offered in the year 1996 and after repayment of the loans availed in 1996 again Late Lohia offered these fixed deposits as collateral security. In the plaint filed by the appellants before the Learned Single Judge, as pointed out by the learned Counsel for the first respondent bank, paragraphs 6, 9 and 11 clearly indicate that Foreign Currency Non-Resident Deposit receipts, referred to in Annexure 'A', were offered as collateral security which indicates the Fixed Deposit Receipt bearing no.455373 for USD 13,31,038.44 as one of the securities offered. It is at page 332. In the suit this is the very certificate which has become subject matter where decree for appropriation of amount equal to rupees is sought against the respondent bank. Subsequent to filing of this suit, DRT proceedings admittedly are initiated under Section 19 where the respondent bank has clearly brought on record what were the facilities availed by the borrower and what was the collateral security offered. Subsequent to filing of this suit, DRT proceedings admittedly are initiated under Section 19 where the respondent bank has clearly brought on record what were the facilities availed by the borrower and what was the collateral security offered. The three documents, that is, the letter dated 12.10.99 and bank guarantee at page 110, agreement for furnishing security dated 12.10.99 are very relevant. Whether collateral security was in respect of only two loan facilities or other loans or funding facility availed by the borrower, is a question of fact to be decided on trial. So also whether there was intention to deposit the fixed deposit receipt no.455373 as collateral security or not is also a triable issue. There is clear admission on the part of the first respondent bank so far as the loan borrowed by Uniworth and also in respect of obligations towards the Customs department. Whether the collateral security would stand even in respect of Texprint Overseas Limited becomes a triable issue. Unless the parties enter the witness box and put-forth their respective stand, which is subject to cross-examination by the other-side, such disputed issues cannot be resolved at this stage. It is well settled now that an admission to have judgment under Order 12, Rule 6 need not be only express. Irrespective whether it is express or implied, as long as it is clear, unambiguous and unequivocal, there cannot be a judgment on admission. 11. In the light of the dispute and the controversy raised between the parties with regard to above triable issues, we are of the opinion much importance cannot be attached to the observation of the Learned Single Judge that plaintiffs have a strong prima facie case. Ultimately one has to see is whether there is express or implied admission of liability to return the fixed deposit or to absolve the collateral security on the part of the bank. 12. According to us, the stand of the first respondent creditor bank either before the DRT or before the Learned Single Judge as defendant does not indicate such unambiguous, clear and unequivocal admission. Therefore, the Learned Single Judge was justified in rejecting the application. Accordingly, the appeal is dismissed. Appeal dismissed.