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TMI Blog2015 (7) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... umar Basu, Adv, Mr. Aniruddha Mitra, Adv. HARISH TANDON, J : This is a simple suit for money on account of delayed payment of the principal sum and the agreed interest. The facts adumbrated in the plaint runs as under: The Plaintiff-Company purchased the bonds in the form of promissory note issued by the defendant which are termed as 13.50% SIDBI Bonds 2003 (4th Series) and 12.50% SIDBI Bonds 2004 (5th Series) from one Shanker LaL Saraf on 1st July, 1998. It is undisputed that the aforesaid bonds are tradable in the market and can be purchased by any person from the holder of the said bonds. It is also undisputed that the bonds forming 4th series shall carry an interest @ 13.50% and the bonds forming 5th series carry an interest @ 12.50% in all such cases. The interest is payable on halfyearly basis on/or before 21st day of June and 21st day of December of every year. The 5th series bonds were agreed to be redeemed on 21st December, 2004 whereas the 4th series bonds were to be redeemed on 21st December, 2003. The Plaintiff-Company purchased 15 such bonds on which the interest was payable @ 13.50% and 26 bonds on which the interest is payable @ 12.50% and all such bonds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17th February, 2005. The defendant made the payment not only the principal amount but also the interest calculated up to the date as promise in the said bond to the Plaintiff-Company. Such payment was made on 21st February, 2005 under a cover letter of the even date wherefrom it appears that certain amount on account of TDS was also deducted. By a letter dated 24th February, 2005, the Plaintiff-Company raised an objection over the rate on which the TDS was deducted. Which was accepted by the defendant as it issued a further warrant covering a sum of ₹ 58,86,833/- on the account of excess deductions of the TDS. According to the plaint case, at the time of audit, it was detected that the interest was calculated up to 31st October, 2005 and a protest was ultimately lodged through a letter dated November 10, 2005. In the said letter not only the calculation of the interest was disputed but a further demand was raised on account of interest on delayed payment of the principal amount and the agreed interest. On both the allegations, the defendant refused to accede the demand made by the plaintiff in its letter dated November 23, 2005. The Plaintiff-Company, therefore, claims a decr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suit is barred by waiver, acquiescence, estoppel or principles analogous thereto? 2) Whether there has been accord and satisfaction between the parties in respect of the transactions, which form the subject matter of the suit? 3) Whether in view of orders passed in C.A. No. 1380 of 1998 and C.A. No. 1834 of 2000 the present suit is not maintainable? 4) Whether there has been any delay or failure on the part of the defendant in registration or enfacement of the bonds? 5) Whether there was a belated payment by the defendant of the bond value and whether plaintiff is entitled to interest on belated payment of the principal amount at the rate of interest mentioned in the bond from the date of maturity with half-yearly rest or any other rate till the date of payment as claimed in the paragraphs 33 and 35 of the plaint? 6) Whether the defendant was liable to pay interest on quantified periodical interest on each bond from due dates till the date of payment at the agreed rate of interest or at any other rate till the date of payment as claimed in the paragraphs 34 and 35 of the plaint? 7) Whether the claim of the plaintiff in the suit is on account of interest on interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He strenuously submits that the Delhi High Court in a liquidation proceeding initiated by RBI categorically held that the subject Bonds are beyond the purview of the said liquidation proceeding and, therefore, payment of the principal and the accrued interest after the period of redemption was deliberately done by raising a frivolous disputes. He thus submits that those Bonds are in the nature of promissory note with clear agreement that an interest @ 13.50% and 12.50% shall be paid and any unreasonable delay beyond the redemption period entitles the depositors to be paid an interest at the agreed rates till the payment of the redemption amount. He submits that even after receiving the facsimile i.e. 9th June, 1997, the defendant paid an interest to the said Shanker Lal Saraf up to the period of 20th June, 1997 which shows the defendant was aware that the said facsimile is neither a direction nor an order putting any fetter on them to pay the periodical interest as agreed and the redemption value on maturity. It is, therefore, submitted that admittedly, the payment is made beyond the maturity period and, therefore, the petitioner is entitled to an interest as claimed in the suit at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be bought by a person from the register holder. In course of the transaction affecting the subject Bonds, the CRB Capital Market Ltd was, at one point of time, the owner and Shanker Lal Saraf, since deceased, purchased the said Bond on February 20, 1997 and April 7, 1997 respectively and was paid the interest up to 20th June, 1997 as the interest payable under the said Bonds was to be on 21st day of June and 21st day of December every year. After the subject Bonds were sold to the present plaintiff, it was lodged with the defendant on 1st July, 1997 for effecting the transfer and onward payments of interest on periodical rests. The subject bonds are tradable in an open market and admittedly are purchased by the plaintiff upon payment of the sum of ₹ 3.69 crores from Shanker Lal Saraf. The defendant showed inability to affect the transfer as Reserve Bank of India initiated the winding up proceeding against CRB Capital Market Ltd under Section 45 MC 1 (d) of the Reserve Bank of India before the Delhi High Court. Prior to the initiation of the said proceeding, the RBI issued notification dated 10.04.1997 under Section 45MB of the RBI (Amendment) Act, 1997 directing the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curities (P) Ltd or their nominee; (f) pass such order or further order to which this Hon ble Court may deem fit and proper on the facts and circumstances of this case. The interlocutory application was registered as CA No. 1380 of 1998 and was finally decided on 17th December, 2004. The Company Court held that the transaction forming the subject bonds was entered into much before the RBI notification dated 10th April, 1997 and, therefore, admittedly before the appointment of the Professional Liquidator. Ultimately it was held that it cannot be a fraudulent preference as the same was a genuine transaction between the parties, the Company Court ultimately concluded as under : 14. This application is accordingly allowed. The respondents 3 and 4 shall pay the interest payable on these Bonds to the applicant till the time the applicant was owner of these Bonds. Since the applicant became owner of these Bonds, he had right to transfer of those Bonds also. Therefore, transfer sought by the applicant in the name of other parties shall also be carried out by the respondents 3 and 4 in favour of the subsequent purchasers, as mentioned in the prayer clause. The said order was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principal sum adjudged envisaged under Section 34 of the Code of Civil Procedure. There is no ambiguity in awarding the interest on the principal sum adjudged which includes the interest. The aforesaid principles can be fortified from the observations made in case of Ravindra (supra) wherein it is held: 36. The English decisions and the decisions of this Court and almost all the High Courts of the country have noticed and approved longestablished banking practice of charging interest at reasonable rates on periodical rests and capitalising the same on remaining unpaid. Such a practice is prevalent and also recognised in non-banking moneylending transactions. The legislature has stepped in from time to time to relieve the debtors from hardship whenever it has found the practice of charging compound interest and its capitalisation to be oppressive and hence needing to be curbed. The practice is permissible, legal and judicially upheld excepting when superseded by legislation. There is nothing wrong in the parties voluntarily entering into transactions, evidenced by deeds incorporating covenant or stipulation for payment of compound interest at reasonable rates, and authorisin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the bank for a period of six months from the date of the said notification. The Official Liquidator was appointed on 22nd May, 1997 who subsequently treated the subject bonds as fraudulent preference under Section 531 of the Act. Though it was held that the transactions are genuine and cannot be declared as fraudulent preference at the instance of the Official Liquidator but the fact remains that there was some claim over the subject bonds. The RBI is empowered to control the management of the Banking Company in certain situations and can lay down the parameters enabling Banking Companies to expend business and regulate the paid up capital, reserve funds, cash funds and above all policies in the matter of advances to be made by the Banking Companies and allocation of resources etc. The RBI is empowered by the Parliament to enact the policy and to issue directions/guidelines which have a statutory force, as held in case of ICICI Bank Ltd (supra) . The aforesaid proposition is further made clear by the Supreme Court in case of Sudhir Shantilal (supra) as under: 58. Whether a circular letter issued by a statutory authority would be binding or not or whether the same has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest but the objection was restricted on the deduction of the TDS at the higher rate and request was made to pay the difference. It is only on October 3, 2005, the claim of interest for delayed payment was raised by the plaintiff. The reference can be conveniently placed upon a judgment of the Supreme Court in case of Bhagwati Prasad Pawan Kumar v- Union of India reported in (2006) 5 SCC 311 wherein the Apex Court held that if the protest is not made before the encashment of the amount and it does not appear from the conduct of the parties that the such encashment was made under protest, the plaintiff is prevented from raising an objection over the short payment in these words: 18. Section 8 of the Contract Act provides for acceptance by performing conditions of a proposal. In the instant case, the Railways made an offer to the appellant laying down the condition that if the offer was not acceptable the cheque should be returned forthwith, failing which it would be deemed that the appellant accepted the offer in full and final satisfaction of its claim. This was further clarified by providing that the retention of the cheque and/or encashment thereof will automaticall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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