R.S.A.No. 1811 of 2007 (O&M) 1
In the High Court of Punjab and Haryana at Chandigarh
R.S.A.No. 1811 of 2007 (O&M)
Date of decision: 11.11.2009
The Punjab Urban Planning and Development Authority
......Appellant
Versus
ABN-AMRO Bank
.......Respondent
CORAM: HON'BLE MRS. JUSTICE SABINA
Present: Mr. A.K.Chopra, Sr.Advocate with
Ms.Shilpa Malhotra, Advocate,
for the appellant.
Mr.R.S.Rai, Sr.Advocate, with
Mr.Gautam Dutt, Advocate,
for the respondent.
****
SABINA, J.
Plaintiff -appellant filed a suit for recovery of
Rs.65,58,981/- with future interest @ 17% and for declaration. The
suit of the plaintiff was decreed by the Civil Judge (Jr.Divn.),
Chandigarh vide judgment and decree dated 3.10.2001. In appeal,
the said judgment and decree were set aside by the Additional
District Judge, Chandigarh vide judgment and decree dated
R.S.A.No. 1811 of 2007 (O&M) 2
10.1.2007 and the suit of the plaintiff was dismissed. Hence, the
present appeal by the plaintiff.
Brief facts of the case, as noticed by the lower appellate
Court in para Nos. 2 to 4 of its judgment, are as under:-
“2. Tersely put, the plaintiff/respondent filed the
suit for recovery of Rs.65,58,981/- with future interest @
18% and for declaration against the appellant on the
averments that the Erstwhile Department, the Punjab
Housing Development Board, a Department of
Government of Punjab paid the appellant bank a sum of
Rs.10 crores under cover of a letter dated 28.2.1992. It is
averred that the agreement/waiver dated 7.7.1993
between the plaintiff and defendant is hit under Section
13 to 19-A of the Contract Act and is not binding on the
plaintiff. An amount of Rs.10 crores was lying in various
banks belonging to the board earning his nominal interest
and hence the board in its meeting decided to invest an
amount of Rs.10 crores in some government Securities in
order to earn more interest and hence the board in its
meeting decided to invest an amount of Rs.10 crores in
some Government Securities in order to earn more
interest. The defendant vide their letter dated 24.2.1992
approached the board with lucrative terms. The bank,
vide their letter dated 26.2.1992 confirmed the terms and
R.S.A.No. 1811 of 2007 (O&M) 3conditions of the board for investment of payment as
conveyed vide letter dated 25.2.1992, except that the
locking period would be 180 days. Consequently, the
plaintiff vide its letter dated 28.2.1992 invested Rs.10
crores on the terms and conditions contained in the letter
dated 25.2.1992. The said amount was withdrawn from
the various banks of the board and passed on to the
defendant bank for 180 days only. Vide letter dated
12.3.1992, the defendant informed the plaintiff that they
had purchased on behalf of plaintiff 17% NPC bonds at
the base rate of Rs.97/- per bond for an amount of
Rs.9,75,58,904.11 paise. It was also intimated that
balance of Rs.24,41,095.89 paise could not be invested
and hence he has put into 46 days fixed deposit carrying
11% interest. Plaintiff vide letter dated 9.4.1992
demanded return of the amount of Rs.24,41,095.89 paise
which had been invested by the defendant against the
instructions @ 17% interest. On 8.5.1992, the defendant
was remained for return of 17% interest. The defendant
was also requested to confirm of purchase of NPC bonds
@ 17% and send complete details of the NPC bonds
alongwith date of maturity. The defendant vide their letter
dated 12.5.1992 returned the balance amount of
Rs.24,76,982.75 paise with interest of 11%. However, an
R.S.A.No. 1811 of 2007 (O&M) 4amount of Rs.11,167.50 paise was deducted as tax and
Rs.1500/- was deducted as draft charges which amount
to the breach of terms. It is further averred that the
defendant intentionally and fraudulently concealed the
rate of interest payable on the bonds. The defendant had
never been instructed in any manner by the board to
invest in any of the securities carrying less tan 17%
return. The plaintiff had been writing letters to the
defendant on various occasions to depict the correct
picture, however, the plaintiff received letter dated
28.8.1992 from the defendant vide which the defendant
for the first time disclosed that IRFC bonds carried 9%
interest which as a shock to the plaintiff and the same
was protested. The plaintiff had issued registered letter
dated 13.11.1992 demanding photocopies of the
securities of the bonds so far purchased by the
defendant. Also vide letter dated 25.11.1992 against
initiated the defendant and demanded the deduction
made from the interest as security etc. so keeping in view
the conduct of the defendant, the defendant finally on
9.2.1993, called back the entire amount along with
interest immediately but the defendant did not respond to
the letter of the plaintiff dated 9.2.1993. The registered
letter dated 10.3.1993 was again sent to the defendant
R.S.A.No. 1811 of 2007 (O&M) 5calling back to the entire loan with interest. Despite
various letters, the defendant kept quite and ultimately a
registered letter dated 26.4.1993 was again sent and the
plaintiff realized from the conduct of the defendant that
the entire principle and interest seems to be unsafe and
started contacting defendant personally. The plaintiff
apprehended a risk of the entire amount and defendant
wanted to make a profit in the compelling circumstances,
dictated its terms such as issue of waiver, full and final
agreement before release of the entire amount. Under
the said circumstances, the plaintiff had to agree to save
the investment, though the plaintiff was not willing to forgo
him claim and consent of the plaintiff was obtained under
coercion, fraud, misrepresentation and under compelling
circumstances. Consequently, it is prayed that an amount
of Rs.42,31,450/- was due as principle from the date of
payment made by the defendant and Rs.23,27,530/- were
due as interest @ 17% on the balance of the principle
amount and further interest @ 17% on the said amount
as the defendant was utilizing the said amount for
commercial purposes from the date of filing of present
suit till the date of realization and prayer for recovery of
total amount to the tune of Rs.65,58,980/- has thus been
made.
R.S.A.No. 1811 of 2007 (O&M) 6
3. Upon notice, the bank has come forward with
the plea that the board had paid the bank a sum of
Rs.10 crores in terms of various instalments, sent
under cover of a letter dated 28.2.1992 on the
conditions as follows:-
a) The funds will be kept by the bank
or invested in Government Securities/Unit
Trust of India and tax free public sector
undertaking bonds;
b) The investment would be for 180
days and the bank would guarantee return of
17% on the investment for that period;
c) If required by the board, the money
could be made available to the board earlier
with whatever return becomes due on
deposits at that time.
4. It is also asserted that at the request of the
board, the bank with a view to purchase 17% NPC bonds
@ Rs.97/- per bond for the benefit of the board made
payment of Rs.9,75,58,904.11 paise by bank which
favour Andhra Bank through M/s Naresh K.Aggarwala
and Co., its share brokers and the balance sum of
Rs.24,41,095.89 paise in deposit for the board pending its
instructions. However, the bank did not receive the 17%
R.S.A.No. 1811 of 2007 (O&M) 7NPC bond either from the Andhra Bank or from M/s
Naresh K.Aggarwal & Co. who instead delivered by way
of alternative security to the bank 9% tax free IRFC bonds
covered by a letter of allotment no.016 and a transfer
deed signed by Karur Vyasa Bank Limited, the registered
holder of the said IRFC bond. The IRFC bonds were
presented by the bank to the IRFC for registration in the
name of the bank for the benefit of the board but before
the IRFC bonds could be registered in the name of the
bank mentioned above, the Standard Chartered Bank
also lodged a claim on these bonds on the ground that
they had been purchased by it from Karur Vyasa Bank
Limited against an existing transaction. Thereafter, the
Standard Chartered Bank instituted a suit in the Bombay
High Court inter alia against the bank and IRFC for an
injunction restraining the registration or transfer of the
IRFC bonds to the bank. The appellant bank has also
instituted rectification proceedings against IRFC before
the Company Law Bord for the registration of the IRFC
bond. The bank had also instituted other legal
proceedings against the Andhra Bank for refund of the
money paid to it, interest and other reliefs. At the request
of the Board on or about 12.5.1992, appellant bank
returned to the Punjab Housing Development Board
R.S.A.No. 1811 of 2007 (O&M) 8(respondent predecessor in interest) a sum of Rs.24,76,982.75
paise inclusive of interest after requisite deductions. It is
further asserted that on or about 9.9.1992, the bank paid the
Punjab Housing Development Board a sum of Rs.82,92,507/-
as and by way of guaranteed return on the investment @ 17%
p.a. on the investment of Rs.9,75,58,904.11 paise in the said
IRFC bonds. The 180 days investment expired on or about
September 3, 1992. The board requested that the said
investment be continued for a further 6 months upto March 3,
1993 in the same securities (i.e. the said IRFC bonds). The
Board, thereafter, on expiry of the extended 6 months period of
investment demanded repayment of the balance
Rs.9,75,58,904.11 paise and interest thereon and stated that
the Board was not interested in the said IRFC bonds or in any
litigation relative thereto or in assuming any risk with
respect thereto, and that it was only willing to accept one
time payment in full and final settlement of its claims with
respect to the said investment. Pursuant thereto, various
negotiations were held between the senior officials of the
appellant bank and the board and it was agreed that the
appellant bank would pay a further sum of
Rs.10,77,82,542.11 paise in additional to the sums
already paid (making a total payment of
Rs.11,85,64,699.36 paise) i.e. Rs. 10,77,82,542.11 paise
+ Rs.24,76,982.75 paise + Rs.11,167.50 paise + Rs.1,500/- +
R.S.A.No. 1811 of 2007 (O&M) 9Rs.82,92,507/-) by the bank to the board in full and final
settlement of the board’s claim against the bank. This
culminated in a settlement as recorded in a letter dated
July 7, 1993 addressed by the Board to the bank. It is
further submitted that against and pursuant to delivery to
the bank of the board’s aforesaid letter dated 7.7.1993
and another letter of the same date instructing the bank to
make payment by banker’s cheque drawn in favour of the
“Corporation Bank, A/c Punjab Housing Development
Board, Chandigarh” and on the basis of the
representations therein, the appellant paid the board a
sum of Rs. 10,77,82,542.11 paise by way of banker’s
cheque drawn in favour of the “Corporation Bank, A/c
Punjab Housing Development Board, Chandigarh” in full
and final settlement of all claims of the board in respect of
or arising out of or in connection with the said investment.
All other allegations and assertions put forth by the board
have specifically been denied and prayer for dismissal of
the claim of the plaintiff has, thus, been made.”
On the pleadings of the parties, following issues were
framed by the trial Court:-
1. Whether the plaintiff is entitled for recovery of
Rs.65,58,981/- from the defendant along with interest, if
so at what rate? OPP
R.S.A.No. 1811 of 2007 (O&M) 10
2. Whether the plaintiff is entitled for the
declaration that agreement/waiver letter dated
7.7.1993 between the parties is hit by the Sections 13
to 18 and 19-A of the Contract Act? OPP
3. Whether the suit of the plaintiff is
maintainable? OPP
4. Whether the suit has been instituted by a
competent person? OPP
5. Whether the plaint has been verified in
accordance with law? OPP
6. Whether this Court has territorial jurisdiction to
try and entertain the suit? OPP
7. Whether the suit is barred by the principle of
estoppel? OPP
8. Whether the suit is filed beyond the period of
limitation? OPD
9. Relief.
After hearing learned senior counsel for the parties, I am
of the opinion that the present appeal deserves to be dismissed.
The plaintiff-Board had agreed to invest a sum of Rupees
Ten Crores in Government securities with the bank. The said
amount was invested by the bank on behalf of the Board. As per
letter Ex.P-5, an amount of Rs.9,75,58,904.11 (Rupees nine crores
seventy five lakhs fifty eight thousand nine hundred four and paise
R.S.A.No. 1811 of 2007 (O&M) 11
eleven only) was invested by the bank by purchasing 17% NPC
bonds at a base rate of Rs.97/- per bond. The amount of
Rs.24,41,095.89 P. was invested in FDR. However, the Board was
given the liberty to withdraw the said amount invested in the FDR.
Vide Ex.P-6, it was intimated to the Board that, in fact, the bonds had
been purchased on behalf of the Board i.e. Indian Railway Finance
Corporation Bonds instead of NPC bonds. A dispute arose between
the parties and ultimately after a lot of negotiations, a settlement took
place between the parties.
Ex.P-27, whereby the plaintiff-Board had accepted
Rs.10,77,82,542.11 P. in full and final settlement of all claims reads
as under:-
1. Whereas the Punjab Housing Development
Board (hereinafter called the ‘Board’) had public funds
amounting to Rs.10,00,00,000/- (Rupees ten crores
only) available for a short term investment, the Board
paid the said amount to ABN AMRO Bank (hereinafter
called the ‘Bank’) for investment in Government
securities insuring a return of at least 17% p.a.
2. And whereas at the request of the Board,
the Bank with a view to purchase 17% (seventeen
percent) NPC Bonds at the rate of Rs.97/- (Rupees
ninety seven only) per bond for the benefit of the Board
made payment of Rs.9,75,58,904.11 (Rupees nine
R.S.A.No. 1811 of 2007 (O&M) 12crores seventy five lakhs fifty eight thousand nine
hundred four and paise eleven only) by Banker’s
cheque favouring Andhra Bank through M/s Naresh
K.Aggarwala and Company, its share brokers, and
returned the Board the balance sum of
Rs.24,41,095.89.
3. And whereas the Bank did not receive the
17% NPC Bonds either from Andhra Bank or the said
M/s N.K. Aggarwala & Co. who instead delivered by
way of alternate security to the Bank 9% (nine percent)
tax free IRFC (Indian Railway Finance Corporation)
Bonds covered by a letter of Allotment No. 016 and a
Transfer Deed signed in blank by Karur Vyasa Bank,
the registered holder of the said IRFC Bonds
(hereinafter called the ‘IRFC Bonds’)
4. And whereas the IRFC Bonds were
presented by the Bank to the IRFC ( Indian Railway
Finance Corporation) for registration in the name of the
Bank for the benefit of the Board, but before the IRFC
Bonds could be registered in the name of the Bank as
aforesaid, the Standard Chartered Bank also lodged a
claim on these bonds on the ground that they had been
purchased by it from Karur Vyasa Bank against an
existing transaction.
R.S.A.No. 1811 of 2007 (O&M) 13
5. And whereas, as stated by the Bank, the
Standard Chartered Bank thereafter filed a suit in the
Bombay High Court inter alia against the Bank and
IRFC for an injunction restraining the registration or the
transfer of the IRFC Bonds to the Bank.
6. And whereas the Bank has also instituted
rectification proceedings agaisnt IRFC before the
Company Law Board for the registration of the IRFC
Bonds.
7. And whereas legal proceedings are bound
to involve substantial time and the Board is in
immediate need of the aforementioned Public Funds
for the execution of its various schemes, and is
consequently, desirous of entering into some
arrangements with the bank by which it could get the
immediate return of its capital employed in the
purchase of the IRFC Bonds together with such
reasonable return as the circumstances permit.
8. And whereas there have consequently been
protracted negotiations between the Bank and the
Board resultant upon which it has been agreed that the
Bank would immediately return the principal amounting
to Rs.9,75,58,904.11 to the Board. The interest would
be calculated at the rate of 17% p.a. For the first six
R.S.A.No. 1811 of 2007 (O&M) 14months upto 3rd September 1992, which amounts to
Rs.82,92,507/- (which has already been received by
us) and for the balance period i.e. 4th September 1992
till date of payment of the principal amount, interest
would be paid at the rate payable on fixed deposits of
this length of time, which, calculated at the rate of 12%
per annum comes to Rs. 1.02,23,638/-. Also in case
and as and when the IRFC Bonds are transferred in the
name of the Bank or Andhra Bank returns the moneys
due to the Bank together with interest, the Bank would
additionally make a payment of the interest differential
between the rate of 17% p.a. and the fixed deposit rate
for the balance period i.e. 12 ½% p.a. amounting to
Rs.36,80,510/-. Interest on this differential amount of
Rs.36,80,510/- would be paid to us by the Bank at the
rate applicable to fixed deposits of the period for which
the amount is retained by the Bank, in accordance with
the provisions of this para, indicated above, provided
the Bank also likewise receive interest on its interest
claims.
That subject to the provisions of this
paragraph as indicated above, the Board would accept
payment as above in full and final settlement of its claims
arising out of or in connection with the said investment,
R.S.A.No. 1811 of 2007 (O&M) 15and for which the Board would furnish the Bank a
disclaimer and waiver as hereinafter appearing.
That the Bank, shall from time to time, and
not atleast less than once in a month, intimate the
position and progress made in the matter of settlement of
claims arising out of the purchase of these IRFC Bonds.
9. And whereas pursuant to the said
settlement, the Bank has paid to the Boards a sum of
Rs.10,77,82,542.11 (Rupees ten crores seventy seven
lakhs eighty two thousand five hundred forty two and
paise eleven only) in full and final settlement of the
Board’s claims against the Bank arising out of or in
connection with the said investment (the receipt of
which in full and final settlement, as aforesaid, the
Board hereby admits and acknowledges) and
consequently the Board is executing the discharge and
waiver as hereinafter appearing.
10. Now, therefore, we the Punjab Housing
Development Board acting through the Housing
Commissioner, Punjab Housing Development Board do
hereby accept the said sum of Rs.10,77,82,542.11
(Rupees ten crores seventy seven lakhs eighty two
thousand five hundred forty two and paise eleven only)
in full and final settlement of all claims of the Punjab
R.S.A.No. 1811 of 2007 (O&M) 16Housing Development Board in respect of or arising out
of or in connection with the said investment of
Rs.9,75,58,904.11 (Rupees nine crores seventy five
lakhs fifty eight thousand nine hundred four and paise
eleven only) on behalf of the Board and do confirm and
declare that the Bank shall be entitled at its discretion
to demand, sue for, enforce, settle compromise or
otherwise howsoever deal with any and all matters
arising out of or concerning the same without any right
in the Board in respect of the usufructs, proceeds or
benefits of such demand, suit enforcement, settlement,
compromise or other dealing(s) and the Board hereby
disclaims, waives and relinquishes in favour of the
Bank any and all rights and claims whatsoever that it
may have with respect thereto.”
Thus, the parties, after negotiations, had arrived at a
compromise and the plaintiff-Board had accepted Rs.
10,77,82,542.11 P. in full and final settlement of all the claims. The
case of the plaintiff-Board is that it had not signed the settlement of
free will. The settlement had been arrived due to coercion and
compelling circumstances. However, the said plea of the plaintiff-
Board was rightly rejected by the learned Additional District Judge as
the parties had arrived at a compromise after negotiations. There
was no question of fraud, coercion or undue influence having been
R.S.A.No. 1811 of 2007 (O&M) 17
exercised by the bank on the plaintiff-Board. The plaintiff-Board
failed to establish as to what fraud or mis-representation had been
effected on them which induced them to sign the agreement. Senior
officials of the Board had participated in the negotiations and
accepted the conditions of the settlement. Learned Additional
District Judge, thus, rightly dismissed the suit of the plaintiff-Board for
recovery.
No substantial question of law arises in this regular
second appeal. Accordingly, the same is dismissed.
(SABINA)
JUDGE
November 11, 2009
anita