w w w . L a w y e r S e r v i c e s . i n



Sidharth Spices Corporation and Others V/S Union Bank of India


Company & Directors' Information:- J G SPICES LTD [Active] CIN = U15143ML1995PLC004523

Company & Directors' Information:- R P SPICES (INDIA) PRIVATE LIMITED [Active] CIN = U51909DL2013PTC253783

Company & Directors' Information:- M S P SPICES PRIVATE LIMITED [Active] CIN = U85110KA1977PTC003147

Company & Directors' Information:- R SIDHARTH & COMPANY (INDIA) PVT LTD [Strike Off] CIN = U17111WB1991PTC051089

Company & Directors' Information:- THE INDIA COMPANY PRIVATE LIMITED [Active] CIN = U74999TN1919PTC000911

Company & Directors' Information:- A D I SPICES PRIVATE LIMITED [Strike Off] CIN = U15549UR2013PTC000669

Company & Directors' Information:- INDIA CORPORATION PRIVATE LIMITED [Active] CIN = U65990MH1941PTC003461

Company & Directors' Information:- SPICES (INDIA) LTD [Active] CIN = U51909WB1951PLC020093

Company & Directors' Information:- B M B SPICES PRIVATE LIMITED [Strike Off] CIN = U24248UP2000PTC025063

Company & Directors' Information:- B P SPICES P. LTD. [Strike Off] CIN = U15315WB1989PTC047568

Company & Directors' Information:- H D SPICES PVT LTD [Strike Off] CIN = U51909WB1981PTC033974

Company & Directors' Information:- M V J SPICES INDIA PVT LTD [Active] CIN = U15495KL1992PTC006741

Company & Directors' Information:- K. K. SPICES PRIVATE LIMITED [Strike Off] CIN = U15495DL2006PTC150668

Company & Directors' Information:- B H SPICES PRIVATE LIMITED [Active] CIN = U15490GJ2020PTC115130

    URA-56 of 2001

    Decided On, 24 January 2003

    At, Debt Recovery Appellate Tribunal At Chennai

    By, THE HONORABLE JUSTICE: A. SUBBULAKSHMY (CHAIRPERSON)

    For Petitioner: Joseph Kodianthara, Advocate And For Defendant: A.P.S. Kasthuriranagan, Advocate.



Judgment Text


1. Both Counsels present. Heard Counsels for both sides. Order was passed by this Tribunal under Section 21 of the Act on 5.7.2002 directing the appellant to deposit Rs. 1 crore within six weeks from 5.7.2002 failing which the appeal shall not be entertained and shall be rejected. As against that order the appellant preferred appeal before the High Court of Kerala in O.P. No. 22789/2002(K) and the High Court of Kerala passed order on 12.9.2002 stating that inasmuch as the appellate Tribunal has not adverted to the contentions of the petitioners that more than the decree amount can be realised only through the account of the Bank and is lying in credit of the petitioners which the Bank alone can collect and the Bank can adjust those amounts to the decree debt immediately on receipt of the same that should have been considered and orders passed by the Appellate Tribunal, and the High Court of Kerala has directed this Appellate Tribunal to reconsider that application and pass appropriate orders.

2. Counsel for the appellants submits that more than the decree amount is tying with the foreign Bank and that can be realised only through the account of the respondent Bank and it is lying in the credit of the appellants and the Bank alone can collect that amount and the Bank can adjust those amounts to the decree debt immediately on receipt of the same and when such is the position and as huge amount is lying in the foreign Bank, it can be realised only through the respondent Bank, the question of payment under Section 21 of the Act does not arise and the appellant is entitled for waiver. He further submitted that inasmuch as huge amount is lying in the foreign Bank, it can be realised through the respondent Bank immediately, on realisation the respondent Bank can adjust that amount towards this decree amount and under such circumstances the appellant is not liable to pay any amount under Section 21 and he is entitled for waiver. He drew my attention to the letter written by the Union Bank of India to the appellant dated 13.8.2001 wherein it is stated that the Reserve Bank of India (RBI) has approved extension of time upto 31.3.2006 for realisation of export proceeds and the appellant may pursue the matter vigorously with overseas buyers/Embassy of India to ensure that the outstandings are realised within the extended period. He further submitted that as per Annexure submitted to the Bank, the Invoice value is $ 7,52,892.12 and the overseas buyer consignee is M/s. Sudan Tea Company Ltd., Khartoum, Sudan, and if that amount is realised (through the Bank the decree amount can be easily adjusted and in any case the question of payment of the amount under Section 21 does not arise.

3. Counsel for the appellants further submits that he filed an Affidavit with regard to the realisation of export proceeds by the Bank on 4.7.2992, but no such Affidavit has been filed before this Tribunal and so the question of considering that aspect did not arise at all when the order was passed on 5.7.2002. Even at the time of advancing arguments on 5.7.2002 on which day the order was pronounced, the Affidavit alleged to have been filed by the appellant on 4.7.2002 was not shown and no argument was advanced on that Affidavit. No prescribed fee for filing that Affidavit was also paid. From the Paper Book filed by the appellants, it appears that the appellants filed petition on 4.7.2002 along with the Affidavit but no prescribed fee for filing that petition has been paid on 4.7.2002. So, it is evident that no such Affidavit at all was filed on 4.7.2002 which does not find place along with the records.

4. Counsel for the respondent Bank submitted that the RBI has approved extension of time upto 31.3.2006 for realisation of export proceeds and if further extension was also given by the RBI, the respondent Bank cannot indefinitely wait for realisation of the decree amount and the extension of time granted by the RBI is not a ground to allege that the appellant is entitled for waiver. As per the extension granted by the RBI for realisation of the export proceeds, three more years have to be waited. As rightly pointed out by the Counsel for the respondent Bank, the respondent Bank cannot be expected to wait for another three more years till the export proceeds are realised and if further extension was also granted by the RBI, the respondent Bank cannot indefinitely wait for realising the decree amount.

5. On a perusal of the Annexure, it is seen that for the payment of that amount in local currency for the goods already supplied as per the Invoice value, the payment dates in local currency are of the years 1979, 1980, 1981 and 1982. More than 20 years have been elapsed. Till now, no amount has been realized. Further, the RBI has also granted extension of time till 31.3.2006 and it is not known whether any further extension also will be made. The respondent Bank has waited for more than 20 years for realisation of that amount and till now no realisation has forthcome. The respondent Bank cannot be expected to wait indefinitely for realisation of the decree amount. The respondent Bank has already waited for more than 20 years. Till now, amount has forth come and it is also not known about the future realisation. The High Court of Kerala has observed that the contention of the appellant that when the decree amount can be realised through the account of the Bank which is lying in the credit of the petitioners and the Bank alone can collect and adjust that amount to the decree debt, should have been considered and accordingly directed this Tribunal to reconsider that contention.

6. After considering the arguments advanced by both sides, it is apparent that the Bank has indefinitely waited for a long period and again the Bank has to wait for another three years and more as the RBI has extended the time, does not appear to be reasonable when a decree has been passed against the appellant and the respondent Bank must realise the decree amount by taking proper steps. If the export proceeds are realised through the respondent Bank, as and when it is realised, the respondent Bank is going to pay the amount to the appellant. Since there is indefiniteness with regard to the realisation of the export proceeds, the Bank cannot be expected to wait for realisation of the decree amount. For the day-to-day running of the Bank business, the Bank has to realise the amount decreed in its favour which is outstanding for a long time. The enactment of the RDDB&FI Act itself is for speedy recovery of the loan amount due to the Bank.

7. Counsel for the respondent Bank further submitted that with regard to the contentions raised by the appellant before the High Court with regard to the realisation of the amount of export proceedings from Sudan, the same has been considered by DRT, Ernakulam, in para 24 of its order and it has been held by the Presiding Officer, DRT, that the allegation regarding the Sudan bill raised in the written statement is devoid of any merit. In para 24 of the order, the Presiding Officer, DRT has stated that "The contention of the defendants regarding Sudan bills is also devoid of any merits. The Counsel for the applicant relies on the ruling in Corporation Bank v. Javerilal and Sons, 2000 AIR SCW 304, by the Hon'ble Supreme Court of India where it was held that the correspondent Bank is not the agent of the Bank and the reason for non-repatriation being the policy of Sudan Government, which did not have the required foreign exchange, the allegations regarding the Sudan bills raised in the written statement is devoid of any merits." The Presiding Officer, DRT, has considered with regard to the contention raised by the appellant in this regard and the Presiding Officer, DRT, relying upon the Supreme Court decision in Corporation Bank v. Javerilal & Sons (supra) has held that the corresponding Bank is not the agent of the Bank and the reason for non-repatriation being the policy of the Sudan Government which did not have the required foreign exchange and so the allegation regarding the Sudan bills raised in the written statement is devoid of any merit. This aspect was not raised before this appellate Tribunal when the matter came up for arguments under Section 21 application. It was represented before this Tribunal by the appellant that the appellant has not received the amount from the National Bank of Sudan and so he is not in a position to pay such a huge amount. The arguments advanced by the Counsel for the appellant before this Tribunal was considered by this Tribunal and order was passed.

8. Further, even in the Affidavit filed before this Tribunal by the petitioner, under Section 21 application nothing is stated with regard to the Sudan bills amount. Since the same contention which was raised before the High Court in the O.P. was not raised before this Tribunal and no argument was also advanced on this aspect by the appellant, that point was not considered by this Tribunal. The contention of the 1st defendant is that repatriation of the currency was the obligation and responsibility of the plaintiff Bank and no cause whatsoever arises for realising any amount from the defendant and on the contrary the plaintiff Bank is liable to compensate the defendant to the tune of several crores on account of non-repatriation of the foreign exchange and as the plaintiff Bank is responsible for procuring foreign exchange as bill of the defendants drawn in Dollars was already presented to the Bank and the plaintiff Bank had also sent it for collection. It was also contended by the defendant that it is on account of the negligence and incompetence of the plaintiff Bank that the amount realised under the bill could not be repatriated for reasons best known to the plaintiff Bank. The 1st defendant moved before the Consumer National Commission in OP No. 78/1994.

9. Counsel for the respondent Bank submits that the OP filed before the National Commission by the 1 st defendant was dismissed by the National Commission following the decision of the Supreme Court in II (2000) SLT 140=AIR 2000 SC Page 761, Corporation Bank and Anr. v. Navin J. Shah. Similar matter with regard to procuring of the foreign exchange on the bills came up for consideration before the Supreme Court in the decision cited supra and the Supreme Court has held that--

"An exporter of tea who had credit facilities with an Indian Bank entrusted the documents relating to export of tea for the purpose of realising the proceeds thereof from the consignee. The Indian Bank issued advice of purchase of bills to the exporter in respect of the goods covered by several invoices. The Indian Bank negotiated the export documents through a foreign Bank. The foreign Bank however failed to realize the export value from the consignee in U.S. Dollars. It was claimed by the exporter that the Indian Bank had totally failed to execute the specific instructions of the exporter to realize the export documents to the consignee only after accepting in cash in U.S. Dollars but were negligent in handling the consignment given to them as a result whereof the goods were released to the consignee without realizing the export proceeds for and on behalf of the respondent. It was also claimed by the exporter that the exporter did not ask the Indian Bank to negotiate the export documents through a particular Bank in place of export but the Indian Bank on their own appointed the foreign Bank for realising the export proceeds from the consignee. The exporter further claimed that the Indian Bank having purchased the documents in question were in fact collecting the monies for their own benefit and not for the benefit of the exporter and that when the documents had clearly indicated the manner in which the consignee get the goods except after payment of cash no delivery could have been made. The Indian Bank had acted with negligence and, therefore, is liable to make good the loss suffered by it. The agreement between the parties however showed thai the consignee and the consignor have clearly indicated that the documents had to be negotiated through the stipulated foreign Bank and the mode of payment was through the foreign Bank.

Held, if that is so, Indian Bank was acting for and on behalf of the exporter when it sent the documents to the named Bank for negotiations and collection of the money due under the agreement. The Indian Bank could not nave sent the documents to any other agent inasmuch as payments had to be made only through that foreign Bank and that foreign Bank as was the usual practice realise the documents against payment in local currency which was higher to convertible in foreign exchange in U.S. Dollars, The conversion in US Dollars could not be done on account of policy of the Sudan Government. If that is so, it is very difficult to perceive of a situation regarding the deficiency in the service rendered by the Indian Bank. The Indian Bank negotiated the documents as provided under the agreement, so did the foreign Bank but the conversion of the local currency to U.S. Dollars became difficult on account of policy of the Sudan Government. When the realization of the money in U.S. Dollars was frustrated by reason of the Government action, Indian Bank could not be held responsible for the same. Whatever may be the position with regard to the collection procedure that by discount or purchase of the bills or otherwise, one thing is clear that alt that was required to be done under the terms of the agreement and under the contract had been done by the two Banks. Therefore, the National Commission was not justified in having reached the conclusion that the Indian Bank's services were deficient."

10. Relying upon this decision only the Presiding Officer, DRT, has also stated in para 24 of her order that the allegation regarding the Sudan bills raised in the written statement is devoid of any merit: With regard to the contention of the appellant that the plaintiff Bank alone can collect the amount from the foreign Bank i.e. Sudan Bank and adjust that amount to the decree debt immediately after receipt of the same and the

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Bank cannot realise that amount from the appellant now does not hold good by virtue of the decision of the Apex Court in AIR 2000 SC Page 761. It appears from the documents that the contract with regard to the foreign export was made as early as 19.3.1979, 14.4.1980 and 14.4.1981 and the bills were sent to Sudan for collection in 1982. For about 20 years nothing has come out. The Apex Court has clearly held in the decision cited supra that when the release of the money in US Dollars was frustrated by the reason of the Government action, Indian Bank could not be held responsible for the same. So, the contention of the appellant that the Indian Bank must wait till the amount is realized from the foreign Bank is wholly untenable. Following the decision of the Apex Court, I am of the view that when there is frustration by the reason of the Government action on the foreign Bank the Indian Bank cannot be held responsible for the same and the Indian Bank also cannot be asked to wait till the foreign Bank realizes that amount. Hence, I find that the contention raised by the appellant with regard to the entire waiver of the amount is wholly untenable and the appellant is not entitled for entire waiver of the amount. 11. Now, the amount due to the respondent Bank by the appellant is Rs. 4 crores as submitted by the Counsel for the appellant. Hence, the appellant is directed to deposit Rs. 1,00,00,000 (Rupees one crore only) within a period of four weeks from today i.e. on or before 24.2.2003 failing which the appeal shall not be entertained and shall be rejected.
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