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Judgment
Ranjit Singh, J
Respondent Punjab and Sind Bank had filed an OA for recovery of Rs. 76,59,952.62 from the borrower company and the guarantors. The amount claimed comprised of LC transaction of 1979 of Rs. 11,82,392.82 in favour of Bentrex and Co., Singapore with a sum of Rs. 43,29,688.78 claimed as interest for the period from 1979 till July, 1987. A sum of Rs. 3,05,500.57 was for an LC transaction of 1983 in favour of PN Rao and Co. Another sum of Rs. 2,88,744/- claimed as overdue commission on the above said Bentrex transaction and the PB Rao transaction. Rs. 12,00,816.55 inclusive of interest was allegedly due for some packing credit transaction. A sum of Rs. 1,48,488.10 and Rs. 2,04,321.80 were claimed as due for certain Foreign Bill Purchase transaction and balance in the Current Account respectively. The Bank had claimed this amount with interest @ 19.5% p.a. with quarterly rests from the appellants and the guarantors jointly and severally. The plea by the appellants before the Tribunal was to stay the suit, as another suit instituted earlier was pending before the High Court. As per the appellants, the suit was barred by limitation and the plaint was vague and lacked material particulars. The appellants would claim that it was not made clear as to how the amount claimed was arrived at. They would also allege that the Bank had filed forged documents. The appellants had even contested the maintainability of the suit having been filed by International Banking Division. Their plea also was that the Bank had charged ECGC shipment premium regularly from 1979 onwards from the appellants. This insurance covered the Bank against any overdraft or loan from the appellants. The Bank thus could have received 90% advance immediately from insurance and it could have saved the appellants from huge compound interest. Various other pleas like the suit was not properly signed, verified or instituted were also raised.
It was alleged that the Letter of Credit for a sum of Rs. 11.50 lacs was opened by the Bank for and on behalf of the appellant company, as the appellants wanted to import copper scrap from Singapore. The shipping documents were of doubtful nature and were rejected by the appellants on 12.9.1979. In the meantime, the appellants came to know that the ship had already sunk on 8.9.1979. On 19.7.1979, on the asking of Mr. Inderjit Singh, the Chairman of the respondent Bank and on his assurance that the insurance money will be received by the Bank from National Insurance Company, the appellant insurer signed the documents. The insurance policies were also endorsed in favour of the Bank. The Bank had also obtained Power of Attorney to file suit against insurance company. The Bank, however, ultimately, backed out and did not file suit against the insurance company and other Banks and because of this the appellants were constrained to file Suit No. 672/1980. The Bank was negotiating with the appellants to admit their lapse and forego the entire amount of Rs. 11.50 lacs and as such did not even file written statement in the suit for six years. Various other defences were also raised against the claims made by the Bank.
The Counsel for the appellants initially highlighted the dubious manner in which the ship had sunk, which was not an isolated instance. Earlier also, Bentrex was involved in ship-sinking incidents, creating doubts about the genuineness of the export of the material. After hearing the Counsel at some length, it was pointed out before me on 10.7.2015 that the appellants had submitted some proposal for settlement to the Bank expressing appellants' willingness to discharge the liability if the interest was calculated @ 10% p.a. simple. This Tribunal noticed that huge liability staring at the appellants was on account of a facility which was not of substantial amount. It was basically for a sum of Rs. 11.50 lacs which has now swelled into a liability of Rs. 120 crores. The appellant Mr. Iqbal Singh was stated to be old-aged and in mid 80's and thus had expressed his willingness to buy peace. The Bank was directed to consider the proposal submitted by the appellants sympathetically.
Ultimately, Counsel for the Bank came out to state that the Bank had rejected the one-time settlement proposal submitted by the appellants and a communication in this regard had been addressed to the appellant. It was at this stage that the appellants moved two applications for placing on record some additional documents, on which notices were issued. The Counsel for the Bank had prayed for time to file reply to these applications. That is how these appeals have now come up for hearing.
Counsel for the appellants Submits that though the case of the appellant has merits to succeed but still the appellant would wish to buy peace by setting the case with the Banks as he does not wish to leave behind any litigation. Counsel submits that this Tribunal may determine the interest considered reasonable and appropriate as the interest at the sale of 10% p.a. simple as proposed by the appellant has been rejected. Counsel would submit that a basic liability of Rs. 11.50 lacs which led to the Rs. 76 lacs and has now assumed huge liability of Rs. 120 crores. Counsel pleads that the old appellant could have escaped by paying Rs. 11.50 lacs, more so when the appellant was not ready accept the shipping documents and did so on the asking of the Chairman of the respondent Bank. Counsel stated that the appellant cannot in fairness be asked to shell out a sum of Rs. 120 crores. As per the Counsel it is too unreasonable, unfair and unreal to bear this liability in the background as noticed.
Apparently there is some substance in the submission made by the Counsel for the appellants. The liability has become many-folded primarily because of the rate of interest which the Tribunal has allowed, which is 19.50% p.a. with quarterly rests. This rate of interest apparently is harsh and cannot pass off as fair. Counsel for the Bank has not been able to show any justification for claiming the amount with this rate of interest as allowed by the Tribunal below. This is a case where the ship had sunk and rightly or wrongly the appellants had claimed that they were persuaded or coerced to sign documents on the assurance that the Bank would claim the amount from ECGC. That was not done. Obviously, this aspect cannot be ignored. The Counsel for the Bank has also very fairly stated that the discretion to grant concession in the rate of interest would be that of this Tribunal. Both the Counsel, however, have not pressed for allowing any particular rate of interest which according to them, would be reasonable. The Counsel for the appellants, however, in a subdued manner has prayed for allowing interest at the rate of 11% p.a. simple once the interest at the rate of 10% p.a. simple is not found acceptable or reasonable.
I have considered the facts emerging in this case very minutely. I have noticed that the rate of interest allowed by the Tribunal is rather harsh and stiff. No doubt, the appellants have delayed in settling the issue with the Bank, but that in itself cannot be taken as circumstance to make the amount of recovery look unreasonable. The basic liability of Rs. 11.50 lacs has now become Rs. 120 crores. This may in itself ring alarm bells for anyone to take note of the same. I, therefore, find that this is a case where concession in the rate of interest is called for, especially so, when the appellants leaving the merits have come forward to buy peace and settle the matter with the Bank. There is some substance in the submission by the Counsel for the appellants that the Bank, after taking responsibility, did not make any effort to recover the amount from insurance. This one factor may be significant to grant some concession in the rate of interest. Having considered the rival submissions, interest @ 12% p.a. simple, in my view, would be reasonable in this case to settle the equities between the parties. In my view allowing the amount claimed with interest at the rate of 12% p.a. simple would meet the ends of justice and would sound just and reasonable.
The amount claimed in the O.A. therefore is allowed with interest @ 12% p.a. simple from the date it is due till the date of payment. The appellants are allowed a period of two months to pay the entire liability inclusive of interest. In case the appellants make any default in clearing the entire liability within the stipulated period, the Bank would be entitled to recover the same in terms of the order passed by the Tribunal below. In view of the limited relief prayed for the appellants, the applications filed by them (I.A. No. 1020/2015 and I.A. No. 1021/2015) for placing additional documents on record are rendered infructuous and are disposed of as such.