TRANSPORT CORPORATION OF INDIA LTD vs RESERVE BANK OF INDIA & ANR

RAJIV SAHAI ENDLAW ,J.

OA No.81/2017

1.The defendant No.2 Yes Bank Limited, who alone is contesting this suit, by this Chamber Appeal, impugns the order dated 21st February, 2017 of

the Joint Registrar allowing IA No.25111/2015 of the plaintiff under Order XI Rules 12 & 13 of the Code of Civil Procedure, 1908 (CPC) and

directing the appellant/defendant to file affidavit of discovery in Form 5 Appendix C with necessary modifications within eight weeks therefrom.

2.The Chamber Appeal came up before the Court first on 27th February, 2017 when notice thereof was ordered to be issued. The senior counsel

for the appellant/defendant and the counsel for the plaintiff were heard on 25th April, 2018 when after full arguments, the counsel for the plaintiff

confined the discovery sought from the appellant/defendant to only of documents in para 9(f) of IA No.25111/2015 and gave up the claim for

discovery qua other documents mentioned in paras 6&9 of the application and orders on the said aspect were reserved.

3.The plaintiff has instituted the present suit for (i) declaration that USD-CHF Derivative Transaction dated 20th September, 2007 is voidable at the

instance of the plaintiff and is void, unenforceable and/or not binding on the plaintiff; and, (ii) consequently, seeking to recover Rs.6,92,55,342/- paid by

the plaintiff to the appellant/defendant pursuant to the aforesaid transaction.

4.The plaintiff seeks declaration of the transaction aforesaid as void on the ground of the same being unconscionable, in contravention of law and

public policy including the Comprehensive Guidelines on Derivatives, the Master Circular on Interbank dealing and the Foreign Exchange Management

(Foreign Exchange Derivative Contract) Regulations.

5.The following issues were framed in the suit on 24th August, 2015:

“1.Whether the USD/CHF transaction dated 20.09.2007 is voidable at the option of the plaintiff (under Section 19 and/or Section 19A of the Indian

Contract Act)? OPP

2.Whether defendant No.2 is liable to the plaintiff for an amount of Rs.6,92,55,342/- with interest, from the date of payment? Â Â OPP

3.Whether the Banking Licencee of defendant No.2 is liable to be cancelled by defendant No.1? OPP

4.Whether the USD/CHF transaction dated 20.09.2007 is void under Section 23 and/or Section 24 of the Indian Contract Act? OPP

5.Whether the present suit is barred by limitation? Â Â Â Â OPD

6.Whether this Court has no territorial jurisdiction to adjudicate the present suit? OPD

7.Whether there is accord and satisfaction achieved in respect of the transactions in issue or, discharge of the contract by virtue of performance of

obligations undertaken therein or, by mutual agreement? OPD

8.Whether the transaction was conducted in pursuance to the ISDA agreement dated 06.09.2007 and the deal confirmation dated 20.09.2007? OPP

9.Relief.â€​

and on 28th September, 2015, the following additional issue was framed:

“8A. Whether defendant No.2 is liable for fraud or deceit in respect of the USD/CHF transaction dated 20th September, 2007? OPPâ€​

6.The plaintiff, in para 9(f) of IA No.25111/2015, seeks discovery from the appellant/defendant of:Â

“f. Records of „exactly off-setting transactions‟/ „back-toback mirror transactions‟ entered into with other banks by Defendant No.2,

including details of the counterparties involved and the profits/margins/ commissions or any other amounts received by Defendant No.2 from these

counter-parties.â€​

7.The learned Joint Registrar, in the impugned order, has jointly dealt with the documents at serial No.9(a) to 9(f) and has not separately given any

reason qua the documents in para 9(f); it has been reasoned (i) that the said documents are relevant to enable the plaintiff to prove its allegation that

the transaction was designed to cause loss to the customers; (ii) the record of the profits/margins earned by the appellant/defendant in respect of the

transactions with the plaintiff as well in respect of transactions with other parties will also be relevant as it would give an overall picture of the manner

in which the transactions were affecting the customers of the appellant/defendant; (iii) the documents are also relevant in view of guidelines of the

Reserve Bank of India (RBI).

8.The appellant/defendant, in this Chamber Appeal, qua the documents in para 9(f) of the application has pleaded that the documents pertain to other

customers who are neither party nor privy to the transaction between the plaintiff and the appellant/defendant and the learned Joint Registrar erred in

allowing third party documents.

9.The senior counsel for the appellant/defendant opposes the said discovery on the same pleas.

10.Per contra, the counsel for the plaintiff drew attention to para 28 of the written statement where the appellant/defendant has pleaded that in terms

of Guidelines and Directives issued by RBI in this regard, the appellant/defendant was under an obligation to enter into an exactly offsetting

transactions and option deals with another person and that it covered the transaction with the plaintiff in entirety by entering into various transactions

at the same time with another person and that the appellant/defendant in this process was able to comply with the RBI Mandate, while being able to

service the plaintiff and that the bank benefited to the extent of fees/margins made between the two sets of transactions.

11.I have considered the aforesaid contentions.

12.Though no specific issue has been framed qua the aforesaid plea but it is quite obvious that what is sought from the appellant/defendant in para 9(f)

of the application is exactly what the appellant/defendant has pleaded in its defence to the suit. The relevance of the documents sought in para 9(f)

of the application thus cannot be questioned by the appellant/defendant and the appellant/defendant having itself taken the said plea, cannot urge that

the said discovery infringes third party rights. Even if that be so, it would be open to the appellant/defendant to seek confidentiality, if any required

qua the documents so discovered.

13.Accordingly, the Chamber Appeal, insofar as against the order directing the appellant/defendant to make disclosure of the other documents

mentioned in paras 6 & 9 of IA No.25111/2015 is allowed on consent and the order of the Joint Registrar to that extend is set aside and the appeal,

insofar as directing disclosure of the documents in para 9(f) of the application supra is concerned, is dismissed.

14.The appeal is disposed of.

CS(OS) 361/2012 & IAs No.2767/2012 (u/S 151 CPC) & 13775/2016 (of D-2 u/S 151 CPC)

List before the Joint Registrar on 14th May, 2018 for fixing the dates for evidence. Â