Partly allowed

I. C. I. C. I. Bank Limited v. Official Liquidator Delhi High Court as Liquidator of Onida Finance Limited and Ors.

Bombay HC15 Jul 2013S/2134/2001

Case brief

AI extract

What is this about?

The High Court at Bombay adjudicated a shareholder suit for recovery of debenture amounts and interest. Secondary evidence was admitted due to the unavailability of originals despite a diligent search. The court decreed the suit in part, allowing recovery while adjusting interest rates post-liquidation.

What did the court decide?

Suit decreed for recovery of principal and interest; 6 weeks allowed for redemption of mortgage; secondary evidence admitted.

I. C. I. C. I. Bank Limited Vs Official… — Contract and Commercial Disputes | Bombay HC (2013)

¶1

s-2134.01.doc

¶2

ppn 1

¶3

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION

¶4

SUIT NO.2134 OF 2001

¶5

ICICI Bank Limited .. Plaintiff Vs. Official Liquidator & Ors. .. Defendants

¶6

Ms. Pooja Kshirsagar a/w Ms. Jui Bhadane i/by M/s. Manilal Kher Ambalal & Co. for the Plaintiff. None for the Defendants.

¶7

CORAM : N.M. JAMDAR, J. DATE : 15 JULY 2013

¶8

P.C. :

¶9

. The Plaintiff-Public Limited Company has instituted a suit for recovery of the sum of Rs.6,49,79,000/- along with interest and other charges, from the defendants. The defendant no.1 is a public limited company which was carrying on business offering services viz. Merchant Banking, Loan Syndication, Corporate Advisory Services etc. The shares of defendant nos.2 & 3 were pledged by defendant no.1 in favour of the plaintiff as security.

¶10

Suit was instituted on 9 May 2001. On 22 January 2004, the High Court at Delhi passed an order in Company Petition No.401 of 2002 for winding up of defendant no.1. The plaintiff thereafter, filed an application before the Delhi High Court seeking leave to prosecute the present suit, which was granted on 2 April 2008. Pursuant to the leave, the Official Liquidator, Delhi was joined as party-Respondent in place of defendant no.1.

¶11

ppn 2 s-2134.01.doc

¶12

The case of the plaintiff, as emerged from perusal of the plaint, is that the plaintiff in its capacity as debenture trustees for the amounts payable by the defendant no.1 in respect of the Secured Redeemable Non-Convertible Debentures, issued on a private placement basis, series of debentures aggregating of Rs.2,37,65,000/-, Rs.2,78,73,000/- and Rs.1,33,41,000/- together with interest. Defendant no.1 has certain immovable properties in the State of Maharashtra and also at Kanpur in the State of Uttar Pradesh. The properties were mortgaged in favour of the plaintiff by the defendant no.1 by duly executing a deed of hypothecation.

¶13

With a view to augmenting the plaintiff’s business and enlarging its working capital, the defendant no.1 offered Secured Redeemable Non-Convertible Debentures for cash at a nominal value of Rs.10 crores. Pursuant to the subscriptions received by the defendant no.1, the Board of Directors passed Resolution on 12 June 1996. Approval of its share holders in terms of Resolution was also took place in the Annual General Meeting held on 14 August 1995. At the request of the defendant no.1, a Debenture Trust Deed was executed on 29 January 1997 wherein the plaintiff agreed to act as Trustees for the Debentures. In consideration and to secure the repayment of the Debentures along with interest, the defendant no.1 also executed Trustee Agreement on 27 June 1997. As per the Trustee Agreement, the defendant no.1 agreed to pledge 30,00,000 fully paid Equity Shares of the defendant no.2 and 27,50,000 fully paid Equity Shares of the defendant no.2 held by the defendant no.1. Thereafter, by Memorandum of Hypothecation dated 27 June 1997, the defendant no.1 hypothecated

¶14

ppn 3 s-2134.01.doc

¶15

the properties which are enumerated in Exhibits ‘B-2’ and ‘C’ annexted to the plaint in favour of the plaintiff and undertaking dated 27 June 1997 was also executed by the defendant no.1 to create mortgage/charge of its properties situate at Kanpur. The agreement mentioned above provided for default clause.

¶16

The defendant no.1 committed default of the amount and the plaintiff called upon the defendant no.1 to make payment. Since the defendant no.1 failed to pay the amounts as well as Trusteeship remuneration, the plaintiff sent recall notice dated 30 April 2001 calling upon the Defendant no.1 to make payment of the entire principal outstanding amount. Inspite of the notice since the defendants failed to pay the amount, the present suit was instituted by the plaintiff.

¶17

By an order dated 6 November 2009, the suit was transferred to the list of “Undefended Suits.” No written statement is filed. None appears on behalf of the Official Liquidator though initially Counsel had appeared on behalf of the defendant no.1. As noted in the order dated 6 September 2011 the learned Counsel for the plaintiff has filed affidavit of evidence of witness Sanjay Sharma, New Delhi along with compilation of documents. By order dated 14 June 2013, the witness was discharged.

¶18

The learned Counsel for the plaintiff submits that the plaintiff be permitted to lead secondary evidence as the originals of the documents are not traceable. The learned Counsel for the plaintiff has submitted that the foundation of leading evidence is made out in

¶19

ppn 4 s-2134.01.doc

¶20

paragraphs 3 to 11 of the affidavit of evidence. The learned Counsel submitted that the plaintiff has taken extensive search at the office of the plaintiff at New Delhi but the originals are not traceable. The learned Counsel submits that as per the usual practice, the originals are preserved in the concerned branch. However, inspite of search at the concerned branches as well as the other branches the originals could not be located. The learned Counsel submitted that now there is an Official Liquidator appointed. The Official Liquidator has also shown inability to assist the plaintiff.

¶21

I have perused the averments made in the affidavit of evidence. The plaintiff has placed on record the efforts made by the plaintiff to search the original documents. By order dated 6 September 2011, this Court had noted the statement made by the learned Counsel appearing for the Official Liquidator attached to Delhi High Court that she is not receiving any instructions from the Official Liquidator. Thereafter, none has appeared on behalf of the Official Liquidator even though the matter was called out on many occasions. On 26 April 2013, the Counsel appeared for the Official Liquidator and stated that the Delhi office of the Official Liquidator seeks to engage another advocate. The Court noted that number of adjournments have already been granted to the defendants and adjournment was refused. Considering this position and the averments made in the affidavit of evidence, the plaintiff is permitted to place these documents on record by way of secondary evidence.

¶22

Perusal of the plaint and the documents annexed to the

¶23

ppn 5 s-2134.01.doc

¶24

plaint clearly makes out the liability of the defendant no.1 to pay the amount. The terms and conditions of the Debenture Trust Deed dated 29 January 1997 and the Trustee Agreement of the same date clearly show that money was advanced by the plaintiff which has been acknowledged by the defendant no.1. The defendant no.1 has created hypothecation in favour of the plaintiff in respect of the properties mentioned therein. This is a case where the money was advanced and the same was not being repaid and no written statement is filed opposing the averments made in the plaint. Thus, a case is made out for grant of prayers made in the suit. Accordingly, the suit is decreed in terms of prayer clauses (a-i), (a-ii), (b), (c), (i),(j), (k), (l-i), (l-ii). Time of 6 weeks is fixed for redemption of mortgage for the purpose of prayer clause (c).

¶25

As far as prayer for interest is concerned, the plaintiff has not specified any rate of interest in the prayer clause. The particulars of the claim are given in the averments of the plaint. It is also stated by the learned Counsel for the plaintiff that on non payment of amount, penalty was to be paid by defendant no.1 which is included in the claim, therefore, till the filing of the suit there would be interest. As far as the rate of interest after filing of the suit is concerned, it has to be noted that the suit was instituted on 9 May 2001 and the Official Liquidator was appointed on defendant no.1 on 22 January 2004, therefore, the rate of interest for the period of 9 May 2001 to 22 January 2004 will be 6% p.a. and after 22 January 2004, it will be 4 % p.a.

¶26

The suit is decreed on above terms.

¶27

After the true copies of the documents are placed on record

¶28

ppn 6 s-2134.01.doc to the satisfaction of the office, the original documents to be returned to the plaintiff.

¶29

N.M. JAMDAR, J.

I. C. I. C. I. Bank Limited v. Official Liquidator Delhi High Court as Liquidator of Onida Finance Limited and Ors.

Case brief

What is this about?

What did the court decide?

I. C. I. C. I. Bank Limited v. Official Liquidator Delhi High Court as Liquidator of Onida Finance Limited and Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Coram

Case details

Similar cases

Saikkrupa Photo Offset Pvt. Ltd. Vs M/S. Percept Picture Company (a Division of Percept Limited)

Zee Entertainment Enterprises Ltd. Vs Catrack Entertainment Ltd.

Rana M. Patel Vs Capital Controls India Private Limited Cin No. U33130MH1995PTC094424

Sarojben N. Shah and Ors. Vs the Stock Exchange, Mumbai and Ors.

The Board of Trustees of Jawaharlal Nehru Port Trust Vs Reliance Silicones (I) Ltd. and Ors.

K.Raheja Estates Pvt.Ltd. Vs Chandru L.Raheja and Ors. Infinity Malls Pvt. Ltd.