Decided on November 23,2007



M.C. Jain, J. (Chairperson) - (1.) HMT Limited (a public sector undertaking) has filed this appeal against judgment dated 20.8.2004 passed by DRT -III, Delhi in O.A. 169/2002. The O.A. had been filed by the respondent herein -The Nainital Bank Ltd. (applicant in O.A.) for the recovery of Rs. 1,13,11,593/ - along with pendente lite and future interest @ 16.5% per annum with half yearly rests as also costs. The DRT allowed the O.A. directing the defendant (appellant herein) to pay the said amount of Rs. 1,13,11,593/ - along with costs, pendente lite and future interest @ 10% per annum with effect from 5.8.2002 (date of filing of the O.A.). The appellant/defendant is aggrieved thereby and has lodged this appeal.
(2.) THE facts may be stated shortly: A sum of Rs. 50 lakh was invested by the respondent -Bank (applicant in O.A.) in HMT Bonds in New Delhi and a sum of Rs. 49.75 lakh, after adjusting upfront discount of Rs. 25,000/ -, was deposited with the appellant/defendant. The appellant/defendant issued Bond Certificate (Unsecured) 1994 Series bearingCertificateNo.0114Regd. Folio No. 92, Distinctive Nos.70354 to 70403, HMT (Taxable Bonds Series B -3. Instrument of Bond in the Nature of Promissory Note) dated 8.8.2004 in respect of 50 Bonds of Rs. 1.00 lakh each in favour of the applicant Bank. As per the terms and conditions of the said Bonds, interest @ 16.5% per annum with effect from 8.8.1994 was payable half yearly. The Bank received interest up to 31.12.1996 and thereafter the accrued interest with effect from 1.7.1997 to 31.12.1997 was also received on 15.1.1998, but despite repeated requests/reminders, the appellant/defendant failed and neglected to make payment of interest with effect from 1.1.1997 to 30.6.1997 and with effect from 1.1.1998 onwards. The Bonds were due for payment after the expiry of 5 years. Having been issued in 1994, they were to be redeemed in 1999. The request for redemption of the Bonds was to be made one month prior to the date of expiry by the applicant Bank. By letter dated 6.7.1999 the Bank requested the appellant/defendant to make payment of the Bonds amount of Rs. 50 lakh along with unpaid interest. The appellant/defendant although acknowledged the receipt of the said letter, expressed its inability to make payment. The original Bonds duly discharged were also sent to the appellant/defendant as requested by them, but the payment of the Bonds amount of Rs. 50 lakh and unpaid overdue interest was not made. The appellant/defendant had acknowledged and admitted its liability from time -to -time, and lastly on 23.5.2002. However, it failed to keep up its promise and even final legal notice dated 5.1.2002 served upon it did not bring any fruitful result. As the liability was not liquidated by the appellant/defendant, the Bank was obliged to bring the O.A. for the recovery of Rs. 1,13,11,593/ - (which had become due till the date of filing of the O.A.) with costs, pendente lite and future interest. The O.A. was contested by the appellant/defendant by filing written statement on varied grounds. The defence as per the written statement and the arguments advanced by the learned Counsel for the defendant/appellant may be summarised thus: It is admitted that it had floated five -year unsecured Bonds in question and many of the institutions, corporations and Banks including the applicant -Bank had invested therein. It is not denied that the applicant -Bank had invested Rs. 50 lakh in the said Bonds. It is also admitted that the interest rate of the said Bonds was 16.5% per annum, but it was allegedly applicable only during the period of the Bonds. The terms and conditions of the Bond were silent with regard to the rate of interest subsequent to maturity. Due to certain market conditions and slow -down in the economy, the appellant/defendant could not adhere to the conditions of the said Bonds. An understanding was arrived at between the Government and the appellant/defendant company, whereby the company formulated a scheme as per the directives of the Government which was accepted by all bond holders whereby the Bond amounts and interest during the Bond period and subsequent to maturity were settled. The scheme was that the principal amount under the Bond was to be paid in full. As regards interest, upto maturity the interest was to be paid at the rate mentioned in the Bonds plus post -maturity interest calculated at the rate mentioned in the Bonds but 75% of the total interest was to be waived. The investment made by the Bank in the Bonds was not in the course of its Banking business and the subject matter was beyond the scope and jurisdiction of the DRT, not being covered under the definition of 'debt' as defined under Section 2(g) of the RDDBFI Act. The DRT -III, Delhi had no territorial jurisdiction. The amount claimed included interest on interest at compounded rates. The Tribunal below could not award pendente lite and future interest @ 10% per annum. The settlement arrived at between the defendant -company and most of the investors mandated a scheme of arrangement and was to be applicable to all investors including the applicant -Bank. These very pleas have been raised in appeal to assail the impugned order passed by the Tribunal below.
(3.) HAVING heard the learned Counsel for the parties and having waded through the record, I propose to deal with the points involved in the appeal, one by one.;

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