- (1.) R.K. Agencies Limited made a fixed deposit with Central Bank of India through their Advocate M/s. Khanna and Company on May 27, 1984. The contents of the letter would be as follows: "Under instructions from and on behalf of our client, M/s. R.K. Agencies Limited we beg to enclose cheque No.3148553 of the 27th November 1984 for Rs.20 lacs drawn on Allahabad Bank in our favour with a request to have the cheque encashed and put the proceeds thereof in a short term fixed deposit for six months carrying your usual interest. The original fixed deposit receipt may be kept under lien by the esteemed Bank and if necessary, we will formerly discharge the same in favour of the bank. We agree that the said receipt will continue to remain under lien with the bank and may be renewed from time to time for identical periods pending RBI permission as stated hereinafter. Needless to add that appropriate permission will be applied for and obtained from the Reserve Bank of India in consultation with under advice to you for credit of the said sum to Foreigner's account as and when such permission is granted."
(2.) Contents quoted above would show, it was not a fixed deposit simplicitor. It was kept as a co-lateral security that would continue to remain "under lien" with the Bank and would be kept renewed from time to time pending "RBI permission". The permission was required for credit of the said sum to a "foreigner's account". The account was however, not specified. It appears, Central Bank of India applied for permission that the Reserve Bank declined. M/s. Khanna and Company prayed for encashment vide letter dated May 28, 1985 that the Bank denied. Khanna and Company in their letter observed, "The understanding for arrangement sought to be arrived at, in terms of our letter dated 27 November, 1984 was never acted upon and nothing definite was achieved between the parties". R.K. Agencies filed suit inter-alia, claiming a decree for Rs.28,04,027.76 being the proceeds of the said fixed deposit. The Bank contested the suit by taking the plea of adjustment. According to the Bank, R,K. Agency would belong to one Sethia group that did have various oversees transactions with the Bank. The Bank already filed suit before the Queen's Bench Division in U.K. against SL Sethia Liner's Limited and K.C. Sethia (1944) Limited on a money claim. The Bank would contend, the subject fixed deposit was nothing but a deposit to the credit of the said claim hence, R.K. Agencies Limited would not be entitled to any decree as prayed for. The learned Single Judge rejected such contention and decreed the suit. His Lordship held, the fixed deposit was kept subject to credit of a foreigner's account that the Reserve Bank did not permit to transmit hence, R.K. Agencies would be entitled to the proceeds. Moreover, the Bank failed to establish nexus between R.K. Agencies Limited and the overseas litigation. Being aggrieved, the Bank preferred the instant appeal that we heard on the above mentioned dates. CONTENTIONS:
(3.) Mr. Hirak Kumar Mitra learned Senior Counsel placed the pleadings as well as the relevant correspondence. Mr. Mitra would suggest, letter dated November 27, 1984 addressed to the Bank by M/s. Khanna and Company was not a deposit simplicitor. It was on a lien account that would be supported by the letter of the overseas advocate Zaiwalla dated February 11, 1985. He would also rely upon a subsequent letter of Zaiwalla dated July 4, 1985 that would also relate to the deposit of R.K. Agencies. Mr. Mitra placed all the correspondence including the letter of Simmons and Simmons the overseas advocates acting on behalf of the Sethias dated May 30, 1986. He would also refer to the Reserve Bank correspondence dated September 5, 1986 and July 26, 2006 in this regard. He would also rely upon the other correspondence exchanged between the Bank and Sethias and their lawyers. Mr. Mitra would contend, the deposit receipt was duly discharged by R.K. Agencies. Once it got discharged the Bank became the absolute owner. In any event, plaintiff did not examine any representative of Khanna and Company, connected with such deposit, so that he could throw some light on the same. Mr. Mitra would heavily rely on a paragraph from Zaiwalla's letter dated July 4, 1985 being exhibit 4.;