CANARA BANK Vs. NATIONAL THERMAL POWER CORPORATION LTD

JUDGEMENT

(1.) IN this order we are considering CA No. 45 of 2001 filed by the petitioner in CP Nos. 11/12/111/1995. Both the petitions filed by the petitioner as Trustees of Canbank Mutual Fund were disposed of by this Board by a common order dated 13-6-1996 directing National Thermal Power Corpn. Ltd. (NTPC) to pay the redemption amount in respect of the bonds impugned in those petitions. This order was challenged by NTPC in the Delhi High Court which set aside the order of this Board with the direction that the disputes between the parties should be referred to the High Power Committee of the Government of INdia. Aggrieved by this direction, the petitioner filed an SLP before the Supreme Court, which, while setting aside the order of the High Court, has restored the order of this Board. Accordingly, NTPC paid the face value of the Bonds to the fund and declined to pay any interest for the delayed payment. IN view of this, the petitioner moved an application before the Supreme Court seeking for consequential order relating to payment of interest. The Supreme Court disposed of the application stating that it was for the parties to move this Board for proper orders. Accordingly, this application has been filed seeking for directions to NTPC to pay interest from the due dates of redemption of the bonds till the date of payment.

(2.) To appreciate the prayer made in the application, it would be appropriate to give a summary of the disputes raised in the petitions and also the orders passed by this Board, High Court and the Supreme Court. The applicant, viz., Canara Bank, in the capacity of the Trustee of Canbank Mutual Fund (the fund) filed two petitions under Section 111(4) of the Companies Act, 1956 ('the Act"), seeking for rectification of the Register of Bond Holders of NTPC in respect of 13% and 14% NTPC Bonds of the face value of Rs. 7.745 crores and Rs. 2.17 crores, respectively. It had also sought redemption of the bonds along with the interest due as well as further interest. Since the issues raised in both the petitions were common, they were considered together. Canara Bank are the trustee of Canbank Mutual Fund. The fund purchased 1396 secured redeemable NTPC bonds of the face value of Rs. 57.5 crores and 14% NTPC bonds of the face value of Rs. 2.17 crores. The letter of allotment in respect of 1396 bonds were lodged with NTPC on 30-6-1989 and the 14% bonds were lodged with NTPC in instalments on different dates from 11-8-1992 to 11-2-1993. In respect of 13% bonds, the letters of allotments were endorsed in favour of 'Canara Bank - Trustee Canbank Mutual Fund'. The fund sold all the bonds except to the extent of Rs. 7.745 crores and these bonds were lodged with the NTPC for redemption on 23-5-1995. Likewise, 14% bonds were also lodged for entering the name of 'Canara Bank -Trustee Canbank Mutual Fund'. The NTPC had refused to consider the request of the fund in respect of both these bonds on 3 main grounds - that Canara Bank and NTPC being Government undertakings, the disputes between them should be referred to the Committee of Secretaries of the Government of India for resolution in terms of the judgment of the Supreme Court in ONGC v. Collector of Central Excise JT 1991 4 SC 158, that the company cannot take note of a trust in the Register of Members and that Canara Bank owed certain amount of money to NTPC against which the proceeds of the bonds had to be adjusted.

(3.) SHRI Jay Savla, appearing for the petitioners submitted : This application has been filed in terms of Section 144 of the Code of Civil Procedure, 1908 NTPC, instead of complying with the orders of the CLB dated 13-6-1996 by making payment of the redemption amount, filed an appeal on frivolous grounds. By doing so, even though NTPC obtained a favourable order from the High Court, yet, the order of the CLB was restored by the Apex Court. The initiation of the appeal proceedings by NTPC has delayed payment of the redemption amount by nearly, 4 years during which period NTPC had enjoyed the benefits of the redemption amount of nearly Rs. 10 crores. As per Section 144, the petitioner is entitled to make an application for restitution and seek for interest for the delayed period on the principles of unjust enrichment. The object of the restitutionary claim is to strip the defendant of a benefit which he has unjustly claimed at the expense of the petitioner. He further submitted that the fund manages mutual funds of thousands of members of the public and it is for their benefit that NTPC should be asked to pay the interest for the delayed period. He relied on the following cases :