Case: Standard Chartered Bank Vs. Andhra Bank Financial Services Ltd


Decision:
0[ds]The suit bonds in the instant case are movable properties which are capable of being possessed. The definition of the term movable property can be found in Section 3(36) of the General Clauses Act, 1897 which reads thusproperty, shall mean property of every description, except immovableA reading of theof the above provision makes it clear that everything that is not immovable ismovable, and thus the suit bonds in the instant case are specific moveable property to which Article 91(a) of the Limitation Act applies.We are unable to agree with this contention advanced by the learned senior counsel on behalf of the respondents. A perusal of Article 91(a) of the Limitation Act shows that it is meant to apply to specific movable property. It further stipulates that the period of limitation shall start running from the date when the person ‘firstabout the conversion of the moveable property. While it is true that the word used in the said Article isnd not knowledge, it is difficult to construe the wordut attributing to it certain degree of knowledge. The degree or the extent of knowledge is the subject matter of controversy in the instantprovision of Article 91 (a) of the Limitation Act thus demands two things. First is knowledge on the part of the plaintiff, and second, that the said fact be within his peculiar knowledge. We agree with the contention advanced by Mr. Ram Jethmalani, the learned senior counsel on behalf of the appellant, that the termes a burden of knowledge which is rather specific in nature. Thus, the knowledge must be of the identity of a specific person in whose possession the bonds are and that he acquired the possession of the said bonds under an arrangement, which in law would constitute wrongful conversion. The knowledge of a specific person against whom the suit can be instituted is what is crucial here. A mere suspicion or a whisper of knowledge is not enough for the period of limitation to start running. Point number 1 is thus, answeredcase of the appellant is that it was during a meeting held on 07.11.1992 that they first learnt that the suit bonds had been misappropriated by Hiten P. Dalal and given to CMF. The learned Special Court came to the conclusion that the plaintiff (appellant herein) had failed to establish the happening of a meeting on 07.11.1992 for three reasons. Firstly, that if the appellant knew of the transaction between Hiten P. Dalal and CMF on 07.11.1992, then they should have been impleaded as parties in the suit filed by the appellant on 27.11.1992, and that the appellant has not given any reason as to why they were not impleaded as parties on 27.11.1992 itself. Secondly, that no reference has been made about this meeting by Mr. Kalyan Raman,in his deposition, who at the time had been deputed from Andhra Bank to ABFSL, who was also alleged to have been present at the meeting. Thirdly, that even Mr. David LovelessDirector of Security and Investigations, Office of the Special Representatives of India (OSRI) does not make any reference to this meeting. The learned Special Court further held that the defendants (respondents herein) have, on the basis of the evidence on record, established that the plaintiff had knowledge about possession of the bonds at least on 18.03.1992 or 23.05.1992.We agree with the contention advanced by the learned senior counsel on behalf of the appellant, Mr. Ram Jethmalani with regard to the meeting on the above date.In the instant case, it is evident from the affidavit of Mr. Srinivasan,that the meeting happened on 07.11.Thus, we conclude that a meeting did infact take place in the office of CMF on 07.11.1992, and that it was on this date that SCB found out about the dummy transaction that had taken place between CMF and Hiten P. Dalal regarding the 9% and 17% NPCL bonds. Therefore, the finding recorded by the learned Special Court is erroneous both in fact and in law, hence the same is liable to be set aside.30. In light of the fact that the knowledge of the appellant had started running on 07.11.1992, the question that now remains to be answered is whether there was any previous date on which it was possible that the appellant had acquired knowledge of the conversion of the bonds. The learned senior counsel appearing on behalf of the respondents, Mr. Rohit Kapadia and Mr. Pradeep Sancheti, contend that there are atleast three alternate prior dates on which the appellant can be said to have acquired knowledge of the fraud perpetrated on it by the respondents. These dates are 18.03.1992, 10.04.1992 and 23.05.1992.31. We have heard Mr. Ram Jethmalani, the learned senior counsel appearing on behalf of the appellant and Mr. Rohit Kapadia and Mr. Pradeep Sancheti, the learned senior counsel appearing on behalf of the respondents and have perused the documents produced before us as evidence. We shall examine these dates one by one in order to conclude whether knowledge of the appellant can be construed from any one of these dates, from which date the period of limitation for instituting the suit for claim against the respondents starts running.The learned senior counsel on behalf of the appellant submits that the said affidavit states that the 17% NPCL bonds were purchased by CMF on 27.02.1992 from ABFSL through its broker Hiten P. Dalal along with 9% NPCL Bonds. Mr. Ramaraj further said that the very same bonds were subsequently sold by CMF to SCB, on 17.03.1992. The Bank Receipt issued was exchanged by delivery of original LOA on 18.03.1992. He does not say that it was delivered to the SCB. The learned senior counsel contends that in view of the averments of the affidavit of Mr. Ramaraj, the knowledge of the bonds being delivered to the Company on 18.03.1992 is not tenable in law. He further contends that the learned Special Court erred in arriving at this conclusion on facts, which is contrary to the affidavit of Mr. Ramaraj and therefore, the said finding is erroneous, liable to be set aside.36. The learned Special Court has erroneously held that the period of limitation for institution of the suit by the appellant would start running on 18.03.1992, as there was no evidence on record to show that the appellant did not have knowledge that this was the only set of bonds which were used by NPCL and therefore there was no question of other bonds being in circulation. The learned Special Court further held that the burden of proving the non existence of knowledge was on the appellant, and that in the absence of evidence on this point, it would have to be held that when the bonds were returned by CMF to ANZ on that date itself the appellant became aware of the possession of the bonds by CMF, and that is the date on which the period of limitation would start running for institution of the suit against the respondents.37. As has already been discussed by us in an earlier part of this judgment, the period of limitation under Article 91(a) of the Limitation Act starts running on the date that the plaintiff acquires knowledge of the identity of the person who is in possession of the bonds. Apart from knowledge of the identity of the person, Article 91(a) also requires the knowledge that the possession of the bonds was acquired by means of wrongful conversion.The learned Special Court dismissed the claim of the respondents that 10.04.1992 could be the date on which knowledge can be said to be imputed to the appellant on the ground that the respondents had not proved by leading any cogent evidence that the appellant became aware of the conversion on 10.04.1992. The learned Special Court further held that the respondents had failed to show that the said transaction was settled against bonds for valuable consideration.42. We agree with this finding of the learned Special Court. The testimony of Mr. Kalyan Raman,makes it manifestly clear that no transaction took place between ABFSL and SCB on 10.04.1992, and thus, the question of imputing knowledge to the appellant on that date does not arise for the purpose of limitation begins to run for the appellant for institution of the suit claim against the respondents.43. The next date, which has been most vehemently contended by the learned senior counsel appearing on behalf of the respondents, is 23.05.1992.The learned senior counsel for the respondents further contend that the meeting of 23.05.1992 is a material fact, which ought to have been pleaded by the appellant particularly since admittedly, the appellant was informed of the conversion of the suit bonds on that day and the alleged explanation, as to whether the knowledge was complete or incomplete etc. ought to have been a part of its pleading.47. The learned senior counsel on behalf of the respondents further contend that the distancing of the appellant from the clear knowledge about the diversion of the bonds to CMF by Hiten P. Dalal by insisting that the said information was purely informal, and that Hiten P. Dalal had even stated that he would deny this conversation if the SCB ever sought to make formal use of his statement is a clear tactic of evasion. He further contended that the minutes of the meeting do not contain any such reservation as claimed by the appellant.48. The learned Special Court, while arriving at the conclusion on the facts pleaded and evidence on record that 23.05.1992 can also be considered to be the date from which knowledge can be said to be imputed to the appellant regarding the conversion of the bonds in question, relied primarily on the evidence of Mr. Kalyan Raman,who was also present at the meeting held on 23.05.1992.Mr. Ram Jethmalani, the learned senior counsel appearing on behalf of the appellant, on the other hand contends that 23.05.1992 cannot be taken to be the date on which SCB had knowledge of the conversion of the suit bonds. He submits that knowledge is not mere suspicion, and that it must be knowledge of such a nature as will enable the person defrauded to seek a remedy in a court of law. He further contends that the fact that appellant did not know of the role played by Hiten P. Dalal and that this becomes amply clear from the FIR filed by them dated 20.06.1992. The appellant was under the clear impression that the suit bonds had not been received by them, and that it had only received a Bank Receipt which had been returned to ABFSL.51. We agree with the submission of Mr. Jethmalani, the learned senior counsel on behalf of the appellant. The learned Special Court erred in arriving at the conclusion that 23.05.1992 could be a date from which the appellant could be said to have knowledge of the diversion of the suit bonds by Hiten Pcareful examination of the deposition of these two witnesses makes it manifestly clear that the revelation made by Hiten P. Dalal during the meeting held on 23.05.1992, did not give the appellant the knowledge requisite for the purpose of Article 91(a) of the Limitation Act. The revelation in contention made by Hiten P. Dalal was vague and he gave evasive responses after the same and thus, it is not reasonable to expect the appellant to believe the same and initiate legal proceedings on the basis of the said statement.53. We examined all the dates alternative dates prior to 07.11.1992 proposed by the respondents, where knowledge could be said to be imputed to the appellant for institution of suit against the respondents. We find no merit in the contentions urged by the learned senior counsel for the respondents. The period of limitation would start running only on 07.11.1992, the reasons for which we have already elaborately stated in an earlier part of this judgment. We set aside the finding of the learned Special Court on the contentious issue nos.1 and 2 framed in the suit that the institution of the suit of the appellant against Respondents Nos.is barred by limitation.Since we have set aside the finding of fact recorded by the learned Special Court holding that the suit is barred by limitation, as prescribed in the Schedule to the Limitation Act, 1963 by recording the reasons in the preceding paragraphs of this judgment and the other issues including the issue on the merits of the claim were held in favour of the plaintiff (appellant herein) by the learned Special Court, which have not been challenged by the Respondentsby filing an appeal, therefore, the appellant is entitled for a decree of the suit claim of the principal amount adjudged as on the date of the institution of the suit. The appellant is also entitled to interest pendente lite and future interest. This transaction can be termed as a commercial transaction and Section 34 of the Code of Civil Procedure, 1908 confers discretionary power upon this Court to award interest at appropriate rate on the suit claim of the appellant. We have considered with regard to the facts and circumstances of the case as to what should be the reasonable rate of interest to be awarded on the suit claim both for the period of pendente lite and for future interest and from what date to be ordered. The suit in the instant case was instituted before the Special Court on 27.11.1992, but the respondentwere brought on record as parties to the suit by way of an amendment, which was allowed on 10.01.1996. Therefore, it would be appropriate for this Court to award interest from the above said date during pendency of the proceedings before the Special Court and this Court and also for future rate of interest at 6% per annum till the date of realisation. The Particulars of Claim, marked as Exh.to the plaint shows that the appellant had claimed 20% interest from 26.02.1992 till 27.11.1992 at the principal sum of Rs.48,02,50,000.00, to arrive at the amount of Rs.55,26,16,438.36 as the adjudged principal amount. Since we have awarded interest at the rate of 6% per annum, we shall calculate the principal amount of Rs.48,02,50,000.00, on that rate itself for the period from 26.02.1992 to 27.11.1992 at that rate itself which amounts to Rs.50,18,61,250.00 will be the adjudged principal amount from the date of institution of the suit.