1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.1480 OF 2004 IN SUIT NO.3706 of 1990 Canara Bank ... Plaintiff. vs. M/s.Odeon T.V. & Radio Corporation & ors. ... Defendants. --- Mr.Umesh Shetty i/b. M/s.S.Kanchan & Co., for Plaintiff. Mr.B.B.Parikh i/b. Mr.S.R.Saudagar, for Defendants CORAM: D.K.DESHMUKH,J. DATED: 1st April,2005 P.C.:- 1. This is a Notice of Motion taken out by the defendants for recording settlement arrived at between the parties. The facts that are material 2 and relevant for deciding this Notice of Motion are that, the plaintiff has filed the suit in this Court for recovery of Rs.9,74,430.40/- (Rupees Nine lakhs Seventy Four thousands Four hundred Thirty and Forty paise only), with interest, from the defendants. In that suit, a Notice of Motion was taken out by the plaintiff being Notice of Motion no.30 of 1991 for appointment of Receiver on the hypothecated goods. It appears that the defendant nos.3 and 4 had foreign currency non resident deposit. The notice of motion was disposed of by order dated 23rd March,1992. It is paragraph no.9 of that order which is relevant which reads as under:- “9. The Defendants no.3 and 4 shall have an option to instruct the Bank to retain Fixed deposit receipt for Rs.7 lacs only and return the balance with all accumulated interest or issue a fresh deposit receipt for Rs.7 lacs so as to secure the suit claim to the extent of Rs.7 lacs and interest thereon. If the Defendants 3 & 4 exercise this option in time, the Defendants 1 to 3 need not make deposit of Rs.7 lacs as directed by earlier order. In such an event the F.C.N.R. Old or new to the extent of Rs.7 lacs and interest accruing thereon from 1.5.1992 shall form part of plaintiff's security for the suit claim.” By that order, the defendant nos. 3 and 4 were given option to instruct the Bank to retain fixed deposit of Rs.7 lacs and to return the balance amount of F.C.N.R. 3 The amount of Rs.7 lacs which was to be retained by the Bank and the interest that may be payable by the Bank on that amount was to be treated as a security for the claim of the plaintiff against the defendants. It appears that there were some schemes promulgated by the Reserve Bank of India for settlement of claims by the Banks. The defendants applied in that scheme for settlement, but nothing really came out of that effort. Ultimately, the defendants addressed a letter dated 4th December,2003 informing the Bank that out of the amount in deposit with the Bank in FCNR, amount of Rs.9,98,423.20/- be retained by the Bank as full and final settlement of the loan amount and the balance amount be refunded to the Defendants. It is a common ground before me that pursuant to that letter, the amount of Rs.9,98,423.20/- was retained by the plaintiff-Bank and the balance amount was refunded to the defendants. According to the defendants, by its conduct, the plaintiff Bank has accepted the proposal contained in the letter dated 4th December,2003 and therefore, the suit is settled. The Defendants had applied with the Bank for “No due letter”, but the Bank refused to issue such letter. The defendants have taken out this Notice of Motion for recording the settlement of the claim in the suit. The notice of motion is opposed by the plaintiff-Bank. According to the plaintiff-Bank, the amount of Rs.9,98,423.20/- from the amount deposited, was retained by the plaintiff bank pursuant the order dated 23.3.1992, and therefore, in terms of that order, this amount is merely a security for the claim of the bank which is yet not settled. 4 2. The second defence that is put up by the plaintiff-bank is that for the Court to record the compromise under Order 23 Rule 3 of Civil Procedure Code, the agreement or compromise has to be in writing and has to be signed by the parties. In support of this proposition, reliance is placed on the judgment of the Supreme Court in the case “Gurpreet Singh Vs. Chatur Bhuj Goel, AIR 1988 Supreme Court 400”. 3. Now in the light of these rival submissions, if the record of the case is perused, it becomes clear that in the letter dated 4th December,2003 addressed to the Bank by the defendants, a clear proposal for settlement of the suit claim is contained. The letter dated 4th December,2003 reads as under:- “Please arrange to close the above deposit before maturity and pay maturity and pay the proceeds by way of DD in my name after adjusting the book liability of ODEON TV A/C.NO.LPD 14/90 AMOUNT Rs.9,98,423.20/- and give the necessary letter having settled the account in full and final settlement of account LPD/14/90 of Odeon TV.” It is common ground before me that pursuant to this letter, the amount of Rs.9,98,423.20/- was retained by the Bank and the balance amount of F.C.N.R. was returned to the defendant. To my mind, therefore, it is clear that the retaining of amount of Rs.9,98,429.20/- by the Bank and paying out the balance 5 amount to the defendants, amounts to clear acceptance of the proposal contained in letter dated 4.12.2003. The first defence of the Bank that the amount was retained pursuant to the order passed in Notice of Motion 30 of 1991, dated 23rd March,1992, has no substance. Perusal of paragraph 9 of the order dated 23rd March,1992 shows that pursuant to that letter, the Bank was to retain only the amount of Rs.7 lacs and not the amount of Rs.9,98,423.20/-. Secondly, that amount was to be retained by the Bank as a security and not as full and final settlement of the claim. Had it been the intention of the bank to retain the amount pursuant to the order dated 23rd March,1992, the Bank would have informed so to the defendants and would have retained the amount of Rs.7 lacs and the Bank would have clearly informed the defendants that this amount is being retained as a security and not as full and final settlement of the claim. Thus, to my mind, it is clear that there is clear settlement of the claim brought about by letter dated 4th December,2003 and the conduct of the bank referred to above. 4. So far as the second defence of the Bank is concerned, it is based on Order 23 Rule 3 of Civil Procedure Code. Order 23 Rule 3 of Civil Procedure Code reads as under:- “Compromise of suit-- Where it is proved to the satisfaction of the Court that a suit has been adjusted wholly or in part by any lawful agreement or compromise “(in writing and signed by the 6 parties), or where the defendant satisfies the plaintiff in respect of the whole or any part of the subject-matter of the suit, the court shall order such agreement, compromise or satisfaction to be recorded, and shall pass a decree in accordance therewith (so far as it relates to the parties to the suit, whether or not the subject- matter of the agreement, compromise or satisfaction is the same as the subject-matter of the suit.) (Provided that where it is alleged by one party and denied by the other that an adjustment or satisfaction has been arrived at, the Court shall decide the question; but no adjournment shall be granted for the purpose of deciding the question, unless the Court, for reasons to be recorded, thinks fit to grant such adjournment.)” The learned Counsel appearing for the Plaintiff-Bank relied on the judgment of the Supreme Court in the case “Gurpreet Singh Vs. Chatur Bhuj Goel, AIR 1988 Supreme Court 400”, wherein it is specially observed in paragraph 11 of the judgment that:- “ In our considered opinion, the view to the contrary expressed by the High Court in Manohar Lal V. Surjan Singh, 1983 Punj. LJ 402:(AIR 1983 Punj & Har 393) that the first part relates to a lawful agreement or compromise arrived at by the 7 parties out of Court, does not seem to be correct. Sandhawalia, C.J. Speaking for himself and Tewatia, J. observes that the word 'or' makes the two parts disjunctive and they visualise two distinct and separate classes of compromise. According to the learned Judges, the first part relates to a lawful agreement or compromise arrived at by the parties out of Court, while the second is applicable where the defendant satisfies the plaintiff in respect of the whole or any part of the subject matter of the suit. Such a restricted construction is not warranted by the language used in R.3. The word 'satisfies' denotes satisfaction of the claim of the plaintiff wholly or in part, and for this there need not be an agreement in writing signed by the parties. It is open to the defendant to prove such satisfaction by the production of a receipt or payment through bank or otherwise. The satisfaction of the claim could also be established by tendering of evidence. It is for the Court to decide the question upon taking evidence or by affidavits as to whether there has in fact been such satisfaction of the claim and pass a decree in accordance with O.XXIII, R.3 of the Code.” In my opinion, the judgment relied on by the learned Counsel appearing for the plaintiff, does not support the defence raised on behalf of the plaintiff. The Supreme Court in paragraph no.11 quoted above has specifically observed that 8 the word “satisfies” used in Rule 3 denotes the satisfaction of the claim of the plaintiff wholly or in part and for this there need not be an agreement in writing signed by the parties. An agreement in writing between the parties is necessary when there is a settlement arrived at between the parties. But in case the claim of the plaintiff is satisfied by the defendant otherwise than by an agreement, then the Court cannot refuse to take that fact on record and make appropriate order in the suit. For example, in case the defendant pays the whole amount claimed by the plaintiff in the suit and files an affidavit in the Court alongwith the receipts issued by the plaintiff showing that the plaintiff has received the entire amount claimed in the suit, if the arguments advanced on behalf of the plaintiff is to be accepted, then in that situation the Court will not be able to dispose of the suit though the claim of the plaintiff is satisfied, because there is no written agreement between the parties. In my opinion, the submission is not well founded. If the circumstances disclosed to the Court clearly establish that the claim of the plaintiff has been satisfied, even in the absence of written agreement between the parties, the Court can record the satisfaction of the claim of the plaintiff and dispose of the suit. In so far as the present case is concerned, the plaintiff Bank by retaining the amount of Rs. 9,98,423.20/- and returning the balance amount of F.C.N.R. pursuant to the letter dated 4th December,2003, clearly accepted the offer contained in the communication made on 4th December,2003 and thus, because of the letter dated 4th December,2003 and the subsequent conduct of the plaintiff, a clear agreement is arrived at between the parties for settlement of the suit claim. In 9 the result, this Notice of Motion deserves to be granted in terms of prayer clause (a). The Notice of Motion is therefore, accordingly, granted in terms of prayer clause (a). Notice of Motion disposed of. ----