1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTIC OF MOTION NO. 589 OF 2009 IN SUIT NO. 1051 OF 2007 Deposit Insurance and Credit Guarantee Corpn. ...Plaintiff Vs. Madhavpura Mercantile Co-op. Bank Ltd. & Anr. ...Defendants Mr.Nikhil Sakhardande with Mr.S. Gaonkar i/b. Udhwadia & Udeshi & Co., for Plaintiff Mr. Milind Sathe with Mr. D.P.Desai for Defendant No.1 Mr.S.C . Pal with Mr. S.R. Rajguru for Defendant No.2 CORAM: SMT.ROSHAN DALVI, J. DATED: 25 TH MARCH , 2009 P.C. 1. The Plaintiff Company insured the Defendant Bank towards payments of Defendant Bank's depositors. The Defendant Bank has paid off its depositors . The Defendant Bank is required to pay/repay at least 1% of the amounts recovered by the Defendant Bank from its creditors towards the amounts paid by the Plaintiff to the depositors under the Insurance. The Defendant Bank was directed to make those payments under order dated 4th December 2008. The Defendant Bank was to compute the total recoveries made by it and pay off 1% of all the amounts realised by the 2 Defendants until the date of that order within 4 weeks of that order. Thereafter that order was stayed and the period for payment /repayment came to be extended up to 10th February 2009. 2. For computation of the total liability of the Defendant Bank under the Insurance Contract for the amounts paid by the Plaintiffs to various depositors the Defendant Bank was requesting the audit reports of the Plaintiff. The Defendant Bank was supplied the audited report of the Plaintiffs by the Plaintiff's letter dated 29 th November 2004. The Audit report of 2004 was accordingly served upon the Defendants on 28th January 2009. The accounts of the Plaintiffs which are required to be made annually, as of any other Limited Company, would therefore, take into account the audit report. The audit report of 2004 must be taken to have been accepted and acted upon, when the annual accounts of the Plaintiffs would be required to be made for income tax purposes and annual returns would be filed under the Companies Act. 3. The Defendants are required to pay Rs.7.18 Crores to the Plaintiffs under Clause 1 of the order dated 4th December 2008. The liability of the Plaintiffs, which has been disputed in other Forums is now shown in the audit report of 2004. That tentamounts to an admission of the liability by the 3 Plaintiffs since it is their own audit report made by their own Auditors 4 years before and which is since not shown to have been disputed. 4. It is based upon the Plaintiff's own document showing its liability as audited that the Defendants claim adjustment by set off of the amount payable by it to the Plaintiffs under the aforesaid order. 5. The audit report shows that the liability of the Plaintiffs incurred by the Plaintiffs in respect of insuring and paying off the depositors of Defendant No.1 Bank is Rs.408.99 Crores. The liability of the Plaintiffs which was accepted by the Defendants was to the extent of Rs.400.94 Crores. The difference in that liability is Rs.8.05 Crores, the Defendant Bank has to pay the Plaintiffs Rs.7.18 Crores. The Defendant would be entitled now to set off or adjust the extent of the liability of the Plaintiffs audited by their auditors towards the first installment payable under clause 1of the order dated 4th December 2008. The Defendant Bank shall have to further pay upon further adjustment of the remaining Rs.87 lakhs towards 1% of the total amount received by it from its depositors each month from March 2009. 4 6. Notice of Motion disposed off accordingly. (SMT. ROSHAN DALVI, J.)