1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION FIRST APPEAL NO.995 OF 1996 M/s.Raigad Concrete Industries & Anr ....Appellants V/s. ICICI Bank Ltd. & Ors. ....Respondents Mr.G.S. Godbole i/b M/s.Shaunak Satpute & Co. for the Appellants. Mr.S.S.Patwardhan for Respondent No.1. CORAM : B.H. MARLAPALLE & S.J. VAZIFDAR, JJ. DATE : 8TH MAY, 2009. JUDGMENT (PER S.J. VAZIFDAR, J.) : 1. The appeal is filed against the judgment of the learned Civil Judge Senior Division at Alibaug decreeing the usual bank suit filed by the first respondent against the appellants and the other respondents to recover the amounts due under various credit facilities granted by it to the first appellant. 2 2. The appellants were defendant nos. 1 and 2. Respondent no. 1 was the plaintiff. Respondent nos. 2 to 6 are individuals and were defendant nos. 3 to 7. Appellant no.2 and respondent nos.2 and 3 are and in any event were at the material time partners of appellant no.1. Respondent nos.4, 5 and 6 are guarantors. 3. The scope of this appeal is very limited. Mr.Godbole, the learned counsel appearing on behalf of the appellant's, limited his challenge to the judgment of the trial court to two grounds. He submitted that the first respondent was not entitled to recover the amounts due to it in view of it having already recovered amounts under the DICGC scheme. He also challenged the rate of interest granted by the trial court contending that this court ought to exercise its jurisdiction and reduce the rate of interest granted by the trial court. Mr. Godbole had initially challenged the admission of certain documents on the ground that they were not duly stamped. He however gave up that contention in view of the fact that the documents had been admitted with the consent of the parties. In any event a challenge to the admissibility of documents on the ground that they were not duly stamped does not lie once the documents had been admitted in evidence in view of the provisions of the Bombay Stamp Act and the Indian Stamp Act. 3 4. The facts are not in dispute. Admittedly the first respondent had granted to the first appellant a cash credit facility and four term loan facilities for various amounts. Admittedly again the first appellant availed of the said facilities. Nor is there any dispute that the repayment of the amounts advanced under the said facilities was secured by the hypothecation and mortgage of various properties and that the same were also guaranteed by respondent nos. 4 to 6. In respect of each of the facilities the parties had also executed the usual documents. As the same are not in dispute it is not necessary for us to set them out. We proceed therefore to deal with the two contentions raised by Mr. Godbole. 5. Mr. Godbole submitted that the first respondent had recovered a sum of Rs. 7, 01,367.70 under the DICGC scheme. He relied upon sections 21A of The Deposit Insurance and Credit Guarantee Corporation Act, 1961 which reads as under :- 21-A. Guaranteeing of credit facilities and indemnifying credit institutions. (1) The Corporation may guarantee credit facilities given by any credit institution and may also indemnify credit institutions in respect of credit facilities granted by them. (2) The Board may, for the purpose of guaranteeing credit facilities granted by credit institutions or indemnifying credit institutions, frame one or more schemes in such form and in such manner and containing such provisions as the Board may, from time to time, deem fit. 4 (3) The Board may levy, on every credit institution availing itself of the guarantees or indemnities provided by the Corporation, a fee at such rate or rates as may, with the previous approval of the Reserve Bank, be notified by the Corporation to the credit institutions from time to time and different rates may be notified for different categories of credit institutions, for different types of credit facilities, for different areas where the credit facilities are utilized, or for different categories of beneficiaries of the credit facilities. Explanation. Credit facility means any financial assistance, including a loan or advance, cash credit, overdraft, bills purchased or discounted, a term of installment credit and any guarantee other than a performance guarantee, granted or issued in India by a credit institution at any of its offices in India. 6. Mr.Godbole submitted that having recovered the said amount under the DICGC scheme the first respondent is now barred from recovering the same amount over again from the appellant's and the other respondents. He submitted that the contract between the first respondent and the DICGC is a contract of indemnity and to the extent that the first respondent is reimbursed by the Corporation the benefit to the extent thereof must be passed over to the appellant's since it is an admitted position that the premium had been debited to the loan accounts and had not been paid by the first respondent. 7. The submission proceeds on the fundamental misconception that the first respondent had adjusted the amount received by it from the DICGC under the said scheme against the loan accounts. The first respondent has not appropriated the amount paid to it 5 under the said scheme towards the dues of the appellant's and the other respondents. Nor has the first respondent adjusted the said amount against the dues of the appellant and the other respondents. This is established from the evidence of the first respondents witnesses which has not been controverted at any stage. The first respondents witness fairly stated that an amount of Rs.7,01,307.70 had been received by the first respondent on 23.6.1990. It is important however to note that he expressly stated that the said amount was deposited in a suspense account. This he said was because the first respondent had to continue the efforts for recovery of the dues from the borrower. He therefore contended that the amount cannot be treated as a repayment from the defendant. 8. It is not necessary for us to consider whether in a case where the indemnity holder is paid the entire amount by the indemnifier he is entitled to reverse the transaction to wit, return the amount paid to him by the indemnifier and to sue the debtor. In this case, as noted above, the indemnity holder i.e. the first respondent had not adjusted the amounts recovered by it from the indemnifier, the DICGC against the dues of the first appellant. Indeed it was not even the appellant's case that the said amount had been credited in the accounts of appellant no. 1. This is clear from the cross-examination of PW 1 where the case put to him was that the amount had not been credited in the 6 account of appellant no. 1. What was contended on behalf of the appellant's was that the amount had wrongly not been credited in the account of appellant no. 1. It was therefore not even the appellant's case that the amounts had in fact been credited in the account of appellant no.1. 9. In a contract of indemnity the indemnity holder is not bound to sue the indemnifier. The indemnity holder may sue only the debtor or only the indemnifier or both. In law there is nothing that prevents an agreement or arrangement between an indemnity holder and the indemnifier as to the manner or circumstances in and the conditions on which the contract of indemnity may be enforced. In particular we do not find anything that prohibits an arrangement whereby the indemnifier pays the amount due under the contract of indemnity subject to the condition or on an understanding between the indemnity holder and the indemnifier that the indemnity holder will continue to pursue its remedies against the debtor and in the event of it recovering the amounts from the debtor it would refund the same to the indemnity holder. This is precisely what has been done in the present case by the first respondent, the indemnity holder by having accepted the amounts from the indemnifier, the DICGC, and placed the same in a suspense account. The fact that the amounts had been placed in a suspense account establishes that the first respondent had not accepted the same in discharge of 7 the liabilities of the debtor's namely the appellants and the other respondents leaving it to the DICGC to in turn recover the same from them. 10. Mr.Godbole then submitted that the money lying in the suspense account cannot be transferred to the DICGC as section 23A does not provide for a credit guarantee fund being credited with such amounts and thereof impliedly prohibits the same. The submission requires merely to be stated to be rejected for more than one reason. Section 23A reads as under :- 23-A. Credit Guarantee Fund. (1) To the Credit Guarantee Fund shall be credited,  (a) all amounts in the Reserve for unexpired Guarantee Risks maintained by the Credit Guarantee Corporation of India Limited, a company formed and registered under the Companies Act, 1956 (1 of 1956), and having its registered office at Bombay; (b) all amounts received by the Corporation as fees for guarantees and indemnities taken over or given by it; (c) all amounts received by the Corporation in respect of guarantees and indemnities taken over or given by it; (d) all amounts transferred to that Fund from the Deposit Insurance Fund or the General Fund under Section 27; and (e) all income arising from the investments made out of that Fund. 2) The said Fund shall be applied  8 (a) to make payments in respect of guarantees and indemnities taken over or issued by the Corporation; (b) to meet any liability in respect of the amount referred to in clause (d) of sub-section (1); and (c) to meet the whole or any part of the liability on account of depreciation in assets, contributions to staff and superannuation and other funds, or other expenses incurred or to be incurred by the Corporation, as may be decided by the Board. 11. Firstly in the event of the amounts placed in the suspense account being returned to the DICGC they would clearly fall within the ambit of section 23A (1) (c) as they would constitute amounts received by the Corporation in respect of the indemnity given by it. That the amounts may not have been so received pursuant to any action on the part of the Corporation qua the debtors would make no difference. The section does not limit the ambit of the provision in that manner. 12. Secondly there is nothing in the Act that prohibits the Corporation from receiving the amounts lying in the suspense account or from any other source. Section 23A does not prohibit the Corporation from receiving amounts in any other manner or to the credit of any other of its accounts or generally. The appellants in any event cannot possibly be concerned with the 9 same if in law the Corporation is entitled to a refund of the said amounts from the first respondent. 13. Further upon the amounts presently placed in the suspense account being returned to the Corporation they would obviously continue to remain with the Corporation in the same character in which they were prior to the payment thereof by the Corporation to the first respondent. This is for the reason that the payment by the Corporation to the first respondent was subject to the condition and in the circumstances we have referred to earlier. In the facts of this case the amounts would be merely returned to the Corporation which is free to credit the same back to the same account. Thus the character of the amounts would not undergo any change as the source thereof would be the original source. The return from the suspense account would not be a fresh induction of credit to the credit guarantee fund. Such refund would not constitute a fresh induction or investment or credit into the credit guarantee fund referred to in section 23A. 14. The first respondent was and is therefore entitled to retain the amounts in a suspense account and to treat the same as payment under the contract of indemnity only in the event of it ultimately being unable to recover the amounts from the debtor's. 10 15. Mr. Patwardhan reiterated that in the event of the first respondent recovering the amounts or any part thereof from the appellant's or the other respondents it would refund the same to the DICGC. The statement is accepted. There is therefore no question of the first respondent having unjustly enriched itself. It has not. It is not necessary therefore for us to consider the judgments cited by Mr.Godbole in support of the submission that the first respondent is not entitled as a matter of law to enrich itself. 16. Mr. Godbole submitted that the consideration for the indemnity having been paid by the first appellant it was entitled to the benefits of the amounts paid by the DICGC to the first respondent. 17. We are with respect, unable to understand this submission. There is nothing unusual in a bank/lender insisting on the customer/debtor paying the commission/consideration for a guarantee or indemnity. That would not in any manner whatever reflect upon the rights of the creditor qua the guarantor or the debtor. It is difficult to understand how the payment of such commission or considered by the debtor entitles the debtor to the amounts paid by the guarantor or the indemnifier to the creditor. The two are totally unrelated and unconnected. 18. This brings us into the next contention raised by Mr. Godbole. The learned judge decreed the suit to the extent of Rs. 11 11,18,793/- with simple interest at 13.5% on amounts due under the term loan agreements aggregating to Rs.3,80,439.91. Mr. Godbole submitted that under the guidelines prevalent at that time interest could be charged on such term loans only at 12.5% per annum. The submission is well founded and the decree is accordingly modified by providing interest on the term loan agreements at the rate of 12.5% instead of 13.5%. 19. The learned Judge also awarded compound interest at 16.5% per annum compound quarterly on the amount of Rs. 7,58,355.00 due under the cash credit facility. Mr. Godbole did not question the legality regarding the award of compound interest. He however submitted that this court ought in the exercise of its discretion to grant only simple interest at the rate of 6% per annum from the date of the filing of the suit till payment and/or realization. He further submitted that we ought to so exercise discretion also in respect of the term loan facility. 20. We are not inclined to exercise our discretion in this manner considering the facts and circumstances of this case. In our opinion the appellants and the other respondents are not entitled to the exercise of such discretion in their favour in view of their conduct. They have unfairly dragged this litigation on for over twenty years. This was despite the fact that they received the said amounts from the first respondent 12 and admittedly did not repay the same. They have not even repaid the admitted amounts. Nor have they even offered to repay the same. They have also on one ground or the other obstructed the execution of the decree before the Debt Recovery Tribunal. Faced with this Mr. Godbole suggested that the only reason that the decree could not be executed by the sale of the hypothecated and mortgaged properties was that there was/is a suit filed by another bank namely the Raigad District Central Co-Operative Bank. We asked Mr. Godbole weather the appellant's were willing to make a statement that subject to the rights of the said bank or any other creditors the appellant's would consent before the Debt Recovery Tribunal to the sale of the properties hypothecated and mortgaged in favor of the first respondent. On taking instructions from the appellant's Mr. Godbole declined to make any such statement. This clearly establishes the appellant's intention to thwart the execution of the decree one way or the other and to avoid paying their debts. It is also alleged by the learned counsel for the Bank that on one hand the appellants used all the possible means to thwart the decree and the resultant sale of the property and on the other hand, they have put to use the property and have been continuously earning good revenue for the same. We see no reason then to exercise our discretion in favor of such parties by reducing the rate of interest or showing any other indulgence in their favor. 13 21. In the circumstances we confirm the judgment and order of the trial court and modify the decree only to the extent of reducing the interest from 13.5% per annum to 12.5% per annum in respect of the amount decreed in respect of the term loan accounts. The rest of the decree stands. The appeal is accordingly disposed of and the appellants shall pay the costs throughout to the first respondent. S.J.VAZIFDAR, J.) (B.H.MARLAPALLE, J.)