SCA/14213/2008 1/9 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 14213 of 2008 For Approval and Signature: HONOURABLE MR.JUSTICE JAYANT PATEL ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= KUSUMBEN JASVANTRAY TRIVEDI & 2 - Petitioner(s) Versus INDUSTRIAL DEVELOPMENT BANK OF INDIA & 2 - Respondent(s) ========================================================= Appearance : PARTY-IN-PERSON for Petitioner(s) : 1 - 3. SERVED BY RPAD - (N) for Respondent(s) : 1, 3, NOTICE SERVED BY DS for Respondent(s) : 2, ========================================================= CORAM : HONOURABLE MR.JUSTICE JAYANT PATEL Date : 15/12/2008 ORAL JUDGMENT 1. Rule. Pursuant to the earlier order issued by this Court, Ms.Charu Mittal, Assistant Manager SCA/14213/2008 2/9 JUDGMENT of IDBI, Shahi Baug Branch, Ahmedabad is personally present and she waives service of notice of Rule. She further submitted that as in the earlier proceedings, the petitioner was not party, the Bank has not paid any interest. However, the principal amount is already paid and the same is confirmed by Mr.Trivedi for the petitioners - parties-in-person. 2. The petitioners have, by this petition, prayed for appropriate writ to direct the respondent Bank to make the payment of the redemption money together with interest from 1.4.2002 at the rate of 8% per annum, since such has been ordered by this Court in Special Civil Application No.1834 of 2008 vide decision dated 21.7.2008. 3. Upon hearing Mr.Trivedi as party-in-person it appears that the issue as such is covered by the decision of this Court dated 21.7.2008 in Special Civil Application No.1834 of 2008. Therefore, similar view deserves to be taken in the present case also. It may be recorded that in the aforesaid decision, this Court, inter alia, observed at paragraphs 9 to 13 as under:- SCA/14213/2008 3/9 JUDGMENT “9.It does appear that the Scheme of the bond provided for enabling power of redemption with the respondent Bank. However, it was required for the respondent Bank to ensure that the money is refunded, if second option is not exercised for switching over to investment under Suvidha Fixed Deposit Scheme. It is true that for encashment of the bond, it was required for the bond-holder to surrender the bond, but contingency may apply if after intimation having received the bond-holder has not surrendered the bond. The case of the petitioner is that he has not received intimation at all, whereas it is the case of the respondent Bank that the intimation has been sent by UPC in routine course to all bond-holders. 10.In a matter of termination of the contract by exercising the option, it appears that the intimation to the bond-holder by UPC may not be sufficient. Had the intimation reached the bond-holder and the bond-holder has acted upon the same, it may stand on a different footing, but in a case where the Bank has opted to redeem SCA/14213/2008 4/9 JUDGMENT the bond, it would be required for the Bank to ensure that the intimation for redemption is received by the bond-holder. No such material is available on record showing the proof that such intimation was received by the bond-holder. 11.Apart from the above, the fact remains that the money of bond with the accrued interest on the date of redemption i.e. 31.3.2002 has not been disbursed by the respondent Bank and has been retained by the respondent Bank. Under such circumstances, even if the switching over of the investment to Suvidha Fixed Deposit Scheme, may not be directed by this Court in absence of any written communication on the part of the bond-holder to the respondent Bank, it would be required for the respondent Bank to pay Bank rate interest to the bond-holder by way of a compensatory measure. Had the money been already forwarded by the respondent Bank to the bond-holder and the bond-holder having not accepted the same, it may stand on a different consideration. But in cases, where on the ground of intimation having not received, the SCA/14213/2008 5/9 JUDGMENT money is retained by the respondent Bank, it would be required for the respondent Bank to pay the accrued interest as per the Bank rate prevailing from time to time. Further, it appears that Suvidha Fixed Deposit Scheme is by the Bank itself and the interest rate is 9% for 12 months, 9.25% for 24 months and for 60 months, it is 10% per annum. 12.Therefore, if the interest is considered at the rate prevailing in Suvidha Fixed Deposit Scheme, it would be higher, but as the money was retained by the Bank, the interest as prevailing with the other Nationalized Banks can be paid by the respondent Bank to the petitioner and such rate can be 8% per annum on the fixed deposit with the Nationalized Banks for the period exceeding 12 months. 13.It is hardly required to be stated that the respondent Bank is a 'State' within the meaning of Article 12 of the constitution of India and its action has to be just, fair and reasonable even in the contractual obligations. If the money was invested in the Deep Discount Bond and SCA/14213/2008 6/9 JUDGMENT had the interest accrued in normal course, it would have been much higher. Further had the reinvestment option been exercised by the bond- holder, the interest accrued also would have been much higher. As against the same, if the Bank rate interest is paid by the respondent Bank to the petitioner, the same would be just and reasonable, keeping in view the principles of compensatory measure by balancing rights of both the sides.” 4. Thereafter the direction was given in the said decision at paragraph 14 as under:- “14.In view of the above, the prayer of the petitioner for directing the respondent Bank to switch over the investment to Suvidha Fixed Deposit Scheme is not granted, however, it is directed that upon the petitioner surrendering the bond to the Bank within one month from today, the respondent Bank shall refund the amount of the bond as it became due on 31.3.2002 with the interest at the rate of 8% per annum SCA/14213/2008 7/9 JUDGMENT until the actual payment is made. The aforesaid payment shall be disbursed by the respondent Bank within one month from the date of surrendering of the bond by the petitioner.” 5. It is also stated by the petitioners in the present petition that LPA No.1125 of 2008 was preferred and the same has been dismissed by the Division Bench. 6. Therefore, similar view deserves to be taken. Ms.Mittal, Assistant Manager of the respondent Bank, who is present, is not in a position to show any distinguishing circumstances in the present case. Further, as stated above, as the principal amount is already paid, the same is not required to be paid and only interest will have to be calculated at the rate of 8% per annum from the date on which the amount was payable and until the amount is actually paid. Hence, in view of the aforesaid, the respondent Bank is directed to pay the amount of interest at the rate of 8% per annum from the date of which the amount was payable until the amount is SCA/14213/2008 8/9 JUDGMENT actually paid to the petitioners. The aforesaid payment shall be disbursed by the respondent Bank within a period of one month from the date of receipt of the order of this Court by 'Account Payee' cheque. 7. Mr.Trivedi appearing as party-in-person prayed that so many investors of such bonds have not been paid interest by the bank in spite of the views taken by this Court. It is submitted that there may be small amount involved and they may not be in a position to approach before this court by spending for litigation. 8. Whereas, the Assistant Manager of the Bank has no answer to such submission made by Mr.Trivedi. 9. In the opinion of this Court, if the view is already taken by this Court and confirmed by the Division Bench of this Court or not upset by the Division Bench of this Court, it is binding to the Bank. Further, the Bank is 'State' within the meaning of Article 12 of the Constitution of India being an instrumentality of the State. Therefore, being an ideal banking institution, it would be required for the Bank to give the SCA/14213/2008 9/9 JUDGMENT same treatment to other investors holding the bonds in the event their cases are also at par with the petitioners of Special Civil Application No.1834 of 2008. It may be that such bond holders due to compelling circumstances may not have approached before this Court, but if any bond holders approaches the Bank for payment of the interest or otherwise and if the Bank finds that their case(s) is/are similarly situated, it would be expected for the Bank to give the same treatment in the matter of payment of interest by way of compensatory measure, irrespective of the fact that whether they had approached this Court or there is a separate direction by this Court pertaining to such investors or not. 10.The petition is allowed to the aforesaid extent. Rule is made absolute accordingly. No order as to costs. Direct service is permitted. 15.12.2008 (Jayant Patel, J.) vinod