STATE BANK OF SAURASHTRA

P.N.B.

APRIL 26, 2001

[B.N. KIRPAL, RUMA PAL AND BRIJESH KUMAR, JJ.]

Specific Relief Act, 1963:

Specific performance of contract-Breach of-Agreement for sale of C units of UT! by appellant to respondent-Payment of purchase money-Nondelivery of units-Suit for delivery of units alongwith alternative plea for damages-Special Court directing respondent to deliver the units after purchasing the same from open market-Validity of-Held, since there was an alternative plea for damages, it would have been appropriate for the D court to have awarded damages, in addition to refut1d of money-Indian Contract Act, 1872-S. 73-Special Court (Trial of offences Relating to transactions in Securities) Act, 1992.

An agreement was entered into, for sale of units of Unit Trust of India (UTI) by appellant bank to respondent bank. Consequently, respondent made E the payment for purchase of the said units. But appellant Bank failed to deliver the units. Res110ndent wrote a letter claiming compensation for breach of the contract treating the same to have taken place on 30.5.1992 and on that basis it claimed difference in price between the rate that was paid and the rate of units as on 30.5.1992. Thereafter, respondent filed a suit inter alia claiming delivery of µnits for which payment was made. An alternative F prayer for damages along with interest was alsQ made. Special Court constituted 101der the Special Court (Trial of Offences Relating to Transaction in Securities) Act. 1992 decreed the suit b_y directing the appellant to purchase the units from open market and deliver the same to respondent.

Hence the present appeal.

G Disposing of the appeals, the Court

HELD: 1.1. In view of alternative plea for damages on the facts of the present case, a decree for specific performance in the manner in which it was passed was not appropriate especially when the respondent could be H compensated with the return of money and award of reasonable damages. It 236

,...

would have been appropriate for the Special Com1 to have computed and A awarded the damages in addition to ordering refund rather then requiring the appellants to purchase the units and give the same to the respondent.

[239-E]

1.2. Since, there is no dispute on the principle applicable, namely, that the amount of Rs. 102, 65,12,500 which was paid by the respondent had to B be refunded to it and the respondent was also entitled to get reasonable amount of com11ensation or damages. Thus, the respondent would be entitled to, in addition to the refund of Rs. 102,65,12,500, interest at the lending rate on the aforesaid amount from the date of payment till the date of filing of suit.

In addition, respondent would also be entitled to interest pendente lite and future interest calculated at the rate of 17.5 per cent per annum, as claimed C by it in the plaint. In view of the difference in the price per unit as on 30th May, 1992 and the rate at which the units had been agreed to be purchased, the total sum payable by the appellant to the respondent would be about Rs. 212 crores. Accordingly, the decree passed by the Special Court is modified with the direction that a sum of Rs. 212 crores be paid by the appellant to D the respondent. However, since punuant to the interim order of this Court units worth Rs. 210 crores have already been given by the appellant to the respondent in addition to payment of about Rs. 2 crores, no further amount would now be payable and the decree stands satisfied. [239-G; 240-A-CJ

CIVIL APPELLATE JURISDICTION:. Civil Appeal No. 7373 of E 1996.

From the Judgment and Order dated 11. 3. 96 of the Special Court at Bombay in Suit No. 33 of 1995.

WITH

Civil Appeal No. 8871of1996.

Harish N. Salve, Solicitor of General, Ashok H. Desai, R.F. Nariman, F. Devitre, Darius Khan1batta, Jai Munim, Sameer Parekh, Sandeep Parekh, D.

Mohancy, Ms. Anuradha Bindra, P.H. Parekh, Mahesh Agrawal, Mannu

Krihanan, Sumit Lal, Rishi Agrawala, E.C. Agrawala, Ms. Sunita Dutt, Pradeep G Sancheti and Shailendra Bhardwaj for the appearing parties.

The Judgment of the Court was delivered by

KIRPAL J. This is an appeal filed against the judgment of the Special Court constituted under the Special Court (Trial of Offences relating to H

A Transactions in Securities) Act, 1992 whereby the suit filed by the respondent was decreed and it was inter alia ordered that the appellant herein should purchase units which had been agreed to be sold to the respondent and deliver the same to it.

Briefly stated the facts are that the respondent paid Rs. 26,82,00,000 to B the appellant on 10th September, 1991 for purchase of 2 crore units of the Unit

Trust of India at the rate of Rs. 13.4lp. per unit. Subsequently, on 23rd October, 1991 it paid further sum of Rs. 75,83,12,500 as consideration for the purchase of 5 .50 crore units at the rate of Rs. 13 .7875 per unit.

In respect of the aforesaid two transactions the appellant issued to the C respondent two bankers' receipts one bearing No. 53 dated 10th September, 1991 and the other being No. 81 dated 23rd October, 1991. According to the said bankers' receipts the units were to be delivered by the appellant to the respondent against the discharge in the said receipts.

It is an admitted case of the parties that the units in respect of which D payment was received by the appellant were never.delivered to the respondent.

Considerable correspondence was exchanged between the parties but what is of relevance is a letter dated 1st July, 1992 whereby the respondent asked the appellant to pay to it a sum of Rs. 134.42 crores by 3rd July, 1992. It was further stated that any delay in payment would then attract interest at the rate E of 24 per cent per annum or call money rate whichever was higher. Prioro

the issuance of this letter, correspondence between the parties showed that the appellant was promising to give the delivery of the units but by this letter of 1st July, 1992 the respondents claimed compensation as calculated in the annexure to this letter. The computation of the claim was given according to which the respondent treated the breach of the contract to have taken place F on 30th May, 1992 and on that basis it claimed difference in price between the rate what was paid and the rate of the Unit Trust of India as on 30th of May, 1992.

No amount was paid by the appellant, whereupon the respondent filed G a suit inter alia claiming the delivery of the units in respect of which the payment had been made. An alternative prayer which was made was for damages for a sum of Rs. 249, 19,00,549 plus further interest at the rate of 17.5 per cent per annum on the said sum .till the date of payment. As already indicated herein above by the impugned judgment dated 11th March, 1996 the Special Court, Bombay granted the relief of specific performance which required H the appellant to buy 7.5 core units for which payment had been made and in

1-..

-t- __

-; ..


addition thereto it was also required to purchase and sell to the respondent A the units representing the right issue which the respondent was deprived of availing of because of the non-delivery of the units. Costs of Rs. 27.87,000 were also awarded. Hence this appeal.

We have heard the counsel for the parties at length. Quring the pendency of the appeal at the time of admission an interim order was passed on 8th B May, 1996. By this order the appellant was directed to pay to the respondentbank Rs. 182 crores or in the alternative it was required to transfer units of the Unit Trust of India worth Rs. 182 crores calculated on the repurchase price. In addition thereto the appellant was directed to transfer units worth Rs. 30 crores. It is an admitted case of the parties that pursuant to the C aforesaid direction between May and June 1996 units worth about Rs. 210 crores were handed over to the respondent and in addition there to an amount of the Rs. 2 crores was also paid by the appellant. According to the appellant, the amount payable by it came to about Rs. 182 crores.

It is not necessary for us to go into the correctness of the various D issues decidt:d by the Special Court. The appellant admit that the respondent, to whom delivery of the units was not made, would be entitled to the refund of the money plus damages thereon calculated in accordance with he principles contained in Section 73 of the Indian Contract Act, 1872.

Considering the fact that there was an alternative plea for damages, on E the facts of the present case it would have been appropriate for the Special Court to have computed and awarded the damages in addition to ordering refund rather than requiring the appellants to purchase the units and give the same to the respondent. In other words, a decree for specific performance in the manner in which it was passed was probably not appropriate especially F when the respondent could be compensated with the return of money and award of reasonable damages.

As, now there is no dispute on the principle applicable namely, that the amount of Rs. 102,65, 12,500 which was paid by the respondent had to be refunded to it and the respondent was also entitled to get reasonable amount . G of compensation or damages, what is now required to be done is only to quantify the same. This is what we propose to do.

The aforesaid letter dated 1st July, 1992 written by the respondent when read alongwith the computatin sheet accompanying the said letter clearly shows that the respondent regarded that the appellant had committed the H

A breach of contract on 30th May, 1992. It is on this basis that it claimed, in addition to the return of money, damages being the difference between the price of t'1e units paid and the price as on 30th May, 1992. It appears to us that w11at the respondent would be entitled to, in addition to the refund of Rs. 102,6'i,12,500, is interest at the lending rate on the aforesaid amount from B the a~\! of payment till the date of filing of suit i.e. 8th September, 1994. In addition thereto, the respondent would also be entitled to pendente lite and future inter~t calculated at the rate of 17.5: per cent per annum, as claimed by it in the plaint. We have got the calculation done.from the representatives of the parties and it appears that calculated in this manner and also keeping in view the difference in the price per unit as on 30th May, 1992 and the rate C at which-the units had been agreed to. be purchased, the total sum payable by the appellant to the respondent would be about Rs. 212 crores. Inasmuch as units worth Rs. 210 crores have been given by the appellant to the respondent in addition to payment of about Rs. 2 crores in cash, no further amount would now be payable.

D We, accordingly, modify the decree passed by the Special Court and direct that a sum of Rs. 212 crores was payable by the appellant to the respondent and as we value the said amount has already been received by the respondent the decree stands satisfied. We make it clear that the disposal of this appeal does not in any way approve or disapprove the reasoning of E the Special Court.

The appeal is disposed of in the aforesaid terms. Cross appeal of the respondent and Interlocutory Application also stand disposed of. Parties to bear their own costs.

S.V.K Appeals disposed.