STATE BANK OF INDIA vs M/S GEETANJALI GEMS LTD on 12 December 2023

J U D G M E N T

1. The Original Application has been filed by the Applicant before the Ld. DRT-III, Mumbai on 03.11.2014 which stands transferred to this Tribunal on 16.12.2016 as per the Govt. Notification dated 26.09.2016 and registered as TA No.634 of 2016. The OA has been filed for recovery of US$ 972.773.03 (Equivalent to Indian Rupees @61.14= Rs.5,94,75,343.05 under the said Bill/Invoices with interest thereon at the rate of 18% p.a. with monthly rests from the date of filing of the present OA till its realization.

2. Facts as succinctly set out in the OA are that the Applicant has sanctioned working capital facilities to M/s Diminco N.V (“borrower”) having office at Hovenierstraat, 30 Box, 201, 2018 Antwerpen. The said borrower in the course of availing the said credit facilities issued Bills/Invoices upon the Defendant towards the sale of various goods in the said Bills/Invoices. The Defendant has duly accepted the said Bills/Invoices issued by the said borrower and upon such acceptance of the said Bills by the Defendant, a Cover for the said amount of the said Bills/Invoices was given by the Applicant in the account of the said borrower. The said borrower has accordingly used and enjoyed the amount of the said Bills/Invoices by withdrawing the same from their account and thereafter, the Applicant has duly sent the said Bills/Invoices issued by the said borrower and duly accepted by the Defendant at the instance of the Borrower to the Defendant for collection, however, the Defendant despite receipt of the said bills/invoices sent by the Applicant for collection didn’t pay the amount to the Applicant due under the said bills/invoices. The details of the said bills are provided as under: InvoiceNo. Date Due Date Amount

110797 19.12.2011 03.05.2012 US$828.513.03 110664 04.11.2011 19.03.2012 US$148.260.00 Total:

US$972.773.03 (Equivalent to Indian Rupees @61.14= Rs.5,94,75,343.05)

3. It is stated that the Defendant duly accepted the said Bills/Invoices against receipt of the goods from the said borrower and in anticipation of and assurances that the said bills would be honoured by the Defendant on its due date the Applicant has duly credited and given the cover of the said amount in the account of the said Borrower. Despite lapse of the due dates as mentioned in the said Bills/Invoices, the same were not honoured by the Defendant and so the Applicant by its various letters addressed to the borrower alongwith the Defendant called upon to pay the said amount mentioned in the said invoices however, no response was received by the Applicant nor any payment has been received in that behalf, since the said borrower in collusion with the Defendant have played a fraud upon Applicant. The aforesaid bills were taken in to cover & M/s Diminco N.V. allowed to use the said amount of the assurances and in anticipation the said Bills/Invoices would be honoured by the Defendant on its due dates, however, it is observed that despite lapse of the due dates the said bills are not honoured by the Defendant. The Applicant has time and again called upon both the Defendant as well as said Borrower M/s Diminco N.V. by their letters/reminders dated 19.03.2012, 29.06.2012, 28.08.2012, 31.10 .2012, 31.01.2013, 21.05.2013, 18.07.2013, 10.09.2013, 05.11.2013, 25.11.2013 & 06.02.2014 which was received no positive response from both obviously for the simple reasons that both of them in collusion with each other played fraud upon Applicant with sole view and intention to cheat the Applicant. However, M/s Diminco N.V. by their email dated 04.02.2014 wrongfully contented that the aforesaid invoices/bills are cleared with Standard Chartered Bank & Bank of India and therefore, informed there are no dues payable to the Applicant. In fact that the Defendant have no business to make the payment under the aforesaid business/Bills to Standard Chartered Bank & Bank of India specially when the said bills/invoices are pledged with Applicant by the drawer M/s Diminco N.V. and therefore, both Defendant and the Borrower are jointly and severally liable to pay the aforesaid amount to the Applicant under the said bills/invoices. Hence, the present OA.

4. Notices were issued to the Defendant. The Defendant put its appearance through counsel and filed the WS. Despite opportunities, no CAOD has been filed thus, right to file the CAOD as per order dated 10.11.2017. Record reveals that since 10.11.2017, none appeared on behalf of the Defendant.

5. In the written statement, the Defendant has mainly raised the objections that:

(i) The OA is not signed by a duly authorized person;

(ii) This Tribunal does not have Territorial jurisdiction to try and entertain the present OA;

(iii) Nothing is due and payable by the Defendant to the Applicant in respect of the alleged Invoices.

(iv) There is no privity of contract by and between the Applicant and Defendant

6. The Applicant has produced all the original documents and other relevant documents alongwith their CAOD filed through their Chief Manager, Sh. Pankaj Kumar Pathak.

7. I have heard the Ld. Counsel for the Applicant and perused the record.

8. Now hereinafter, I would like to decide the issue raised by the Defendant in its written statement.

(i) The first objection raised by the Defendant is that the present OA is not signed by a duly authorized person.

The OA has been filed by Sh. B.V. Shreedhar, Chief Manager of the Applicant Bank who is fully conversant with the facts of the case and he is competent to sign, verify and institute the present OA. Even otherwise, the OA cannot be dismissed on this technical ground as held by Hon’ble Supreme Court in UBI Vs Naresh Kumar & Ors., AIR 1997 SC 3. Therefore, the objection raised by the Defendant No.2 is declined.

(ii) The next objection raised by the Defendant is that this Tribunal does not have Territorial jurisdiction to try and entertain the present OA.

Record reveals that the registered office of the Defendant is at Bandra, Kurla Complex, Bandra (E), Mumbai. The Defendant has duly accepted the Bills/Invoices issued by M/s Diminco N.V. against the purchase of various goods, at Mumbai. Therefore, this Tribunal has territorial jurisdiction to try and entertain the present OA.

(iii) The next objection raised by the Defendant has cleared the dues of Invoices bearing No.110664 on 07.06.2012 through Union

Bank of India, and the payment of other Invoice bearing No.110797 is adjusted against the dues payable by the Principal borrower as the principal Borrower is also the customer of Defendant and they were liable to make certain payment to Defendant thus, nothing remains to be paid by Defendant either the Principal Borrower or to the Applicant Bank, in any manner whatsoever, therefore, the Defendant is no way liable for any such dues as prayed in the present OA.

I have gone through the record. It is specifically mentioned in the said Bills/Invoices (Exb.A of the list of documents of Applicant), that the amount of the said invoices should be paid directly to the Applicant in whose favour the said invoices were endorsed by way of pledge and with the said condition the said Invoices were duly accepted by the Defendant. The Applicant issued various letters and reminders i.e. on 19.03.2012, 29.06.2012, 28.08.2012, 31.10 .2012, 31.01.2013, 21.05.2013, 18.07.2013, 10.09.2013, 05.11.2013, 25.11.2013 & 06.02.2014 (Exb.B (Colly) of the List of Documents of Applicant), but neither the Defendant make the payment nor gave any response. Further, the Applicant issued legal notice dated 07.10.2014 however, inspite the said notice, the Defendant failed to make the payment.

Thus, since as per the Bills/Invoices, the Defendant agreed to pay the amount of the invoices directly to the Applicant, therefore, the objection of the Defendant that the Defendant cleared the dues of Invoice No.110664 through Union Bank of India and further adjusted the amount of Invoice bearing No.110797 against the dues payable by the Borrower to Defendant, is not sustainable hence, the same is hereby rejected.

(iv) The next objection raised by the Defendant is that there is no privity of contract by and between the Applicant and Defendant.

In the present case, the Defendant has accepted the Bills/Invoices issued by the Borrower and upon such acceptance of the Bills by the Defendant, a cover for the said amount of the said bills/invoices was given by the Applicant in the account of the said borrower. The said borrower has accordingly used and enjoyed the amount of the said Bills/Invoices by withdrawing the same from their account and thereafter the Applicant has duly sent the said Bills/Invoices issued by the said borrower and duly accepted by the Defendant at the instance of the Borrower to the Defendant for collection. Thus, the objection of the Defendant that there is no privity of contract is not sustainable hence, declined.

9. The witness of the Applicant has fully corroborated the averments made in the OA/TA, even otherwise the whole case of the Applicant is based on documents and the witness has duly proved all these documents as against the Defendant. In my view there is no question of disbelieving the evidence led by the Applicant and the Applicant has proved its case beyond reasonable doubt against the Defendant.

10. In the light of above discussions, the Original Application deserves to be allowed against the Defendant.

O R D E R

(i) The present O.A. is hereby allowed and Defendant is hereby directed to pay to the Applicant Bank, within a period of 60 days, a sum of US$ 972.773.03 (US Dollar Nine Lakh

Seventy Two Thousand Seven Hundred Seventy Three and Penny Three only) under the Bill/Invoices with interest thereon at the rate of 18% p.a. with monthly rests from the date of filing of the present OA till its realization.

(ii) Failing which the aforesaid amount shall be recovered from the sale of personal moveable and immoveable assets of the Defendant.

(iii) Defendant is hereby directed not to deal with their properties till further direction of Ld. Recovery Officer.

(iv) Defendant shall also pay the cost and expenses of the OA/TA.

(v) Recovery Certificate be issued forthwith and be sent to the Recovery Officer of this Tribunal. Copy of this order be sent to the parties as per rules. File be consigned to record.

Place: Mumbai.

(Dr. Rekha G. Dhakar) Date: 12.12.2023

Presiding Officer,

DRT-1, Mumbai

SC/-