Judgment

BANERJEE, J.

( 1 ) M/s Skipper Constructions (P) Ltd was incorporated on 14th February, 1986 to undertake development and construction of commercial and residential complexes the activity is generally financed from advances/deposits from prospective buyers Skipper has had five other associates skipper Tower Private Limited, skipper Builders Private Limited, Skipper sales Private Limited Skipper Properties private Limited, and Anand Construction (Delhi) Private Limited

( 2 ) THE contextual facts depict that in an auction held on 8th October, 1980 in respect of the plot of land in Jhandewalan, the bid of Rs 982 lacs offered by skipper constructions was accepted by the Delhi development Authority (DDA herein) the company had deposited Rs 245 75 lacs on the date of auction and the balance amount of Rs 736 25 lacs was required to be deposited within 90 days the records depict that the company was able to raise a sum of Rs 645 66 lacs from the flat owners in stages, out of which Rs 583 25 lacs were paid to the dda towards the cost of the land The dda however, had agreed to recover the balance amount of Rs 398 75 lacs together with interest at the rate of 18% per annum amounting to Rs 392 61 lacs accumulated up to the end of year 1985 in five equal instalments in 2-1/2 years and delivered possession of the land against bank guarantee for the like amount The company accordingly approached the New Bank of India Tolstoy marg branch in January 1986 with the request for issuance of bank guarantee of Rs 790 crores to be executed in favour of the DDA The said guarantee was required to be given as the cost of land was not paid in full by the company to the DDA The company proposed to construct the flats on a portion of the jhandewalan Tower, New Delhi

( 3 ) THE facts further depict that on receipt of the letter dated 23rd January, 1986 from the Skipper Company, the Tolstoy marg branch of New Bank of India recommended the facility of having the bank guarantee sanctioned by charging 1% commission per annum on diminishing balance of half yearly rests together with a margin of 15% in the form of FDR main security by equitable mortgage of property No 3, Aurangzeb Road, New Delhi and the lien over unsold space in jhandewalan Tower amounting to rs 676 09 lacs along with collateral security of counter guarantee of the company and personal guarantee of the directors Tejwant Singh and Harpreet singh having net means of Rs 2,78,000/- and Rs 2. 51. 706/- respectively

( 4 ) THE factual score further depicts that the application of the party for issue of guarantee was duly received by the head office and after initial quibbles, the proposal was finally sanctioned by the board of New Bank of India and the limit was enhanced from Rs 7 90 crores to Rs 8 70 crores

( 5 ) THE role played by the bank officials, however, did not find favour with this court and without much of a narration on the factual score since the matter is kept pending in this Court for quite some time, it would be worthwhile only to note that liberality in advancement of loans and bank guarantees prompted this Court to have the matter inquired into by a sitting judge of the High Court

( 6 ) PRESENTLY for our purpose, we are concerned with the report as detailed out by justice Saharya, a former judge of the delhi High Court and a former chief justice of Punjab and Haryana High Court

( 7 ) SIGNIFICANTLY, however, the issue was examined by the two deputy governors of the Reserve Bank of India relating to the question on the issuance of the guarantee for and on behalf of Skipper constructions by the New Bank of India and canara Bank The report of the governors stands out to be singularly singular in its vagueness and we do think it fit, however, to put on record relevant extracts of the same"6 25 In regard to the conspiracy, the persons referred to represent different interests and constituencies There is no clear evidence that there was any communication amongst them in the matter nor was the