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2015 Supreme(Bom) 386
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ROSHAN DALVI, J.
Bajranglal Anilkumar Jaju & Ors., - Plaintiffs
Vs.
The Vyasya Bank Ltd. – Defendant
SUIT NO. 824 OF 1980
Decided On : 12TH MARCH, 2015
Advocate Appeared:
Mr. Nitin Parekh i/b. M/s. Pious Law Associates for the Plaintiff
Ms. Shreya Deshpande i/b. Intralegal for the Defendant
Consent terms executed between parties are binding on them and cannot be vitiated by coercion unless the coercion is as defined in Section 15 of the Indian Contract Act, 1872.
Headnote:
Suit for damages for wrongful sale of palm oil at an undervaluation by the defendant bank. Plaintiff claimed that the consent terms executed between the parties were obtained under coercion and were not binding on him. Court held that the consent terms were not obtained under coercion and were binding on the plaintiff. Plaintiff also claimed that the defendant bank sold the oil at an undervaluation. Court held that the plaintiff failed to prove that the oil was sold at an undervaluation.
Fact of the Case:
The plaintiff, an importer, obtained two Letters of Credit (LCs) from the defendant bank to import palm oil. The first consignment was cleared uneventfully. The second consignment resulted in an inquiry by the Collector of Customs, who imposed a penalty of Rs.28 lakhs on the plaintiff. The defendant bank sued the plaintiff in the Debt Recovery Tribunal (DRT), which suit was dismissed. The third consignment could not be cleared because the defendant bank informed the Collector of Customs that the LCs were cancelled. The Collector of Customs confiscated the goods and imposed a personal penalty of Rs.12.65 lakhs on the plaintiff. The goods were sold under auction on 23rd May, 1978. The plaintiff challenged the auction in a writ petition, which resulted in certain minutes of the order being passed on 26th May, 1978. The shipper filed Suit No.855 of 1979 in the Bombay High Court, in which the consent terms were executed on 1st June 1979. The plaintiff claimed that the defendant bank sold the consignment of oil without the prior consent of the plaintiff and at a price lower than the market price. The defendant bank remitted certain amounts to UAB and wrongfully debited the plaintiff’s account. The defendant bank opened a Bills Maturity Deposit Account (BMDA), but did not give credit to the plaintiff in the said account.
Finding of the Court:
The Court held that the consent terms were not obtained under coercion and were binding on the plaintiff. The Court also held that the plaintiff failed to prove that the oil was sold at an undervaluation.
Issues: 1. Whether the consent terms executed between the parties were obtained under coercion and were not binding on the plaintiff. 2. Whether the defendant bank sold the oil at an undervaluation.
Ratio Decidendi: 1. The Court held that the consent terms were not obtained under coercion because: a. There was no evidence that any party had made the plaintiff sign the consent terms under threat of committing any offence under the IPC. b. The plaintiff was not unlawfully detained or threatened to be detained if the consent terms were not signed. c. The plaintiff, as a prudent businessman, would have considered the pros and cons of the various defences that the defendant bank might have taken and agreed to settle the dispute entirely by allowing the sale of the consignment. 2. The Court held that the plaintiff failed to prove that the oil was sold at an undervaluation because: a. The plaintiff did not produce any evidence to show the market price of oil on the precise dates of sale.
Final Decision: The Court dismissed the plaintiff's suit.
1. The plaintiff has sued for Rs.2.38 crores with interest @ 15% p.a from the defendant bank, for accounts, for a declaration that the defendant is holding all the sale proceeds of palm oil received by it under a consent decree obtained in Suit No. 855 of 1979 including a sum of Rs.45.30 lakhs in trust for and as agents of the plaintiff, for an injunction against the defendant for remitting that amount the United Asian Bank (UAB) or to the credit of one Patel Holdings and for accounts and directions in that behalf.
2. The plaintiff carried on business in palm oil. The plaintiff got certain Letters of Credits (LCs) issued with regard to certain import consignments. The first consignment under the LCs was cleared. Thereafter the LCs were seen by the defendant bank to be fraudulently obtained by the plaintiff. The bank refused to act upon the LCs. The second consignment was not cleared as per the averments made in para 8 of the plaint itself. There has been another litigation between the parties upon the LCs, copies of which are not produced in this suit. When the third consignment arrived the defendant bank claimed that the LC was fraudulently obtained as per averments in para 9 of the plaint.
3. It is the plaintiff's case in paras 13 to 15 of the plaint that the suit consignment was confiscated by the Collector of Customs. It was declared unfit for human consumption. It was put up for public auction on or about 23rd May, 1978. The public auction came to be stayed.
4. It is the plaintiff's case in para 19 of the plaint that the shipper, one M/s. Tokyo Marine Company Ltd., filed a suit inter alia against the plaintiff as defendant No.1 therein and against the defendant bank as defendant No.3 therein. The parties entered into consent terms which have been recited in para 19 of the plaint. Under the consent terms a decree was obtained by the shipper for Rs.8.75 lakhs against the plaintiff herein in full and final settlement of the claims of the shipper against the plaintiff herein. The shipper and the plaintiff herein authorised the defendant bank herein to pay Rs.8.75 lakhs to the shipper. For that purpose the defendant bank was allowed to obtain delivery of 2403 metric tonnes of palm oil which was imported and stored. Defendant No.3 bank was also to pay fine and penalty that may be levied upon the plaintiff herein. The possession of the palm oil imported by the plaintiff herein were agreed to be handed over to the defendant bank herein. It was agreed that the defendant bank herein would be entitled to obtain possession of the oil and sell the same by public auction or private treaty as it may deem fit at such price as it may deem fit and to appropriate the proceeds towards the satisfaction of the amounts payable by the plaintiff herein to the shipper. On the basis of the said consent terms decree was passed in Suit No. 855 of 1979 by this Court.
5. The plaintiff has claimed in para 20 of the plaint that the consent terms have been executed by the plaintiff under coercion and that the plaintiff has agreed to sign the consent terms to mitigate further losses and claims.
6. The plaintiff has averred in paragraph 21(b) of the plaint that after the consent terms were executed on 1/6/1979 the defendant bank obtained delivery orders of the oil from the Collector of Customs on 16th June, 1979 and the ultimate delivery by 11th July, 1979. It is the plaintiff's case that the defendant bank sold the oil to Liberty Oil Mills and Allana Oil Mills without consulting the plaintiff.
7. The plaintiff has challenged the sale of palm oil made by the defendant bank on the ground that it was sold at undervaluation. In para 21(c) the plaintiff claims that the defendant is only a banker and has no knowledge of the sale of oil. The plaintiff has further averred that it was understood between the parties that the oil will be sold only with t
