* IN THE HIGH COURT OF DELHI AT NEW DELHI % Reserved on : 21^st December, 2022 Pronounced on: 29^th March, 2023 + CS(OS) 361/2012 TRANSPORT CORPORATION OF INDIA LTD ..... Plaintiff Through: Ms. Diya Kapur and Mr. Aditya Ladha, Advocates versus RESERVE BANK OF INDIA & ANR ..... Defendants Through: Mr. Sandeep Sethi, Sr. Advocate with Mr. Neeraj Yadav, Advocate for D-2 CORAM:

HON’BLE MR. JUSTICE CHANDRA DHARI SINGH

J U D G M E N T

CHANDRA DHARI SINGH, J.

I.A. 10192/2018 (Under Order XI Rule 21)

1. The present application has been filed under Order XI Rule 21 read with Section 151 of the Code of Civil Procedure, 1908 seeking the following reliefs:

“a. Allow the present application in favour of the Plaintiff and strike off the defence of the Defendant No. 2;

b. Pass any further order(s) as this Hon'ble Court may deem fit and proper in the present facts and circumstances of the present case.”

FACTUAL MATRIX

2. The applicant/plaintiff herein had filed a suit seeking a declaration, a mandatory injunction, and the recovery of Rs 6,92,55,342/- in relation to a I.A. 10192/2018 in CS(OS) 361/2012 Page 1 of 11 Signature Not Verified Digitally Signed Foreign Exchange Derivative transaction involving a USD-CHF transaction on 20^th September, 2007 between the plaintiff and the Yes Bank Ltd, i.e., the non-applicant/defendant No. 2.

3. The applicant/plaintiff firm is engaged in the business of multi-modal transport and logistics, including supply chain solutions, periodically required term loans and working capital loan facilities from several banks. In 2006, the applicant/plaintiff firm had around Rs. 226 crores in outstanding loans on which it was paying interest between 6.50 % and 11% per annum. During the same year, the non-applicant/ defendant No. 2 convinced the applicant/plaintiff to participate into Foreign Exchange Derivative transactions that were supposed to save the applicant/plaintiff herein 2% in interest charges on its loan, but were in fact meant to generate profits for the non-applicant/defendant No. 2.

4. The non-applicant/defendant No. 2 herein convinced the applicant/ plaintiff to "notionally" convert its Rupee loan into a Swiss Franc (CHF) loan by claiming that interest rates were significantly lower in CHF and, as a result, the applicant/plaintiff would incur fewer interest expenses. Also, it is stated that there was no forex risk associated with this notional conversion, as the CHF was a very stable currency, and that any potential forex risk associated with this notional conversion was mitigated by an "option protection".

5. On 23^rd October, 2006, the applicant/plaintiff approved a resolution permitting certain business officials to accept the terms and circumstances of bank offers for derivative transactions that are in the firm's best interests. On 20^th September, 2007, the plaintiff entered into an interest-saving transaction with non-applicant/defendant No. 2 in which Rs. 15,00,00,000/- I.A. 10192/2018 in CS(OS) 361/2012 Page 2 of 11 Signature Not Verified Digitally Signed was ostensibly swapped for CHF 44,43,467/-, with the maturity date was set for 24^th September, 2009 and the plaintiff was to receive a sum equal to 2% of Rs. 15,00,00,000/-, which was ostensibly a savings in interest due to the swap into Swiss Francs (CHF).

6. It has been stated on behalf of the applicant/plaintiff herein that the said transactions were in fact very risky and the said fact was actively concealed by the non-applicant/defendant No. 2 despite being under a fiduciary relationship with the applicant/plaintiff herein.

7. It has been stated on behalf of the applicant/plaintiff that on 26^th April, 2011, the Reserve Bank of India issued a circular imposing a penalty on several banks in relation to foreign exchange derivative transactions of the same nature, as was entered into by the plaintiff company, on the grounds of contravention of various instructions issued by the Reserve Bank of India in respect of derivatives, such as failure to conduct due dilige