Delhi Development Authority vs Skipper Construction And Anr.
- Citation1998 SCC OnLine SC 200
Ratio decidendi
The rule this decision rests on
Where an inquiry committee has identified responsibility for transactions involving bank guarantees, the court must first determine whether the issuing bank has actually sustained a loss before determining personal liability of bank officials, and such loss must be established and crystallised before action can be taken against those officials. The inter se liabilities between the parties to a contract involving bank guarantees cannot be said to be concluded by earlier court orders merely because those orders addressed related matters, and the question of whether a bank has incurred loss must be decided afresh with reference to the actual terms of the contract between the principal and the beneficiary of the guarantee.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
1. This Court had passed an order on 11-2-1997 in this Special Leave Petition, directing an Inquiry Committee to be set up by the Governor, Reserve Bank of India (RBI) to go into the circumstances under which bank guarantees were issued by the New Bank of India (now merged with the Punjab National Bank) and Canara Bank in favour of D.D.A. concerning the transactions of Skipper Construction Company. Pursuant to the order, the RBI has given a Report dated 9.5.1997, copies of which have been furnished to the affected parties. It is sufficient to refer to the fact that the RBI has placed certain responsibility for the transactions aforesaid on the Chairman and Managing Director of the then New Bank of India, Shri R.C. Suneja. In the light of the observations of the RBI the question arises, as to what orders have to be passed with regard to Shri R.C. Suneja. The RBI has also stated that action can justifiably be contemplated once "loss " to the banks is established and crystalised.
2. For the aforesaid purposes, it has become necessary to go into the question as to whether the then New Bank of India has sustained any loss on account of the bank guarantees given by it to the D.D.A. on behalf of the Skipper Construction Company. The question has to be decided in the light of the earlier orders of this Court and, in particular, the judgment of this Court in D.D.A. v. Skipper Construction Company Pvt. Ltd. and also in the light of the terms of the contract between Skipper Construction Company and D.D.A. and the other respective parties thereto.
3. A contention has been raised on behalf of the D.D.A. that the question of deciding the inter se liabilities between Skipper Construction Company and D.D.A. has already been concluded by earlier orders of this Court and the same cannot be reopened. On the other hand, it has been contended by learned senior counsel, Mr. M.L. Verma, appearing for Skipper Construction Co. and also the learned senior counsel, Mr. M.N. Krishnamani, appearing for Mr. R.C. Suneja, former C.M.D. of the then New Bank of India, that these issues have not so far been adjudicated with reference to the terms of the contract and the D.D.A. and the Skipper Construction Company.
4. For the purposes of ascertaining whether the new Bank of India has incurred any loss vis-a-vis the transactions of Skipper Construction Company with D.D.A., it has become necessary to give further opportunities to the parties to file necessary pleadings in this behalf. We are, no doubt, told that the Punjab National Bank (PNB), (with which the New Bank of India has since merged) has since filed a suit against the Skipper Construction Company for recovery of the amounts encashed by the D.D.A. by virtue of the Bank guarantees furnished by New Bank of India to the D.D.A. on behalf of the Skipper Construction Company. The said suit has been filed by the Punjab National bank as a Lead Bank, on behalf of itself and Canara Bank, though the bank guarantees were furnished by the New Bank of India.
5. All the parties, namely, D.D.A., Skipper Construction Co., Punjab National Bank, Mr. R.C. Suneja, former C.M.D. of New Bank of India, and Canara Bank are permitted to file their respective pleadings on the question limited to whether New Bank of India has incurred any loss relating to the transactions of bank guarantees given by it to the D.D.A.
6. It is contended by the learned counsel for the Canara Bank that part of this money was paid out of the fund provided by Canara Bank to New Bank of India. It is yet to be ascertained whether any loss is incurred in this transaction. The loss, if incurred, would affect not only New Bank of India (Which has been merged with the PNB) but also the Canara Bank.
7. Pleadings be filed within two weeks from today.
8. Mr. krishnamani, learned senior counsel appearing on behalf of Mr. R.C. Suneja, seeks permission to file an affidavit in the Court in relation to the earlier Report of RBI. He is permitted to file the affidavit, copies of which will also be furnished to D.D.A., RBI, PNB and Canara Bank.
9. Learned counsel for D.D.A. will also place before the Court an affidavit as to what action has been taken against D.D.A. Officers consequent to the Report submitted by Hon'ble Mr. Justice Chinappa Reddy.
10. The above matters will be listed on 9th August, 1999.
11. The other matters which were directed to be listed on 26th July, 1999 will now be listed on 2nd August, 1999.
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