BUSINESS BANK Vs. UNITED BANK OF INDIA

JUDGEMENT

(1.) The plaintiff is a company having its head office in Hashemite Kingdom of Jordan at Queen Nour Street, Amman, Jordan. Suit has been filed under Order 37 of the Code of Civil Procedure against United Bank of India, defendant, for recovery of Jordanian Dinnars 1,72,634 with future interest and costs.

(2.) It is alleged that National General Investments Company Ltd. was established during 1980 as a public shareholding company and on 23rd October, 1990 Central Bank of Jordan approved the conversion of the company into an Investment Bank called "Business Bank". On 3rd November, 1991 Central Bank of Jordan also approved the conversion of Business Bank (Investment Bank) to a commercial bank and the General Assembly in its extraordinary meeting held on 31st October, 1990 resolved to amend Company's Articles of Association to reflect the change of company's name to "Business Bank". Suit has been filed by Wasef Yacoub Azar, the Managing Director, Deputy Chairman and General Manager of the plaintiff-bank under the authority and on the basis of a power of attorney granted by the plaintiff- bank.

(3.) It is alleged that the defendant-bank had given a counter bank guarantee for 3,74,800 Jordanian Dinnars to Bank of Credit and Commerce International, Amman, Jordan (for short 'BCCI'). This counter bank guarantee was given by the defendant in consideration of BCCI having extended overdraft facility of maximum of 3,74,800 Jordanian Dinnars to M/s Uttam Singh Duggal & Company (P) Ltd., construction contractor. The guarantee was valid till 31.12.1986. It was extended from time to time. The last extension was till 31.5.1991 for Jordanian Dinnar 1,72,779.61 with interest at the rate of 13% p.a. from 1.5.1991. It is alleged that on the strength of the guarantee, the contractor made use of the overdraft facility. During the validity of the counter guarantee BCCI on 2.5.1991 wrote to the United Bank of India to finally and completely settle the overdraft account by 30th May, 1991 since contractor was not repaying the overdraft amount and the Central Bank of Jordan was not giving approval for further extension of overdraft facility. The defendant was called upon to confirm that final and complete settlement will be effected latest by 30th May, 1991. It is alleged that the defendant did not send .the required confirmation. Consequently, BCCI, Amman, Jordan through telex dated 7th May, 1991 lodged its claim under the bank guarantee for a sum of US $ 1,73,184.17. The defendant was called upon to remit the amount immediately. The defendant acknowledged the receipt of telex and stated that the matter had been referred to the higher authorities. Repeated messages were sent by BCCI on 22nd May, 1991, 28th May and 29th May, 1991 calling upon the defendant to credit to their account at the Security Pacific International Bank, New York with the amount, which they had guaranteed under overdraft guarantee No. 19/86. It is also alleged that the defendant through telex dated 29.5.1991 acknowledged receipt of the telex message and informed that the defendant had approached the Reserve Bank of India for approval for remittance of US $ 1,72,298.60 and that the said amount shall be remitted immediately on receipt of approval. When it was not done, another reminder was issued. On 11th June, 1991 the defendant again wrote back to BCCI that the matter was still awaiting clearance from the Reserve Bank of India and was likely to be cleared in next 2/3 days whereafter amount would be sent through Reserve Bank of India. Again on 27th June, 1991 the defendant acknowledged its liability and said that the amount would be sent soon on receipt of approval. On 16th June, 1991 the defendant asked BCCI to let the defendant know the equivalent amount of US $ 1,74,912, claimed by it, in Jordanian Dinnars and to give details of interest accrued thereupon. It is alleged that in the mean while BCCI was liquidated and the Central Bank of Jordan was appointed as the liquidator to sell the assets of BCCI, Jordan. Central Bank of Jordan thereafter entered into an agreement with the plaintiff-bank by virtue of which assets and liabilities of BCCI operations in Jordan were transferred to the plaintiff. The plaintiff on the strength of agreement called upon the defendant to remit the amount till date. The defendant wrote back on 12.2.1991, requesting the plaintiff to furnish documentary evidence to the effect that the plaintiff was the legal successor of BCCI. On 20th June, 1992, requisite proof was furnished by sending various documents, including Court's order and the copy of the agreement. Despite number of reminders and assurances, the defendant failed to make the payment. In this background, the plaintiff has claimed a decree in Jordanian Dinna rs 1,72,634 being the amount due at the time of institution of the suit with future interest from the date of the suit till recovery at the rate of 19.5% p.a. and costs of the suit. Decree has been claimed in Jordanian Dinnars subject to permission being granted by the concerned authorities under Foreign Exchange Regulation Act, 1973. In the alternative decree in rupee equivalent of the foreign currency on the exchange rate prevailing on the date of judgment has been prayed with direction that the decretal amount be paid to the plaintiff in US $ and necessary permission, if any, for remitting the amount to the plaintiff.