RAKESH MOHAN SHARMA Vs. FEDERAL BANK LTD.

JUDGEMENT

(1.) THIS appeal has been directed against the judgment and order dated 14th December, 2010 passed by the learned Presiding Officer of DRT -II, Delhi, whereby OA No. 318/2001 filed by the Bank for the recovery of Rs. 14,83,991.10 together with pendente lite and future interest @ 13% per annum and cost, has been allowed with the direction that the amount deposited during the trial shall be adjusted towards the dues and interest shall be charged thereafter on the reduced balance. The controversy giving rise to this appeal relates to a short question i.e., whether the Bank had acted negligently and against the request of the borrower/ appellant to sell his Dematerialized (DEMAT) shares of the specified companies pledged with it in liquidating the amount of loan?

(2.) ACCORDING to the appellant, an OD limit of Rs. 20 lacs was sanctioned by the respondent Bank to him on 7th March, 2000 against the registered pledge of his DEMAT shares of three companies then valuing Rs. 41.24 lacs of which he had availed of Rs. 18.21 lacs. In March 2000 when the value of the pledged securities went up very high, he requested the Bank to sell the shares, but the Bank did not respond to it and took various pretext like March closing, individual targets, etc. but when during April to August 2000 the share market fluctuated, the Bank wrote several letters, at short intervals, asking him to deposit shares/money. On 20th September, 2000 the appellant sent a letter to the Bank requesting it to sell 500 shares of Himachal Futuristic Company Ltd. (HFCL) and 181 shares of Infosys, as at that time per share value of HFCL was Rs. 1470 and Infosys was Rs. 7975, thus aggregating the value of those shares to Rs. 21.78 lacs. The Bank, on that very date, wrote to its broker Abhipra Capitals to sell the aforesaid shares and to send the cheque for the credit in the appellant's OD account and also sent invocation Slip No. 5160 dated 20th September, 2000 to the said broker and thereby invoked the said shares of both companies. The shares were accordingly transferred from the account of the appellant on 21st September, 2000. However, when the appellant received a letter dated 9th January, 2001 from the Bank demanding additional shares/money, he contacted the Bank and reminded about the transaction of 20th September, 2000 whereby the entire loan was set off, the Bank assured to lock into it but insisted on pledging more shares in the meantime, which the appellant did in good faith to maintain status quo and to avoid distress sale. But when the appellant realized that despite continued follow -up the Bank was showing the amount as outstanding, he gave a legal notice dated 30th July, 2001 through his Counsel demanding the credit for the transactions as per letter dated 20th September, 2000. In its reply to that notice the Bank, for the first time, took the plea that since the letter dated 20th September, 2000 was conditional as the appellant was required to advice/instruct the Bank's broker, which he never did, therefore, the shares could not be sold and also denied the invocation of shares. Thereafter, the appellant filed a complaint before the National Consumer Disputes Redressal Commission (for short, the NCDRC), which is still pending.

(3.) HE further submitted that his letter dated 20th September, 2000 clearly shows that he had requested the Bank to issue instructions for the sale of the pledged shares through Bank's broker and the instructions were sought through the bearer only to avoid the probable delay, as had happened in March 2000, and a week's time was mentioned only to complete the sale during the weekly settlement as 20th September, 2000, being Wednesday, was the first day of weekly settlement. Mr. Sharma also argued that had the Bank been given a different meaning to his letter dated 20th September, 2000, as has been assigned now by the Bank, it would neither have sent a clear sale advice to its broker Abhipra Capital on the same date nor it would have invoked those shares from the appellant's OD account. He further contended that the Bank's letter dated 20th September, 2000 sent to its broker was without reference of any advice of the appellant as alleged. He also contended that his letter dated 20th September, 2000 could not be read in isolation and it should have been read with the letter of the respondent Bank to see the real intent, otherwise also the Bank's acceptance without the alleged condition constitutes a valid contract as per Section 7(2) of the Indian Contract Act. According to Mr. Sharma, though the DRT noted down these contentions in its judgment but it did not consider or gave any findings on them.