Rahee Industries Ltd. Vs. the Hong Kong and Shanghai Banking Corporation Limited and anr. - Court Judgment

SooperKanoon Citationsooperkanoon.com/875782
SubjectContract
CourtKolkata High Court
Decided OnApr-04-2003
Case NumberSuit No. 340 of 1992
JudgeAist Kumar Bisi, J.
Reported in(2004)1CALLT280(HC)
ActsSpecific Relief Act, 1963 - Section 34; ;Contract Act, 1872; ;Indian Partnership Act, 1932
AppellantRahee Industries Ltd.
RespondentThe Hong Kong and Shanghai Banking Corporation Limited and anr.
Appellant AdvocateAnindya Mitra, ;Soumitra Sen, ;Dhruba Ghosh, ;S.K. Kundu and ;V. Agarwala, Advs.
Respondent AdvocateSupriya Bose and ;Sabyasachi Chowdhury, Advs. for Defendant No. 1 and ;Sanjib Banerjee and ;Amitava Ghosh, Advs. for Defendant No. 2
Cases ReferredAmerican Home Products Corporation v. Mac Laboratories Pvt. Ltd. and Anr.
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a.k. bisi, j.1. in the instant suit against defendant no. 1 the hong kong and shanghai banking corporation ltd. and defendant no. 2 the export credit & guarantee corporation ltd. the plaintiff rahee industries ltd. has sought declaration, if necessary, that the plaintiff alone is entitled to the balance sum of rs. 97,02,153.90p calculated by defendant no. 1 on account of the original plaintiff out of the proceeds of the transaction between the original plaintiff and the egyptian national railways and is entitled to the credit of the said amount less the sum of rs. 16,11.099/- already credited to the account of the original plaintiff with defendant no. 1, decree for permanent mandatory injunction against defendant no. 1 to credit the said sum to the account of the plaintiff and against.....
Judgment:

A.K. Bisi, J.

1. In the instant suit against defendant No. 1 the Hong Kong and Shanghai Banking Corporation Ltd. and defendant No. 2 the Export Credit & Guarantee Corporation Ltd. the plaintiff Rahee Industries Ltd. has sought declaration, if necessary, that the plaintiff alone is entitled to the balance sum of Rs. 97,02,153.90p calculated by defendant No. 1 on account of the original plaintiff out of the proceeds of the transaction between the original plaintiff and the Egyptian National Railways and is entitled to the credit of the said amount less the sum of Rs. 16,11.099/- already credited to the account of the original plaintiff with defendant No. 1, decree for permanent mandatory injunction against defendant No. 1 to credit the said sum to the account of the plaintiff and against defendant No. 2 not to make any claim on the said sum or any portion thereof, decree for Rs. 80,91,054/- against defendant No. 2, interest @ 18% per annum on the said sum of Rs. 80,91,054/- from 18.4.92 till the date of institution of the suit, interim interest and interest on judgment @ 18% per annum on the said sum of Rs. 80,91,054/- until realisation and some other reliefs.

2. Briefly stated the case of the plaintiff is that original plaintiff was a partnership firm registered under the Indian Partnership Act, 1932 and was carrying on business as an exporter of diverse products to diverse foreign buyers. On 8th October, 1985 the original plaintiff entered into an agreement with the Egyptian National Railways (hereinafter referred to as the foreign buyer) for supply of 20.00,000 clip bolts type D according to ENR specification to the said buyer for a total value of US $ 615,200 FOB, Calcutta. Under the said agreement the conditions of payment were inter alia, as follows:--

(a) 20% of the total value of the contract as advance payment against presentation of a letter of guarantee covering the same amount and the same currency endorsed by a local bank in Cairo, Egypt.

(b) 80% of the total value of the contract would be financed for a period of 3 years to be paid in 6 equal semi-annual consecutive instalments with fixed interest @ 90% per annum. The first instalment to be paid after 6 months from the date of each shipment. The half yearly capital instalment and the accrued interest would be secured by a letter of guarantee issued by the National Bank of Egypt covering the principal and the interest.

3. At the request of the original plaintiff and in terms of the aforesaid agreement defendant No. 1 acting as a banker of the original plaintiff duly furnished to the foreign buyer on behalf of the original plaintiff a bank guarantee covering 20% of the total value of the contract and the foreign buyer duly paid the said 20% of the total value of the contract to the original plaintiff. On 27th January, 1987 at the request of the original plaintiff defendant No. 2 in consideration of a premium of Rs. 81,891/- issued to the original plaintiff a specific shipment (political risk) Policy No. 14499/ 87 and sent the said policy to the original plaintiff from its head office at Bombay under a covering letter dated 30th January, 1987. The original plaintiff duly made supplies of 20,00,000 clip bolts to the foreign buyer in the following manner:--

(a) 3,00,000 Nos. clip bolts on or about the 31st March, 1987.

(b) 6,00,000 Nos. clip bolts on or about the 15th July, 1987.

(c) 6,00,000 Nos. clip bolts on or about the 28th September, 1987.

(d) 5,00,000 Nos. clip bolts on or about the 31st October, 1987.

The foreign buyer duly deposited the amounts payable by the foreign buyer in terms of the contract and against the value of the shipments made by the original plaintiff from time to time with the banker of the foreign buyer i.e. The National Bank of Egypt. The said National Bank of Egypt, however, failed to remit any such amount to the original plaintiff in India. On enquiry the original plaintiff came to know that due to restriction imposed by the Egyptian Central Bank substantial delay would occur in the remittance of the said amounts to the original plaintiff. In terms of the said policy the original plaintiff from time to time made claims in the standard claim form upon defendant No. 2 for payment of the amounts lying blocked in the National Bank of Egypt in the account of the original plaintiff. Defendant No. 2 paid a total sum of Rs. 64,08,846/- being the amount of the total liability of defendant No. 2 under the said policy to the original plaintiff.

4. On or about 2nd April, 1992, defendant No. 1 received a telex message from the National Bank of Egypt whereby the National Bank of Egypt informed defendant No. 1 that the funds blocked in Egypt due to externalisation problem was being released and requested defendant No. 1 to follow up the matter with its correspondent Bank of the Manufacturers. On or about the 18th April, 1992 the original plaintiff received a copy of the letter written by defendant No. 1 to defendant No. 2 to the effect that defendant No. 1 received remittance of a total sum of US $ 5,59,696.14 being the value of the shifting bills of the original plaintiff proceeds whereof were lying blocked in Egypt. By the said letter defendant No. 1 wrongfully alleged that defendant No. 1 could not ascertain the proportionate shares of the original plaintiff and defendant No. 2.

5. Further case of the plaintiff is that the said sums are the proceeds of the foreign sales made by the original plaintiff and the moneys are due to the plaintiff only. Defendant No. 1 merely acted as the banker of the original plaintiff and was entrusted to collect the proceeds from the foreign buyer. Defendant No. 1 cannot refuse to credit the same to the account of the plaintiff in any manner. The said sum of Rs. 64,08,846 was paid to the original plaintiff after ascertainment of loss by defendant No. 2. Consequently there cannot be any question of payment of any further sum other than the said sum of Rs. 64,08,846/- out of the moneys of the plaintiff i.e. the sale proceeds of the said transaction. Due to appreciation in the value of US Dollar vis-a-vis the Indian Rupee, the said sum in foreign currency has appreciated in Indian rupee value the benefit whereof cannot be taken by any one else other than the plaintiff. The said policy issued by defendant No. 2 clearly excluded any such benefit to be accrued other than to the plaintiff. In the event of repatriation of the said amount of US $ 5,59,696.14 to India defendant No. 2 in any event cannot be entitled to claim any amount representing appreciation and/or depreciation in exchange rates and any such variation in exchange rate by way of revaluation or devaluation was and is solely to the account of the plaintiff. The said policy provides inter alia that in case any amount is recovered either by the plaintiff or defendant No. 2 in respect of the loss to which the said policy applies the same shall be divided in the proportion of 90 for defendant No. 2 and 10 for the plaintiff. Defendant No. 2 has paid the total sum of Rs. 64,08,846/- on a loss of Rs. 72,77,286.99 as ascertained at or before payment of the said total sum. Defendant No. 1 has realised the total sum of US. $ 559696.14 equivalent to Rs. 1,61,10,999.90 (converted at the current exchange rate) on account of the original plaintiff and/or the present plaintiff under the said transaction between the original plaintiff and the foreign buyer. The said amount of Rs. 1,61,10,999.90 has been received by defendant No. 1 on behalf of and as agent and/or trustee of the original plaintiff and/or the present plaintiff. As such defendant No. 1 is not entitled to hold the same and/or divert the same under any circumstances. Defendant No. 2 never requested the original plaintiff to assign and/or transfer to defendant No. 2 the original plaintiff's rights under the said contract including the right to receive any moneys payable thereunder or the right to damages for any breach thereof. The original plaintiff and/or the present plaintiff has not assigned and/or transferred any of such rights. As such defendant No. 1 is wrongfully withholding the said amount Rs. 1,61,10,999.90 less the said amount of Rs. 64,08,846/- being the amount of loss covered by the said policy and paid by defendant No. 2 to the original plaintiff from time to time.

6. On or about 7th May, 1992 defendant No. 1 credited the account of the original plaintiff with the sum of Rs. 16,11,099/- being 10% of the said total amount of Rs. 1,61,10,999.00 received by it from the foreign banker of the said foreign buyer for and on account of the original plaintiff. The original plaintiff further came to know that defendant No. 1 had also remitted the balance 90% of the said sum of Rs. 1,61,10,999.90 being a sum of Rs. 1,44,99,900/- to defendant No. 2. It has alleged by the plaintiff that defendant No. 2 at best was entitled to receive the said sum of Rs. 64,08,846/- out of the aforesaid sum of Rs. 1,61,10,999.90. Defendant No. 2 was only entitled to be reimbursed of the amount paid by it to the original plaintiff under the said policy.

7. The plaintiff further alleges that contrary to its right under the policy defendant No. 2 received a further sum of Rs. 80,91,054/- over and above the said sum of Rs. 64,08,846/-. The said sum of Rs. 80,91,054/- belonged to the original plaintiff and now belongs to the present plaintiff and defendant No. 2 is liable to reimburse the said sum along with interest @ 18% per annum to the plaintiff. The plaintiff is entitled to claim a decree for Rs. 80,91,054/- along with interest thereon from 18.4.92 @ 18% per annum against defendant No. 2 as defendant No. 2 received the said sum of Rs. 80,91,054/- for and on account of and for the benefit of the original plaintiff and then the present plaintiff. On 30th January 1996 the present plaintiff was incorporated under the Companies Act. 1956 and all the assets, rights, benefits, licenses, liabilities and obligations of the original plaintiff Ram Chander Heeralall which was a partnership business stood vested in the present plaintiff and the plaintiff became entitled to pursue the suit.

8. Defendant No. 1 the Hong Kong and Shanghai Banking Corporation Ltd. has contested the suit by filing the written statement wherein the material allegations contained in the plaint have been denied. The case of defendant No. 1 in brief is that pursuant to the plaintiff's request to this defendant and/or its representative, this defendant agreed to act and acted as a banker on behalf of the plaintiff in order to enable the plaintiff to avail itself of Export Credit and Guarantee Corporation Scheme (shortly known as 'ECGC Scheme') of defendant No. 2. Such scheme was introduced by defendant No. 2 to assist exporter to insure their losses arising out of non-payment of the export bills. As a pre-requisite for the export order defendant No. 2 at the request of the plaintiff furnished a bank guarantee in favour of Egyptian National Railway covering 20% of the total value of the contract in terms of the agreement dated October 8, 1985 by and between the plaintiff and Egyptian National Railways. In order to mitigate the losses arising out of non-payment of the aforesaid export transaction the plaintiff obtained a specific shipment (Political Risk) Policy No. 14499/87 from defendant No. 2 in consideration of premium of Rs. 81,891/- on or about January 27, 1987. Upon failure of the banker of the foreign buyer to remit the amount deposited by the foreign buyer with the National Bank of Egypt the plaintiff in terms of the aforesaid policy dated January 27, 1987 made claims in the standard claim forms upon defendant No. 2 from time to timer On such demand ma'de by the plaintiff defendant No. 2 duly made payments to the plaintiff. Thereupon all the rights under the bills stood transferred to defendant No. 2 in terms of Clause 7 of the transfer claim form. On being informed by the telex message dated April 2, 1992 by the National Bank of Egypt, the banker for the plaintiff to take steps for remittance of funds lying with it in respect of the aforesaid transaction this defendant bank took steps accordingly for remittance of the aforesaid funds. On payments made by defendant No. 2 to the plaintiff the amounts which were received by defendant No. 1 from the banker of the overseas buyer of the plaintiff were to be held by defendant No. 1 as trustee for defendant No. 2.

9. Further case of defendant No. 1 is that on April 24, 1992 the plaintiff moved this Court restraining defendant No. 1 from making proportionate payments in terms of the aforesaid agreement to defendant No. 2. By an order dated May 5, 1992 this Court vacated the aforesaid ad interim order of injunction which was granted on April 24, 1992 in favour of the plaintiff. Thereupon on May 7, 1992 this defendant remitted the proportionate share of the claim of the plaintiff and defendant No. 2 by two several letters dated May 7, 1992. The plaintiff has received payment by making claim upon defendant No. 2 and so the question of making any further payment as alleged does not arise. In view of the aforesaid payment made in accordance with the said policy dated January 27, 1987 and pursuant to the terms of standard claim form there is no sum outstanding or payable to the plaintiff. It is clearly stipulated in the said policy that any sum recovered by the plaintiff or defendant No. 2 in respect of the losses to which the policy applies after the date on which the loss is ascertained from the buyer or from any other source shall be divided between defendant No. 2 and the plaintiff in the proportionate share of 90 and 10. In the premises the plaintiff is not entitled to get any further sum as alleged. It is denied that this defendant is not entitled to hold the said sums or divert the same as alleged. The aforesaid policy as well as the clause in the standard claim form spelt out the contractual obligation of defendant No. 1 bank in no uncertain terms. Defendant No. 1 has done what is just, right and lawful under the aforesaid agreement. It has been specifically averred by defendant No. 1 that the amounts representing proportionate share of the claim of the plaintiff and defendant No. 2 had already been paid to the parties concerned and that the plaint does not disclose any cause of action against defendant No. 1.

10. Defendant No. 2 the Export Credit and Guarantee Corporation Ltd. has contested the suit by filing the written statement as well as the additional written statement wherein the material averments contained in the plaint have been denied. Briefly stated the case of defendant No. 2 is that this defendant issued a policy being No. 14499/87 dated 17.1.87 to the plaintiff on the terms and conditions set out therein. The said policy covered the contract entered into by the plaintiff for the shipment of 20,00,000 clip, bolts type D to the Egyptian National Railways, Cairo. The plaintiff shipped the said goods between 31st March, 1987. The plaintiff was unable to receive payment for the same due to restrictions imposed by the Egyptian National Bank. Thereafter the plaintiff made claims in the standard claim forms from time to time upon this defendant for payment of the amounts. After the plaintiff submitted each such claim form, this defendant addressed letters to the plaintiff allowing certain claims being 90% of the principal amount and interest in full and final settlement. By the said letters this defendant accepted the undertaking given by the plaintiff exporter and its bankers and forwarded their cheques. In response to each such claim submitted by it, the plaintiff addressed letters to this defendant confirming and accepting the conditions on which this defendant made payment and acknowledging the full discharge of its liability.

11. Further case of defendant No. 2 is that the plaintiff accepted the terms and conditions of the policy and Clause 16 thereof as a result of which all recoveries were to be shared in the ratio of 90% to this defendant and 10% to the plaintiff. This defendant paid claims on all the twenty-four instalments, upto 90% of the amount of loss, in terms of the policy and payment of such claim against each Instalment included payment against principal as well as interest. The plaintiff received the full amount payable under the policy which included interest upto the due date of payment for each Instalment. In the circumstances there is no question of the plaintiff being entitled to claim any payment de hors the conditions thereof. It has been alleged by defendant No. 2 that the plaintiff having accepted the terms and conditions of the policy acted upon the same and received the full payment thereunder and as such the plaintiff cannot challenge the express terms of the policy in particular Clause 16 which entitle this defendant to retain 90% of recoveries. It is denied by third defendant that this defendant was entrusted to collect the proceeds from the foreign buyer and thereafter obliged to credit the same to the account of the plaintiff in the manner as alleged. Defendant No. 1 bank held the amount in trust for defendant No. 2 and was obliged to make payment of 90% of recoveries to this defendant under the said policy and the claim form. This defendant is entitled to retain 90% of the recoveries as referred to in the policy. It lias been further alleged by this defendant that by virtue of the terms and conditions of the said policy and the declaration and undertakings made in the claim form and by virtue of accepting payment of the claim form this defendant in full and final settlement under the policy, the plaintiff has given this defendant the right to receive all monies relating to the loss ascertained under the policy and the right to have such money shared between this defendant and the plaintiff in the ratio agreed to under Clause 16 of the policy. This defendant was entitled to get 90% of the monies recovered from the foreign buyer and duly appropriated such 90% amount and made over the 10% of the amount being entitlement of the plaintiff to the plaintiff. This defendant has acted bona fide and in accordance with the terms and conditions of the subject policy and no grievance in respect of the same can be made by the plaintiff. It is denied by this defendant that this defendant has unjustly enriched itself of that this defendant was not entitled to receive any sum over and above Rs. 64,08,846/- out of the amount recovered from the foreign buyer as alleged by the plaintiff. It has been denied by this defendant that the sum of Rs. 80,91,054/- or any part thereof belongs to the plaintiff and that this defendant is liable to reimburse or refund or pay the same to the plaintiff as alleged in the plaint.

12. On pleadings of the parties the following issues have been framed for the purpose of trial of the suit:

(1) Has the plaintiff any cause of action against the defendants?

(2) Has this Court territorial jurisdiction to try this suit?

(3) Is the plaintiff entitled to the benefit of foreign currency appreciation in terms of the policy No. 14499 of 1987 dated 4.1.1987?

(4) Is the defendant No. 2 exclusively entitled to retain the benefit on account of appreciation of foreign currency, inter alia, in terms of Clause 11 of the said policy?

(5) Is the defendant No. 2 entitled to retain any amount exceeding Rs. 64,08,846/- as alleged in the plaint?

(6) Was the defendant No. 1 bound by the terms and conditions contained in the Transfer Claim Form in respect of the said policy? If yes, has the defendant No. 1 discharged its obligation in terms thereof? If not, is the plaintiff entitled to get any relief against the defendant No. 1?

(7) Has the plaintiff waived its right to claim the benefit of appreciation of foreign currency as alleged in the written statement?

(8) Is the plaintiff entitled to get the positive and negative declaration as prayed for?

(9) Is the plaintiff entitled to get a decree of mandatory injunction against the defendant No. 1?

(10) To what relief, if any, is the plaintiff entitled?

(11) Is the plaintiff entitled to get declaration that the plaintiff alone is entitled to the balance sum of Rs. 97,02,153.90 collected by defendant No. 1 on account of the original plaintiff out of the proceeds of the transactions between the original plaintiff and the Egyptian National Railways and is entitled to the credit of the said amounts less the sum of Rs. 16,11,099 already credited to the account of the original plaintiff with defendant No. 1 as prayed for in prayer (a) of the plaint?

(12) Is the plaintiff entitled to get decree for Rs. 80,91,054 with interest as prayed for in the plaint?

Decision:

Issue No. 2:

13. This issue has not been pressed during trial. The said issue not having been pressed during trial, the same is answered in the affirmative and decided accordingly in favour of the plaintiff.

Issue Nos. 1. 3, 4, 5, 6 and 7:

14. Being interlinked all these issues are taken up together for consideration for the sake of convenience and brevity.

15. Admittedly, Ramchander Heerlall which was a registered partnership firm was the original plaintiff and PW Pradip Khaitan who has come as sole witness on behalf of the plaintiff was partner of the said registered firm. Exhibit 'A' is the certificate of registration of the said firm. It transpires from the evidence of PW Pradip Khaitan that in 1996 the original plaintiff firm was converted into incorporated company under the name and style of Ramchander Heerlall Ltd. and subsequently the name of the said company was changed to Rahee Industries Ltd. and such change of name took place on 3.8.98. Exhibit 'O' is the certificate of incorporation issued by the Registrar of Company in the name of Ramchander Heeralall Ltd. and Exhibit 'U' is a fresh certificate of incorporation for change of name of the said company as Rahee Industries Ltd. Admittedly, the present plaintiff is Rahee Industries Ltd. and all the assets, rights, benefits and liabilities of the original plaintiff ultimately vested in the present plaintiff.

16. The admitted facts emerging from the materials on record are as follows. Pursuant to the contract dated October 8, 1985 which is marked as Exhibit 'B' the original plaintiff sold, supplied and exported 20 lacs of clip bolts to the Egyptian National Railways for a total value of US $ 6,15,200. In terms of the said contract 200 of the total value of the contract was paid in advance and the remaining 80% of the total value of the contract was to be paid over a period of three years in equal semiannual consecutive instalments with fixed interest @ 9% per annum. The foreign buyer had to make payments in US dollars. The said materials were exported by the original plaintiff in four consignments on 31.3.87, 15.7.87, 28.9.87 and 31.10.87 respectively. The foreign buyer deposited the semi-annual instalments with its banker, the National Bank of Egypt six months after each of the aforesaid consignments had been sent. It is indisputable as well that because of restrictions imposed by the Government of Egypt at the material of point of time the National Bank of Egypt was unable to remit the amounts in India. A letter of guarantee bearing LG No. 6020/666 was issued by the National Bank of Egypt at the behest of the foreign buyer for payment of the remaining 80% of the value of the exported goods in terms of the aforesaid contract dated 8.10.85. It is admitted as well that on 27th January, 1987 defendant No. 2 the Export Credit and Guarantee Corporation Ltd. (hereinafter referred to as ECGC) issued specific Shipment (political risk) policy to the plaintiff in consideration of a premium of Rs. 81,891/- Exhibit 'D' is the said specific shipment (political risk) policy issued by defendant No. 2 ECGC to the plaintiff.

17. The materials on record further denote that since the money was not remitted by the foreign buyer or its banker in terms of the contract to the plaintiff, the plaintiff from time to time lodged claim with defendant No. 2 in terms of the said policy of insurance (Exhibit 'D') and payments were made by defendant No. 2 to the plaintiff from time to time accordingly. The particulars of payment made by defendant No. 2 ECGC have been shown by the plaintiff in a schedule which is marked Exhibit I. None of the defendants has raised any dispute about such particulars of payment shown in Exhibit 'I'.

18. Mr. Anindya Mitra the learned senior advocate appearing for the plaintiff has drawn my attention to the fact that defendant No. 2 ECGC paid 90% of the value of the invoices at the exchange rate prevailing on the date of shipment to the foreign buyer in accordance with the policy. Exhibit ''F is the transfer claim form submitted by the plaintiff in respect of the claim in the last instalment. Mr. Mitra has further drawn my attention to annexure T to Exhibit 'F' wherefrom it will appear that by calculating at the rate of exchange on the date of shipment, the equivalent amount of the outstanding 80% (being dollars 559,696.14) is Rs. 72,77,286.99 and 90% thereof amounts to Rs. 65,49,558.13. As contended by Mr. Mitra, defendant No. 2 ECGC paid a sum of Rs. 64,08,846/- which is the amount mentioned in the policy (Exhibit 'D') as the maximum liability. Clause 13 of the policy (Exhibit 'D') reveals in unambiguous terms that the total liability of defendant No. 2 ECGC under the said policy is limited to Rs. 64,08,846/-. Mr. Mitra has drawn my attention to the two letters being Exhibit Nos. 'S' and 'T' wherefrom it appears that by the letter dated 13.2.89 (Exhibit 'T') defendant No. 2 requested the original plaintiff initially to make payment of extra premium of Rs. 1798 to cover the extra amount. The letter dated 26.4.89 addressed by defendant No. 2 to the original plaintiff which is marked Exhibit 'S', however, reveals that defendant No. 2 refunded the extra premium of Rs. 1798. The above materials on record clearly indicate that the maximum liability of defendant No. 2 ECGC is limited to Rs. 64,08,846 as stipulated in the aforesaid policy (Exhibit 'D') and nothing more than that.

19. Mr. Mitra has pointed out that long after final payment had been made by defendant No. 2 on or about April 2, 1992, the National Bank of Egypt remitted the funds lying with it to the plaintiff's banker defendant No. 1 and such transfer was made under cover of the telex dated April 2, 1992 marked as Exhibit 'G', which clearly indicates that the National Bank of Egypt had remitted the amount of US Dollar 5,59,696.14 in discharge of its obligation under letter of guarantee No. 6020/666. As calculated by the plaintiff in the plaint, the value of US Dollar 5,59,696.14 as on April 2, 1992 was equivalent to Rs. 1,61,10,999.90.

20. Exhibit 'H' the letter dated 18th April, 1992 sent by defendant No. 1 bank to the original plaintiff. The contents of the said letter are quoted below:--

'Re: Ramchander Heeralall (Policy No. 14499/87)

We write to inform you that we have on 13th April, '92 received payment USD 559696.14 being the value of bills being Nos. EXP/87/2 dated 20.01.87, EXP/87/3 dated 06.04.87, EXP/87/4 dated 11.07.87 and EXP/87/6 dated 17.10.87 drawn by the captioned firm on Egyptian National Railway, and we are holding the same as we are unable to arrive at 'proportionate share' which is to be paid to the Corporation as the interpretation of the clause of the above policy is not very clear to us. Please note that as soon as you intimate the amount to be paid to the Corporation and/or to our constituent, the captioned firm, we will immediately disburse the amount in accordance with the certificate incorporated in the claim form which was signed by us.'

21. From the contents of the said letter (Exhibit 'H') it appears that it was not clear to defendant No. 1 bank in what proportion the amount received by them would be distributed between the plaintiff and defendant No. 2. It further appears therefrom that interpretation of the clause relating to proportionate share as contained in the said policy (Exhibit 'D') was not clear to defendant No. 1 bank.

22. Exhibit 'J' is copy of the order dated 24.4.92 wherefrom it appears that after institution of the suit upon an application of the plaintiff Justice Hazari (as His Lordship then was) restrained defendant No. 1 from making any payment or remitting any sum amounting to Rs. 97,02,153.90p out of the total sum of Rs. 1,61,10,999.90p to defendant No. 2 without further order of the Court. Copy of the order dated 5.5.92 passed by Justice Padma Khastgir (as Her Lordship then was) marked as Ext. L shows that the said interim order was subsequently vacated.

23. Indisputable is the fact that after the interim order was vacated, defendant No. 1 bank remitted 90% of the total money in Indian Currency to defendant No. 2 and 10% to the plaintiff. It has been contended by Mr. Mitra the learned senior advocate for the plaintiff that such payments were made by defendant No. 1 bank even though there was no express order or leave granted by this Court to do so and even though the question as to how the money was to be proportioned was a question to be decided in this suit. As contended by Mr. Mitra, on April 2, 1992 defendant No. 1 bank received the sum of US $ 5,59,696.14 equivalent to Rs. 1,61,10,999.90p in Indian Currency from the National Bank of Egypt and defendant No. 1 bank divided the entire amount received by them in the proportion of 90 : 10 and made over 90% of the said money to defendant No. 2 and 10% to the plaintiff. The letter dated 7th May, 1992 addressed by defendant No. 1 bank to the original plaintiff which is marked as Ext. M reveals that defendant No. 1 bank remitted Rs. 1,42,04,588.00 being 90% of value of the amount received to defendant No. 2 ECGC and credited Rs. 15,78,288 being 10% of the amount received to the current account of the original plaintiff. It has been argued by Mr. Mitra that even though defendant No. 2 paid out only Rs. 64,08,846 under the policy of insurance (Exhibit 'D'), due to wrongful act of defendant No. 1, defendant No. 2 received the excess sum of (Rs. 1,42,04,588 less Rs. 64,08,846) Rs. 77,95,742. Mr. Mitra has further contended that the said excess amount has been generated due to devaluation of the Rupee against the Dollar and cannot be said to be recovery of 'loss' under the policy.

24. The crux of the dispute centres upon the question as to whether or not defendant No. 2 ECGC is entitled to retain the said excess amount of Rs. 77,95,742. The answer to the said question depends on the interpretation of the relevant clauses of the policy of insurance which is marked as Exhibit 'D'. Mr. Mitra has contended that an identical policy of insurance had been considered and interpreted by the House of Lords and it was held that the excess amount could not be retained by the insurer. He has relied on the decision of the House of Lords in the case of L Lucas and Anr. v. Export Credits Guarantee Department reported in (1974)2 All ER 889. It appears that Clause 17 of the policy interpreted by the House of Lords is more or less identical with Clause 16 of the present policy of insurance Exhibit 'D'. Clause 17 of the policy of insurance interpreted by the House of Lords is set out below:--

'Any sums recovered by the Merchant or the Guarantors in respect of a loss to which this Guarantee applies after the date at which the loss is ascertained, whether from the buyer or any other source shall:--(i) if the ground of the claim is the occurrence of the cause specified in sub-paragraph (i) of paragraph I of this Guarantee, be divided between the Guarantors and the Merchant in the proportions of 85 and 15; (if) In any other case be divided between the Guarantors and the Merchant in the proportions of 90 and 10;The Merchant shall pay all sums recovered to the Guarantors forthwith upon their being received by him or any person on his behalf, the Merchant hereby acknowledging and declaring that until such payment is made to the Guarantors, he receives and holds such sums in trust for the Guarantors.'

25. Clause 16 of the present policy of insurance (Exhibit 'D') reads thus:--

'Any sums recovered by the Exporter or the Corporation in respect of a loss to which this policy applies after the date on which the loss is ascertained, from the buyer or any other source shall be divided between the Corporation and the Exporter in the proportion of 90 and 10.

The Exporter shall pay all sums so recovered to the Corporation forthwith upon their being received by him or any person on his behalf, the Exporter hereby acknowledging and declaring that until such payment is made to the Corporation, he receives and holds such sums in trust for the Corporation.'

26. The facts of the case of L Lucas Ltd. & Anr. (supra) decided by the House of Lords may briefly be quoted as follows:--

'A company ('the merchant') sold flour to Egyptian buyers and the contracts with them provided that payment therefor should be made in US dollars. The contracts were covered by a 'guarantee' given by the Export Credits Guarantee Department acting for the Board of Trade ('the guarantors') in return for the payment of a premium. By Clause I of that guarantee the guarantors agreed to pay the merchant a percentage of the amount of any loss sustained in connection with the export of any goods under such contracts caused, inter alia, by the prevention of or delay in the transfer of payment from the buyer's country to the United Kingdom in circumstances outside the control of both the merchant and the buyer. The guarantors undertook to pay to the merchant 90 per cent of 'the loss' immediately after it had been ascertained, which, under the terms of the guarantee, would be four months after the due date of payment by the buyer. The amount of the loss was defined in Clause 9 as being the gross invoice value of the goods the subject of the contract of sale, delivered and accepted by the buyer. Under an endorsement added to the contract, where the currency of payment was other than in sterling, the amount of the loss was to be calculated in sterling by converting the foreign currency into sterling at the buying rate of exchange in the foreign exchange market on the date when the goods were exported under the contract of sale. Clause 17 of the contract provided; 'Any sums recovered by the Merchant or the Guarantors in respect of a loss to which this Guarantee applies, after the date at which the loss is ascertained, whether from the buyer or any other source shall.....be divided between the Guarantors and the Merchant in the proportions of 90 and 10; The Merchant shall pay all sums recovered to the Guarantors forthwith upon their being received by him or any person on his behalf, the Merchant hereby acknowledging and declaring that until such payment is made to the Guarantors, he receives and holds such sums in trust for the Guarantors'. Six drafts in US dollars given by the Egyptian buyers to the merchant in respect of goods exported under the contract of sale were not paid on maturity because certain restrictions on the transfer of currency were imposed by the United Arab Republic. The drafts were for a total of US $ 1,155,181.26. The merchant made an claim under the guarantee in respect of the delay in payment. The guarantors examined the claim and paid to the merchant 372,071 6s 10d, i.e. 90 per cent of 413,412 12s, which was the sterling equivalent of the gross invoice value of the goods (US $ 1,155,181.26) at the date when the loss fell to be ascertained. Subsequently the currency restrictions of the United Arab Republic were removed and the amounts due on the drafts in US dollars were paid in four instalments to the merchant's bankers who converted the dollars into sterling at the prevailing rate of exchange for payment to the merchant. After the first instalment had been paid, the rate of exchange altered and in consequence the total sum received by the merchant as payment, when converted into sterling, amounted to 443,032 8s ld. The merchant repaid the guarantors the 372,071 6s 10d that they had paid (i.e. the 90 per cent of 413,412 12s). The guarantors contended that they were entitled to be paid 398,729 3s 3d, i.e. 90 per cent of the sum received 443,032 8s 1d).'

27. In the said case Lord Morris of Borth-Y-Gest quoted Clause 17 of the policy and observed as follows at page 895-896:--

'If a sum is recovered (whether by a merchant or by the guarantors) in respect of a loss to which the 'guarantee' applied then naturally it should be divided in the proportions applicable to the transaction. If the guarantors had to make a payment of 90 per cent of the 413,412 12s (the loss) then if there was recovery in respect of the 413,412 12s the sum recovered ought to be divided so that the guarantors received 90 per cent of it. So the question arises what sum was recovered in respect of the 413,412 12s? The answer is that all the 413,412 12s was recovered. The loss was deemed. The guarantors became entitled to 90 per cent of the amount recovered in respect of the loss. Clause 17 is really the counterpart of Clause 8. But once a sum recovered in respect of a loss covered by the 'guarantee' reaches the amount of that loss then Clause 17 has, in my view, no further application. Any further sum received is not received in respect of the loss.

If pursuant to Clause 16 of the contract there had been a request to the merchant to assign and transfer under (b) or a request to assign, deliver up or transfer securities under d) and if the guarantors had later received more than the amount of the loss certain problems might have arisen. Clauses 16 and 17 are, in my view, linked; this is so because Clause 17 refers to sums recovered in respect of a loss either by the merchant or by the 'Guarantors'. The contract does not in terms provide for what is to happen if it is the guarantors who receive a sum of money over and above what they recover in respect of a loss. The problem that might arise does not call for present determination.

Some reliance was placed on behalf of the guarantors on the opening words of the second sentence of Clause 17, viz. The Merchant shall pay all sums recovered to the Guarantors forthwith upon their being received by him or any person on his behalf....'. In my view, that sentence merely follows on the first sentence so that the reference to all sums recovered is a reference to all sums which are recovered in respect of a loss.

It is to be observed that the word 'loss' appears both in the second line of Clause 17 and also in the third line. It must have the same meaning in both places. The second mention is in the words 'the date at which the loss is ascertained'. That refers to Clause 7 and, in my view, Clause 7 (which provides for payment being made to the merchant) denotes a money sum as being ascertained: the amount of such sum being determined according to Clause 9. This reinforces the view that no valid distinction can be drawn between a sum of money which is called a loss and the amount of such sum of money.'

28. In the case of L Lucas Ltd. & Anr. (supra) Viscount Dilhorne at page 898 made the following observations:--

'That a policy of this kind should contain provisions designed to secure that the respondents would recover the percentage of the loss which they had paid if later the appellants received payment for their goods, is to be expected. But I doubt if it was ever contemplated that delay in payment by the buyer would lead in the end to the vendor getting more than the sterling value of the dollars at the time they fell to be converted into pounds in order to calculate the amount of a loss in accordance with the terms of the policy. If it had been intended that the respondents should be entitled to 90 per cent of any such fortuitous profits, I would have expected that to have been made explicit. The contract would then not have been one indemnifying against a percentage of a loss and containing provisions enabling recoupment of that loss but also on providing for sharing of any profit there might be as a result of devaluation.

I feel no doubt that the language of the contract does not permit of interpretation in accordance with the respondents' contention, I cannot see that any part of it supports the conclusion that the respondents were under it entitled to receive back more than they had paid in respect of a loss.'

29. Relying on the said decision of House of Lords Mr. Mitra has contended that since both Clause 16 of the present policy of insurance (Exhibit 'D') and Clause 17 of the policy interpreted by the House of Lords are more or less identical, the said decision of the House of Lords is of great relevance and has high persuasive value. He has further, submitted that there is no ground to differ from the reasoning and/or Interpretation given by the House of Lords to the said clause. It is further contention of Mr. Mitra that recovery of any sum in excess of the amount indemnified by the insurer cannot be said to be in respect of the loss under the policy and the contract between the plaintiff and defendant No. 2 ECGC is a contract of insurance which is essentially a contract of indemnity but not full indemnity. It is further contended by Mr. Mitra that in the event the insurer does not indemnity completely but only partially, the insurer has no right of subrogation at all. He has further pointed out that defendant No. 2 has not taken any defence of subrogation or assignment in the instant case and without being subrogated the insurer cannot claim to retain the amount in excess of what it has paid by way of indemnity. Reliance has been placed by Mr. Mitra on the ratio of the decision in the case of Yorkshire Insurance Co. Ltd. v. Nisbet Shipping Co. Ltd., reported in (1962)2 Queen's Bench Division Bench 330 in support of his contention that the insurer cannot retain the amount in excess of what it has paid by way of indemnity.

30. Mr. Supriya Bose the learned advocate for defendant No. 1 Hong Kong & Shanghai Banking Corporation Ltd. has contended, on the other hand, that by its act of disbursing payment to the parties in the ratio as provided in Clause 16 of the policy (Exhibit 'D') the bank discharged its contractual obligation and adhered to the assurance and/or guarantee given by it to defendant No. 2 as contained in Part VIII of the transfer claim form which is marked as Exhibit 'F'. He has drawn my attention to the relevant portion of Part VIII in Exhibit 'F' wherein it has been stipulated that upon payment by the Corporation the bank shall treat all the rights under the bill as transferred to the Corporation and the bank shall hold the said bill in trust for the Corporation. He has cited the case of the Central Bank of India Ltd. Amritsar v. The Hartford Fire Insurance Co. Ltd. reported in : AIR1965SC1288 so far as interpretation of Clause 16 of the policy is concerned and argued that the Court must give effect to the plain meaning of the words of Clause 16 of the policy of insurance (Exhibit 'D'). It is his contention that Clause 16 of the policy clearly indicates that any sums recovered by the Exporter or the Corporation in respect of the loss to which this policy applies shall be divided between the Corporation and the Exporter in the proportion of 90 and 10. Mr. Bose has argued further that the plain and categorical language of Clause 16 of the policy clearly indicates that any sum in respect of the loss covered by the policy shall be divided between the Corporation and the Exporter in the proportion of 90 and 10 and as such the excess amount recovered from the foreign buyer due to appreciation in the value of US dollar vis-a-vis the Indian Rupee would be divided in the ratio of 90 and 10 between the insurer and the assured in terms of the plain language of Clause 16 of the policy. He has referred to the evidence of PW 1 Pradip Khaitan who is the Director of the plaintiff company and pointed out the relevant portion of evidence of PW 1 Pradip Khaitan to show that the plaintiff was bound by the terms contained in the policy (Exhibit 'D') and the terms contained in the transfer claim form (Exhibit 'F'). Mr. Bose has further argued that the principles laid down by the House of Lords in the case of L Lucas Ltd & Anr. (supra) as cited by Mr. Mitra the learned senior advocate for the plaintiff have no application in the Indian context where the socio-economic conditions and political milieu are quite different from those of the United Kingdom.

31. Mr. Sanjib Banerjee the learned advocate for defendant No. 2 ECGC has advanced argument to the effect that the policy of insurance (Exhibit 'D') has to be construed by reference to its terms and the words of Clause 16 of the policy are clear and explicit and do not necessitate any interpretation other than what is expressed. As contended by him, to construe Clause 16 of the policy (Ext. 'D') to mean that defendant No. 2 ECGC will only recover what it has paid to the plaintiff would be erroneous and if the rupee would have appreciated as against the dollar, ECGC would have got a sum less than what it has paid to the plaintiff and would not in terms of the policy be entitled to recover any sum from the plaintiff. Mr. Banerjee has further argued that in the event of appreciation of the rupee vis-a-vis the dollar, ECGC is required to bear the loss as the contract does not provide for any recovery and so on a parity of reasoning, ECGC should be allowed to retain the proportionate gain on account of depreciation of the rupee. Mr. Banerjee has referred to proviso to Clause 11 of the policy (Exhibit 'D') which provides that if devaluation of the currency in which the buyer has to pay takes place before the claim is paid, the amount claimed in Indian currency shall be based on the devalued rate. Mr. Banerjee has submitted that such proviso to Clause 11 does not apply to recoveries since admittedly the disputes arose after the claims were paid. It is his further contention that the extent of sharing of the amount recovered has a direct nexus with the ratio of loss agreed to be borne by the Exporter and the insurer and the ratio as stipulated in Clause 16 of the policy was 90% to ECGC and 10% to the plaintiff. Mr. Banerjee has urged that all the parties to the instant suit have acted in terms of the policy (Exhibit 'D') and the terms, conditions and undertakings contained in the transfer claim form (Exhibit 'F'), the letter dated 19.5.88 addressed by defendant No. 2 to the original plaintiff marked Exhibit 'Q' and the plaintiffs letter dated 30th May, 1988 to defendant No. 2 (Exhibit 'V'). It has been further contended by Mr. Banerjee that the plaintiff has received more than the rupee value of the goods exported by the plaintiff and that ECGC has not received any amount at the expenses of the plaintiff. He has also contended that the excess amount has been received by ECGC in terms of the policy (Exhibit 'D') which is binding upon the plaintiff and ECGC.

32. Mr. Banerjee has submitted that in the case of L Lucas Ltd. & Anr. (supra) the House of Lords discarded the plain and literary meaning of the words contained in the clause and interpreted the expression 'loss to which this guarantee applies' by holding that such loss was only restricted to the amount paid by the department to the merchant and did not apply to the amount recovered from the foreign buyer. It is submitted by Mr. Banerjee that the expression 'loss to which the policy applies' cannot mean the money paid by the insurer to the exporter. As contended by Mr. Banerjee on behalf of defendant No. 2, the aforesaid judgment of the House of Lords only considers the case of appreciation of the foreign currency vis-a-vis the local currency and the interpretation of a clause has to be made in the light of all possible situations. He has further contended that proviso to Clause 11 of the policy regarding rate of conversion applies only to payments at a pre-recovery stage and the recovery clause being Clause 16 of the policy (Exhibit 'D') stands on itself and a plain reading thereof does not suggest the construction as made in the aforesaid judgment of the House of Lords. Mr. Banerjee has also submitted that no question of subrogation arises in the instant case nor any such defence has been taken either in the written statement or in the additional written statement. It is his further contention that general principles of subrogation can only be applied in absence of express terms and conditions and while overruling the judgment of the Court of Appeal in L Lucas Ltd. and Anr. v. The Export Credit Guarantee Department reported in (1973)2 All ER 984, the House of Lords has not disagreed with this view. He has drawn my attention to the decision of the House of Lords reported in (1974)2 All ER 889 at pages 897-898 in this regard.

33. On hearing the rival contentions raised by the learned advocates for the parties and going through the materials on record I find that the agreement advanced by Mr. Anindya Mitra the learned senior advocate for the plaintiff has got sufficient legal force. It can in no way be denied that the law of Insurance in India is principally based on the law of Insurance prevalent in England. Mr. Mitra has pertinently drawn my attention to substantial identity between the policy of insurance (Exhibit 'D') in the instant case and the policy of insurance interpreted by the House of Lords in the case of L Lucas Ltd & Anr. (supra). The materials on record leave no room for scepticism that an identical policy of insurance like the present one had been considered by the House of Lords and after interpreting the relevant clause particularly Clause 17 of the policy relating to recovery the House of Lords specifically held that recovery in respect of such loss signified recovery in recoupment of the loss. In L Lucas Ltd. & Anr. (supra) at page 898 Viscount Dilhorne observed as follows:--

'Recovered in respect of a loss to me signifies recovered in recoupment of the loss. I cannot interpret those words as entitling the respondents to require payment to them of sums in excess of the loss calculated in accordance with the contract.

The last sentence of Clause 17 required the appellants to pay all sums recovered to the respondents, although under that clause the respondents were only entitled to retain 90 per cent thereof. 'Recovered' in this sentence relates back to the opening words of the clause and, in my view, means recovered in respect of a loss to which the guarantee applies.'

34. In the present case I find that the excess amount of rupees was generated due to fluctuation of foreign exchange and such excess amount recovered due to fluctuation of foreign exchange cannot be said to be money recovered in respect of loss to which the policy (Exhibit 'D') applies. Such excess amount generated by devaluation of Indian currency is fortuitous event which cannot come within the ambit of loss in respect of which the policy applies. There is nothing in the policy (Exhibit 'D') to indicate that defendant No. 2 ECGC being the insurer ever accepted to take the risk of fluctuation of foreign exchange. So they cannot now take the benefit of fluctuation of foreign exchange.

35. From the above factual matrix it emerges that the money received is entirely against the outstanding bills being 80% of total value of the contract with interest paid by the buyer, but the same could not be repatriated to India due to Government restrictions together with interest and at the rate of exchange on the date of remittance. There is obviously difference between the loss and the event or the occurrence. Use of the expression 'loss to which this policy applies' in Clause 16 of the policy (Exhibit 'D') no doubt signifies the ascertained loss. Had it not been so, the words referring to any sums received following on an event or occurrence which was the cause of a loss could have found place instead of the words 'any sums recovered in respect of loss' in Clause 16 of the policy (Exhibit 'D'). Similar observation was made by Lord Morris of Borth-Y-Gest in the case of L Lucas Ltd. & Anr. (supra) at page 895.

36. During his argument in reply Mr. Anindya Mitra the learned senior advocate for the plaintiff has contended that in absence of any binding authority of an Indian Court on a particular point of law the decision of the House of Lords as cited by him is of high persuasive value to which this Court can turn for assistance. He has cited American Home Products Corporation v. Mac Laboratories Pvt. Ltd. and Anr., reported in : AIR1986SC137 to buttress up his contention on this score. Since the said contention has been raised by Mr. Mitra at the time of hearing of argument in reply on points of law, I would not have dealt with this aspect of the matter if it was not agitated by the learned advocate for defendant No. 2 at page 12-13 of the short notes of submissions on behalf of defendant No. 2 ECGC kept on the records. It has been submitted on behalf of defendant No. 2 that the aforesaid judgment of the Supreme Court is of no assistance to the plaintiff as the assistance value of English cases as recognised by the Supreme Court was in respect of a particular point of law as distinguished from a construction of a clause in a contract and the House of Lords has construed a clause in a particular manner and such construction cannot be said to have persuasive valued by reason of the judgment of the Supreme Court (vide page 13 of short notes of submissions on behalf of ECGC defendant No. 2). Such contention raised on behalf of defendant No. 2 cannot be countenanced for the plain reason that a clause in a contract is to be constructed or interpreted, as the case may be, in the light of the principles of law governing such construction or interpretation. In the case I am seized of I find that the decision of the House of Lords, reported in (1974)2 All ER 889 (supra) as cited by Mr. Mitra is of high persuasive value since there is no binding authority of an Indian Court on that particular point of law and, as noted hereinbefore, the law of insurance in India is principally based on the law of insurer prevalent in England.

For the foregoing reasons I hold that the plaintiff is entitled to the benefit resulting from appreciation of foreign currency and defendant No. 2 exclusively is not entitled to retain such benefit on account of appreciation of foreign currency in terms of the policy. I further hold that defendant No. 2 is not entitled to retain any amount exceeding Rs. 64,08,846/- to which their total liability is fixed in terms of the policy. It is manifestly clear from the materials on record the defendant No. 1 has not discharged its obligations in terms and conditions contained in the transfer claim form in respect of the said policy and wrongfully paid the excess amount exceeding Rs. 64,08,846/- to defendant No. 2. The plaintiff never waived its right to claim the benefit of appreciation of foreign currency,

37. All these issues are decided accordingly in favour of the plaintiff.

Issue Nos. 8, 9 and 11:

38. As submitted by Mr. Mitra the learned senior advocate for the plaintiff, these three issues have lost their efficacy in view of subsequent events. In view of such submission these three issues have become infructuous at this stage and the same be disposed of accordingly.

Issue Nos. 10 and 12:

39. Admittedly, defendant No. 2 being insurer paid a sum of Rs. 64,08,846/- to the plaintiff. It is quite evident from the letter dated 7th May, 1992 (Ext. M) addressed by defendant No. 1 to the original plaintiff that defendant No. 1 bank remitted a sum of Rs. 1,42,04,588 to defendant No. 2 ECGC. The materials on record make it quite clear that defendant No. 2 received the excess amount of Rs. 77,95,742/- (Rs. 1,42,04,588/- -Rs. 64,08,846/- = Rs. 77,95,742/-). In prayer (c) and c(i) of the plaint as amended the plaintiff, however, prayer for decree for the sum of Rs. 80,91,054/- with interest against defendant No. 2. The said amount of Rs. 80,91,054/- appears to have been claimed by the plaintiff on the basis that Rs. 1,44,99,900 was received by defendant No. 2. But subsequently it appears from the document marked as Exhibit 'M'. as referred to above, that defendant No. 2 received Rs. 1,42,04,588 and not Rs. 1,44,99,900 from defendant No. 1 and as such the amount as claimed in the plaint is required to be modified from Rs. 80,91,054 to Rs. 77,95,742 as mentioned hereinbefore. Thus I find that the plaintiff is entitled to get decree for the sum of Rs. 77,95,742/- with interest @ 9% per annum from the date of the decree till recovery of the dues against defendant No. 2. In view of the peculiar facts and circumstances of the case and subsequent events as narrated above I am not inclined to award interest for the period from 18.4.92 till the date of institution of the suit and interest pendente lite as claimed in the plaint. The plaintiff is entitled to get costs of the suit against both defendant Nos. 1 and 2. Both the issues are disposed of accordingly.

Court fees paid are sufficient.

40. The suit be decreed with costs in the following manner. The plaintiff do get decree for Rs. 77,95,742/- with interest @ 9 % per annum from the date of the decree till recovery of the dues against defendant No. 2. The plaintiff do get costs of the suit against both the defendants.

Decree be drawn up expeditiously.