By Adv. R. S. Agrawal 

 

 

IN THE Commercial Summary suit filed by the- plaintiff Bombay Iron and Steel Labour Board against the State Bank of India (Original Defendant), the Bank has failed to get the plaint rejected /returned on the ground that the same is barred under the law and cannot be tried under the Commercial Courts Act, 2015. This prayer was made by the defendant-Bank through an interim application filed by it under Order VII Rule 11 of the Code of Civil Procedure, 1908. The Plaintiff Board has filed reply to the same. It is not in dispute that the plaintiff-Board placed fixed deposits of Rs 45 crores with the defendant-Bank upon the terms as contained in the said fixed deposit receipts, as annexed to the plaint. The fixed deposit receipts are term deposit receipts which imply promise to pay the amounts mentioned in the fixed deposit receipts with interest on maturity. It is also not in dispute that out of the fixed deposits of Rs 45 crores, the plaintiff Board has been paid the fixed deposits of Rs 9 crores with interest on September 2, 2021. That, therefore, what remains outstanding is the payment of fixed deposits of Rs 36 crores with interest. It is alleged that the fixed deposits of Rs 36 crores were fraudulently, prematurely withdrawn and siphoned off. That some part of it namely, an amount of Rs 11,39,62,531 which has been siphoned off and deposited with Akhand Anand Co-operative Bank in Gujarat, has been debit frozen.

 

There are allegations that a Manager of the defendant-Bank had committed fraud and misappropriation due to which the premature withdrawal / siphoning off has taken place. There are also criminal proceedings pending with respect to the same. A perusal of the plaint indicates that the plaintiff –Board has made a claim of Rs 36 crores with interest in prayer clauses 58(a), (b) and (c) along with further interest in prayer clause (d) for the recovery of the said amounts. It is not in dispute that the plaintiff-Board had placed the fixed deposits with the defendant – Bank which carries on the business of banking. As can be seen, the defendant Bank, which is a banking company /banker had in the ordinary course of its business, accepted the deposits from the plaintiff-Board, which is repayable on demand or maturity and issued fixed deposit receipts which are mercantile documents and the suit has been filed for enforcement of the fixed deposit receipts as the defendant –Bank has failed to repay the amounts payable to the plaintiff-Board, despite demand/legal notice for recovery. Therefore, in the HC’s view, the dispute is a commercial dispute, squarely falling within the definition of commercial dispute as defined under section (2)(1)(c)(i)of the Commercial Courts Act. That, there are criminal proceedings pending against Manager of the defendant-Bank or other co-conspirators for fraud committed on the defendant-Bank or that, there has been a purported siphoning off / embezzlement of funds, would not, in my view, change the character or nature of the dispute, to not being a commercial one.

 

Mention of fraud, forgery, embezzlement in the plaint would not change the cause of action of the suit, which is set out in paragraph 52 of the plaint. It is quite clear that the cause of action is the failure of the defendant-Bank to pay the amount of Rs 36 crore with interest accrued thereon as per the fixed deposit receipts, despite legal notice as well as the pre-institution mediation, which failed, due to the refusal of the defendant-Bank to participate in the mediation process. The aforesaid paragraph clearly refers to the fixed deposit receipts with numbers and amounts on which the commercial summary suit is based. The relationship between the plaintiff and the defendant-Bank is that of creditor and debtor and by no stretch of imagination, the said relationship can be said to be not a commercial one. Justice Abhay Ahuja, who dismissed the interim application of the defendant-Bank on June 10, 2024, has expressed agreement with the plaintiff’s counsel Shailesh Naidu, at the Bombay High Court on June 10, 2024, that the dispute is commercial one, arising out of ordinary transaction between a banker and customer for enforcement of fixed deposit receipts by the customer for recovery of amounts of principal and interest placed under the fixed deposits with the defendant-Bank.

 

The HC also agreed with Advocate Naidu that the decision of the Delhi HC in the case of IHHR Hospitality (Andhra) Pvt. Ltd. v. Seema Swami and Others- (2022) SCC OnLine Del. 3635, relied upon by the defendant-Bank’s counsel is clearly distinguishable as the said suit therein was between a company and wife of the accused, who had embezzled huge amounts through cheques and also made fraudulent direct transactions from the bank account of the plaintiff-Company and siphoned off the money. Therefore, the said suit was held to be based on fraud committed on the basis of forged cheques and falsification of accounts, which is not the case here, as even though there may have been embezzlement of funds by an employee of the bank along with other co-conspirators, however, the present suit is claim by the plaintiff – Board against the defendant-Bank for recovery of fixed deposits of Rs 36 crore along with interest and not against the employees or persons involved in the fraud or embezzlement, and therefore, the reliance by the defendant-Bank on said decision is misplaced. Accordingly, the High Court has held that the dispute is a commercial dispute as defined under section 2(1)(c)(i) of the Commercial Courts Act. The suit claim is of more than Rs 36 crore, which is more than the specified value, and therefore, has been correctly registered under the commercial category as a commercial summary suit. In view of this, the High Court has stated that it is inclined to dismiss the application as the suit is not barred by the Commercial Courts Act. The HC has dismissed the interim application under Order VII Rule 11 of the CPC holding that the question of rejecting /returning the plaint does not arise.