Delhi District Court
Civil Judge vs Punjab National Bank on 13 March, 2020
IN THE COURT OF DR. PANKAJ SHARMA, ADDITIONAL SENIOR
CIVIL JUDGE, NEW DELHI DISTRICT, PATIALA HOUSE COURT,
NEW DELHI
Civil Suit no: 1114/18
Welldone Exim Pvt. Ltd.
(Formerly known as G.D. Mangalam Exim Pvt. Ltd.)
6/843, Main Bazar, Mehrauli,
New Delhi-110030 ..........Plaintiff
Versus
Punjab National Bank
(A Banking Company constituted
under the Banking Companies
(Acquisition and Transfer of
Undertakings) Act, 1970)
Having its Head Office at:
7, Bhikaji Cama Place,
New Delhi-110067
And
International Banking Branch at
DCM Building, 8th Floor,
16, Barakhamba Road,
New Delhi-110001 .........Defendant
Date of Institution : 20.08.2018
Date on which judgment was reserved : 28.02.2020
Date of pronouncing judgment : 13.03.2020
SUIT FOR DECLARATION AND INJUNCTION
JUDGMENT
1. Vide this order an application filed under Order XII Rule 6 CPC r/w Section 151 CPC filed by plaintiff is disposed off. However, it is necessary to advert to the facts of the present suit before taking up the application. In brief, case of the plaintiff is that plaintiff is a private limited company engaged in the business of export of garments etc. having Import Export Code (IEC) No.0503078786 and its registered office is situated at 6/843, Main Bazar, Mehrauli, New Delhi. The CS No.1114/18 Welldone Exim Pvt. Ltd. Vs. Punjab National Bank Page no.1 of 12 plaintiff is maintaining a current account no.2254002100011792 with defendant at its branch at DCM Building, 8th Floor, 16, Barakhamba Road, New Delhi. The defendant had issued e-BRCs (Bank Realization Certificate) to the plaintiff confirming receipt of the sale proceeds of exports made by the plaintiff in convertible foreign exchange through the proper banking channel. It is submitted that admittedly the remittance in foreign exchange is duly received by the defendant as sale proceeds for the goods exported by the plaintiff and reported to the RBI by filing fortnightly R-returns available at the website of RBI.
2. As per the procedure under the Customs Act, the plaintiff, through its Customs House Broker, filed the shipping bills Online for the goods exported by the plaintiff and also submitted the relevant documents i.e. invoices, packing list etc. to the customs for verification and the Custom Department after due verification generated the shipping bills and Let Export Order (LEO) used to be issued and upon its issuance the goods were loaded on the shop for export outside India. Thereafter, the plaintiff submitted the relevant documents including shipping bills (Exchange Control Copy) to the defendant bank for collection of sale proceeds from the buyers and the defendant bank generate a reference number for each transaction and the said reference number is forwarded to the Overseas Buyer to enable the buyer/bank to remit the payment. The buyer or their banks have accordingly remit the sale proceeds duly received by the defendant on behalf of plaintiff and credited to the current account of the plaintiff and during this process defendant generate a swift message containing all relevant details pertaining to the transaction i.e. details of sender/remitter, details of beneficiary, amount, currency, reference number etc. CS No.1114/18 Welldone Exim Pvt. Ltd. Vs. Punjab National Bank Page no.2 of 12
3. After receipt of payment and upon due verification of all the details and documents related to the transaction, defendant bank issued BRCs containing shipping bill number, bank reference number and other relevant details. The following BRCs were issued as under:-
a). BRC No.PUNB0543000000365721 Dated 18.11.2013,
b). BRC No.PUNB0543000000365722 Dated 18.11.2013,
c). BRC No.PUNB0543000000367007 Dated 20.11.2013,
d). BRC No.PUNB0543000000366978 Dated 20.11.2013,
e). BRC No.PUNB0543000000370159 Dated 26.11.2013, and
f). BRC No.PUNB0543000000370158 Dated 26.11.2013.
4. BRCs are issued by the bank on realization of export proceeds for exports made by the exporter and upon fulfillment of requirements and following the due procedure. The defendant had purported to cancel 854 BRCs validly issued to the plaintiff alleging that export proceeds were received from third party between 08.11.2013 to 04.02.2014. Plaintiff learned from DGFT Website in an around January, 2016 that some of the BRCs relating to the exports made by plaintiff are cancelled. It was informed to plaintiff by defendant that some of the BRCs have been cancelled due to the pressure from DRI without giving complete details of BRCs alleged cancelled and the ground for cancellation. The plaintiff vide letter dated 21.01.2016 requested the defendant to provide details of the shipping bills in respect of the BRCs were allegedly cancelled and also requested to withdraw the cancellation, however, defendant neither replied the said letter nor complied with the requisitions therein. Plaintiff reiterated the said request through letter dated 29.01.2016 and defendant vide letter dated 01.03.2016 gave the details of shipping bills in respect of which e-BRCs were allegedly cancelled. The Hon'ble High Court of Delhi vide CS No.1114/18 Welldone Exim Pvt. Ltd. Vs. Punjab National Bank Page no.3 of 12 order dated 03.03.2016 r/w Order dated 14.03.2016 disposed off the Writ Petition No.1230/2016 filed by the plaintiff and directed the defendant bank to decide the representations of the plaintiff by passing reasoned order after giving personal hearing to the plaintiff. The personal hearing of the plaintiff with the defendant bank was held on 15.03.2016. Thereafter, plaintiff submitted a letter dated 25.03.2016 to the defendant requesting to provide reasons for cancellation of e-BRCs so that plaintiff could make further representation in terms of the direction of Hon'ble High Court. The defendant bank issued a letter dated 01.04.2016 enclosing therewith a copy of letter dated 30.03.2016 purportedly giving reasons for cancellation of e-BRCs stating that export realization received from third parties by the plaintiff were not in conformity with the guidelines provided by RBI Circular No.70 dated 08.11.2013 and Circular No.100 dated 04.02.2014 to the extent:- a) Firm Irrevocable Order backed by a Tripartite Agreement was not furnished by the company; and b) relevant declaration about third party remittance in the export declaration form was not provided by the company.
5. Plaintiff made a detail representation dated 13.04.2016 and sought reconsideration of the issue of cancellation of e-BRCs afresh and personal hearing, however, same was declined by defendant vide communication dated 31.01.2017 and in its response the plaintiff's sister concern again made a common and detail representation dated 22.01.2018 requested withdrawal of cancellation of e-BRCs. Plaintiff had come to know that defendant vide its letter dated 16.01.2016 addressed to ADG of Foreign Trade I.P. Estate stating that defendant has treated all BRCs pertaining to remittances received during the period of 08.11.2013 to 04.02.2014 null and void without all CS No.1114/18 Welldone Exim Pvt. Ltd. Vs. Punjab National Bank Page no.4 of 12 consequential impacts, however, the said letter was never communicated to the plaintiff and plaintiff could receive the said letter from the relied upon documents provided by the office of Commissioner of Customs in connection with show cause notice issued under Customs Act, 1962.
6. It is submitted that Circular No.70 was amended/modified subsequent Circular No.100 dated 04.02.2014 wherein the condition of Firm Irrevocable Order backed by Tripartite Agreement was dispensed with. Circular No.100 reads as under:- "attention of authorized dealer category - I banks is invited to A.P. (DIR Series) Circular No.70 dated November 8, 2013, in terms of which they have been permitted to allow third party payments for export goods & software/import of goods subject to the conditions stated therein".
7. Paragraph 2 of Circular No.100 stipulated that in view of the difficulties faced by exporters/importers in meeting the condition "Firm Irrevocable Order backed by Tripartite Agreement should be in place, it has been decided that this requirement may not be insisted upon in cases where documentary evidence for circumstances leading to third party payments have been produced and it has been provided therein that A.D. Bank should be satisfied with the bonafide of the transactions and export documents, such as invoice/FIRC.
8. It is submitted that defendant had never doubted about the bonafides of the transaction or the export documents and out of 854 BRCs purportedly cancelled by defendant, none of the shipping bills pertained to the exports made between 08.11.2013 to 02.04.2014. It is submitted that cancellation of e-BRCs through letter dated 30.03.2016 on the ground that payments were received from third parties (other than buyer), which were not in conformity with RBI Guidelines as CS No.1114/18 Welldone Exim Pvt. Ltd. Vs. Punjab National Bank Page no.5 of 12 provided under Circular No.70 dated 08.11.2013 is arbitrary as Circular No.70 was modified by Circular No.100. In para 5 of the letter dated 30.03.2016 the defendant bank has claimed that "based on observation of investigating agencies and keeping in view the outcome of the internal audit conducted by the bank, a decision was taken by the bank to cancel e-BRCs in respect of the shipping bills which were realized and were not in compliance with RBI extant guidelines". It is submitted that it is apparent from "Snap FEMA Audit Report" of the bank that e-BRCs were cancelled under the pressure of DRI even though the defendant bank was of the opinion that transactions pertaining to plaintiff's export are correct and inconformity with the norms prescribed. The DRI had received the MLAT Report from Dubai, U.A.E. which makes it clear that there was no miss declaration or over valuation of the goods and the said report was produced before learned Special Judge-03 (PC Act) CBI, Patiala House Court. Hence, the present suit.
9. In the WS, the defendant bank admitted that plaintiff was allowed credit facilities for their export sales. It is submitted that defendant bank used to receive export proceeds generally in time, through swift messages and the conduct of the account has been satisfactory so there was no reason for concern as the payments were coming through banking channels only therefore, BRCs were issued. It is submitted that before 08.11.2013 there were no restriction/guidelines regarding the remittances received from the third parties. However, after the circular no.70 dated 08.11.2013 things changed as in case of third party payments, the borrowers/plaintiffs were supposed to submit the genuineness of the transactions and it was stipulated that exporter should enter into tripartite agreements in all such cases. The plaintiff CS No.1114/18 Welldone Exim Pvt. Ltd. Vs. Punjab National Bank Page no.6 of 12 company assured that when their buyers would visit to them, they shall convince their buyers and would produce the tripartite agreement. As the conduct of the account of plaintiff being satisfactory the defendant allowed some time to plaintiff to submit the tripartite agreement with regard to remittances received during the abovementioned period confirming the transactions. However, the said condition was subsequently modified vide circular no.100/2014 dated 04.02.2014.
10. It is submitted that the defendant bank in an internal audit conducted for export transactions of the plaintiff for ascertaining violation of FEMA or RBI Guidelines, if any of business, the defendant bank could not found irregularity/discrepancy with regard to transactions pertaining to plaintiff's export. However, when DRI approached the defendant bank in 2015 and informed that they were investigating the case against the plaintiff, their groups regarding misuse/irregularities in duty drawback benefit taken by the plaintiff company from the government the same was the reason to cancel the BRCs. It is submitted that defendant bank tried to convince the investigating agency that the payments received in the accounts of plaintiff towards the exports made by them were in compliance of RBI guidelines and field 70 of Swift message MT 103 contained the complete details of Bill reference number, invoice number and also of the buyer. It is submitted that DRI/CBI were casting aspersion over the defendant bank to cancel the BRCs issued to the plaintiff and therefore, having no option left they were cancelled and a letter was written to DGFT for the said purpose. The defendant also communicated to the RBI regarding guidelines dated 08.11.2013 that same could be implemented only for shipments made after the date of issuance of guidelines and not to the shipments which had already CS No.1114/18 Welldone Exim Pvt. Ltd. Vs. Punjab National Bank Page no.7 of 12 taken place prior to the said date. It is submitted that bills realized after 08.11.2013 claimed to shipment made prior to issue of the said circular were to be realized based upon the extended RBI Guidelines. However, the defendant's stand was that, BRCs pertaining to shipments related to period from 08.11.2013 to 04.02.2014 can only be cancelled, however, in situation of doubts and aspersion casted by investigated agency over the said transaction, the investigating agency's direction is followed.
11. After the pleadings were completed the plaintiff moved the instant application submitting that in the suit the plaintiff has claimed following reliefs:-
"(a) That this Hon'ble Court be pleased to pass a decree of declaration in favour of the plaintiff and against the defendant declaring that the purported cancellation of Bank Remittance Certificate (BRCs) vide letter dated 16.01.2016 addressed to Additional Director General of Foreign Trade, 'A' Wing, Indraprastha Bhawan, I.P. Estate, New Delhi-110001 as null and void and of no effect and not binding on the plaintiff;
(b) That this Hon'ble court be pleased to pass a decree of declaration that 854 Bank Remittance Certificate issued by the defendant bank evidencing receipt of export proceeds on behalf of the plaintiff are valid, subsisting and binding and operative in favour of the plaintiff;
(c) That this Hon'ble Court be please to pass an order of injunction restraining the defendant from giving effect to the letter dated 16.01.2016 with respect to cancellation of the Bank Realization Certificate (BRCs) and further to cancel any Bank Realization Certificate (BRCs);
(d) Grant cost of the suit in favour of the plaintiff and against the defendants."
12. It is submitted in the application that defendant in the WS has not disputed the documents filed by the plaintiff and made following admissions:-
CS No.1114/18Welldone Exim Pvt. Ltd. Vs. Punjab National Bank Page no.8 of 12
a). The defendant bank had infact received the remittances from the buyers'/buyers banks in respect of the exports made through proper banking channels as per law and it is only thereafter that the BRCs were issued.
b). Further that the BRCs and Swift messages contained details of the invoices, shipping bills and clients etc.
c). That the defendant bank in its internal FEMA audit and audit for violation for RBI guidelines did not find any irregularity in the said exports on the part of the plaintiff and that the relevant RBI guidelines have been duly followed.
d). That the conditions in the RBI Circular No.70 dated 08.11.2013 were relaxed vide the Circular No.100 dated 04.02.2014 wherein the condition of firm irrevocable order backed by a tripartite agreement was dispensed.
e). That all the export transactions and the export cycle in respect of the plaintiff was treated as closed.
f). That the sole reason for cancellation of the BRCs was pressure from investigative agencies.
13. It is submitted that vide order dated 02.05.2019 the application under Order 39 Rule 1 & 2 CPC was allowed and defendant was restrained from giving effect to the letter dated 16.01.2016 with respect to the cancellation of BRCs till the pendency of the suit.
14. Reply filed by the defendant perused. Arguments heard from both sides and record perused.
Order XII Rule 6 CPC. Judgment on admissions.-(1) Where admissions of fact have been made either in the pleading or otherwise, whether orally on in writing, the Court may at any stage of the suit, either on the application of any party or of its own motion and without waiting for the determination of any other question between the parties, make such order or give such judgment as it may think fit, having regard to such admission. (2) Whenever a judgment is pronounced under sub-rule (1), a decree shall be drawn up in accordance with the judgment and the decree shall bear the CS No.1114/18 Welldone Exim Pvt. Ltd. Vs. Punjab National Bank Page no.9 of 12 date on which the said judgment was pronounced.
15. For exercise of discretion by the court under Order XII Rule 6 CPC, the pleadings are to be read as a whole and not be dissected. The pleadings has to be construed as a whole to see its effect and one or two lines cannot be permitted to be taken out of context and use as an admission. The admissions in pleadings must be clear, unambiguous, definite and unequivocal. Further, the denial in the written statement must be specific and in the absence of specific denial every allegation of fact in the plaint will be taken to be admitted by necessary implication.
16. A careful scrutiny of the written statement would show that defendant has admitted that the BRCs were issued only after the realization of the export remittances through proper banking channels from the buyer/buyer's bank and the export proceeds used to be received, generally on time, through Swift messages and the conduct of the account has been satisfactory, so, there was no reason for concern as the payments were coming through banking channels only and therefore, BRCs were issued. These admissions are reflective of the fact that the BRCs were issued in due course and in compliance of the standard banking protocol. It is noteworthy that the defendant found no irregularity in the audit of the plaintiff company and the export transactions for the compliance of FEMA and RBI Guidelines. Also, before the period from 08.11.2013 there were no restrictions/guidelines regarding the remittances received from the third parties and the said circular was modified on 04.02.2014 rendering the tripartite agreement not applicable at all and as per the defendant communication to the RBI regarding circular no.70 dated 08.11.2013, the requirement for obtaining tripartite agreement and declaration of the name of third party CS No.1114/18 Welldone Exim Pvt. Ltd. Vs. Punjab National Bank Page no.10 of 12 in the export declaration forms could be implemented only for shipments made after the date of issuance of guidelines and not to the shipments which had already taken place prior to said date and which is the case of the plaintiff precisely that the shipments were made prior to the circular dated 08.11.2013.
17. As per the pleadings, the reason for cancellation of BRCs by the defendant bank is the pressure from the investigating agencies, however, the said fact has turned out to be hollow as despite elapse of considerable time, no authoritative communication had been received by the defendant bank from the investigating agencies pertaining to the said BRCs as such, the said plea of the pressure taken by the defendant appears to be without any substance.
18. A bare perusal of the written statement would show that the averments made in the plaint are not specifically denied in the clear words and if the contents of the written statement are construed in the proper perspective they can be termed as clear, unequivocal and unambiguous admissions of the allegations made in the plaint. Nothing has averred in the written statement which could contradict or dispute the claim of the plaintiff. The averments in the written statement that defendant bank conducted an internal audit of the plaintiff and found nothing illegal further supports the case of the plaintiff. Also, the opinion rendered by the defendant bank that circular no.70 can at best be applicable for the shipments w.e.f 08.11.2013 till 04.02.2014 is logical and reasonable and as such, the transactions of the plaintiff remains out of the purview of circular no.70 which was otherwise modified by circular no.100. Therefore, the defendant bank cannot take a mutually divergent view regarding its stand as at one point of time they find nothing wrong in issuance of BRCs and on the other hand issued a CS No.1114/18 Welldone Exim Pvt. Ltd. Vs. Punjab National Bank Page no.11 of 12 letter dated 16.01.2016 canceling the said BRCs. All it can be culled out from the pleadings that the averments of the plaint have been admitted and the admissions made by defendant are unambiguous, clear and unequivocal. Accordingly, suit of the plaintiff is decreed in the following terms:-
A). Plaintiff is entitled for the decree of declaration that the purported cancellation of Bank Remittance Certificate (BRCs) vide letter dated 16.01.2016 addressed to Additional Director General of Foreign Trade, A-Wing, Indraprastha Bhawan, I.P. Estate, New Delhi-110001 is declared as null and void having no effect on the plaintiff;
B). Plaintiff is entitled for a decree of declaration that 854 Bank Remittance Certificate (BRCs) issued by the defendant bank evidencing receipt of export proceedings on behalf of the plaintiff are valid, subsisting, binding and operative in favour of the plaintiff;
C). Plaintiff is also entitled for a decree of permanent injunction whereby defendant is permanently restrained from giving effect to the letter dated 16.01.2016 with respect to cancellation of BRCs and further cancellation of these BRCs.
No order as to costs.
Decree sheet be prepared accordingly.
File be consigned to Record Room after due compliance.
Digitally signed byDR ANNOUNCED IN THE OPEN COURT DR PANKAJ PANKAJ SHARMA Date: 2020.03.13 ON 13.03.2020 SHARMA 15:35:45 +0530 (DR. PANKAJ SHARMA) ADDITIONAL SENIOR CIVIL JUDGE, PATIALA HOUSE COURTS, NEW DELHI CS No.1114/18 Welldone Exim Pvt. Ltd. Vs. Punjab National Bank Page no.12 of 12