Can you ask the bank to pay interest on delayed payment for your bond if the delayed on part of Bank was caused due to RBI Notification ?
SIDBI purchased bonds and there is dispute pending in court with regard to payment. The Bank made the payment but at delayed time. The SIDBI asked for interest on delayed payment. The Apex court held that SIDBI cannot claim interest on delayed payment because RBI notification was preventing the bank in repayment. The SIDBI cannot be put in same position as of a party claiming pendent lite interest for pending suit especially when the SIDBI never protested it at time of acceptance
For ‘public interest’ the RBI is empowered to issue any directive to any banking institution, and to prohibit alienation of an NBFC’s property. The term ‘Public interest’ has no rigid definition. It has to be understood and interpreted in reference to the context in which it is used. The concept derives its meaning from the statute where it occurs, the transaction involved, the state of society and its needs.
It is not necessary for RBI to mention a specific provision before issuing directions, for it to have statutory consequences. All that is required is the authority under the law, to issue such direction.
RBI as was declared is not only vested with curative powers but also preventive powers. Hence, it is not necessary for the bank to wait for a direction to be violated, and then launch penal actions against the offenders. But the RBI can also issue directions to ensure that the relevant orders/directions are effectively followed.
The omission by the RBI to mention any enabling provision, doesn’t change the nature and status of the direction. The statutory arrangement and interpretation as above persuade us to hold that actions in furtherance of grounds of ‘public policy’ by the RBI was justified, for issuing the Notification dated 10.04.1997. The notification itself clearly mentioned that it is issued for the benefit of depositors and creditors of CRB Capital. The RBI’s communication dated 09.06.1997 was in fact a direction, with the appropriate statutory backing traceable to S. 45-MB of the RBI Act as well as S. 35-A of the Banking Regulation Act.
The bank was therefore justified in withholding payment till conclusion of dispute in Company Court, even though the relief claimed was in respect of an ‘unconditional undertaking’, as there were reasonable legal concerns for the transaction during the suspect spell, for making such payments.
As per S. 34 of the Code of Civil Procedure (CPC), award of interest is a discretionary exercise, steeped in equitable considerations. Interest is payable for different purposes such as compensatory, penal, etc. but these are not the situations in the present case. Here firstly, the defendant was justified in withholding payment, as they were under RBI’s direction to do so; secondly, the defendant hasn’t derived any undue benefit by their act and; thirdly, due payment was promptly made to the plaintiffs upon settlement of rights by the court. Moreover, the concerned transactions were during the “suspect spell”. This in our view shows that the defendant acted bona fide and there was no undue delay on their part, to remit the dues.
The plaintiff did pray for pendente lite interest in the Trial Court but neither did the trial court frame any issue in this regard, nor were any arguments recorded. This shows that such claim was not pressed by the plaintiff. Further, no ground is urged in the appeal memo, that such an issue ought to have been framed. Hence, it is clear that the plaintiff is not serious on its claim for pendente lite interest.
Failure to raise protest and demand for interest at the earliest possible stage, amounted to sub-silencio acceptance. Accordingly, the plaintiff is barred from raising this demand after several months applying the principle of waiver/acquiescence.
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