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SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA vs M/S SIBCO INVESTMENT PVT LTD

SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA vs M/S SIBCO INVESTMENT PVT. LTD.

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 8 OF 2022

(Arising out of SLP(C) No.6533 of 2020)

SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA APPELLANT(S)

VERSUS

M/S. SIBCO INVESTMENT PVT. LTD. RESPONDENT(S)

WITH

CIVIL APPEAL NO. 9 OF 2022

(Arising out of SLP(C) No.2876 of 2021)

Hrishikesh Roy, J. 

Leave granted. 

2. The challenge in these appeals is to the judgment and order dated 25.11.2019 of the Division Bench of the High Court of Calcutta, whereby the decision of the Single Judge dismissing the suit i.e. CS No. 79/2006 of M/s. SIBCO Investment Pvt Ltd (for short SIBCO) was reversed. The suit was filed against Small Industries Development Bank of India (SIDBI) seeking interest on the alleged belated payment of principal sum and accrued interest to the plaintiff for the Bonds issued by SIDBI. 

3. The question to be answered in this case is whether plaintiff has set forth a just claim, based on the Bonds issued by the defendant or is it a case of that trial in Shakespeare’s The Merchant of Venice where Shylock is claiming the promised pound of flesh in the form of interest on delayed payment on the Bonds purchased by the plaintiff. The 41 Bonds related to this case were initially issued by SIDBI to M/s. CRB Capital Markets Ltd. (Hereinafter referred to as “CRB Capital”) in 1993. Those Bonds were then sold by CRB Capital to one Shankar Lal Saraf in February, 1997 and those in turn were then sold on 1.7.1998 to SIBCO – the plaintiff and the respondent herein. In the meantime, CRB Capital faced winding up proceedings at the instance of the RBI in the Delhi High Court. The said proceeding will have a bearing on this case.  

4. The following relevant facts necessary for consideration of this appeal are broadly culled out from the judgment of the Calcutta High Court:- 

4.1 The Plaintiff SIBCO purchased the Bonds in the form of promissory notes issued by the defendant SIDBI. These are termed as SIDBI Bonds 2003 (4th Series) carrying 13.50% interest and SIDBI Bonds 2004 (5th Series) generating interest at the rate of 12.50%, from one Shankar Lal Saraf on 1st July, 1998. The interest is payable on a half-yearly basis on/or before 21st day of June and 21st day of December of every year. The 5th series Bonds were agreed to be redeemed on 21st December, 2004 whereas the 4th series Bonds were to be redeemed on 21st December, 2003. The Bonds are freely tradable in the market. M/s. SIBCO purchased 15 Bonds (interest payable @ 13.50%) and 26 Bonds (interest payable @12.50%) of face value of ten lakhs each for an aggregate price of Rs. 3.69 crores on 1st July, 1998 by M/s. SIBCO from the said Shankar Lal Saraf. The Bonds were deposited with M/s. SIDBI (defendant) on July 2, 1998 with the request to endorse the name of the Plaintiff-purchaser on the said Bonds. On refusal to register and/or record the name of the SIBCO by the defendant on the ground that CRB Capital had gone into involuntary liquidation proceedings at the instance of the RBI. At first the Plaintiff filed the W.P. No. 1456 of 1998 before the Calcutta High Court seeking a mandamus upon defendant to transfer the aforesaid Bonds in favour of the plaintiff and also to pay the interest accrued on them. 

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