Summary
The Bench differed on whether SEPCO had to replace a Rs 30 crore guarantee from ICBC’s Mumbai branch with one from a scheduled Indian bank. Banerjee J would allow the substantive appeal because SEPCO complied with the written order and no relevant deficiency in ICBC’s guarantee was established. Ramasubramanian J would decline interference because the same Judge had clarified an order founded on SEPCO’s own offer to furnish an Indian-bank guarantee. The common order directed placement before the Chief Justice for appropriate directions; it did not finally resolve the substantive appeal.
Issues
- Whether the written direction permitting a scheduled bank located in India could be clarified to require a scheduled Indian bank after compliance.
- Whether the guarantee’s validity and the issuing foreign bank’s scheduled status justified intervention in the interlocutory order.
- What disposition followed from the judges’ disagreement.
Provisions considered
- Section 2(e) and Second Schedule, Reserve Bank of India Act, 1934Banerjee J relied on ICBC’s scheduled status and absence of a statutory definition of scheduled Indian bank; Ramasubramanian J regarded the statutory distinction as unnecessary to decide this offer-based dispute. (¶¶ Banerjee J: 41, Banerjee J: 42, Banerjee J: 47, Banerjee J: 48, Ramasubramanian J: 24)
- Section 5(c), including Explanation, Banking Regulation Act, 1949Banerjee J treated ICBC’s Indian banking operations as subject to the Indian regulatory framework; this formed part of one opinion, not an agreed substantive determination. (¶¶ Banerjee J: 40, Banerjee J: 46)
- Section 114 and Order XLVII Rule 1, Code of Civil Procedure, 1908Both opinions found no basis for interference with refusal of review in the absence of the limited review grounds; the ultimate common order nevertheless placed the matter before the Chief Justice. (¶¶ Banerjee J: 25, Ramasubramanian J: 12)
Held
- Banerjee J held that the operative order required a guarantee from a scheduled bank located in India and SEPCO complied. The wording contained no obvious typographical error; after SEPCO incurred substantial charges in reliance on it, the later substitution direction was inappropriate on these facts. (¶¶ Banerjee J: 16, Banerjee J: 17, Banerjee J: 18, Banerjee J: 19, Banerjee J: 20, Banerjee J: 21, Banerjee J: 22, Banerjee J: 23, Banerjee J: 59)
- Banerjee J found the guarantee effective on the High Court’s direction and its incorporation of URDG rules did not diminish that obligation. The Court could require a particular bank or class where justified, but no adverse material about ICBC or prejudice from this guarantee had been demonstrated. She would set aside the substitution orders and the substantive appellate judgment. (¶¶ Banerjee J: 28, Banerjee J: 29, Banerjee J: 53, Banerjee J: 54, Banerjee J: 56, Banerjee J: 57, Banerjee J: 59, Banerjee J: 60)
- Ramasubramanian J viewed the original order as founded on SEPCO’s express offer to furnish a scheduled Indian bank’s guarantee. The same Judge’s subsequent clarification reflected that offer and the intended order. SEPCO had not furnished the complete promised affidavit and could not rely on the court-act maxim to avoid its commitment. (¶¶ Ramasubramanian J: 7, Ramasubramanian J: 14, Ramasubramanian J: 15, Ramasubramanian J: 16, Ramasubramanian J: 17, Ramasubramanian J: 18, Ramasubramanian J: 20, Ramasubramanian J: 21, Ramasubramanian J: 22)
- Ramasubramanian J would refuse Article 136 interference with the discretionary interim measure. In his view the case concerned the offer, its acceptance and clarification, rather than requiring a ruling on statutory bank classifications. (¶¶ Ramasubramanian J: 13, Ramasubramanian J: 23, Ramasubramanian J: 24, Ramasubramanian J: 25)
- Because the judges could not agree, their common order directed that the matter be placed forthwith before the Chief Justice of India for appropriate directions. Neither proposed substantive disposition became the Bench’s final ruling. (¶ Common order, SCR 283)
Result
Split decision; matter directed to be placed before the Chief Justice of India for appropriate directions, without an agreed final determination of the substantive appeal.