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Small Industries Development Bank of India v. M/S Sibco Investment Pvt. Ltd. ,(2022) 3 SCC 56

Small Industries Development Bank of India v. M/S Sibco Investment Pvt. Ltd. ,(2022) 3 SCC 56

FACTS-

  • The plaintiff, SIBCO Investment Pvt. Ltd. (SIBCO) filed a suit against Small Industries Development Bank of India (SIDBI)- Defendant, seeking interest on belated payment of principal sum and accrued interest for Bonds issued by SIDBI.
  • The Bonds in question were initially issued to M/s. CRB Capital Markets Ltd., which later sold them to Shankar Lal Saraf, who then sold them to SIBCO.
  • CRB Capital faced winding up proceedings initiated by the RBI, which had implications on the Bonds.
  • SIBCO deposited the Bonds with SIDBI in 1998 but faced refusal to register their name due to the liquidation proceedings against CRB Capital.
  • SIBCO sought intervention from the Calcutta High Court, which directed them to approach the Company Court in Delhi.
  • The Company Court directed SIDBI to make payment, which was done in 2005, but SIBCO later claimed interest on delayed payment, leading to the lawsuit.
  • The present appeal is against the judgment of Division Bench of the Calcutta High Court. Which reversed the decision of Single judge who dismissed the suit filed by SIBCO.

ISSUE- 

  • Whether SIBCO has a just claim for interest on delayed payment of Bonds issued by SIDBI, considering the circumstances surrounding the liquidation proceedings of CRB Capital and the directives issued by the RBI.

RULE-

  • The RBI directive was justified for protecting the interests of creditors and depositors of CRB Capital and the delay caused in payment was due to the RBI directives. Hence, delay was reasonable and no interest can be claimed for the delay.

HELD-

  • The RBI has wide supervisory powers over financial institutions like SIDBI, and its directions are binding.
  • The concept of "holder in due course" under the Negotiable Instruments Act requires acquiring the note or bond in good faith and without sufficient cause to believe in any defect in the title.
  • The defendant bank was justified in withholding payment due to ongoing litigation, concerns over the title of the Bonds during the "suspect spell," and compliance with RBI directives.
  • It was sufficient that the RBI‟s power to issue such a direction could be traced to either S.45-MB (2) of the RBI Act, or S. 35-A of the Banking Regulation Act. Hence, the said direction was statutorily binding on the defendant.
  • The RBI's directives were justified for protecting the interests of creditors and depositors of CRB Capital.
  • SIBCO's transaction during the "suspect spell" raised doubts about their status as a "holder in due course."
  • SIBCO's failure to challenge the legality of RBI notifications and their acceptance of payment without protest were noted.
  • The court allowed SIDBI's appeal, restoring the judgment of the Trial Court.
  • SIBCO's cross-appeal was rejected, rejecting the claim on delayed payment of bonds. The court disposed of the appeals without any order on costs