BSRS Vs. She Shipping Lines Ltd. and others [4 LNJ AD (2015) 18]

Case No: CIVIL APPEAL No. 237 OF 2002

Judge: Md. Muzammel Hossain,

Court: Appellate Division ,,

Advocate: Mr. A. K. M. Nazrul Islam,,

Citation: 4 LNJ AD (2015) 18

Case Year: 2015

Appellant: Bangladesh Shilpa Rin Sangstha (BSRS)

Respondent: She Shipping Lines Limited and others

Delivery Date: 2010-12-13

APPELLATE DIVISION
(CIVIL)
 
A. B. M. Khairul Haque, J
Md. Muzammel Hossain, J
S. K. Shinha, J
Judgment
13.12.2010
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Bangladesh Shilpa Rin Sangstha (BSRS)
...Appellant
-Versus-
She Shipping Lines Limited and others
...Respondents.
 
Evidence Act (I of 1872)
Section 58
The contents of this undertaking has been duly proved by the appellant and it acts as admission of the fact described therein by the respondent No.1. Section 58 of the Evidence Act, 1872 provides that facts admitted need not be proved. As per admission in the undertaking respondent No.1 violated the terms and conditions of the tripartite contract entered into among the respondent Nos.1, 5 and the appellant. It also substantiates the claim of the appellant that the disbursement of the money of the 2nd installment was made with the full knowledge and under the instruction of the respondent No. 1. ... (12)

Bangladesh Shilpa Rin Sangstha Order, 1972
(PO No. 128 of 1972)
Articles 32 and 33
The appellant proved that the respondents are not at all interested to complete the project since the under-construction of the vessel had been left abandoned when the reconditioned engines were imported instead of new engines and thereby they violated the terms and conditions of the contract as well as the loan sanction letter. It has also been proved that the reconditioned engines were imported instead of new engines in the name of the respondent No.5 not in the name of the appellant or the respondent No.1 or the Project Company. By the conduct of the parties the appellant proved that the respondents failed to perform their part of the contract and make any payment of the outstanding loan and interest amounting to Tk. 63,54,326.33 by 01.01.1984. As per Article 32 clause (b) of the Bangladesh Shilpa Rin Sangstha Order, 1972 the violation of the terms and conditions of the loan agreement by the respondents has made the appellant entitled to have the repayment of the loan in full. Article 33 clause (1) (d) of the Bangladesh Shilpa Rin Sangstha Order, 1972 contemplates payment of “any other sum” relating to loan with the original loan money when the Sangstha becomes entitled to payment of any loan by reason of the breach of any condition of any agreement between the Sangstha and an industrial concern to which any loan has been granted. Here the expression “any other sum” definitely connotes a sum adjudged as compensation for the breach of contract and to determine the extent of compensation existing bank rate of interest can be taken into consideration. Accordingly, the appeal is allowed with cost of Tk. 20,000/-. The impugned judgment and order dated 04.06.2000 passed by the High Court Division in F.M.A. No. 95 of 1990 is set aside and the Miscellaneous Case No. 20 of 1986 is allowed. The respondents are directed to pay the aforesaid amount with a further compensation calculated at the rate of bank interest prevalent at the time of the institution of the suit.    . . . (13, 14 and 29)

Webb Vs. Stanton(1883) 11 Q.B.D 518 at page 527; National Royan Corporation Ltd. Vs. the Commissioner of Income Tax, AIR 1997 SC 3487; O’Driseoll V. Manchester Insurance Committee, (1915) 3 K.B. 499 and Sonali Bank Vs. M/S. Karanaphuli Works Ltd., 2 BLT (AD) 78 ref.

For the Appellant: Mr. A. K. M. Nazrul Islam, Senior Advocate, instructed by Mr. Syed Mahbubar Rahman, Advocate-on-Record.
For the Respondent No. 2: None Represented
For the Respondent Nos. 1 & 3-7: None Represented

CIVIL APPEAL No. 237 OF 2002
 
JUDGMENT
 
Md. Muzammel Hossain, J: This appeal by leave is directed against the judgment and order dated 04.06.2000 passed by a Division Bench of the High Court Division in F.M.A. No.95 of 1990 dismissing the appeal and affirming the judgment and order dated 21.10.1989 passed by the learned Subordinate Judge (presently Joint District Judge), Commercial Court No.2, Dhaka in Miscellaneous Case No.20 of 1986 dismissing the same.

The appellant as petitioner instituted Miscellaneous Case No.124 of 1984 which was subsequently renumbered as Miscellaneous Case No.20 of 1986 before the learned Subordinate Judge, Commercial Court No.2, Dhaka for realization of a sum of Tk. 63,54,326.33 as on 01.01.1984 under Article 33 of the President's Order No.128 of 1972 from the opposite parties-respondents stating, interalia, that the petitioner-appellant Bangladesh Shilpa Rin Sangstha (hereinafter referred to as BSRS) was established by P.O. No.128 of 1972 to provide credit facilities and other assistance to industrial concerns and to broaden the base of investment in Bangladesh. On the application of the respondent No.l the appellant-BSRS sanctioned a loan of Tk.70,00,000/- on 18.12.1979 for acquisition of two steel body self propelled Cargo Coasters of 600 DWT each. The loan is repayable in sixteen equal half-yearly installments commencing from two years after disbursement of the first installment which was disbursed on 30.12.1980. To that effect a loan agreement was entered into on 06.06.1980 between the respondent No.1-She Shipping Lines Limited and the appellant-BSRS. Thereafter a tripartite contract was executed on 29.11.1980 between the appellant BSRS, the respondent No.1-She Shipping Lines Limited and the respondent No.5-Rajdhani Ship Building and Engineering Works Ltd. to build the body of two vessels in the dockyard and a total amount of Tk.42 lacs was disbursed in two installments. The first installment of Tk.14 lacs was disbursed for building the body of the Vessels and the last installment of Tk.28 lacs was meant for opening of L/C to import engines for the vessels. The total amount of Tk.42 lacs was disbursed by cheque to the account of the respondent No.5. But the respondent No.5 did not import the new marine engines as per terms of the contract rather they imported reconditioned engines which are now lying in the godown of the Rupali Bank and misappropriated the money. Thirty five percent of the construction of the body of the vessel had been completed on 14.03.1983. Since then no progress had been made though the date of delivery of the vessels as per agreement dated 31.10.1983. The appellant claims that the respondent Nos.l-4 being guarantors are jointly and severally liable to repay the BSRS’s dues.

The respondent Nos.1 and 2 contested the case by filing written objection denying all the material allegations stating, interalia, that the appellant sanctioned an amount of Tk.70 lacs on 18.12.1979 to purchase two steel body self-propelled Coasters of 600 DWT each and the loan was repayable by 16 half yearly installments commencing from 2 years after disbursement of the loan; that a tripartite contract was entered into among the Bangladesh Shilpa Rin Sangstha, the appellant, Rajdhani Ship Building Engineering Works Ltd. and She Shipping Lines Ltd., the respondents; that under the tripartite contract the installment was required to be paid to the respondent No.5 directly; that as per terms and conditions of the contract Bank to Bank L.C. was to be opened. But in fact, it was not followed and consequently, the officials of the appellant and the respondent No.5 took advantage of it and misappropriated the whole money; that the respondent Nos.1 and 2 are not responsible for payment of loan money.
The learned Subordinate Judge, Commercial Court No.2, Dhaka found the appellant and the respondent No.5 solely liable for breach of contract and frustration of the project and by the judgment and order dated 21.10.1989 dismissed the miscellaneous case on contest against the respondent Nos.1 and 2 and exparte against the rest without cost. The appellant being aggrieved by the aforesaid judgment and order dated 21.10.1989 preferred First Miscellaneous Appeal No.95 of 1990 before the High Court Division which was pleased to dismiss the same by the judgment and order dated 04.06.2000.

The petitioner-appellant being aggrieved by and dissatisfied with the impugned judgment and order dated 04.06.2000 passed by the High Court Division preferred the instant Appeal with the leave of this Court.

Leave was granted to consider the following grounds:
  1. whether the respondent No.1-She Shipping Lines Limited is a loanee at law, because of (1) the loan agreement entered into between the petitioner and the respondent No.1 on 06.06.1986, (2) the tripartite contract executed on 29.11.1980 by the petitioner-BSRS, respondent No.1-She Shipping Lines Limited and the respondent No.5-builder, Rajdhani Ship Building and Engin-eering Works Limited, (3) the personal guarantees and Demand, Promissory Notes etc. executed by its directors for Tk.42,00,000/- which was received by the respondent No.5-­Rajdhani Ship Building and Engineering Works Limited, (4) the withdrawal and misappropriation of Tk.42 lacs by the respondent Nos.6 and 7, the Managing Director and the Director respectively of the respondent No.5 as agents from it’s account (5) the importation of second hand engines in place of brand new engines. Whether all these make the respondent No.1 and other respondents personally liable for wrong doing, misfeasance, malfeasance and breach of trust and as such they are liable for payment of BSRS dues.
  2. whether both the trial court and the High Court Division committed error of law and facts by holding that the respondent Nos.1 and 2 knew only of the disbursement of the first installment, although by exhibit 19 the respondent No.1­-She Shipping Lines Limited had requested BSRS, the petitioner to disburse second installment for procurement of engines and as such the judgment of the trial Court and the High Court Division are not sustainable in law and in facts.

Mr. A.K.M. Nazrul Islam, the learned Senior Advocate appearing for the appellant submits that the respondent No.1, being a loanee at law, under the terms and conditions of the loan agreement, entered into between the appellant and the respondent No.1 on 06.06.1980 and the tripartite contract executed on 29.11.1980 by the appellant-BSRS, the respondent No.1-She Shipping Lines Ltd. and the respondent No.5-builder Rajdhani Ship Building and Engineering Works Ltd., the personal guarantees and Demand, Promissory Notes etc. executed by the Directors of She Shipping Lines Ltd. for Tk.42,00,000/- which was received by the respondent No.5-Rajdhani Ship Building & Engineering Works Ltd., the withdrawal and misappropriation of Tk.42 lacs by the respondent Nos.6 and 7 from the account of the respondent No.5 was done as agents and the importation of second-hand engine in place of brand new engine in the name of Rajdhani Ship Building and Engineering Works Ltd. having done by the directors of Rajdhani Ship Building and Engineering Works Ltd. who are personally liable for their wrong doing, misfeasance, malfeasance and breach of trust and as such all the respondents are liable for payment of BSRS dues. Mr. Nazrul Islam then submits that both the trial Court and the High Court Division were wrong in holding that the respondent Nos.1 and 2 knew only of the disbursement of the first instalment, although by exhibit 19 the respondent No.1, She Shipping Lines Ltd. had requested the appellant, BSRS to disburse second instalment for procurement of engines and that both the trial Court and the High Court Division committed error of law and facts and as such the judgments of the trial Court and the High Court Division are not sustainable in law and in facts. The learned Advocate appearing for the appellant further submits that both the Courts were wrong in not holding that collusion existed between the respondent No.1 and the respondent No.5 and not between the appellant and the respondent No.5. Finally, he submits that the trial Court and the High Court Division were wrong in not holding that by non-completing the project the She Shipping Lines Ltd. and the Rajdhani Ship Building and Engineering Works Ltd. have committed breach of contract violating the provisions of loan agreement and the tripartite contract under which they are bound to complete the Project and as such the appeal is liable to be allowed.

Mr. Md. Aftab Hossain, the learned Advocate-On-Record appearing on behalf of the respondent No.2 submits that both the trial Court and the High Court Division concurrently found that the appellant and the respondent No.5 in collusion with each other violated the tripartite contract and as such the respondent No.2 is not liable for money claimed by the appellant. He then submits that the trial Court and the High Court Division have rightly held that the respondent No.2 had no knowledge about payment to the respondent No.5 by the appellant and as such both the respondent Nos.1 and 2 are exempted from any liability of the appellant. Mr. Aftab Hossain contends that both the trial Court and the High Court Division have rightly held that collusion existed between the appellant and the respondent No.5 and the respondent No.2 has nothing to do in respect of loan money of the appellant. The learned Advocate-on-record appearing for the respondent No.2 finally submits that the trial Court and the High Court Division have rightly held that the respondent No.2 is in no way liable for the loan money, on the other hand, the respondent No.2 has been seriously affected for not completing the project by the respondent No.5 and as such the appeal is liable to be dismissed.

We have heard the learned Advocates for both the parties, perused the leave granting order, impugned judgment and order passed by the High Court Division, Concise Statements filed by the parties and other materials on record.

In the instant case Md. Junnur Rahman, Senior Principal Officer of BSRS as P.W.1 in examination-in-chief stated that on 18.12.1979 the appellant-BSRS sanctioned a loan of Tk.70,00000/- (seventy lacs) for two steel body self-propelled Coasters of 600 D.W.T. each and the loan was repayable by 16 half-yearly installments commencing from 2 years after disbersment of the first installment and accordingly, an agreement for loan was signed on 06.06.1980 with the respondent No.1. The first installment was disbursed on 30.12.1980. Previously on 28.12.1980, the respondent No.1 requested the appellant to make payment of the first installment in favour of the respondent No.5 by letter dated 24.12.1980 which was proved and marked as Exbt.12 and accordingly, first installment amounting to Tk.14,00,000/- (fourteen lacs) was paid to the respondent No.5. At the request of the respondent Nos.1 and 5, the appellant disbursed the money of second installment amounting to Tk.28,00,000/- on 20.01.1981 with an advice to the Rupali Bank under Wage Earner’s Scheme A/C Rajdhani Ship Building and Engineering Works Ltd. and according to that advice two new engines as per Proforma Invoice were required to be imported through Rupali Bank. The respondent Nos.5-7 violating the terms and conditions of the tripartite agreement imported two old engines. When they were asked about it they stated that on request of the respondent No.1 they had imported these old engines. The respondent No.1 by it’s letter dated 28.08.1982 (Exbt.17) gave their consent in the importation of old engines. P.W.1 further deposed that the respondents collusively imported old engines instead of new engines. In cross-examination P.W.1 stated that the respondent No.1, sponsor and the respondent No.5,builder violated the terms and conditions of the tripartite contract inasmuch as the respondent No.5 violated the terms and condition of the contract by importing old engines and the respondent No.1 violated the terms and conditions of the contract by giving it’s consent to their act. P.W.1 in cross-examination also stated that the appellant did not pay any money to the sponsor, respondent No.1 because it was stipulated in the tripartite contract that money would be disbursed in favour of the respondent No.5. Accordingly, the appellant paid money to the respondent No.5. Initially Tk.14,00000/- (fourteen lacs) was paid. P.W.1 in cross-examination further stated that at the time of payment of second installment amounting to Tk.28,00000/- (twenty eight lacs) they advised for opening of bank to bank L.C. but the sponsor, respondent No.1 did not pay any heed to it. This advice was proved and marked as Exbt.15. The cheque was sent with the advise letter. There was no L.C. number in the advise. P.W.1 in cross-examination also stated that the respondent No.1 in collusion with the respondent No.5, builder encashed payment of second installment. P.W.1 in cross-examination stated that after importation of the engines they came to know that these were second-hand engines and then they called explanation from the respondent No.5 and in reply, the respondent No.5 stated that with the advice of the respondent No.1- sponsor they imported the engines. It appears that the engines were not imported as per specification. The respondent Nos.1 and 5 in collusion with each other imported the old engines and thereby they violated the terms and conditions of the contract. The respondent No.1 on 14.12.1982 gave an undertaking (Exbt.18), stating, that in association with the respondent No.5-builder, they imported old engines for which they are fully responsible. The respondent No.1 by it’s letter dated 06.01.1981 requested the appellant to make payment against second installment whereupon they paid the second installment to the respondent No.5. The letter of request issued by the respondent No.1 was proved and marked as Exbt.19. The appellant performed its part of the contract but the respondent Nos.1 and 5 failed to perform their part of the contract.

Mazharul Huq Majumder, P.W.2, Senior Principal Officer of the Accounts Department of the appellant Bank formally proved the Statement of Accounts which was marked as Exbt.20. A.M. Sirajul Karim, the Company Manager of the respondent No.1-company as D.W.1 in examination-in-chief stated that there was a tripartite contract executed by the appellant-BSRS, the respondent No.1-sponsor and the respondent No.5-builder. As per terms and conditions of the contract the appellant was required to make the payment of loan in favour of the builder-respondent No.5. D.W.1 denied that they in collusion with the respondent No.5-builder had imported old engines to misappro-priate the payment of second installment. 

In the instant case it appears that the appellant BSRS sanctioned a loan of Tk.70 lacs in favour of the respondent No.1, borrower, for construction of two steel body self-propelled coasters of 600 D.W.T. each and the loan was repayable by 16 half-yearly installments commencing from two years after disbursement of the first installment as per loan agreement dated 06.06.1980. The first installment of Tk.14 lacs was disbursed on 30.12.1980 to the respondent No.5 as per instruction of the respondent No.1 vide letter dated 24.12.1980 (Exbt.12) and thereafter as per request of respondent Nos.1 and 5, the appellant disbursed the 2nd installment amounting to Tk.28 lacs on 20.01.1981 with an advice (Exbt.15) to the account of Rajdhani Ship Building and Engineering Works Ltd. with Rupali Bank endorsing copies of the same to the respondent Nos.1 and 5 to import new Caterpillar 3412 Marine Propulsion Engines as per proforma invoice and in the said advice the appellant categorically stated that the amount would be utilized for the aforesaid purpose. There was a tripartite contract dated 29.11.1980 (Exbt.10) among the appellant-BSRS, the respondent No.1-borrower-purchaser and the respondent No.5-builder to build and deliver to the respondent No.1-purchaser two new steel body self-propelled cargo coasters / vessels in the dockyard. On perusal of memo dated 06.01.1981 (Exbt.19) it appears that the respondent No.1 requested the appellant to disburse second installment to the respondent No.5 for procurement of engines as per appellant’s letter to the latter. At the time of disbursement of second installment of Tk.28 lacs the appellant vide Memo No.E1152 dated 20.01.1981 (Exbt.15) advised to open letter of credit for importing new caterpillar 3412 Marine Propulsion engines but the respondent No.1 did not pay any heed to it. The respondent No.5 in collusion with the respondent No.1 encashed the payment of second installment in their personal name in violation of the terms and conditions contained in the loan agreement dated 06.05.1980 (Exbt.1) and imported two second-hand reconditioned marine engines. When appellant came to know about the second-hand reconditioned engines it called explanation from respondent No.5 who in reply stated that they had imported the second-hand reconditioned engines with the advice of respondent No.1. Thereby the respondent No.1 violated the terms and conditions of the contract. Admittedly, the engines were not imported as per stipulation of the contract. On perusal of respondent No.1’s letter dated 28.08.1982 (Exbt.17) addressed to the respondent No.5, it appears that the respondent No.1 approved the supply of the second-hand re-conditioned engines by respondent No.5. Thereafter, the respondent No.1 admitted that they had violated the terms and conditions of the contract and gave an undertaking dated 14.12.1982 (Exbt.18) to the appellant admitting that the contract was to procure two new engines and the respondent No.5 in association with the respondent No.1 had imported the second-hand re-conditioned engines and that they shall remain responsible for any damage for unsatisfactory performance of the engines and make good the loss from their own resources and accordingly shall make repayment of BSRS loan strictly in accordance with repayment schedule and they shall be bound to compensate for the unsatisfactory performance of the reconditioned engines and shall indemnify the appellant for any loss, liability, harm or damage sustained or caused to the appellant on account of their non-fulfillment of the terms and conditions of the loan agreement or as may be imposed by the appellant at its absolute discretion. In this context it is pertinent to reproduce in verbatim for better appreciation the undertaking dated 14.12.1982 (Exbt.18) which runs as follows:
"Bangladesh Shilpa Rin Sangstha (BSRS)"
Agrani Bank Building
Motijheel C/A, Dhaka.
UNDERTAKING
Dear Sir,
WHEREAS:
  1. You have granted to us She Shipping Lines Ltd. a Company incorporated under the Companies Act,1913 and having our registered office at Previous 17, Siddeswari Lane, Presently: 1-F/3, Mirbagh, Nayatola, Moghbazar, Dhaka-17 a local currency loan of Tk.70,00,00.00 (Taka Seventy lac) on terms and conditions contained in the Loan Agreement dated 06.06.1980 entered into between you and us and at our request placed work order to Rajdhani Ship Building & Engineering Works Ltd. Previously 5/1, Chittaranjan Avenue, Dhaka, Presently 23/1, East Rampura, Dhaka (hereinafter called the Dockyard) for construction of 2 Nos. Steel body self propelled cargo coaster (s)/ Vessels of 600 DWT each on terms and conditions contained, in the Tripartite Contract No. Nil dated 29.11.80 entered into among you, the said Dockyard and us (hereinafter called "Contract").
  2. In terms of para 7 of Annexure "A" to the said Contract it is required inter-alia, new engine (s) of reputable make in the said coaster (s) vessels are to be installed.
  3. The Dockyard in association with us has imported the reconditioned engine (s) in place of brand new engine (s) stipulated in said contract.
  4. For violation of the terms and conditions of the said Contract as aforesaid and as we are associated with the said violation you required from us an undertaking to the effect that we shall remain responsible for any damage / unsatisfactory performance of the engine (s) and make good the loss from our own resources and under no circumstance we shall disown BSRS loan liability and shall make repayment of BSRS loan strictly in accordance with the repayment schedule.
Now, thereafter, we the said She Shipping Lines Ltd. do in the premises agree, undertake and covenant as follows:
  1. That we shall remain responsible for any damage/unsatisfactory performance of the engine (s) installed in the Coaster (s) / Vessels built in the said Dockyard for us and make good all the losses from our own resources and under no circumstance we will disown BSRS loan liability and shall make repayment of BSRS loan strictly in accordance with repayment schedule.
  2. That for any cause whatsoever the said engine (s) do not work satisfactorily we shall be completely liable for that and shall be bound to compensate for the said unsatisfactory performance.
  3. That in the event the engine (s) installed as aforesaid are absolutely damaged or absolutely incapable of giving satisfactory performance, on account of the same being Second-hand/recondition we shall be liable, on your demand, at your absolute discretion, to completely replace the said Second-hand/reconditioned engine (s) by brand new engine (s) immediately,
  4. That you shall at your discretion hold us responsible at any time for violation of the terms and conditions of the said Contract and/or the said Loan Agreement.
  5. That this undertaking shall be without any prejudice to your rights and claims against us or as to your loans and we hereby confirm that we shall continue to repay your loans till liquidation thereof in terms of the Loan Agreement irrespective of any out come / result of such legal actions proceedings.
  6. This undertaking is additional and nothing /herein contained shall prejudice any of your rights or remedies in respect of any present or future security, obligation or decree for any of our indebtedness or liability.
  7. That we do hereby, further agree, undertake and covenant that we shall indemnify and keep you indemnified for any loss, liability harm or damage sustained, by or caused to you on account of our non fulfillment of the terms and conditions of the said contract and the Loan Agreement or as may be imposed by you at your absolute discretion.
  8. That we shall be absolutely abide by the aforementioned conditions.
  9. That this undertaking shall be binding on us and on our successors-in-interests, assigns, heirs, executors, administrators and legal representative.
For and on behalf of she shipping lines limited.
1.   Abdul Mabud
      Managing Director.
2.   M. Mokarram Hakim
      Director.
Dated, Dhaka.
the 14th December, 1982."
 
The contents of this undertaking has been duly proved by the appellant and it acts as admission of the fact described therein by the respondent No.1. Section 58 of the Evidence Act,1872 provides that facts admitted need not be proved. As per admission in the undertaking respondent No.1 violated the terms and conditions of the tripartite contract entered into among the respondent Nos.1, 5 and the appellant. It also substantiates the claim of the appellant that the disbursement of the money of the 2nd installment was made with the full knowledge and under the instruction of the respondent No.1 as opposed to the findings of both the trial Court as well as the High Court Division that respondent Nos.1 and 2 knew only of the disbursement of the first installment. It also appears that the High Court Division while holding that the second installment of the money was disbursed without the knowledge of the respondent Nos.1 and 2, lost sight of the letter issued by the respondent No.1 on 06.01.1981 (Exbt.19) to the appellant requesting them to disburse the same to the respondent No.5 the content of which has been duly proved by the appellant.

We will now examine whether the respondent No.1 is a loanee at law. What is loan or debt had been discussed by Lord Justice Lindley in the case Webb v. Stenton, (1883) 11 Q.B.D. 518 at page 527. He opined:

“I should say, apart from any authority, that a debt legal or equitable can be attached whether it be a debt owing or accruing; but it must be a debt, and a debt is a sum of money which is now payable or will become payable in the future by reason of a present obligation, debitum in presenti, solvendum in futuro. An accruing debt, therefore, is a debt not yet actually payable, but a debt which is represented by an existing obligation.”

The Supreme Court of India in the case of National Royan Corporation Ltd vs The Commissioner of Income Tax, AIR 1997 SC 3487 held as under:

“The liability to repay arises the moment the money is borrowed. The amount borrowed may be repayable immediately or in future. The date of repayment of loan may be deferred by agreement but the obligation or the liability to repay will not cease on that account. The obligation is a present obligation; Debitum in Presenti, solvendum in futuro.

It appears that to become a loanee or debtor a sum of money has to be borrowed or an obligation has to be accepted for which a sum of money is now payable or will become payable in future. In the instant case it is admitted that a loan agreement was executed between the appellant and the respondent No.1. It is also not denied that the appellant made payment of Tk.28 lacs as second installment of the loan money to the account of respondent No.5. It has been duly proved by the appellant that the money of second installment was advanced to the account of the respondent No.5 at the request and with the full knowledge of the respondent No.1. It is admitted fact that the first installment of money amounting to Tk.14 lacs was disbursed by the appellant for building the body of two vessels. After these two payments there is nothing left to make the respondent No.1 borrower of the money.

In O’Driscoll v. Manchester Insurance Committee, (1915) 3 K.B. 499, the Court of Appeal held that where a panel doctor has done work under his agreement with the insurance committee, and the committee have received funds in respect of medical benefit from the National Insurance Commissioners, there is a debt owing or accruing from the insurance committee to the panel doctor.

Lord Justice Swinfen Eady observed at page 512 as under:

“It is contended, however, that there cannot be a “debt” until the amount has been ascertained, and in support of this contention cases have been cited to us where it was attempted to attach unliquidated damages. But in such cases there is no debt at all until the verdict of the jury is pronounced assessing the damages and judgment is given. Here is a debt, uncertain in amount, which will become certain when the accounts are finally dealt with by the Insurance Committee. Therefore there was a “debt” at the material date, though it was not presently payable and the amount was not ascertained. It is not like a case where there is a mere probability of a debt, as, for instance, where a person has to serve for a fixed period before being entitled to any salary, and he has served part of that period at the time the garnishee order nisi is served. In such a case there is no “debt” until he has served the whole period.”

As observed in the preceding paragraph, this is also not a case where there exists a mere probability of a debt. In the instant case it is clearly a case of taking loan from the appellant and thereby incurring debt liability by the respondent No.1 inasmuch as money was disbursed on request of the respondent No.1 as per tripartite agreement to the respondent No.5. Therefore, inevitably respondent No.1 has become loanee at law.

So, when money is disbursed on request of the respondent No.1 as per tripartite contract to the respondent No.5, inevitably respondent No.1 becomes loanee at law and all consequential liabilities fall upon it. If that money is misappropriated by the respondent Nos.5-7 that does not exempt respondent No.1 from the loan liability. It is more so when seemingly fact of the misappropriation is known to the respondent No.1 from the very beginning as evident from the undertaking given to the appellant by the respondent No.1.

Respondent No.1 after giving undertaking to the effect that due to the violation of the contract by procuring two reconditioned engines instead of two new ones if any damage occurs they would make good the loss from their own resources, and accordingly make repayment of BSRS loan, they can not be exempted from the responsibility as it appears that these two reconditioned engines have been lying in the godown of the Rupali Bank for clearance and the appellant has proved that 35% of construction of body of the vessels was completed by 14th March 1983 and thereafter there is no progress of the work though as per agreement the said vessels were required to be delivered within 31.10.1981.

However, after the sanction of the loan there was a tripartite contract on 29.11.1980 between the BSRS-appellant and the respondent Nos.1 and 5. It has been stipulated in the contract that the installments were required to be paid to the respondent No.5-builder in the dockyard and accordingly the appellant paid the said amount. But the mode of payment as stipulated in the tripartite contract was through letter of credit (L.C.).

But it has to be noted that while disbursing the second installment amounting to Tk.28,000,00/- (twenty eight lacs) the appellant advised for opening a letter of credit but the sponsor, respondent No.1 did not pay heed to it. This advice was marked as Exbt.15. The cheque was sent with the advise letter. From the conduct of the appellant it is evident that they did not violate the terms and conditions of the contract, rather non-cooperation of the respondent No.1 resulted in the violation. So the liability does not fall upon the appellant. 

The appellant proved that the respondents are not at all interested to complete the project since the under-construction of the vessel had been left abandoned when the reconditioned engines were imported instead of new engines and thereby they violated the terms and conditions of the contract as well as the loan sanction letter. It has also been proved that the reconditioned engines were imported instead of new engines in the name of the respondent No.5 not in the name of the appellant or the respondent No.1 or the Project Company. By the conduct of the parties the appellant proved that the respondents failed to perform their part of the contract and make any payment of the outstanding loan and interest amounting to Tk.63,54,326.33 by 01.01.1984.

As per Article 32 clause (b) of the Bangladesh Shilpa Rin Sangstha Order, 1972 the violation of the terms and conditions of the loan agreement by the respondents has made the appellant entitled to have the repayment of the loan in full. Article 32 clause (b) of the Bangladesh Shilpa Rin Sangstha Order, 1972 is reproduced below:

“32. Notwithstanding any agreement to the contrary, the Sangstha may, by notice, require any industrial concern to which it has granted any loan or any person who is liable for payment of such loan forthwith to repay the loan in full, if-
....... .........
the industrial concern has failed to comply with the terms of any agreement with the Sangstha in the matter of the loan; or”

From the aforesaid discussions and findings we are of the view that the appellant as petitioner in the miscellaneous case by adducing both oral and documentary evidence successfully proved their case for recovery of the present outstanding loan with interest of the respondents as on 01.01.1984 amounting to Tk.63,54,326.33.

We also think it a proper case for awarding compensation for violation of contract by the respondents. In Sonali Bank vs. M/S. Karanaphuli Works Ltd., 2 BLT (AD) 78, this Division observed:

“Sec. 34 of the C.P. Code provides that when the court passes a money decree, it may order interest to be paid on the principal sum adjudged from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest on the aggregate sum so adjudged from the date of the decree to the date of payment. Purpose of this section has been expressed in a complex sentence, and if it is simplified, it will show that the court has got power to award interest for three distinct periods-(1) the period from the date a sum is payable to the date of institution of the suit, (2) the period during which the suit remains pending and (3) the period from the date of decree till payment of the decretal amount.”

In the aforesaid case his Lordship Justice Latifur Rahman, as he then was, further observed as under:

“Section 73 of the Contract Act only speaks of compensation for loss or damage caused by breach of Contract. Thus, this section gives statutory recognition for compensation for any loss or damage. Section 73 does not contemplate awarding of any interests by way of damage ..... ....... Strictly speaking under the law interest can not be recovered as damages. Other than an agreement for the payment of interest at a fixed rate or it is payable by the usage of the trade having the force of law or under any substantive law.”

However, in Sonali Bank case (supra) trial court allowed an interest of Tk.33 lacs to the plaintiff for the period from the date the sum was payable to the date of institution of the suit, on the principal sum adjudged at a rate of 15% (the then bank interest rate) taking the ground that had the money due been kept in a bank as deposit, the plaintiff would have received interest to this extent and again allowed interest thereupon at a rate of 15% from the date of institution of the suit till realisation. The High Court Division concurred with the decision of the trial court excepting that the awarding of interest of Tk.33 lacs for the period prior to the institution of the suit was not interest, but compensation in the form of interest. This Division approved the decision holding that interest was not awarded by way of damages but the prevailing rate of bank interest was taken into consideration for measuring business loss and damages of the plaintiff and court is not prevented from adopting this method for determining the amount of compensation as per the existing bank rate.

Article 33 clause (1) (d) of the Bangladesh Shilpa Rin Sangstha Order,1972 contemplates payment of “any other sum” relating to loan with the original loan money when the Sangstha becomes entitled to payment of any loan by reason of the breach of any condition of any agreement between the Sangstha and an industrial concern to which any loan has been granted. Article 33 clause (1) (d) of the Bangladesh Shilpa Rin Sangstha Order, 1972 is reproduced below:

“33. (1). Where the Sangstha becomes entitled to require the immediate payment of any loan before the due date under Article 32 or by reason of the breach of any condition of any agreement between the Sangstha and an industrial concern to which any loan has been granted or any person liable for payment of that loan, or where an industrial concern to which any loan has been granted or any person liable for payment of that loan fails to repay the loan by the due date or in compliance with the notice under Article 32, an officer of the Sangstha generally or specially authorised by the Board in this behalf, may apply to the District Judge within the local limits of whose jurisdiction the industrial concern carries on the whole or a substantial part of its business, or the office or Branch of the Sangstha from which the loan was disbursed is situated, for one or more of the following reliefs, namely:-
  1. .............
  2. ..............
  3. .................
  4. an order for payment of the loan or any other sum relating thereto.”
Here the expression “any other sum” definitely connotes a sum adjudged as compensation for the breach of contract and to determine the extent of compen-sation existing bank rate of interest can be taken into consideration.

Accordingly, the appeal is allowed with cost of Tk.20,000/-. The impugned judgment and order dated 04.06.2000 passed by the High Court Division in F.M.A. No.95 of 1990 is set aside and the Miscellaneous Case No.20 of 1986 is allowed. The respondents are directed to pay the aforesaid amount with a further compensation calculated at the rate of bank interest prevalent at the time of the institution of the suit.
 
Ed.

Reference: 4 LNJ AD (2015) 18