M/s. Haque Bro­thers (Carbide) Ltd. Vs. Bangladesh Shilpa Rin Sangstha & others, 37 DLR (AD) (1985) 47

Case No: Civil Appeal Nos. 31 & 32 of 1983

Judge: F.K.M.A. Munim,

Court: Appellate Division ,,

Advocate: Syed Ishtiaq Ahmed,Faqeer Shahabuddin Ahmad,,

Citation: 37 DLR (AD) (1985) 47

Case Year: 1985

Appellant: M/s. Haque Bro­thers (Carbide) Ltd.

Respondent: Bangladesh Shilpa Rin Sangstha and others

Subject: Law of Evidence, Procedural Law,

Delivery Date: 1984-4-2

M/s. Haque Bro­thers (Carbide) Ltd. Vs. Bangladesh Shilpa Rin Sangstha & others, 37 DLR (AD) (1985) 47
Supreme Court
Appellate Division
Badrul Haider Chowdhury J
Shahabuddin Ahmed J
Chowdhury ATM Masud J
Syed Md. Mohsen Ali J
M/s. Haque Bro­thers (Carbide) Ltd.
……….................Petitioner (In both the cases)
Bangladesh Shilpa Rin Sangstha & others
…………….........Respondents (In both the cases)
April 2, 1984.
The Evidence Act, 1872 (I of 1872) 
“Without prejudice”- letter written with the expression ‘without prejudice’ on the top of it- Its implication 
The words ‘'without prejudice" are often written by one party to the other on the assurance that the proposed terms were not to be used against the writer if there is no settlement. The entire object of the writer is that the writer expresses in writing that the suit may be settled on the proposed terms. If they are acceptable, the parties will be bound by these terms and the dispute comes to an end. If the proposed terms become infructuous, they cannot be used in future against the writer in deciding the issues between the parties. 
If the document is formally proved, the Court can ultimately examine such letter. But if the entire letter is written “without prejudice” the value of such evidence in determining the disputes between the parties is very little. If, however, a portion of letter is written “without prejudice”, that portion should not also been given consideration in decision the case against the party or the other………………………(19)
Lawyers Involved:
Syed Ishtiaq Ahmed, Senior Advocate, Mahmudul Islam, Advocate with him, instructed by Kazi Ebadul Haque, Advocate-on-Record—For the Petitioner (In both the cases)
Faqeer Shahabuddin Ahmed, Senior Advo­cate, K.S. Nabi, Advocate instructed by Sharif-uddin Chaklader, Advocate-on-Record—For the Respondent No. 1 (In both the cases).
Ex-parte.—Respondent Nos. 2-4 (In both the cases).
Civil Appeal Nos. 31 & 32 of 1983.
(From the Judgments and Orders dated 22-9-82 passed by the High Court Division Dhaka Bench in First Miscellaneous Appeal Nos. 490 of 1979 and 474 of 1980 res­pectively)
Fazle Munim CJ.
These appeals arise from First Miscellaneous Appeal Nos. 490 of 1979 and 474 of 1980 dismissing the former appeal and allowing the latter. These appeals had arisen from the judgment of Additional District Judge, 5th Court, Dhaka passed in Miscellaneous Case No. 140 of 1977.
2. Respondent No. 1, Bangladesh Shilpa Rin Sangstha established under President's Order No. 128 of 1972, filed the aforesaid miscellaneous case under Article 33 of the above-mentioned President's Order against the appellant for realisation of Tk. 29,72,910.28, equivalent to US dollar 1,90,609.05, with pendente lite interest at the rate of 71/2% and 2% liquidated interest per annum on the sum claimed including both principal and interest accrued up to date of filing the application. Respondent No. 1 succeeded, under the above-mentioned President's Order No. 128 of 1972, to the undertaking and assets of Pakistan Industrial Credit and Investment Corporation hereinafter referred to as "THE PICIC". Facts as stated in (the application show that appellant which is a private limited company obtained in 1962 a loan of US dollar. 1,51,000.00 under "AID (DLF) 100 credit" for setting up a new Dry-cell battery manufacturing plant and in 1966 another loan of US dollar 52,000.00 under -"IBRD 382 Credit" for expansion and modernization of the aforesaid project. These loans were given in Dollar currency and repayable in local currency at the rate of exchange pre­vailing on the-date of repayment. The first loan carried interest at the rate of 8% per annum and liquidated interest at the rate of 1% per annum which was enhanced by supp­lementary loan agreement dated 11-5-71. After the emergence of Bangladesh the appel­lant made total payment of Tk. 3,75,000/- on 1-1-77 the outstanding loan was US dollar 1,90,609.05. In their letter dated 22-10-77 the appellant admitted that a sum of US dollar 1, 42,583.82 was due from the appellant and that the appellant was prepared to pay Tk. 10,00,000/- in all.
3. On the failure of the appellant to make any payment of the loan in spite of repeated demands the respondent filed the aforesaid application for attachment of properties mentioned in schedules A and B there under for realization of the respondent's dues in accordance with the provisions of Article 33 (1) of the President's Order No. 128 of 1972.
After the closing of the arguments the respondent filed an application for amendment of-their petition whereby their claim was shown reduced as under;
1st loan dollar 1,08,899.55=6 98,495.40  
2nd loan dollar 57,866.11=Tk.9, 02 531.83 which amounted to dollar total of dollar 1, 66 765.66 or Tk. 26 01,027.33.
Reasons for amendment as shown in their application were that the account was further examined during the pendency of the case which revealed that some payments made earlier were not included before and hence the amendment was necessary, Respondent, there­fore, prayed for realisation of the amount with interest at the rate 7½% and liquidated damage 2% of the defaulted amount.
Appellant along with defendant-respon­dents 2—4 contested the case. In their written statement, it was contended, inter alia, that the petition was not maintaina­ble, that the respondent No. 1 was not the successor of the PICIC, that the foreign loan giving Agencies have written off the loans and therefore, the question of repay­ment of the loans to respondent No. 1 did not arise, that out of the second loan, US dollar 46,000.00 only- was disbursed, that the appellant, paid several instalments to the PICIC, Karachi, that after the emer­gence of Bangladesh the undertaking of the appellant was taken over as abandoned property though subsequently released and that the appellant did not, in their letter dated 22-2-77 admit that the sum of US dollar 1,42,583.82 was still payable by them but it was true that by the said letter appellant agreed to pay Taka 10 lacs in full and final settlement of the dues.
The Additional District Judge, by his judgment dated 21-9-71, allowed the Miscellaneous Case No.140 of 1977 on the findings that the statements of account, Exts. 8, 9 and 9 (a) being inadmissible, do not conclusively prove the claim of respon­dent No. 1, but since, however, the appell­ants, by their letter dated 22-10-77, Ext. 7 (d), admitted the claim of respondent No. 1 amounting to US dollar 1,02,103.37 for "AID (DLF) 100 Credit" and US dollar 40,480.09 for IBRD 382 Credit' totaling US dollar 1, 42,583.46, the learned' Addi­tional District Judge accordingly allowed the claim to this extent convertible at the rate of exchange, prevalent on the date of repayment. Against this judgment appellants preferred First Miscellaneous Appeal No. 490 of 1979 against the part decree and respondent No. 1 preferred First Miscellan­eous Appeal No. 474 of 1980 against the rejection of part of their claim before the High Court Division
7. On hearing the appeals analogously the learned Judges of the High Court Division dismissed F.M.A. No. 490 of 1979 and allowed F.M.A. No. 474 of 1980 on the findings that Exts. 8 and 9 series as also Ext. 10 were admissible and decree was accordingly passed for the amount shown in the amended plaint with interest as prayed for.
8. Being aggrieved by this judgment, appellant moved this Court and obtained leave to consider the following contentions, namely (1)whether the High Court Division was t in passing its "decision on. Exts.8, 9 and 10 which, according to appellants, are admissible in evidence: (2) whether the High Court Division correctly decided that respondent No. 1 are the successors of PICIC that all assets of the PICIC vested in respondent No. 1 and (3) whether the High Court Division was correct in not holding that since the appellants had paid Taka 4 lacs between September and December of the year 1971 the payment was not reflected in Ext. 8 and that if this payment had been adjusted at the rate of exchange applicable then, there would have been hardly any outstanding loan.
Syed lshtiaq Ahmed, Counsel for the appellant, submitted that the statements of account respondent No.1 were not admissible under the Bankers Books Evidence Act. Of these statements of account Ext. 8 was stated to be prepared on the basis of accounts received from the Head Office of the PICIC Karachi up to September 1971. P.W.1, Ranjit Kumar Chakravarty Deputy Assistant General Manager of respondent No.1 who revealed this fact also admitted that the amount of Taka 4 lacs which the appellant claimee to have passed between September December of 1971 which payment was not reflected in Ext. 8. Subsequent statements of account which were received through World Bank from the PICIC Head Office also showed that the appellant made some payments during the aforesaid period. Exhibits 9 and 9 (a) which were not proved to have been prepared by the PICIC and also being unsigned and uncertified were not admissible. Exhibit 10 series are letters of respondent No. 1 to the appellant but could not be proved in view of the provisions of section 21 of the Evidence Act.
9. It appears that the appellants were unable to produce receipts showing amounts paid by them.  P.W.3 who is the Managing Director of the appellant stated in his depo­sition that during the disturbances in 1971 the original documents, records and books of account were lost. He, however, claimed that the first loan was paid off before Bangladesh became independent. He refused to accept the statements of account namely, Ext. 8 for two reasons, firstly, it was full of mistakes and secondly, it did not show previous out-standings and payments by the appellant made before Bangladesh became independent.
10. The learned Counsel also mentioned that respondent No.1 in their application for amendment of the petition reduced their claim from US $ 1,90,609,05  to US $ 1,66,765. 66 adjusting the payment of Taka 4 lacs made in 1971 at the rate of US $ 1.00= Tk. 15 5969, the rate prevailing in 1977. Further, the lear­ned Counsel asserted that the adjustment should have been made @ US $ 1.00 equivalent to Tk. 4.80, the rate prevailing in 1971, the contract being for repayment in local currency at the rate of exchange prevailing on the date of repayment. He also submitted that if this amount was adjusted at the applicable rate of exchange prevalent on the date of repay­ment there would been no loan outstanding against the appellant.
11. Syed Ishtiaq Ahmed, Counsel for the appellant, next submitted that since the loans obtained by the appellant were advanced agai­nst the World Bank loan under AID (DLF) 100 Credit which have been repaid by the PICIC, respondent No. 1 the successor of the PICIC, cannot recover any payment against the loans advanced to the appellant by the PICIC. But, alternatively, if, it is found at all repayable by the appellant, it should be treated as a local currency loan repayable at the rate of exchange prevalent in Dece­mber, 1971.
Appellant's Counsel contended that this rate of exchange cannot be more than US $ 1.00 — Tk. 4.80. The learned Counsel further submitted that having regard to the provisions of section 34-of the Code of Civil Procedure interest on the principal sum and the interest accrued till the filing of the case should not be granted.
12. Time was granted on two occasions for enabling both parties to reach an agree­ment as to the amount including the princi­pal and interest payable by the appellant and further to ascertain whether the world Bank had written off the loans concerned. As to the purposes first mentioned nothing tangible came out form the adjournments of the hea­ring of the appeals since neither of the parties had even agreed to sit together and find out afresh the amount still outstanding. As to the ascertainment of the fact regarding the writing off the loans by the World Bank it appears that the appellant's claim is founded. This is evident from the consideration of the documents produced by the learned Cou­nsel of respondent No. 1.
13. As to whether Bangladesh Shilpa Rin Sangstha could validly claim the repayment of the loans concerned from the appellant, the respondent's Counsel asserted that it being the successor of PICIC under the provisions of P.O. No. 26 of 1972 and all undertakings of the PICIC having vested in it under Article 20 of P.O. No. 128 of 1972, there cannot be any doubt regarding the validity of such claim. No serious attempt was, however, made by the appellant's Counsel to prove the contrary. In order to establish that the vesting of all undertakings of the PICIC in the Sangstha had been validly accomplished, the learned Counsel of the respondent No. 1 also referred to the provisions of the State Bank of India Act, 1955 (Act 23 of 1955), the State Bank of India (Amendment) Act 1955, the Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1969 and 1970. From a consideration of the provisions of the relevant clauses in the aforesaid President's Orders and Acts it would seem to be too late in the day to contend that the Sangstha is next the successor of the PICIC. Both the courts below had also rejected outright this contention and held that the appellant was liable to repay the outstanding loans it had obtained from the PICIC to respondent No. 1.
14. The next point seriously canvassed by the appellant's Counsel is with regard to the admissibility of the statement of accounts, Exts. 8, letter sanctioning the loan, 9 (a) and statement of accounts sent to the appellant from time to time by respondent No. 1, 10 series. The main ground on which these documents were assailed is that there was no basis for the statements contained therein. It was mentioned that respondent No. 1 did not produce any ledger or books of account maintained by the Bank in support of the entries made in the statement of accounts and the letter of respondent No.1 to the appellant.  Further, there is no continuity in the accounts in respect of the dues still payable by the appellant. Finally, appellant's Counsel submitted that since respondent No. 1 is not in a position to return the title deeds of the appellant deposited with the PICIC for securing the loans, it is not enti­tled to repayment of the loans. Mortgage by deposit of title deeds creates obligations and to derive the benefit from such contract, a party to it has to discharge the obligations under it.
15. Leaving aside the arguments regard­ing the admissibility or otherwise of these documents in supporting the claim to repay­ment of the dues outstanding as shown therein, the appellant's Counsel when confronted with the query of the Court as the effect of Ext. 7 (a), the letter written "without  prejudice" by the  appellant regarding the loans concer­ned  and its liability which still continues, could not give any convincing reply excepting that respondent No. 1 was to succeed on the strength of its papers and documents produced in this  behalf. The letter "without prejudice" being inadmissible cannot be the foundation for establishment of the respondent's claim or the determination of the appellant's liability.
16. Admissibility of letters written "with­out prejudice" is not without controversy. It is, therefore, necessary to see to what extent "Ext. 7(d) can be allowed to be used against the appellant. Can it be used for any col­lateral purposes?
The legal position of a letter written by the appellant with the words "without pre­judice" is to be understood with reference to section 23 of the Evidence Act which reads as follows:
"In civil cases no admission is relevant if it is made either upon an express con­dition that evidence of it is not to be given, or under the circumstances from which the court can infer that the parties agree together that evidence of it should not be given."
18. Whether such letters are at all admissible in evidence and if admissible what use can be made, of them has been considered in the case of Ajit Kumar Bose Vs Snehalata Biswas (1967)72 CWN 1. The relevant pas­sage is quoted below: - 
''The words 'without prejudice" are often written by one party to the other on the assurance that the proposed terms were not to be used against the writer if there is no settlement. The entire object of the writer is that the writer expresses in writing that the suit may be settled on the proposed terms. If they are acceptable, the parties will be bound by these terms and the dispute comes to an end. If the proposed terms become infructuous, they cannot be used in future against the writer in deciding the issues between the parties. Section 23 indicates that the court should not allow itself to be prejudiced by such proposed terms. But it is not correct to say that the document is inadmissible because the words "without prejudice" are mentioned at the top of the letter. If the document is formally proved other­wise, the court can certainly examine such letter. But if the entire letter is written "without prejudice" the value of such evidence in determining the dis­putes between the parties is very little. If, however, a portion of the letter is written without prejudice" that portion should not also be given consideration in deciding the case against the party or the other." 
19. It would seem that the letter written by the appellant cannot be used to determine the extent of its liability, but insofar as it shows the relationship between the appellant and respondent No. 1 as debtor and creditor and that they tried to settle the account the letter can be taken into consideration.
20. From the facts and circumstances so far placed for our consideration, it appears that in spite of frantic efforts the appellant has not succeeded in totally denying the liability. It is not clear why the appellant company is reluctant either to admit its liability when it appears from the papers and documents executed by it including the deposit of title deeds to secure the aforesaid loans and also from the papers submitted by the respondent No.1, the existence of the loans is apparent and real. It seems equally strange that when the appellant company is claiming to have paid certain amounts including the payments of-some amounts twice over, which I shall presently consider, but it cannot produce ei­ther the receipts for such double payment or the statement obtained from the Head Office of PICIC in Karachi, it has proceeded to deny the liability to pay altogether.
21. One of the main controversies centered round the payment of Rs. 4, 00,000/- during September 1971 to December 1971. It was claimed by the appellant that this amount was paid twice and should have, therefore, been reflected in Ext. 8. In support of this contention, the respondent's Counsel referred to the following statement of Ranjit Kumar Chakravarty, Deputy Assistant General Man­ager of the Sangstha-  
"We have not submitted the supporting documents of Ext, 8, Statement of A/C Ext. 8 was prepared with the help of Assistants, I have not produced those Assistants before the Court, We have not mentioned in Ext. 8 on the basis of which documents it was prepared. The certificate given in Ext. 8 does not bear my signature. The certificate given in Ext. 8 does not cover the ledger A/C of opposite party up to December 1971. The witness volunteers that ledger A/C's are maintained thereafter but these are not filed. The difference of 4 lakhs between the original claim and the am­ended claim has not been reported in Ext. 8. Ext. 8 there is no mention of the records OP the basis of which it was prepared." 
22. Our attention was drawn specially to the last but one sentence in this statement, namely, "the difference of 4 lakhs between the original claim and the amended claim has not been reported in Ext. 8". I do not think that this sentence alone establishes the appellant's claim that they have paid 4 lacs not once, but twice over on two different occasions. The appellant company could not prod­uce any receipt whatsoever of payment of this amount of money twice over. The mere assertion that they have lost all their papers during the disturbance in 1971, carries no conviction, for if they had done so they could have easily obtained a copy of the statement of accounts showing the payment of 4 lacs on two different" dates from the head office of PICIC in Karachi. This they have not done, Controversy over payment and realisation of the loan amount arose much later but when it has claimed that such payments on double occasions were made to the head office of the PICIC the latter must have, in due course credited the appellant company with such amounts and a copy of that statement obtained from the head office could have clearly shown the same.
23. In reply to the quarries made by the Court as to the position of the appellant company  in respect of the loan outstanding in their name till the date of the institution of the suit, namely, 1-7-77. Mr. Shahabuddin Ahmed, Counsel for the res­pondents, produced the following Table with the loan outstanding including principal and interest and the rate of conversion is also shown, therein which is underlined by me-
  Original Claim Position
Amended Claim Position Difference
Total position as on 1-1-72 $146,016.00 $135,055.75 ($10,960,25)
Add: Interest & Penal Interest  accrued Between 1-1-72 to 1-1-76   
$54 054.26
Total position as on 1-7-76 $209,031.68 $189,110.01
Less: Paid between 1-1-72 to 1-1-76
$ 44,376.39 $ 44,376.39  
Balance as on 1-1-76 $164,655.29 $144,733.62 ($19,921.67)
Add: Interest & Penal  interest   accrued from 1-1-76 to 1-7-77  
Total    as    on   1-7-77 Taka  equivalent $190,609.05
Tk. 26,01,027.33
Tk. 371,882.97
  Rate of conversion $ 1= Tk. 15.5969.
  Reconciliation    of $ 10960,25 being  the   difference as on
During   1-10-71   to 31-12-71 the Company made following payments:
on 15-10-71  Rs.   20,000
on 15-11-71 Rs.    20,000
                  Rs.   40,000   equivalent to  US$ (Conversion rate $1= Tk. 4.76) Excess   interest   charged earlier due   to   non-availability  of information regarding payment during 1971    ........US$      8403.36
US$ 10,960.35
24. This Table shows in three columns, the original claim position, the amended claim position and the difference between them. This Table gives quite a clear picture of the outstanding including principal and in­terest against the loans obtained by the appellant company. Apart from the princi­pal and interest including penal interest shown in the Table it shows the deduction of US dollar 44,376.39 which has been paid bet­ween two dates, namely 1-1-72 and 1-1-76. If this amount is now deducted from the amount claimed by the respondent Sangstha it comes up to US dollar 90,679.36. It may be mentioned that the amended claim posi­tion showing an outstanding of US dollar 135,055.75 has been shown after deducting US dollar 10,960.25 from the original claim of US dollar 146,016.00. The amount of US dollar 10,960.25 has been shown to have been paid between 1-10-71 to 31-12-71 and its break-up with the dates of payment of the amounts has been shown in the afore­said Table. There is, therefore, no vague­ness about the total amount claimed by the respondents and the total amount paid in by the appellant. I have, therefore, taken into account the total amount of principal which is US dollar 135,055.75 and after deducting US dollar 44,376.39 which has been shown to have been paid by the appellant company between 1-1-27 and 1-1-76, the amount of principal stands at US dollar 90, 679.36 and is payable by the appell­ant company. So far as the interest which, have been shown accrued between 1-1-72 and 1-1-76 is US dollar 63,015.68 and the interest accrued between 1-1-76 & 1-7-77, the date of institution of the suit, is shown as US dollar 25,953.76 and   the  amount of interest also  includes penal interest.
25. As already observed, the amount which is outstanding against 'the appellant company and payable by them is US $90,679,36. Since this amount has remained unpaid the appellant company could not substantiate its claims denying the liability to pay the amount. Its contentions that the Sangstha is not the successor of PICIC and the World Bank remitted the loan amounts obtain by the appellant company having failed, the appellant company is under obligation to pay this amount. It is also required to pay interest on this amount which has accrued thereon from the date on which the loans were obtained till the date of the institution the suit.
26. As to the rate of conversion fro dollar to Taka currency, I have taken it to the rate prevailing on the date of termination of the contract which is Tk.15.5969 to dollar Applying this rate of conversion the amount of US dollar 90,679.36 payable by the appellant company, the claim in Taka currency would be Tk. 14, 14,316.91. The appellant company must, therefore, pay this amount to the respondent Sangstha.
27. For the reasons stated above, appeal is allowed in part. The amended claim of the respondent, Bangladesh Shilpa Rin Sangstha, is US dollar 1, 35, 055.75 excluding interest and penal interest. An amount of US doll 44, 376.39 was paid by the appellant between 1972 and 1976 and after crediting the appellant Company with this amount the net claim Of the respondent is the amount of US dollar 90,679; excluding interest and penal interest. The rate of conversion from dollar to Taka currency being as it prevailed on the date of termination of the contract is Tk. 15.5969 to a dollar and the total amount due to the respondent in Taka currency, therefore, is Tk. 14, 14,316.91 This amount is decreed in favour of the respondent.
28. The appellant shall pay the aforesaid principal  amount with interest thereon at the rate of 7½% from the date of the institution of the suit, namely, 1-7-77 to this day of the decree plus 15% interest on the aforesaid amount of principal and interest calculating from this day till realization. There will be no order as to costs.