BANK OF INDIA v. BHAGWANDAS KEWALERAM MURJANI AND OTHERS

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J U D G M E N T

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Hunter, JA :

1. On 27th April 1989 Barnett J gave judgment for the plaintiff bank against six of the applicants under O 14 in two related actions. On 29th May 1989 Barnett J gave like judgment against a seventh applicant in one of those actions. From those decisions the seven applicants appeal, and in these appeals have made application to this court for an order for specific discovery. The specific discovery sought is of a document referred to in a circular which had been exhibited to the evidence in the court below.

2. The point was spotted by the defendants very shortly before the O 14 hearing commenced. It was due to start, we were told, on Friday. On that occasion leading counsel for the defendants sought an adjournment until the Monday, inter alia, to take instructions from India. On Monday the evidence dealing with this matter was put before the court; first an affirmation which had been sworn I understand on the Friday, and another sworn over the weekend. No further application for an adjournment was made and no attempt was made to seek discovery of the document sought by this application. It is perfectly true that this court has all the powers of the judge below to order discovery. But prima facie it would be very reluctant to exercise them when no application was made to the court below.

3. The application itself is founded upon O 24 r 10 as being specific discovery of a document referred to in a pleading or affidavit. Our attention was drawn to Re Hinchliffe [1895] 1 Ch 117, as authority for the proposition that affidavits include exhibits. That goes without saying under the modern practice. In this jurisdiction there could be no question about a party being entitled to a sight of the exhibits themselves. This is all Hinchliffe decided. Hinchliffe does not cover specifically, any more than I think the rule does, discovery of documents referred in the exhibits themselves. I think in such circumstances it comes back to a matter of relevance, and that the applicant has to show at least a prima facie case of relevance, and in circumstances like these a powerfully persuasive case of relevance.

4. What is potentially in issue is the question as to whether or not the Reserve Bank of India has issued any directives under s 21 of the Banking Regulations Act India 1949. This section, inter alia enables the Reserve Bank of India to give directions to banks as to the maximum amount of advances or other accommodation which they may extend to individuals or groups. This, as I understand it, is a public act, and any directions issued under that act one might have thought, prima facie, were public documents. It is therefore somewhat surprising that if any directions have been issued, apparently no one in India is able to lay their hands upon them.

5. The problem arose, as it appears because at least one member of the staff of the plaintiff, Bank of India, referred to borrowing limits "imposed by the Reserve Bank of India". It is sometimes convenient for bank staff in these circumstances to suggest that limits are imposed by some body other than their own bank. Form the documentation we have seen it is to my mind abundantly clear that the limits were imposed by his bank on the recommendation of the Reserve Bank of India.

6. In evidence before the judge in the court below were three documents.

7. The first is a circular dated 7th April 1986 with attached document entitled "Prudential guidelines and recommended control systems for portfolio management" which the chairman of the Reserve Bank of India, sent to the chairmen of all the Indian banks. The language of that letter to my mind is quite inconsistent with the prior existence of any directions given by the Reserve Bank of India at all. The whole tenor of these documents is that they are advisory. They constitute recommended guidelines and "it is suggested that the recommended systems be placed before the board of directors of your bank, which may, after due consideration, take necessary decisions on the systems". Then when the banks had taken their individual decisions they are invited to report back. In other words the whole tenor of the document is quite inconsistent with directions from the bank. It only advised, and the ultimate decision was for the banks themselves.

8. The significance of this document to this application is also this. In the course of the circular the author refers to an earlier circular letter of 10th October 1984. It is that letter of which discovery is sought. The way it is put in simple terms is that since that letter is referred to in the circular by the author as having bearing upon the contents of the circular, then prima facie it is discoverable. Another equally obvious explanation of the reference is that it is a reference to a circular which started the guideline history. Indeed to read it in any other way seems to me to be contradictory to the April circular.

9. The guidelines were then considered by the Bank of India. On 23rd June 1986 they circularised all foreign branches saying that they had considered the RBI norms and "decided to adopt the various norms/guidelines given by the Reserve Bank of India". Those were then summarised and setout in the letter. That was followed by another circular, again Bank of India to all its foreign branches, on 16th February 1987, pointing out that the guidelines as adopted have to be adhered to. If any bank is over-exposed in respect to any customer this has got to be phased out over the period of two years which had been specified in the first circular.

10. That was the state of evidence before the trial judge. He came to the conclusion that there was no evidence at all of any issuing of any directions. I should add that it was also in evidence from the Bank of India's manager that he was quite unaware of the existence of any directions. The judge took the view that the documents which I have just referred to were quite inconsistent in their provisions with the existence of any such directions. He simply described this particular point as a "non-starter".

11. Today in the course of this hearing two further letters have been produced to us, which to my mind do no more than underline the position which the judge accepted. The first is from the Bank of India itself to its solicitors in Hong Kong saying that they are unaware of any directions being issued by the Reserve Bank. The second dated 10th July is from the Reserve Bank itself in which they say that the guidelines in the circular of 7th April 1986 "represent a set of prudential norms for adoption by Indian banks in respect of their overseas operations and are not directions issued by the Reserve Bank of India under s 21 of the Banking Regulation Act 1949".

12. In those circumstances it seems to me plain that there is no substance in the defence, for which these defendants are grasping, that in some way there have been directions issued by the Reserve Bank of India which were breached in the lending to them by the plaintiff bank. There is likewise no substance in this application which in my view has to be rejected.

Cons, VP :

13. I agree entirely with my lord and also reject the three applications.

Clough, JA :

14. I also agree.