BANK OF INDIA v. BHAGWANDAS KEWALRAM MURJANI AND OTHERS

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J U D G M E N T

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Cons, Ag. C.J.:

1. We have been dealing with these matters since 10 o'clock this morning. As we have already observed, the appeal proper will have to be adjourned until some date later in the year. It is obviously desirable that during the interim the parties should, if possible, know what is or is not to be accepted as evidence in the appeal. We have found in the short adjournment that we are agreed upon our decision, and so, even though it is now well past time, I shall attempt briefly to give the reasons which have led me to my conclusion, and my brothers will add their comments as they think fit.

2. We are in the middle of hearing three appeals which arise in two actions in which summary judgment has been given in favour of the Plaintiff, an Indian bank, suing for the recovery of monies lent and against several guarantors of the loan. We are concerned only with the latter.

3. In the course of his submission counsel for the guarantors has introduced summonses to admit further evidence in the form of an affidavit by the guarantors' solicitor exhibiting three documents. The first is a memorandum from another Indian bank which is said to have been acting in concert with the Plaintiff bank. It is put forward in support of a moratorium, suggested as a defence below, by which the Plaintiff agreed not to seek recovery of the principal of the monies lent until a date which was later than that on which the writ was issued. The memorandum shows that a moratorium of similar kind had been given by the other bank, the suggestion then being, that as the two banks were acting in concert, there was a likelihood that a similar moratorium had been granted by the Plaintiff bank.

4. With every respect to the deponent, the memorandum does not indicate that the two banks were acting in concert. It merely shows that the other bank, having decided upon a course of action which involved proceedings in court, was hoping to interest the Plaintiff bank in joining in the proceedings and sharing some of the costs. The memorandum would have been of no assistance to the judge below in coming to his conclusion, on to this Court.

5. The other two documents are counsel's opinions emanating from a retired Chief Justice of India. Their import is that, in his opinion, having regard to a letter from the Reserve Bank of India which he considers would be taken in the courts of India as having statutory effect, the Plaintiff bank, being a bank incorporated in India, firstly would have had no capacity to make the loans in question, which would therefore have been void, or alternatively, would have made them in violation of the directives of the Reserve Bank of India, wherefore they would be irrecoverable at least to some extent.

6. The question of ultra vires or illegality came into the proceedings by way of an affidavit by the Defendants' solicitor shortly before the hearing below. He had by that time received advice from a solicitor in India, which advice was before the judge. It is apparent though, that the activity of the Reserve Bank of India to use a neutral word-was known to the Defendants personally long before that. It is mentioned, for example, in their letter of 19th May, 1989.

7. It is clear, from paragraph 7 of the affidavit filed in support of the applications, that no consideration was given to obtaining any further opinion until after judgement had been given in the court below. At that hearing the Defendants were represented by leading and junior counsel. They were aware of the point, for indeed they argued it fully before the judge. No satisfactory explanation has been given why no further opinion had been then sought or why no adjournment was requested in order to obtain the same. I note that an adjournment had been requested, and granted, a few days earlier to deal with other points. All this leads me to the conclusion that there was a deliberate decision at the time to go ahead with the hearing upon such evidence as was then in their possession.

8. It has been suggested today, and I respectfully accept, that what might be termed "lesser diligence" is required when evidence is sought to be introduced in this Court after Order 14 proceedings than after a full blown trial. But I do not think that "lesser diligence" extends to this Court's allowing parties, who have made a deliberate decision in this respect to proceed below, to come later to this Court with evidence, which though not immediately available below, could have been obtained, or at least attempted to have been obtained, with no difficulty.

9. The second opinion of the learned retired Chief Justice raises an additional point. Part of it is merely a clarification of the earlier opinion, and nothing further need be said. But the rest relates specifically to two letters which this Court allowed into evidence at some time, I think last week, in other proceedings dealing with discovery. To that extent no opinion could have been sought at the time of the hearing below. But in fact the letters take matters no further and that part of the opinion which relates to them would have been of no value without the other.

10. For these reasons I would myself reject the applications, and as I understand my brothers have come to the same conclusion, that will be the order of this Court.

Clough, J.A.:

11. I agree with all that My Lord has said and there is nothing I can usefully add.

Hunter, J.A_.:

12. I agree and would only add this. It is essential to this application for the Applicants to show that the "reasonable diligence clock" as it were for the purpose of the reasoning in Langdale v. Danby [1982] 1 W.L.R. 1123 at 1133, started to run on 20th April at the date of the swearing of an affirmation by Mr. Chakravarti in which, in paragraph 4, he refers to SBL as being a single borrower limit fixed by the Reserve Bank of India. This is said to be the first intimation to the Defendants that they might have a defence or illegality which they wished to explore upon the basis of breach of those limitations. But it is painfully apparent to my mind that these limits were well known to the Defendants themselves for many months before this and had been discussed in May 1987, as one of the letters to which My Lord refers, shows, and the letter, exhibited to Mr. Chakravarti's affidavit, of May 1988 shows the same thing. Indeed for high on two years there had been discussions between the parties as to how to bring down the borrowing from 14 million to 10 million by reason of this very same limit. There was therefore ample opportunity long before the hearing, if the Defendants had wished, to explore this defence of illegality under Indian law and to obtain the two opinions sought now to be admitted from the retired Chief Justice.