Central Bank of India v Hemant Govindprasad Bansal and others and other actions

• Jurisdiction: Singapore
• Judge: S Rajendran J
• Judgment Date: 07 January 2002
• Neutral Citation: [2002] SGHC 1
• Date: 07 January 2002
• Subject Matter: Effect of such election,Whether any prima facie evidence to support plaintiffs' claims,Evidence,ss 32(b) & 34 Evidence Act (Cap 97, 1997 Ed),Statements made by persons not testifying at trial,Dismissal for want of prosecution,Defendants electing not to give evidence in defence,Submission of no case to answer,Hearsay,Admissibility of evidence,Civil Procedure,Whether such statements admissible,Whether criteria for admission met
• Docket Number: Suits Nos 1045–1047 of 1999
• Published date: 19 September 2003
• Defendant Counsel: N Sreenivasan and M Rajaram (Straits Law Practice LLC)
• Court: High Court (Singapore)
• Plaintiff Counsel: Tan Teng Muan and Wong Khai Leng (Mallal & Namazie)

: Central Bank of India (`CBI`), the plaintiff in this consolidated hearing, is a bank incorporated in India. Natsyn Fibres Pte Ltd (`Natsyn`), the third defendant in Suit Nos 1045/99 and 1046/99 and the defendant in Suit 1047/99, is a company incorporated in Singapore. Hemant Bansal (`Bansal`) and his wife Aneeta Bansal, the first and second defendants respectively in Suit Nos 1045/99 and 1046/99 (referred to collectively as `the Bansals`), were the only shareholders and directors of Natsyn.

On 3 August 2001, a few days prior to the commencement of these hearings, a winding-up order was made against Natsyn. As a consequence all proceedings against Natsyn were, by reason of s 263(3) of the Companies Act, stayed. Accordingly, the hearings before me proceeded only in respect of the claims against the Bansals in Suit Nos 1045/99 and 1046/99.

Natsyn, in late 1997, had purchased various goods from Bhagwati Cottons Ltd (`Bhagwati`) and GPB Fibres Ltd (`GPB`). Bhagwati - a public listed company in India - was founded by Bansal`s father. Bansal`s father had passed away in 1986 but Bansal and other members of his family continued to hold substantial interests in Bhagwati. Bansal was a director of Bhagwati.

GPB was also an Indian company. Bansal and other members of his family had substantial equity interest in GPB. GPB, at about the time of these transactions, was amalgamated into Bhagwati. In view of the close relationship between GPB and Bhagwati, the parties in the proceedings before me did not seek to make any distinction between the two companies. All references to Bhagwati in this judgment will therefore, where appropriate, be references to GPB.

To pay for the goods purchased from Bhagwati, Natsyn, through Campagnie Financiere De Cic Et De L`Union Europeene in Singapore (`CF Bank`) and Mees Pierson NV in Singapore (`MP Bank`) had opened various letters of credit (`LCs`) in favour of Bhagwati. The LCs were subject to UCP 500 and credit was available by negotiation.

Bhagwati, upon receipt of the LCs referred to above, approached CBI and discounted the bills under the LCs with CBI by presenting the requisite banking and shipping documents to CBI. Bhagwati received about US$2.8m from CBI pursuant to such negotiations. It was CBI`s pleaded case that after negotiation CBI, at Bhagwati`s request, handed the negotiated documents to Bhagwati for Bhagwati to courier to CF Bank/MP Bank in Singapore. The documents did not, however, find their way to either CF Bank or MP Bank. It was pleaded that the documents, instead, found their way to the Bansals (and Natsyn) who then proceeded to arrange for the collection of the goods comprised in the documents without payment to CBI of the sums due under the LCs.

In their defence, the Bansals did not specifically deny CBI`s allegation that the documents had been handed to Bhagwati for transmission to CF Bank and MP Bank. The position the Bansals took (as stated in para 3 of the defence) was:

The 1st Defendant [ie Bansal] has no detailed knowledge of the business relationship between GPB, Bhagwati and the Plaintiff. The 2nd and 3rd Defendants [ie Aneeta Bansal and Natsyn] have no knowledge of the relationship between GPB, Bhagwati and the Plaintiff.

Most significantly, there was no denial by the Bansals that they had received the negotiated documents from Bhagwati and had collected the goods comprised therein.

conspiracy conversion constructive trust CBI claimed that the Bansals were accountable to CBI for the goods/moneys received on the following grounds:

(1) : conspiring with Bhagwati to injure CBI by inducing CBI to part with the said documents purportedly for the purpose of delivering the documents to CF Bank or MP Bank when the Bansals and Bhagwati had no intention of so doing;

(2) : unlawfully obtaining possession of the goods represented by the said documents without CBI`s consent and appropriating those goods in conversion of the same; and

(3) : by knowingly receiving the documents and/or the goods, the Bansals become constructive trustees for CBI of all moneys received that relate to the documents/goods.

Alternatively, CBI claimed damages for the loss of the goods and/or bills.

The claim against the Bansals in Suit 1045/99 was for US$1,190,893.28 and the claim in Suit 1046/99 was for US$274,319.04, making a total claim of US$1,465,212. This figure was arrived at after giving the Bansals and Natsyn (`the defendants`) credit for the sum of US$1,325,033 (being US$1,291,694 in respect of Suit 1045/99 and US$33,339 in respect of Suit 1046/99) which sum the defendants had, it was alleged, paid to CBI on or about 11 December 1997 in part settlement of CBI`s claims in respect of these transactions. The Bansals, in their defence and in the cross-examination of CBI`s witness, did not seek to deny that such part-payments had, in fact, been effected.

The claims against the Bansals in the two suits were almost identical in nature. So were the defences filed. The Bansals were content, in their defence, merely to deny the alleged conspiracy, conversion and constructive trust. They did not seek to put forward any positive case as to why they were not accountable to CBI for the goods or the proceeds of sale thereof. However, in the course of the hearing, under pressure from Mr Tan Teng Muan, counsel for CBI, the Bansals amended their defence. In their amended defence, they alleged that Natsyn had purchased the goods from Bhagwati under terms which included the following:

(1) LCs would be opened with GPB/Bhagwati as the beneficiaries;

(2) the LCs would have certain conditions [which counsel referred to as `pre-conditions`] apparent on the face of them, which would have to be fulfilled for payment to be made. The effect of these conditions was that, if the conditions were not met, the third defendant had the commercial option to make payment outside the LC, through banking...