Panwell Pte Ltd v Indian Bank (No 2)

JurisdictionSingapore
JudgeTan Lee Meng J
Judgment Date17 October 2001
Neutral Citation[2001] SGHC 315
Docket NumberSuit No 422 of 2001
Date17 October 2001
Published date19 September 2003
Year2001
Plaintiff CounselSushil Sukumaran Nair and Yarni Loi (Drew & Napier LLC)
Citation[2001] SGHC 315
Defendant CounselTan Teng Muan and Wong Khai Leng (Mallal & Namazie)
CourtHigh Court (Singapore)
Subject MatterOffer and acceptance,Formation,First plaintiffs subsequently accepting offer,Estoppel,Whether other party can deny truth of such facts,Whether extension of deadline by defendants,Parties entering into transaction on basis of common assumption of facts,Whether defendants acting on basis that offer still effective,Estoppel by convention,Equity,Expiry of offer,Defendants reminding first plaintiffs about offer,Change of position by a party,Contract

Cur Adv Vult

: The first plaintiffs, Panwell Pte Ltd (`Panwell`), sought a declaration that its liabilities to the defendants, the Indian Bank, had been fully settled. The second plaintiffs, Deogratias Pte Ltd (`Deogratias`), claimed to be entitled to a tranche of Central Bank of Nigeria Promissory Notes with a face value of US$7m, which were allegedly wrongfully sold by the bank. In addition, Deogratias sought the recovery of US$139,901.32 from the bank. The Indian Bank, which denied that Panwell`s liabilities had been settled, contended that Panwell still owed it a large amount of money and sought to recover the amount allegedly owed. The bank also asserted that it was entitled to sell the promissory notes claimed by Deogratias and to retain the sale proceeds.

Background



Panwell, a Singapore company, is in the business of trade financing.
Deogratias, a Hong Kong company, is an investment company. The Indian Bank, an Indian corporation, has a registered office in Singapore.

In the late 1970s, Multibis Ltd, a Hong Kong company, whose credit facilities with the Indian Bank were insufficient for its business in Nigeria, approached Panwell for assistance.
Panwell was offered facilities including those relating to letters of credit, trust receipts and foreign bills purchase, by the Indian Bank. These facilities were utilised by Multibis and Panwell earned a commission.

In the early 1980s, the Nigerian government imposed foreign exchange controls.
Multibis ceased its trading activities in Nigeria and Panwell was unable to pay the large amount owed to the Indian Bank. Subsequently, the Central Bank of Nigeria issued United States Dollar Promissory Notes (`CBN Notes`), payable up to January 2010, to foreign creditors, with quarterly instalment payments at an agreed rate of interest. Panwell`s clients, Multibis, were entitled to such CBN Notes.

Multibis utilised the CBN Notes in the following manner:

    (1) One tranche of CBN Notes with a face value of US$7m (`Multibis tranche`) was assigned to the Indian Bank. Part of this tranche, namely CBN Notes with a face value of US$2m, was utilised to settle Multibis` own liabilities to the bank. It was agreed that after the 41st instalment had been paid, the remaining instalments under these CBN Notes would be utilised to reduce Panwell`s liabilities and that this batch of CBN Notes was to be assigned to Deogratias after Panwell`s liabilities had been extinguished. The remaining CBN Notes with a face value of US$5m in the Multibis tranche were offered as security for Panwell`s liabilities to the bank and were to be transferred to Deogratias once Panwell`s liabilities to the bank had been extinguished.
    (2) A second tranche of CBN Notes with a face value of US$6,761,398 (`Panwell tranche`) was assigned to the Indian Bank in 1988 as security for the Panwell`s liabilities.


Panwell estimated that as at 31 December 1988, it owed the bank more than US$9.6m. It entered into negotiations with the bank on reducing its liabilities. On 14 June 1990, the Indian Bank offered Panwell an arrangement to restructure its liabilities. This letter of offer (`the 1990 offer`) required the proposed package to be accepted within 30 days.

The terms of the 1990 offer need not be discussed. What is relevant is that while the bank thought that it had made favourable concessions to Panwell, the 1990 offer was not accepted within the specified deadline as Panwell wanted even more favourable terms. After the deadline expired, the bank reminded Panwell on a number of occasions to accept the offer but to no avail. Panwell`s account was suspended in 1992 and classified as a `non-performing asset` in 1994.

On 5 May 1998, Panwell`s adviser, Dr RC Cooper, met the bank`s general manager, Mr Shri Srinivasan, to discuss the company`s position. After the meeting, Dr Cooper wrote to the bank to accept the 1990 offer to restructure Panwell`s liabilities to the bank. The bank`s assistant manager, Ms Meyyappan Umayal, was then instructed to work with Panwell`s accountant, Ms Mary Quake, to update Panwell`s accounts on the basis of the terms of the 1990 offer. A year later, on 12 May 1999, the accounts were finalised and were faxed by Ms Umayal to Panwell.

On 2 November 1999, following Panwell`s request for its Singapore Dollar Term Loan Account (`SDTL Account`) to be converted into United States currency and transferred to a second United States Dollar Term Loan Account (`USDTL Account`), the Indian Bank confirmed that after the conversion, the amount outstanding in this second USDTL Account as at 30 September 1999 was US$485,737.96, an amount which was calculated on the basis of the terms of the 1990 offer.

Panwell then took steps to extinguish its liabilities to the bank. On 1 August 2000, it instructed the bank to sell CBN Notes with a face value of US$1,761,398 from the Panwell tranche. These were sold at the rate of 28% and the bank acted on Panwell`s instructions to utilise the sale proceeds to fully settle its liabilities in its second USDTL Account, with the remainder to be used to partially settle the outstanding amount in its first USDTL Account.

In September 2000, Panwell instructed the bank to sell CBN Notes with a face value of US$4m from the Panwell tranche and to use the sale proceeds to settle its liabilities in its first USDTL Account. Panwell, which assumed that the terms of the 1990 offer governed its relationship with the bank, calculated that its liabilities to the bank were extinguished after the sale proceeds were received by the bank. In fact, the bank now owed Panwell around US$122,000. As such, Panwell asked the bank for a refund of this sum and for the remaining CBN Notes with a face value of US$1m in the Panwell tranche to be transferred to Deogratias. Without disagreeing with Panwell, the bank paid Panwell more than US$121,000 and transferred the said CBN Notes to Deogratias.

The bank was then requested to transfer the remaining unsold CBN Notes with a face value of US$7m in the Multibis tranche to Deogratias. However, the bank suddenly asserted in early 2001 that as Panwell had not accepted the 1990 offer within the deadline of 30 days, its terms did not govern the bank`s relationship with Panwell. The bank also claimed that Panwell still owed it a large sum of money. In March 1998, the bank sold the said CBN Notes with a face value of US$7m and kept the sale proceeds.

If the terms of the 1990 offer governed Panwell`s relationship with the bank after May 1998, Panwell does not owe the bank any money. Furthermore, the bank would have to account to Deogratias for the proceeds of the sale of the CBN Notes with a face value of US$7m. On the other hand, if the terms of the 1990 offer did not govern Panwell`s relationship with the bank after May 1998, Panwell still owes the bank a large sum of money and the question of transferring the CBN Notes with a face value of US$7m to Deogratias does not arise.

Pleadings



Panwell`s counsel, Mr Sushil Nair, put Panwell`s case on two fronts.
First, he contended that the doors to the 1990 offer were never closed as a result of continuing negotiations between the parties and that in early 1998, the bank requested Panwell to sign and return the letter of offer of 14 June 1990. Secondly, he asserted that after receiving Panwell`s letter of acceptance in May 1998, the bank acted on the basis that the terms of the 1990 offer were in force and held out to Panwell on innumerable occasions that the said terms governed their business relationship. Panwell altered its position on the basis of the bank`s actions and representations and the bank is estopped from asserting that the terms of the 1990 offer did not govern its relationship with Panwell after May 1998.

The bank pleaded that Panwell could not have accepted the 1990 offer because it lapsed 30 days after it was made.
The bank`s witnesses also asserted that the 1990 offer had not been validly accepted because the bank`s Head Office had not agreed to allow Panwell to accept the 1990 offer in 1998 and that fresh guarantees were not furnished by Panwell. These additional assertions by the bank`s witnesses need not be considered because they were not pleaded. In any case, even if these assertions had been pleaded, the bank`s general manager, Mr Srinivasan, admitted that approval by the Head Office is an internal matter of the bank which is not communicated to clients. It was not established that an exception to this rule was made in Panwell`s case. As for the additional guarantees required under the terms of the 1990 offer, the bank had clearly waived this requirement. Mr Nachiappan, the bank`s assistant manager, admitted that the bank did not press for the additional guarantees because it already had existing guarantees in place.

Did the 1990 offer lapse after 30 days?



The bank`s defence that the 1990 offer lapsed 30 days after it was made will first be considered.
Although the bank`s letter of offer of 14 June 1990 imposed a deadline of 30 days for the offer to be accepted, the bank`s assertion that this offer lapsed when the deadline passed does not rest on solid ground. This is because the said deadline was extended when the bank reminded Panwell on a number of occasions after its expiry to accept the offer.

To begin with, on 30 July 1990, two weeks after the deadline, Mr MBN Rao, the bank`s deputy general manager, wrote to Panwell as follows:

We refer to our [letter] dated 14 June 1990 on the restructuring of your liabilities under (1). We are still awaiting your acceptance for the restructuring packages on which we have not heard from you.



Furthermore, on 28 August 1990, Mr M Nachiappan, the bank`s assistant manager, wrote to Panwell as follows:

However, we note that we have yet to receive your acceptance for the restructuring arrangements which we request you to look into and respond as soon as possible.



Almost one year after the 1990 offer was made, Mr Rao notified Panwell on 9 May 1991 that
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    ...it is in fact extending the deadline. This was indeed found to be the case in the High Court decision of Panwell Pte Ltd v Indian Bank [2001] 3 SLR (R)462. [emphasis added] 57 Having not qualified its offer in express terms, the Defendant is now indirectly asking the court to imply a condit......
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1 books & journal articles
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    • Singapore
    • Singapore Academy of Law Annual Review No. 2002, December 2002
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