Authority: High Court of Karnataka at Bengaluru
Order Date: 12 June 2026
Case Overview
- Petitioners: Texport Overseas Private Limited (company), its directors Satish Kumar Goenka and family members (Nisha Goenka, Shalini Goenka, etc.), and Kisha Pvt. Ltd.; Respondent: Canara Bank (Overseas Branch, Bangalore).
- Three writ petitions were consolidated: WP No.24893/2016, WP No.3120/2018 (filed by Texport Overseas and related parties), and WP No.27021/2019 (filed by Canara Bank).
- The dispute centered on alleged booking of 48 Forward Purchase Contracts (FPCs) by Nisha Designs (a sister concern of Texport) between April 2008 and August 2008. The bank claimed the contracts were not utilized or cancelled, seeking Rs 14,55,60,750 principal plus Rs 4,85,54,190 interest, totaling Rs 19,41,14,940.
- The bank’s claim was originally filed before the Debt Recovery Tribunal (DRT) as O.A. No.742/2011. The DRT dismissed the claim for lack of evidence. The Debt Recovery Appellate Tribunal (DRAT) later allowed the claim in principle but denied interest, leading to the present High Court proceedings.
Evidence and Findings
- The bank relied on three categories of evidence: (i) Inward Register entries, (ii) Commission Payment Register entries, and (iii) a CD containing a voice recording allegedly of Mr. Dinesh Singh, who the bank said booked the FPCs on behalf of the petitioners.
- The petitioners contested that no written contracts, booking applications, or confirmations existed for the 48 FPCs; no authorization for Mr. Dinesh Singh was produced; and the registers were not examined through their authors (e.g., Mrs. Vijaya Kamath, Export‑Import Desk Officer).
- Witnesses of the bank (AW1‑AW3) admitted that FPCs must be concluded in writing and that relevant documents reside with the overseas branch, yet the bank failed to produce any such documents.
- The DRT held that the registers and the CD were merely circumstantial evidence, insufficient without primary documentary proof, and drew an adverse inference under Section 114 of the Indian Evidence Act.
- The DRT also noted violations of RBI guidelines requiring cancellation of unutilized FPCs within seven days of maturity; the bank had allowed the alleged contracts to remain outstanding for over a year.
- The DRAT, however, reversed the DRT’s dismissal, holding that the bank’s claim for principal was provable on the basis of the statement of account, but it declined interest, citing the bank’s procedural lapses.
Court Reasoning
- The High Court examined the DRT judgment, the DRAT order, and the entire record of the three writ petitions.
- It observed that the bank bore the onus of proving the existence of the 48 FPCs and the involvement of the petitioners, which it failed to discharge.
- The court emphasized that the bank did not produce the essential documents (booking request, contract note, signed confirmation, export order/LC) that are mandatory under banking regulations and RBI circulars.
- The court rejected the DRAT’s reversal, noting that the appellate tribunal ignored the adverse inference drawn by the DRT and the lack of primary evidence, thereby committing a perversity.
- The court affirmed the principle that the burden of proof lies on the party asserting the claim (Section 101, 102 of the Evidence Act) and that shifting the burden to the petitioners, as done by the DRAT, was unlawful.
- Consequently, the High Court set aside the DRAT order, confirmed the DRT judgment, and dismissed the bank’s appeal.
Final Outcome
- The order of the Debt Recovery Appellate Tribunal (R.A. No. 82/2017) is set aside.
- The Debt Recovery Tribunal’s order dismissing Canara Bank’s claim for Rs 19.41 crore is confirmed.
- All three writ petitions (WP 24893/2016, WP 3120/2018, WP 27021/2019) are dismissed.
- No liability, damages, or interest are awarded against the petitioners; the bank’s request for remand or further evidence is rejected.
Topics: Legal Judgment, Banking Dispute, Evidence Law