Binding RBI directions and bona fide withholding of bond payment defeated claims for delayed and pendente lite interest.

RBI supervisory communications issued in public interest were treated as binding statutory directions where their source was traceable to the Reserve Bank of India Act, 1934 and the Banking Regulation Act, 1949, even without express citation of the enabling provision. On the facts, payment on the bonds was withheld bona fide because of the RBI direction, winding-up proceedings, and unresolved title concerns, so delayed-payment and pendente lite interest were not awardable. The further claim for additional interest also failed because the warrants were accepted without timely protest, amounting to waiver and acquiescence, and the omitted claim was barred by constructive res judicata.

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Issues: (i) Whether the RBI communication dated 09.06.1997 was a binding statutory direction on the banking institution. (ii) Whether the withholding of payment on the bonds was bona fide and disentitled the claimant to interest on delayed payment and pendente lite interest. (iii) Whether the claimant's demand for additional interest was barred by waiver, acquiescence, and constructive res judicata.

Issue (i): Whether the RBI communication dated 09.06.1997 was a binding statutory direction on the banking institution.

Analysis: The RBI's supervisory powers under the Reserve Bank of India Act, 1934 and the Banking Regulation Act, 1949 were held sufficient to sustain directions issued in public interest. The absence of an express citation of the enabling provision in the communication did not detract from its legal efficacy, since the power was traceable to the statute. The communication was issued in the context of a prior prohibition affecting the assets and securities of the NBFC group, and was therefore treated as a binding direction, not a mere advisory note.

Conclusion: The communication was a binding statutory direction and was enforceable against the banking institution.

Issue (ii): Whether the withholding of payment on the bonds was bona fide and disentitled the claimant to interest on delayed payment and pendente lite interest.

Analysis: The withholding was examined in the backdrop of the RBI's directions, the pending winding-up proceedings, and the cloud over the predecessor's title arising from a possible fraudulent preference during the suspect period. The claimant's title had not been finally cleared until the Company Court's order, and the bank acted cautiously, sought clarification from the Official Liquidator, and paid promptly after the legal position was settled. Interest was treated as discretionary and not payable where the money was not wrongfully withheld and no equitable basis for such relief was made out.

Conclusion: The withholding was bona fide, and the claim for interest on delayed payment and pendente lite interest was not maintainable.

Issue (iii): Whether the claimant's demand for additional interest was barred by waiver, acquiescence, and constructive res judicata.

Analysis: The payment warrants were accepted without timely protest, and the demand for further interest was raised only after several months. The Court treated this conduct as acceptance by silence and found waiver and acquiescence. It also held that the claim could and should have been pursued earlier, and its omission in prior proceedings attracted constructive res judicata.

Conclusion: The additional claim was barred by waiver, acquiescence, and constructive res judicata.

Final Conclusion: The appellate challenge to the High Court's view succeeded, the trial court's dismissal of the suit was restored, and the claimant's cross challenge failed.

Ratio Decidendi: A direction issued by the RBI in exercise of statutory powers, though not expressly citing the enabling provision, is binding if its source is traceable to the governing statute, and where payment is withheld bona fide due to such binding directions and unresolved title disputes, interest for delayed payment is not ordinarily awardable.

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