Bank Of India V. Gobindram Naraindas Sadhwani And Others - A Case Analysis

Summary

Discuss about the Bank of India v. Gobindram Naraindas Sadhwani and Others.

The paper deals with the case of Bank of India v. Gobindram Naraindas Sadhwani and others where both the ends meet for the case at one place as the former has recognized the latter as guarantors to the large sum. In this paper, the case is also explained from one party's perspective in terms of arguments and validity. The rules that are applicable to this case are also detailed in the IRAC method. This case specifically involves a range of parties to obtain justice for all that the guarantors did.

The case involves two different parties - Gobindaram and family and bank that has acknowledged him and his wife to be the guarantors for a huge sum.

Gobindram Naraindas Sadhwani along with his wife are the plaintiffs and are supposed to be Indian nations residing in the region of Hong Kong. Kishinchando Naraindas Sadhwani is the brother of Gobindram. Kishinchando along with his wife reside in Japan but are actually from India. This implies that all of them origin from India and they have settled in different places for various reasons. At this point, K (Kishinchando) has started an international trade business in his current location along with his wife. They both constitute as the defendants in this case.

Due to the business requirement, plaintiffs and defendants attempted to obtain loan from Bank of India. This bank has insisted them to undertake a guaranty agreement in the name of company that they are about to start (Anon, 2016). As there were issues between the plaintiffs and defendants, the former had to cancel the acceptance to guaranty agreement. As a result, the defendants created a new one with the limit of 330 million yen. The deal got over with the defendants.

One fine day, the bill drawn by K's company was dishonored and the Bank of India had to claim $540,000 USD against this international trade company. While the bank realized that the plaintiffs need to be sued for they had given the surety towards this case. In 1982, Bank of India decided to sue against Gobindaram and his wife for having breached the guaranty agreement and the case was filed in Hong Kong High Court. Having heard the same from the bank, Gobindaram and his wife decided to sue the bank again for having pledged the mortgage with the defendants K and his wife.

Selected party

Two cases were already in progress at the Hong Kong High Court. To ensure additional safety, Gobindram and his wife pled for compensation from the defendants in the court as a new case. In order to defend the case between the plaintiffs and defendants, Radika and K filed yet another case against the plaintiffs as they were the guarantors for the whole contract in association with Bank of India and therefore, this was submitted for hearing. In 1998, the hearing arrived and the judgments to all the four cases were favorable towards the plaintiffs (Ruthan, 2007).

Upon this judgment, plaintiffs demanded for litigation cost compensation from defendants and the court has also decided to send the notice of motion stating the need to compensate about 1.2 million Hong Kong dollars as the litigation cost. This action was taken against the defendants because the defendants had left the issue half way and they proved their dishonesty through their actions and non - responsiveness. Adding to dishonesty, delayed interest was shown as yet another reason for the plaintiff to file a case against the defendants in District Court of Kobe for the purpose of immediate collection or reimbursement of litigation costs. Eventually, the defendants arrived to appeal at the court but the court has dismissed the appeal.

The cases went on and on. K had argued at the court that Gobindram and his wife are the ones to be sued. To this argument, Gobindram and his wife argued that the law under which they have signed and accepted as the guarantors is Japanese law. Having considered Japanese law to deal with the case hearing and judgment, Mr and Mrs Gobindram were let free from liability as Bank of India accepted to the same (Foote, 2007). On the other hand, the problem comes now on which law has to be applied to give the judgment towards the guarantee contract - India or Hong Kong.

Throughout this paper dealing with Bank of India v. Gobindaram and others, the party chosen to project is India. Bank of India is the one to have dealt with the plaintiffs and defendants since the beginning and this bank is the one to have filed cases against the guarantors for the dishonor of payment that happened from K's end. As a result, several arguments are highlighted from India's side to seek justice and also to reimburse the charges for dishonor of K and his wife.

Facts

• Gobindrams are Hong Kong based residents and Kishinchands are Japan based residents
• Bank of India - an Indian corporation bank with its headquarters in Bombay had dealt with the plaintiffs and defendants in this case
• The bank also had its regional offices located in Tokyo and Osaka

The actual organigram associated with the case is presented below.

Kischinchands owned about 60% while Gobindrams owned the balance of 40% in the company. The other brothers of Gobindram and Kischinchands run corporations in Sri Lanka and Nigeria to and were responsible to pay for the bills of exchange that the K's company actually created.

• While several confusions on whom to punish were developed in the minds of bank and the courts, the Bank of India eventually decided to file a case in Hong Kong Court where they actually have their businesses running and it is Hong Kong law that should actually intervene in this case (Henderson, 1973).

This international business case has had issues in terms of dishonor, moral irresponsibility, unaccountability, ever growing disputes, change in agreements and negative intentions. All these virtues were taken into account when Bank of India had filed the case.

The biggest issue that is existing in this case is "which law to follow to deal with the guaranty agreement - India or Japan?"

While they are nationals of India and Bank of India from India had actually agreed them the amount, it is Japan where the family of Kishanchand has the business running and every law is in accordance with their existing country of residence and operation (Henderson, 1973).

"Is Japanese law supposed to be the governing law?"

The guarantee contract is regarded to be a separate contract but still somewhere associated with the line of credit contract.

In accordance with the rule in general, the court has to apply the governing law of state. The state here is the one that is very close and much real with respect to dispute. This applies as long as the intention being expressed to the actual law is absent (Singh, 2004).

The Bank of India here is supposed to be the actual plaintiff that argues that Indian or Hong Kong law should be applied to this breach of guaranty contract having understood the terms (Ho, 2012).

Although it is Gobindrams who tried to defend with the law, according to Bank of India, it is Kishanchands who actually tried to fool in a big way. They are supposed to be the defendants. It is Bank of India who has granted release for the guarantors - Mr and Mrs Gobindram. As a result, Japanese law is the closest law according to Gobindrams and has to protect in terms of liability.

There are three ways by which Japanese law has the closest connection with respect to this case.

1. Place of party - Japan is the place where Kishanchand and his wife Radhika stay and execute their business. Hence, this is also regarded as the place of act and negotiation.
2. Type of guarantee - With respect to the guarantee contract signed by both the ends, the figures are in Yen which is very much clear that it is Japanese currency and Japanese law is related to this case (Fletcher, 2005).
3. Residence of guarantor - Kishinchand resides in this very location

Hence, it is Japanese law that has to deal with this case but it is also clear at this point that Gobindrams have been excluded from liability to this case long ago.

Issue

Taking Article 118i of Code of Civil Procedure, there is a judicial cooperation between the country currently considered and the judgment country. Here it is, India vs Japan. There are no earlier treaties signed between these two countries to deal with cases like these. Indemnity basis is the only concept applied to examine the dishonest conduct by the defendants. This is a special case that requires excess punitive evaluation (Justia, 2016). In the case of Gobindram, foreign judgment is demanded under the common law so as to ensure that relevant judgment is passed by the Court. Even though there is no direct reference to the law clause of the country, there is still a relation with the same.

Multiple parties have engaged in this case to explain and deal with the situation. The case of India is quite complicated as this is the country where the dealing has been started by the defendants.

There are several arguments that India can make this point to prove that they are still plaintiffs and ignorant owing to the dishonesty and immoral activities performed by the defendants (Law, 1998). The possible arguments are given below.

1. India is the location where the guaranty contract was established with the Gobindrams family.
2. The proceedings of this case happened in the foreign country and the defendants do not belong to India in terms of residence or work operations
3. Guaranty contract clearly indicated the statement of Yen in the transfer and acceptance for transactional convenience
4. The bankruptcy had actually happened in other countries namely Nigeria and Sri Lanka where the brothers of defendants had their businesses running
5. The continuous mischief and immoral acts by the defendants clearly show that they have done this act of fooling the banking institution deliberately to fulfill the needs at that point of time (Leonard and Besant, 1994).
6. Gobindram has submitted a false oath when he actually signed the guarantor agreement and his brother has just tried to divert the focus of the entire case by entering from yet another location
7. The acts of brothers / defendants clearly show the cases of bankruptcy and complete disregard for truth which are the clear reasons behind their knowingly submitted false oath to the bank to seek the amount (Ratner, Stein and Weitnauer, 2009).
8. The settlement should be done by both Kishanchands and Gobindrams for their false promises and continuous reasons shown to escape from the court's punishments and hearing. The settlement should necessarily reimburse the losses incurred during the period and the legal amounts as instructed by the Japanese laws. Gobindrams should reimburse for the false oath and Kishanchands for all the other immoral activities to stay away from the judgments.
9. The settlements should also be penalized with the taxes that fit the state's law (Mason, 2012).

While the Gobindarams have denied to accept the incharge and accountability for this debt and reluctance to attend the court proceedings, they have also filed case against Bank of India for being sued in accordance with the case. The charges for denial of discharge are also exposed to both the defendants.

By these arguments, India clearly seeks justice for all the false negotiations and mistrust developed by Gobindrams during the course of this case. Bank of India then realized and appealed in the higher court of Hong Kong for justice and reimbursement of all the amounts being spent towards this case. Special conciliation was also held to notify the defendants about further proceedings. Bank of India only remained as a starting point for the defendants to take advantage of this case and fool people around with different opinions and malpractices (Ped, 2016). Japanese judiciary laws gave the results to this case in the most just manner.

The case of Gobindram shows the situation of personal as well as professional insolvency situations. According to the business law in Japan, it is essential to legally and ethically proceed in every operation of the entity. In the case of Gobindram, the insolvency is known in prior and that is the ultimate reason he tried to back out from the situation even after signing the guaranty agreement. Although there are many cases of insolvency and bankruptcy reported by different businesses, the case involving Gobindram and his brother Kishanchand along with their corresponding wives demonstrates the deliberate action to fool the Bank of India that tried to sanction them with the amount. It is not only a dishonor but also a case of conflict as it worked against the actual laws.

Rule

There is also a conflict of law observed in this case which is the very reason for the interruption of foreign court to deal the case and deliver relevant judgments. The suit was carried out in one country but dealt and ordered with further proceedings in other country. This also implies variation in the litigation charges that the defendants are actually responsible to bear soon after the hearing is done and judgment is given. However, the only advantage with this case is that all the states had legitimate interests and similar objectives to end this case which is the reason Bank of India had agreed for Japanese law to occur in place.

This case also shows a specific form of negligence expressed by both the brothers to deal with further proceedings so after the dishonor to the exchange bills happened. There are several virtues being neglected in this paper. These include dishonor, lack of accountability, conflicts of interest, immorality and lack of truthfulness. The side of India is specifically taken to discuss in this paper because of the sole reason that justice lies with it for the continual disagreements and disinterests shown by the defendants even after they are regarded as law breakers. The only thing that Bank of India had missed to evaluate is their previous background in terms of operational financial history followed by clear list of penalties if the laws are broken and not adhered to.

Conclusion

In this paper, the case of Gobindram v. Bank of India is discussed in terms of its issues, actual facts, relevant rules that are applicable under Japanese law and that go hand in hand. Further, the arguments that are from the Bank of India's side are listed and the situation of insolvency along with negligence soon after the guaranty agreement is signed by both the defendants - Gobindram and Kishanchand. This is also a specific case where multiple parties from different countries involved including Sri Lanka, Nigeria, Japan and India which is indeed a rare instance. 

References

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