Calcutta High Court
M/S. Strescon Industries Ltd. & Anr vs Eastern Railway & Ors on 15 September, 2010
Author: I. P. Mukerji
Bench: I. P. Mukerji
AP No. 515 of 2010
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
In the matter of:
M/S. STRESCON INDUSTRIES LTD. & ANR.
Versus
EASTERN RAILWAY & ORS.
BEFORE:
The Hon'ble JUSTICE I. P. MUKERJI
Date : 15th September, 2010.
Appearance:
Mr. Sauvik Nandy Adv.,
Mr. Somnath Saha, Adv.,
For the petitioners.
Mr. Priyabrata Mukherjee Adv.
For the respondents.
The Court : This is a Section 9 application. It is founded on a contract between the petitioners and the railways containing an arbitration clause. The disputes in this contract have been urged to be referred to arbitration by the letter of the petitioner dated 3rd September, 2010. But no arbitrator has so far been appointed.
The grievance of the petitioner is that about Rs.50 lacs or so are sought to be deducted by the railways from monies receivable by the petitioner from the railways for performance of 2 other contracts, on account of alleged liquidated damages, payable in this contract.
Liquidated damages can only be quantified and held payable to the railways when the award is passed. Of course, any creditor has the right to withhold any sum of the debtor in his hands in satisfaction of the alleged debt.
If the amount had been quantified I would have understood withholding of the said sum but to withhold without such quantification such a large sum of money allegedly payable on account of damages, is not fair to the petitioner. Nevertheless, the interests of the railways have to be secured. I think if an appropriate security is furnished by the petitioner to the railways for payment of this sum, the ends of justice would be subserved.
I am not calling for any affidavits in this matter, as they are not called for in the facts and circumstances. This application is disposed of by the following order. If the railways propose to withhold any sum payable to the petitioner they will notify the same to them. If the petitioner furnishes bank guarantee of the like amount to the railways, they will not resort to withholding of the said payment to the petitioner. The petitioner will furnish a bank guarantee within three days of such notification by the railways. The railways will not encash the bank guarantee without the leave of the arbitrator or the Court. 3 In default of furnishing a bank guarantee in favour of the railways, the railways will keep the deducted sum in a separate account earning the highest rates of interest to be intimated by them to the petitioner. Entitlement of such sum will depend on the award to be passed in this arbitral reference. The railways will release the payment to the petitioner within three working days of furnishing the bank guarantee. If the railways have already deducted the amount, the petitioner will be at liberty to forthwith furnish the bank guarantee of the same amount. In that case also the railways will forthwith release payment to the petitioner within three days of furnishing of such bank guarantee.
All parties concerned are to act on a signed photocopy of this order on the usual undertakings.
(I. P. MUKERJI, J.) SP/