Gauhati High Court
National Small Industries Corporation ... vs M/S. P. Das And Company And 3 Ors on 24 May, 2019
Author: Ujjal Bhuyan
Bench: Ujjal Bhuyan
Page No.# 1/6
GAHC010277482018
THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
I.A.(Civil) 4258/2018 In
WP(C) No.4757/2018
1:NATIONAL SMALL INDUSTRIES CORPORATION AND 5 ORS.
NSIC BHAWAN, OKHLA INDUSTRIAL ESTATE, NEW DELHI-110020,
REPRESENTED BY ITS CHAIRMAN, NATIONAL SMALL INDUSTRIES
CORPORATION, OKHLA INDUSTRIAL ESTATE, NEW DELHI-110020
2: ZONAL GENERAL MANAGER
NSIC LIMITED
INDUSTRIAL ESTATE
BYE LANE NO.3
BAMUNIMAIDAM
GUWAHATI
ASSAM-781021
3: CHIEF MANAGER
NSIC LTD.
INDUSTRIAL ESTATE
BYE LANE NO.3
BAMUNIMAIDAM
GUWAHATI
ASSAM-781021.
4: BRANCH HEAD
NSIC LTD.
INDUSTRIAL ESTATE
BYE LANE NO.3
BAMUNIMAIDAM
GUWAHATI
ASSAM-781021.
Page No.# 2/6
5: SR. BRANCH MANAGER
NSIC LTD.
INDUSTRIAL ESTATE
BYE LANE NO.3
BAMUNIMAIDAM
GUWAHATI
ASSAM-781021
6: CHIEF MANAGER (A/CS)
LEGAL AND RECOVERY
NSIC LTD.
INDUSTRIAL ESTATE
BYE LANE NO.3
BAMUNIMAIDAM
GUWAHATI
ASSAM-781021
VERSUS
1:M/S. P. DAS AND COMPANY AND 3 ORS.
A REGISTERED PARTNERSHIP FIRM HAVING ITS HEAD OFFICE AT GOPAL
ROAD, PAN BAZAR, GUWAHATI AND IS REPRESENTED BY ONE OF ITS
DULY AUTHORIZED PARTNER SHRI SWAPAN DAS, S/O LATE BHARAT
CHANDRA DAS, R/O LAMB ROAD, UZANBAAR, GUWAHATI
2:THE UNION OF INDIA
REP. BY THE SECRETARY
MINISTRY OF MSME (MICRO
SMALL AND MEDIUM ENTERPRISES)
DELHI
3:MANAGER
BANK OF BARODA
DISPUR BRANCH
GUWAHATI
ASSAM-781005
4:THE DIRECTOR OF INLAND WATER TRANSPORT
ULUBARI
GUWAHATI
ASSAM-78100
Page No.# 3/6
Advocate for the Petitioner : MR. M CHOUDHURY
Advocate for the Respondent : MR D SENAPATI
BEFORE
HONOURABLE MR. JUSTICE UJJAL BHUYAN
ORDER
Date : 24-05-2019 Heard Mr. AD Choudhury, learned counsel for the applicants and Mr. GN Sahewalla, learned Senior Counsel for opposite party No.1. This is an application for vacation of interim order dated 20.07.2018 passed by this Court in WP(C) No.4757/2018 filed by OP No.1 as the writ petitioner.
Applicants are National Small Industries Corporation (Corporation) and its officials who have been arrayed as respondent Nos.2 to 7 in the writ petition. As noticed above, OP No.1 is the writ petitioner. Relevant portion of the order dated 20.07.2018 is extracted hereunder: -
" Petitioner is aggrieved by impugned communication dated 09.07.2018 of the respondent No. 6 calling upon the petitioner to pay the outstanding dues of Rs. 77 lakhs on or before 16.07.2018 failing which the bank guarantee of the petitioner would be invoked.
Mr. Sahewalla, learned Sr. Counsel for the petitioner submits that an amount of more than Rs. 1.4 crores is due to be paid to the petitioner by the Inland Water Transport i.e., respondent No. 9 and once this amount is received which is expected to be released during the month of August, 2018, immediately the outstanding amount would be paid to respondent No.2. Issue notice, returnable 4 (four) weeks.
Mr. Keyal accepts notice on behalf of respondent Nos. 1 to 7; respondent No. 9 be served through Mr. Y. Doloi, learned Standing Counsel, Inland Water Transport.
Extra copies within 3 (three) days.
Notice to respondent No.8 by registered post with A/D. Steps within 3 (three) days.
After hearing learned counsel for the parties and on due consideration, respondents are directed not to invoke the bank guarantee of the petitioner and also not to take any coercive action against the petitioner till the next date.
It goes without saying that in the event payment is received by the petitioner from the Inland Water Transport, Assam, immediately and without any delay, Page No.# 4/6 the outstanding dues of respondent No. 2 should be cleared. Pendency of this writ petition shall not be a bar for respondent No. 9 i.e. Inland Water Transport, Assam to release the due payment to the petitioner. List on 07.09.2018."
In the hearing which took place on 27.03.2019, the following order was passed: -
" According to OP No.1, it is a Micro, Small, Medium Enterprise (MSME) and entitled to financial support/assistance by the Corporation. It was awarded a contract by Assam Power General Corporation Ltd. for execution of the work "Engineering, procurement and construction of Lungnit Small Hydro Electric Power Stage-I (2x1.5 MW) and Stage-II (2x1.5 MW) including Civil, Electro- Mechanical Electrical and Hydro Mechanical Works" vide work order dated 21.12.2006; following which contract agreement was entered into between the parties.
For execution of the work, OP No.1 approached the Corporation for availing assistance under Raw Material Assistance Scheme; pursuant to which Corporation sanctioned an amount of Rs.100 lakhs for such assistance to OP No.1 on 20.11.2007. Towards security for such assistance, petitioner submitted bank guarantee from Bank of Baroda covering the amount of assistance. According to the OP No.1, it was making due payments to the Corporation for the assistance render under the aforesaid scheme from the bill amounts received from Assam Power Generation Corporation Ltd. for execution of the work. However, on 10.08.2012, the contract was terminated; as a result of which contractual dues of OP No.1 was withheld. Such termination of contract is now being examined by the arbitral tribunal in arbitration proceeding.
Because of the aforesaid development, OP No.1 was irregular in repaying the dues of the Corporation.
At this stage, it may also be mentioned that the initial assistance amount of Rs.100 lakhs was enhanced by a further amount of Rs.30 lakhs for which additional bank guarantees were furnished by OP No.1. In the meanwhile, OP No.1 is also executing contract works with Inland Water Transport Directorate regarding manufacture of boats for which two amounts of Rs.53,75,550.00 and Rs.87,82,836.00 are outstanding from the Directorate of Inland Water Transport. Notwithstanding the financial difficulties faced by OP No.1, it had remitted an amount of Rs.20 lakhs to the Raw Material Assistance Account of the Corporation. As per intimation dated 31.05.2018, an amount of Rs.95.67 lakhs was outstanding to be paid by OP No.1 being more than 360 days, the total amount being Rs.124.27 lakhs. Thereafter OP No.1 received a mail dated 09.07.2018, as per which an amount of Rs.77 lakhs was lying outstanding against OP No.1 for more than 360 days, in addition to dues which were 467 days old. OP No.1 had moved the Corporation seeking extension of time for repayment of dues but there was no response. Faced with such a situation OP No.1 has preferred the Page No.# 5/6 related writ petition wherein basic prayer made is for grant of reasonable time to clear the outstanding dues.
As noticed above, this Court while issuing notice on 20.07.2018 had passed the interim order as above; for vacation of which Corporation has filed the present interlocutory application.
Basic stand of the Corporation is that it has got no connection with dues receivable by OP No.1 from Inland Water Transport Directorate. It is a matter between OP No.1 and the Directorate. Corporation had provided financial assistance to OP No.1 under the Raw Material Assistance Scheme. There has been persistent default on the part of OP No.1. Agreement with OP No.1 clearly empowers the Corporation to invoke the bank guarantee in the event of default by OP No.1. Since there has been default by OP No.1, Corporation is well within its right to invoke the bank guarantee. Learned counsel for the applicants has referred to a decision of the Supreme Court in the case of Himadri Chemicals Industries Ltd. Vs. Coal Tar Refining Co., reported in (2007) 8 SCC 110 and contends that the law relating to grant or refusal to grant injunction in the matter of invocation of bank guarantee or letter of credit is well settled by the Supreme Court. While there can be no dispute to the proposition of law relating to invocation of bank guarantee, Court is however of the view that dispute between the parties is not of such a nature or magnitude that it is beyond resolution. As a matter of fact, OP No.1 has not disputed the dues payable by it to the Corporation. All that it seeks is reasonable time to repay the outstanding dues.
Therefore, taking an overall view of the matter and balancing the competing interest, Court is of the view that OP No.1 should pay an amount of Rs.10 lakhs to the Corporation/applicants within a period of 30 days from today and shall also submit the repayment schedule before the Court on the next date. Without disposing of the interlocutory application, let it be listed again after a month on 02.05.2019 when OP No.1 shall furnish before the Court proof of payment of Rs.10 lakhs and the schedule of repayment."
On 02.05.2019, Mr. Sahewalla submits that because of non-receipt of funds from various sources, OP No.1 had permitted applicants to encash one of the bank guarantees to the extent of Rs.10 lakhs in terms of order dated 27.03.2019. OP No.1 was also directed to furnish schedule of repayment. In the hearing which took place on 17.05.2019 OP No.1 furnished the schedule of repayment, as per which outstanding dues will be repaid within a period of eight months from May, 2019 to December, 2019. While directing learned counsel for the applicants to obtain instruction, this Court observed that in the event of validity of any bank guarantee of OP No.1 expiring or about to expire, it was open to OP No.1 to get the validity of those bank guarantees extended with due intimation to the applicants.
Page No.# 6/6 Today when the matter is called upon, Mr. Choudhury, learned counsel for the applicants submits that in so far Corporation is concerned, it can agree to accept the dues of OP No.1 up-to 30.06.2019; otherwise, they may have to invoke the bank guarantees.
On the other hand, Mr. Sahewalla submits that OP No.1 has got the validity of the bank guarantees suitably extended.
After hearing learned counsel for the parties and on due consideration as well as considering the repayment schedule submitted by OP No.1, it is seen that OP No.1 has not provided for any repayment during the months of May and June, 2019. In such circumstances, OP No.1 shall re-work the repayment schedule so that the dues payable to the Corporation are cleared by November 30, 2019; failing which it would be open to the Corporation to invoke the bank guarantees. In the meanwhile, OP No.1 shall also get the bank guarantees further extended for the period up-to 30.12.2019.
Interlocutory application is accordingly disposed of.
JUDGE Biplab Comparing Assistant