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On the basis of the aforesaid facts and circumstances, the company says that the amount is not due and pleads that, in any case, these facts show the existence of a bona fide dispute in regard to the facts as reproduced above have been further elaborated by the company and reference has been made to the correspondence exchanged between the parties. The company has also placed on record an unsigned document entitled "Note on Coated Paper Copier ", and relying on it, learned counsel for the company contended that the petitioner was required to open letters of credit for the purposes of the company effecting the import of the components of the machines. The case of the company is that, prior to placing an order on the company, it was taking supply of coated paper copiers in an arrangement with B.P.L.(India) Ltd. The said arrangement was discontinued. Now, the petitioner wanted to engage the company to replace B.P.L. and hence the petitioner agreed to finance the project and also agreed to arrange the imported components from a German company, Develop. The company agreed to obtain the industrial license, import license,know-how and local materials at the cost of the petitioner. The company completed the arrangement and obtained the industrial license on May 12, 1984, and undertook discussion with Develop on April 3, 1984, in Germany. The chairman of the petitioner fell ill and went to the U.S.A. The junior management failed to take a decision thereafter. After several months, the company was instructed not to go ahead with the completion of the project. The petitioner, after satisfying advance of Rs. 2,00,000 for purchasing local material and for importing technology and placed an order for importing additional machines. As a consequence of the petitioner not opening letters of credit in favor of Develop, the company could also not open letters of credit in favor of Develop. A number of staff members and engineers were hired by the company for completion of the project but the petitioner failed to take any further action. After several months of these exercise, the company was instructed not proceed any further with the project. The company protested as the cancellation resulted in tremendous business and financial loss to the company. The chairman of the Petitioner-company agreed to meet the expenses and losses incurred by the company on account of local material but did not agree to reimburse losses incurred as a result of default and indecision regarding the project. The company submitted a complete account but no action was taken by the petitioner. Further details as per the reply reproduced above have been given by the company.

The main stand of the company seems to be that, by non-opening of letters of credit by the petitioner and by illegal termination of contract, the company has suffered losses which are liable to be set off against the claim of the petitioner. Apart from the unsigned note, as referred to above, there is no other document to show that the petitioner had agreed to open letters of credit. The petitioner has denied that it agreed to open letters of credit. The of the petitioners seems to be correct. On the contrary, it appears that the company had agreed to furnish a bank guarantee for the amounts advanced to it but it did not furnish the same for amounts other than Rs. 1,25,000. Even otherwise, prima facie, reliance on the unsigned note and the correspondence prior to the order dated March 23, 1984, is not of much consequence on the facts and circumstances of this case. There is no requirement in the order that the petitioner is required to open letters of credit. There is also no reference to the opening letters of credit in any of the letters sent by the petitioner to the company. Counsel for the petitioner, however, placed reliance on letter dated February 28, 1985, sent by the company to the petitioner, inter alia, stating that the petitioner had agreed to give the guarantees to the bankers of the company for opening of letters of credit in favor of the German firm. According to the petitioner, the aforesaid letters and a few more are only fabrication and were not received by the company. Prima facie this letter does not fit in the sequence of events and no reliance can be placed on it. Counsel for the petitioner also contended that specifications for the imported components as given by the petitioner to the company are exactly the same as were being supplied by B.P.L. However, I fail to see the relevancy of this contention.