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2014 DIGILAW 27 (CAL)

State of Jharkhand v. Bank of Baroda

2014-01-16

DEBANGSU BASAK

body2014
Judgment : Debangsu Basak, J. Defendant No. 2 entered into two several contracts with the then State of Bihar to execute civil works at Palamu. At the request of the Defendant No. 2 the Defendant No. 1 furnished 18 several Bank guarantees in favour of the State of Bihar. Disputes and differences arose between the Defendant No. 2 and the State of Bihar with regard to the execution of the aforesaid two contracts. The validity of the 18 several Bank guarantees were to expire on October 31, 1992. Prior to the expiry of the validity of such Bank guarantees the State of Bihar called upon the Defendant No. 1 to extend the Bank guarantees and failing such extension requested encashment thereof. According to the plaintiffs the Defendant No. 1 extended the validity period of the 18 several Bank guarantees to October 31, 1993. According to the plaintiffs by suppressing the factum of extension, the Defendant No. 2 filed a writ petition being Matter No. 1163 of 1993 before this Hon’ble Court and prayed that the Defendant No. 1 ought not to renew the Bank guarantees. Several interim orders were passed in Matter No. 1163 of 1993. The plaintiff invoked the Bank guarantees by Notices dated December 14, 1993 and December 17, 1993. The Defendant No. 1 by a Letter dated December 16, 1993 contended that unless a suit or action to enforce the Bank guarantees was lodged against the Defendant No. 1 the right of the plaintiffs under the Bank guarantees would be forfeited and that the Defendant No. 1 would be discharged or released of all its liabilities thereunder. According to the plaintiffs the first writ petition of the Defendant No. 1 being Matter No. 1163 of 1993 was dismissed for default and all interim orders passed therein was vacated on November 15, 1994. By a letter dated November 17, 1994 the plaintiffs called upon the Defendant No. 1 to pay the entire amount under the Bank guarantees more so in view of the dismissal of the first writ petition and the vacating of the orders passed therein. According to the plaintiffs the first writ petition was restored by an Order dated February 8, 1995 subject to payment of costs. According to the plaintiffs cost awarded was not paid and the condition imposed by the order of restoration was not complied with by the Defendant No. 2. According to the plaintiffs the first writ petition was restored by an Order dated February 8, 1995 subject to payment of costs. According to the plaintiffs cost awarded was not paid and the condition imposed by the order of restoration was not complied with by the Defendant No. 2. The plaintiffs made repeated requests for payment and the Defendant No. 1 in spite of receipt of such demand notices failed and neglected to pay the amount covered under the Bank guarantees necessitating the State of Bihar and its Executive Engineer to institute the suit. In Matter No. 1163 of 1993 the Defendant No. 2 obtained an order on the Defendant No. 1 not to extend the Bank guarantees. The State of Bihar preferred an appeal against such order which was dismissed by the Hon’ble Division Bench. The instant suit was thereafter instituted. According to the Defendant No. 2 on subsequent to the institution of the instant suit the Defendant No. 2 applied for and obtained an order of withdrawal of Matter No. 1163 of 1993. It is, however, contended in the plaint by the plaintiffs that Matter No. 1163 of 1993 was dismissed for default on November 15, 1994 and was restored conditionally on February 8, 1995, the condition being that the Defendant No. 2 pay a cost of 100 gms. The Defendant No. 2 did not comply with such order and such non-compliance was recorded by the Advocate for the then plaintiffs’ by a letter dated February 17, 1995 addressed to the Advocate for the Defendant No. 2. During the pendency of the instant suit the Bihar Reorganization Act, 2000 came into effect from August 25, 2000 Palamu district came within the State of Jharkhand. By virtue of the said Act of 2000 the State of Jharkhand joined as the plaintiff in the instant suit. In the instant suit the then plaintiffs applied for judgment under Chapter XIII A of the Original Side Rules of this Hon’ble Court. The Defendant No. 2 applied under Order VII Rule 11 for dismissal of the suit. During the pendency of the instant suit disputes and differences arose inter se between the Defendant No. 1 and the Defendant No. 2. The Defendant No. 2 filed a writ petition being Matter No. 2349 of 1996 and sought various reliefs against the Defendant No. 1. During the pendency of the instant suit disputes and differences arose inter se between the Defendant No. 1 and the Defendant No. 2. The Defendant No. 2 filed a writ petition being Matter No. 2349 of 1996 and sought various reliefs against the Defendant No. 1. Such writ petition was disposed of by an Order dated April 9, 1998. The order directed the Defendant No. 1 to encash all fixed deposit whether matured or not and adjust the entire proceeds against all dues against the Defendant No. 2 to the Defendant No. 1. In the event of shortfall the Defendant No. 2 was directed to pay to the Defendant No. 1. In the event of a surplus the same to be made over to the Defendant No. 1. The Defendant No. 1 was directed to issue no objection certificate and to close and terminate the Cash-Credit Account in all its branches. The Defendant No. 1 was given liberty to keep margin money at the rate of 10 per cent of each of the Bank guarantees and also other securities furnished by the Defendant No. 2 excepting the fixed deposits till deposal of the application for final judgment and/or rejection of the plaint as the case may be, which included in the right to appeal. The writ petition was disposed of. The Defendant No. 2 applied for clarification of the Order dated April 9, 1998 being G.A. No. 2140 of 1998. Such clarification application was disposed of by a judgment and order dated November 12, 1998. By the judgment and order it was held that the reliefs granted by the Order dated April 9, 1998 was passed “almost in consensus of the parties”. It was further held that the Defendant No. 1 was agreeable to keep other securities as it was till the result of the suit during the course of hearing of W.P. No. 2349 of 1996. It was clarified that the judgment and the findings returned on April 9, 1998 were restricted to W.P. No. 2349 of 1996 and that such findings would not be binding and/or operative in the pending suit. The judgment and order dated April 9, 1998 was modified by saying that the Defendant No. 2 would be at liberty to approach the suit Court for obtaining suitable direction and order for release of other securities. The judgment and order dated April 9, 1998 was modified by saying that the Defendant No. 2 would be at liberty to approach the suit Court for obtaining suitable direction and order for release of other securities. It was held that the Defendant No. 1 was entitled to withhold other securities excepting the book debts subject any other order passed by the suit Court. Prima facie, it was found that the securities were connected with the subject matter of the suit. In such circumstances the Defendant No. 2 had made the present application and sought for following reliefs:- (a) Notice be issued to the State of Jharkhand through Chief Secretary Jharkhand. (b) State of Jharkhand be substituted in place and stead of State of Bihar, to plaintiff herein and the cause title be suitable amended. (c) Defendant No. 1 be directed forthwith to release the securities held by the defendant No. 1 mentioned in paragraph 26 of the petition. (d) Defendant No. 1 be directed to return the document of title relating to the property at Dogachi, Naihati, 24- Parganas (North) described in Schedule being annexure “K” to the petition of your petitioner and release the same from mortgage. (e) Defendant No. 1 be directed to cancel the charge in respect of the assets and properties mentioned in paragraph 26 of the petition registered with the Registrar of Companies. (f) Adinterim order in terms of prayers above. (g) Such further and other order or orders made and/or direction or directions be given as to this Hon’ble Court may deem fit and proper. Mr. Dhruba Ghosh learned Advocate for the Defendant No. 2 submitted that in view of the Orders dated April 9, 1998 and November 12, 1998 his client was obliged to make the present application. Relief with regard to prayers (a) and (b) of the present application was already granted. His client was entitled to release of the securities, excepting the book debts. The same securities were up for consideration in W.P. No. 2349 of 1998 in which the aforesaid two orders were passed. He submitted that his client was facing double jeopardy in keeping securities with the Defendant No. 1 and that those securities were valuable to his client. His client would be in a position to utilize such securities for the purpose of obtaining financial accommodation from other financial institutions for the purpose of its business. He submitted that his client was facing double jeopardy in keeping securities with the Defendant No. 1 and that those securities were valuable to his client. His client would be in a position to utilize such securities for the purpose of obtaining financial accommodation from other financial institutions for the purpose of its business. He, therefore, prayed for necessary relief. On a query from the Court as to whether the reliefs sought for by the Defendant No. 2 specifically prayers (c), (d) and (e) to the petition were within the scope and ambit of the instant suit, he submitted that the securities furnished by the Defendant No. 2 to the Defendant No. 1 were outside the scope of the suit. Mr. Pradip Kr. Dutta learned Senior Advocate for the Defendant No. 1 submitted that the reliefs sought for by the Defendant No. 2, namely, the prayers (c), (d) and (e) were not within the scope and ambit of the suit. He contended that even assuming that such reliefs were within the scope and ambit of the suit then in view of the Order dated November 12, 1998 passed in W.P. No. 2349 of 1996, the petition was premature and that the Defendant No. 2 needed to wait till the disposal of the suit. He contended that the Defendant No. 2 could not seek relief against the Defendant No. 1in the suit filed by the plaintiffs. The respective lawyers for the Plaintiff No. 1 and the Plaintiff Nos. 2 and 3 adopted the submissions of Mr. Dutta. It was further contended that the plaintiffs were not parties in W.P. No. 2349 of 1996 and as such the orders passed in W.P. No. 2349 of 1996 were not binding upon them. I have heard and considered the respective submissions of the learned lawyers. I have considered the respective pleadings and the Orders dated April 9, 1998 as well as the Order dated November 12, 1998. I examined the scope and ambit of the suit and the present application. The suit was for recovery of money covered under the 18 several Bank guarantees. The Bank guarantees were furnished by the Defendant No. 1 to then State of Bihar. In view of the Bihar Reorganization Act, 2000 the State of Jharkhand was entitled to be joined as plaintiffs to the suit. The suit was for recovery of money covered under the 18 several Bank guarantees. The Bank guarantees were furnished by the Defendant No. 1 to then State of Bihar. In view of the Bihar Reorganization Act, 2000 the State of Jharkhand was entitled to be joined as plaintiffs to the suit. The Defendant No. 2 sought to enforce rights emanating from its relationship with the Defendant No. 1 when it claimed release of the securities. The disputes between the Defendant Nos. 1 and 2 could by no stretch of imagination be contended to come within the purview of the instant suit. The question involved in the instant suit was whether the plaintiffs were entitled to the proceeds of the 18 several Bank guarantees issued by the Defendant No. 1 on behalf of the Defendant No. 2 or not. The disputes between the Defendant Nos. 1 and 2 could not be raised and adjudicated upon in this suit. The disputes between the Defendant No.1 and Defendant No. 2 were not the subject matter of the instant suit. The reliefs sought for by the Defendant No. 2 by way of the application under consideration would not come within the scope and ambit of the instant suit. Although the Order dated November 12, 1998 allowed the Defendant No. 2 to approach the suit Court for obtaining suitable direction and order for release of the other securities I hold that in absence of the reliefs sought for by the Defendant No. 2 being within the scope and ambit of the suit the application under consideration was not maintainable. In course of an argument the learned Counsel appearing for the respective parties accepted the position that the securities which the Defendant No. 2 sought release of under Prayers (c) to (e) of the petition were not within the scope and ambit of instant suit. Furthermore, the Order date November 12, 1998 directed that the securities to continue till disposal of the instant suit. In such circumstances I am not inclined to grant prayers (c), (d) and (e) of the petition. Prayers (a) and (b) were already allowed earlier. G.A. No. 2140 of 2008 is disposed of accordingly. There will be no order as to costs. Certified website copies of this order, if applied for, be urgently supplied to the parties subject to compliance with all requisite formalities.