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2021 DIGILAW 59 (BOM)

M K Aromatics Ltd v. State Of Goa

2021-01-12

BHARATI H.DANGRE, M.S.SONAK

body2021
JUDGMENT 1. Heard Mr. S. Dessai, learned Senior Advocate appearing for the applicant, M/s. M.K.Aromatics Ltd. and its Managing Director Mr. Mahesh Merchant, who is present in the Court today. 2. This application seeks modification of our order dated 30.01.2020 and exemption from furnishing Bank Guarantee as undertaken by the applicant in the undertaking given to this Court on 30.01.2020 and 17.02.2020 in M.C.A.no.72/2020 on the file of this Court. There is also a prayer that the undertakings be dispensed with and the applicant be discharged from the undertakings. 3. Mr. Dessai, the learned Senior Advocate, no doubt, on the basis of instructions makes a submission that the applicant did attempt to obtain Bank Guarantee from the Bank of Maharashtra, Bangalore, but the bank by its communication dated 03.12.2019 has declined to furnish the bank guarantee on the ground that the applicant has already exceeded the credit limit extended to it. Mr. Dessai also pointed out that in yet another communication dated 14.02.2020 from the Bank of Maharashtra, on the basis of which Mr. Dessai submits that the applicant should be relieved of the undertaking furnished by him. 4. The applicant in this case, is a contractor who was to execute a project relating to Solid Waste Management. This contract was awarded sometime in 2014 and was required to be completed by 10.08.2015. For one reason or the other, the contractor has failed to complete this project, even though, extensions were granted and the time schedule was revised, without prejudice to the rights and contentions of the State Authorities to take action against the applicant. 5. In Public Interest Litigation, this Court has been monitoring the issue of Solid Waste Management in the State of Goa, where the project was to be completed latest by 2015. However, this project was not completed. Finally we were constrained to implead the applicant herein as party to this proceedings. 6. On 05.12.2019, the applicant appeared before this Court and expressed certain difficulties. Although the difficulties were not quite genuine, in order that the project was made operational, the difficulties were suitably redressed. The applicant gave solemn undertaking to this Court that the project will be made operational latest by 15.01.2020. Even this solemn undertaking was breached with impunity. 7. The applicant applied for time till 15.05.2020. Although the difficulties were not quite genuine, in order that the project was made operational, the difficulties were suitably redressed. The applicant gave solemn undertaking to this Court that the project will be made operational latest by 15.01.2020. Even this solemn undertaking was breached with impunity. 7. The applicant applied for time till 15.05.2020. For the reasons recorded in our order dated 30.01.2020, we were persuaded to grant this last and final extension primarily based upon the statement made by the applicant, that it would within 15 days, furnish a fresh Bank Guarantee of a Nationalised Bank, in the amount of Rs.2 Crores in favour of the Goa State Urban Development Agency (GSUDA) which is the agency overseeing the implementation of this project. This statement was accepted as an undertaking to this Court. Further undertaking was given to this Court that the project will be complete in all respects and made operational by 15.05.2020. 8. The offer made by the applicant and the reasons why we were persuaded to accept the undertakings quite reluctantly as reflected at paragraphs 20 to 24 in our order dated 30.01.2020. The same are transcribed below for ready reference:- "18. According to us, the interpretation proposed by the learned Advocate General can be examined in the due course. However, taking into the consideration, the position described above, by way of interim relief, we direct the State Government to forthwith encash the Bank Guarantee and to recover atleast the amount of Rs.1 Crore from the contractor. Such revocation will not amount to termination. The treatment of this amount shall abide by further orders in this matter. 19. Mr. A.D. Bhobe, the learned Counsel for the contractor, this time, on the basis of instructions of Mr. Mahesh Merchant, who is the Managing Director of M/s. M.K. Aromatics Ltd., makes a statement that M/s. M.K. Aromatics Ltd., will within 15 days from today, furnish a fresh Bank Guarantee of a Nationalised Bank this time in an amount of Rs.2 Crores in favour of Goa State Urban Development Agency (GSUDA) which is an agency which is overseeing the implementation of this project. This statement is accepted as an undertaking to this Court. Such fresh Bank Guarantee of a Nationalised Bank will have to be furnished within 15 days from today as undertaken. 20. Mr. This statement is accepted as an undertaking to this Court. Such fresh Bank Guarantee of a Nationalised Bank will have to be furnished within 15 days from today as undertaken. 20. Mr. Bhobe, on the basis of instructions from the Managing Director, who is present in the Court, states that the project will be complete in all respects and operational by 15.05.2020. He states that there will be no occasion for seeking any further extension in the matter. 21. Very reluctantly and realising that the contractor has created a situation wherein it will counter product to terminate the contract and award a fresh contract in favour of any other agency, the extension as prayed for is hereby granted. However, the extension is subject to the condition that if for any reason whatsoever the plant is not made operational in all respects by 15.05.2020, then by 18.05.2020, the contractor will not object to GSUDA encashing this fresh Bank Guarantee and recovering further amount of Rs.2 Crores from the contractor. 22. We make it clear that if the fresh Bank Guarantee from a Nationalised bank is not furnished within 15 days from today, we will be left with no option but to consider taking action for the breach of undertaking solemnly given to this Court. The Bank Guarantee will not only have to be of a Nationalised Bank but the same should clearly state that in case the plant is not made operational in all respects by 15.05.2020, then the GSUDA will have absolute unqualified and irrevocable rights to invoke such Bank Guarantee even without any necessity of issuing notice to the contractor. Liberty is granted to the State Government and GSUDA to mention this matter in case of any difficulties in encashing the Bank Guarantee. 23. For limited compliance on this aspect of Bank Guarantee, we place this matter on 17.02.2020 for directions. We also direct the Chief Officer of the Pernem Municipal Council to appear in this Court on 17.02.2020 in relation to the issue of setting up this plant. 24. This application is not disposed off and will be considered further on 17.02.2020." 9. The applicant did furnish the undertaking on 17.02.2020 consistent with what was undertaken by the applicant on the earlier date. This was only after the applicant sought for extension of time which extension was granted by our order dated 17.02.2020. 24. This application is not disposed off and will be considered further on 17.02.2020." 9. The applicant did furnish the undertaking on 17.02.2020 consistent with what was undertaken by the applicant on the earlier date. This was only after the applicant sought for extension of time which extension was granted by our order dated 17.02.2020. This means that the applicant had breached our earlier directions, thereafter sought indulgence and only thereafter furnished the undertaking. 10. The circumstances on record bear out that the applicant was never serious with the compliance of his own undertakings. The undertaking was furnished only to buy time. The reasons now given in support of this application are that the banks are not giving Bank Guarantee as undertaken. This is hardly some reason. If the applicant knew that its credit position was precarious the applicant should not have given undertaking to this Court. Incidentally the communication dated 14.02.2020 issued by the bank itself has not declined the applicant's request for issuance of Bank Guarantee, but, merely requires the applicant to deposit 2 Crores to process such application. 11. The circumstances make it very clear that the undertakings were furnished by the applicant only to ward of the action of contempt. The applicant had prima facie breached the undertakings given to this Court in the matters earlier. The undertakings were possibly given with intentions of never complying with the same. The applicant in this case has taken advantage of the indulgence of this Court and the COVID situation. The statement that the applicant has spent considerable amount at the site inspires no confidence. On account of non completion of this project, there is a serious issue of Solid Waste Management in the State of Goa. 12. As noted earlier, the applicant has created a situation whereby it will be extremely difficult to terminate the contract and at the same time the applicant has delayed the project by five years. Real ising this position, the applicant is bent upon taking undue advantage of the situation. 13. This application is totally misconceived and therefore, is rejected.