H.K. Bhalla vs Union Of India And Ors.
1997 Latest Caselaw 855 Del

JUDGMENT

K. Ramamoorthy, J.

(1) The plaintiff has filed the suit for perpetual injunction against the Union of India, through the Secretary, Ministry of External Affairs (defendant No. 1 ), Protector of Emigrants, Ministry of External Affairs (defendant No. 2), the Secretary, Ministry of Labour (defendant No. 3), The New Bank of India (defendant No. 4) and Air India (defendant No. 5). The case of the plaintiff briefly staked is this: The plaintiff is engaged in the business of domestic and international - travel bookings. ;

(2) In or about 1976 the plaintiff applied for registration with the Ministry of Labour (3rd defendant) for acting as recruitment agent for employing skilled, semi- skilled and unskilled workmen in foreign country. The 3rd defendant granted to the plaintiff provisional certificate of registration on the following terms:

1.The registration will be valid for a period of one year from the date of issue or until further orders.

2. The registration will not ipso facto entitle the registered recruiting 353 agency to despatch any Indian worker to a foreign employer unless it obtains from the Ministry of Labour a specific permission in such case where the agency desires to cause or assist any person to emigrate. For this purpose, the agency shall apply to the Ministry of Labour in Form- Ill (copy enclosed) at least 45 days before the workers are actually proposed to be deployed. The agency shall furnish five copies of the form alongwith five copies of each of the following documents : (a) Duly authorised legal power of attorney from the foreign employer authorising the agency to recruit workers on his behalf; (b) Request from foreign employers to recruit specified categories and number of workers desired to be recruited for their employment indicating the period when the workers are to be deployed; (c) Employment agreement from which the foreign employer proposes to be executed with the recruited workers indicating separately the salary and allowances payable to each type of workers; and (d) Information in respect of selected candidates for the aforesaid recruitment in Form-IV.

3.No application for grant of permission would be considered if it is not supported by the documents at (a), (b), (e) and (d) above.

4.Before applying for the permission, the recruiting agency will satisfy itself that the employment agreement proposed to be executed with the recruited workers contains inter alia all the provisions mentioned in annexure.

5.If any recruiting agency intends to recruit workers for employment by more than one foreign employer, separate applications for grant of permission would be required to be submitted in each case.

6.The recruiting agency shall not execute the employment contract with any worker recruited for employment abroad unless the permission applied for has been granted by the Ministry of Labour.

7.Every contract of employment (written in English) of recruited workers shall be signed in India by the recruiting agent on behalf of the foreign employer and shall be registered by him with the concerned Protector of Emigrants. While the recruiting agency is in any case to be a signatory on the employment contract he could, if he so desires, make the foreign employer also to be a signatory to that effect. The entire responsibility for completing the emigration formalities of every emigrant will -be that of the recruiting agency. In no case the emigrant worker should be asked/coerced to sign any other contract subsequently either in India or abroad by the employer or his agents.

8.Every recruiting agency/recruiting agent shall ensure that the workers, before he actually leaves India to take up employment in foreign country for which he has been recruited, is in possession of proper travel documents such as passport, via endorsement, necessary clearance from the Reserve Bank of India and health certificate etc.

9.The recruiting agent shall not charge any money by way of recruiting fee or otherwise from any worker recruited by him for employment in foreign countries.

10.The worker recruited by recruiting agent shall be provided with full factual information and briefing regarding living conditions in the country where he is being deputed for employment.

11.The recruiting agent shall adopt fair practices in selection (including trade test/medical examination etc.) of right types of workers with due consideration to weaker sections of the community and regional representation.

12.The recruiting agent shall furnish regularly a monthly statistical return in respect of workers sent by him abroad in the prescribed form -V to the authority granting the registration within one week of the close of every calender month.

13.The recruiting agency shall abide by all Government orders and directions issued from time to time in connection with their role as recruiting agent for recruitment of workers on behalf of foreign employers.

14.The registration will be cancelled and the recruiting agent liable for disqualification if he is found to be indulging in any unfair recruitment practices or not complying with the terms and conditions of the registration including Government directions given to them from time to time.

(3) The plaintiff made arrangement for employment of such persons in Takhta Tavous, Tehran (Iran) and the plaintiff was to act as an agent of M/s. Precision Building Company Limited, West Ave. According to the plaintiff, the certificate was approved by the Protector of Emigrants, the 2nd defendant. The 2nd defendant later on called upon the plaintiff to issue a letter of indemnity and the plaintiff had no option but to execute the surety bond in favour of the 2nd defendant. The plaintiff had also to give two bank guarantees; (1) on 6.6.1978 for Rs. 3,00,000.00 and on 23.3.1978 for Rs. l,00,000.00 . The plaintiff made arrangement for sending the workers and they were working under the plaintiff's principal. By a letter dated 19.8.1978, from the 3rd defendant. Ministry of Labour that the workers in Tehran complained of ill-treatment by the plaintiff's principal, the plaintiff to verify the factual situation visited Tehran.

(4) On 29.8.1978, the plaintiff wrote to the Indian Embassy about the factual position owing to change in the political situation in Tehran, that the foreign employer who was the principal of the plaintiff had to close down its establishment and suspended the construction work and as a consequence the workers had to leave Tehran. According to the plaintiff, in Tehran the Indian Embassy brought about settlement between the workers and the foreign employer and received a sum of Rs. 65,00,000.00 for and on behalf of the workers who were sent to Tehran. According to the plaintiff the Indian Embassy settled the claim of the Indian workers with foreign employer without any reference. The plaintiff asserted that in the aforesaid circumstances the obligation of the plaintiff under the two bank guarantees stood discharged. The foreign employer had obtained due discharge for all the Indian workers. The plaintiff was surprised to receive a letter dated 1.3.1979 enclosing a copy of the communication dated 17.2.1979 from the second defenant. The plaintiff by a letter dated 12.3.1979 repudiated the claim. The 4th defendant wrote a letter on 15.1.1979 to the plaintiff about the communication to the second defendant wherein the second defendant had advised the 4th defendant to withhold release of bank guarantees to the plaintiff. The security bonds and bank guarantees were executed without any consideration and they are void ab initio. It is stated that the transactions could be termed as the terms of indemnity as distinguished from the contract of guarantee. The condition precedent for enforcement of any claim with reference to the indemnity is that there should be proof that the person claiming indemnity, as a matter of fact, should that he sustain loss and he paid money and and then only he can seek indemnification. All the claims between the Indian workers and the foreign employer have been fully settled.

(5) Defendants I and 2 are seeking to enforce the bank guarantees on merely on the statement of employers whose names and identity were never disclosed to the plaintiff. The first defendant is bound to disclose to the plaintiff the money received from the foreign employer. The bank guarantees are stood to be enforced. The second defendant is claiming the amount towards the expenses for Air lifting the employees for repatriation without giving details thereof. It is only for this purpose the 5th defendant Air India was made a party to the present suit.

(6) Defendants 1,2 and 3 filed the written statement 8.7.1980. These defendants denied the allegations made in the plaint. It is stated that the consideration and object of the surety bonds are very much lawful and they were executed in accordance with Indian Emigration Act, 1972.

(7) In paras 10, these defendants stated in the following terms : It is denied that the workers deployed by the foreign employer in Iran left that country after due settlement of all their entitlements from the foreign employer to the satisfaction of the Indian Embassy at Tehran. It is submitted that in fact the defendant No. 2 received a letter dated 10th of March, 1980 from Embassy of India, Tehran stating therein that the dues of nearly 25 Indian workers and a sum of Rats 11,717,640 payable for transportation for about 550 Indian workers are still outstanding against the foreign employer and that these dues have not yet been settled despite several reminders to the foreign employer. It may not be out of place to mention here that the foreign employer even refused to pay transportation charges for those 550 Indian workers. Later on these workers were repatriated by the efforts of the Indian Embassy at Tehran through Air India. It is further submitted that Indian Embassy has also pointed out that a good number of Indian workers who were paid by the foreign employer have represented that they were not paid their dues in full. According to the information of the Ministry, foreign employers have yet to secure outstanding dues of over Rs. 21 lakhs. It is submitted that firm has tried to mislead the court by giving mis-statement of facts. In fact, in the end of January, 1979 office of defendant No.2 was informed by Indian Embassy, Tehran that the workers deployed by foreign firm were stranded in Iran and employers were not prepared to repatriate them to India. On 2.7.1979, firm wrote a letter to office of defendant No.2 staling that the disputes between the workers and the Iranian firm had been resolved through Embassy of India, Tehran and Ministry of External Affairs, New Delhi, and as such bank guarantee should be released. But in fact firm was fully aware of the fact that Iranian firm was yet to settle payments of over Rs. 21,00,000.00 in terms of payment of dues and repatriation charges of the workers.

(8) The foreign employer refused to pay the transportation charges of 550 workers. The Indian Embassy had to make arrangement for their coming to India through Air India. The foreign employer was to pay for transpiration charges for 550 Indian workers and 23 employees had not been paid anything and another set of 180 employees were partially paid. The foreign employer and the plaintiff failed and neglected to fulfilll their part of the agreement and, therefore, these defendants were obliged to encash the bank guarantees. The transpiration charges exceeded Rs. ll,00,000.00 and have not been paid by the foreign employer. The plaintiff is liable to pay Rs. 22,00,000.00 more to the second defenant. There is no question of coercion and undue influence and these defendants are acting in accordance with law. The 5th defenant. Air India, had filed the written statement but it is not necessary to set out the averments. Pending the suit Mr. H.K. Bhalla died and his LRs. Saroj Bhalla (widow), Rohit Bhalla (son and Ms. Pooja Bhalla (daughter) were brought on record and were made plaintiffs and the amended plaint was filed. The plaintiff filed replication and it is not necessary to refer to the allegations made therein.

(9) On 18.2.1987, the following issues were framed :

1. Whether Mr. H.K. Bhalla, the predecessor-in-interest of the plaintiffs had been coerced to execute the bank-guarantee?

2.Whether the defendants cannot enforce the bank guarantee (onus objected to)

3.Relief.

On 9.12.1993, the following additional issues were framed :

4.Whether the guarantees furnished by the plaintiff are void on account of coercion, alleged in para 5 of the plaint? OFF

5.Whether the defendants have suffered any loss enforceable under the guarantees?

6.Whether on account of the claims of the workmen having been settled, there is no outstanding claim enforceable under the guarantee?

7.Whether on account of settlement between the foreign employee and defendant No. 1, the guarantors stood discharged?

(10) On 10.7.1996, Mrs. Saroj Bhalla widow of late Sh. H.K. Bhalla was examined as PW-. The documents were marked Exhibits P-1 to F-13. Documents, Exhibits F-4 and P-5 are the bank guarantees are very absolute in their terms and the plaintiff cannot absolve themselves from the obligation undertaken by late Shri H.K. Bhalla. PW-11 stated that the main thrust of the case is that there was insurgency ill Iran, therefore, the whole contract between the Union of India and- the plaintiffs and the principal employer in Iran had become unenforceable and consequently the plaintiff, H.K. Bhalla was not obliged to pay any amount under the bank guarantees. This cannot at all be accepted in law. The transactions of sending workers to Iran under the agreement is not disputed and, therefore, the Union of India (defendants 2 and 3) are entitled to invoke the bank guarantees. The plaintiffs had prayed for injunction restraining defendants 1 to 4 from enforcing the bank guarantees being No. 23/78 dated 6.6.1978 and 9/78 dated 23.3.1978 issued by the 4th defenant Bank of India, in favour of defendants 1 to 4. The law relating to enforce the bank guarantees is now settled by the Supreme Court in the following cases ; United Commercial Bank v. Bank of India and Ors., , U.P. Cooperative Federation Ltd. v. Singh Consultants & Engineers (P) Ltd., , General Electric Technical Services Co. Inc. v. Punj Sons (P) Ltd. & Another, , National Thermal Power Corporation Ltd. v. Mis. Flowmore Private Ltd., and Larsen & Toubro Limited v. Maharashtra State Electricity Board & Others, .

(11) The plaintiffs had not given any notice under Section 80 of the Civil Procedure Code before instituting the suit. Section 80, Civil Procedure Code reads as follows : (1)(Save as otherwise provided in Sub-section (2) no suit shall be instituted) against the Government (including the Government of the State of Jammu and Kashmir) or against a public officer in respect of any act purporting to be done by such public officer in his official capacity, until the expiration of two months next after notice in writing has been delivered to, or left at the office of - (a) in the case of a suit against the Central Government, except where it relates to a Railway, a Secretary to that Government; (b) in the case of a suit against the Central Government where it relates to a Railway, the General Manager of this Railway; (bb) in the case of a suit against the Government of the State of Jammu and Kashmir, the Chief Secretary to the Government or any other officer authorised by that Government in this behalf; (e) in the case of a suit against any other State Government, a Secretary to that Government or the Collector of the district; and in the case of a public officer, delivered to him or left at his office, stating the cause of action, the name, description and place of residence of the plaintiff and the relief which he claims; and the plaint shall contain a statement that such notice has been so delivered or left. (2) A suit to obtain an urgent or immediate relief against the Government (including the Government of the State of Jammu and Kashmir) or any public officer in respect of any act purporting to be done by such public officer in his official capacity, may be instituted, with the leave of the Court, without serving any notice as required by Sub-section (1); but the Court shall not grant relief in the suit, whether interim or otherwise, 358 except after giving to the Government or public officer, as the case may be, a reasonable opportunity of showing cause in respect of the relief prayed for in the suit; Provided that the Court shall, if it is satisfied, after hearing the parties, that no urgent or immediate relief need be granted in the suit, return the plaint for presentation to it after complying with the requirements of Sub-section (1). (3) No suit instituted against the Government or against a public officer in respect of any act purporting to be done by such public officer in his official capacity shall be dismissed merely by reason of any error or defect ill the notice referred to in sub-section (1), if in such notice - (a) the name, description and the residence of the plaintiff had been so given as to enable the Appropriate Authority or the public officer to identify the person serving the notice and such notice had been delivered or left at the office of the Appropriate Authority specified in Sub-section (1); and (b) the cause of action and the relief claimed by the plaintiff had been substantially indicated. Issuance of the notice is mandatory and the suit is liable to be dismissed on this ground alone.

(12) On Issue No.l I find that the plaintiff had not established that H.K. Bhalla was coerced to execute the bank guarantees. There are no pleading to this effect and evidence of PW-1 does not at all prove the case of the plaintiff.

(13) On issue No. 2,1 find that defendants 1 to 4 are entitled to enforce the bank guarantees.

ON additional issue No. 31 find that the plaintiff has not established that the bank guarantees are vitiated by coercion, therefore, this issue is answered against the plaintiff.

On additional issue No. 4, whether the defendants have suffered any loss enforceable under the bank guarantees? I find that the first defendant had discharged the burden of taking the workmen on foreign land from India and had paid compensation to them, therefore, the first defendant had suffered a loss apart from that in terms of the bank guarantee. The first defendant is entitled to enforce the bank guarantees.

ON additional issue No. 5, the claims of the workmen had not been settled and the issue is not correctly framed. Even today the claim of the workmen remained unsettled, therefore, I find that the bank guarantees are enforceable.

ON additional issue No.6, whether on account of settlement between the foreign employee and defendant No.l, the guarantors stood discharged? This issue has also not been properly framed. When there has been no settlement the plaintiff had assumed that there had been a settlement between the foreign employee and the first defendant. I find that there was no settlement between foreign employee and the first defendant the way in which the plaintiff projected the suit. Therefore this issue is answered against the plaintiff. Consequently the suit is liable to be dismissed.

(14) Accordingly, shall be a decree; (a) directing the dismissal of the suit; (b) directing the parties to bear their own costs. Decree.