M.M.T.C. Ltd. vs Rajeev Bakshi Proprietor, M/S. ...
2000 Latest Caselaw 1013 Del

ORDER

K.S. Gupta, J.

1. In O.M.P., the petitioner filed this application, interalia, alleging that on being approached by the respondent the petitioner sanctioned packing credit limit of Rs.100 lakhs COD as also packing credit of 5 Kgs. gold under the Domestic Tariff Area Scheme. Respondent and petitioner also entered into an agreement for export of jewellery. It is alleged that the respondent was supplied 2 kgs gold on loan on 25th April, 1994 @ Rs. 4.30 lakhs per kg (notional international price) of the total amount of Rs. 8,60,000/ against contract No. M-0027 and 3, Kgs gold on 26th April 1994 also at the said rate of the total amount of Rs. 12,90,000/- against contract No. M-0029 by the petitioner. It is further alleged that the respondent failed to export gold jewellery against said 5 kgs. gold. As a result of failure to export gold jewellery the respondent exposed the petitioner to custom duty and penalty inasmuch as the gold given to him was duty free and was to be exported after manufacturing jewellery within the stipulated period. Even otherwise said gold was to be returned by the respondent by purchasing similar quantity of gold to the petitioner within a period of 90 days from the date of issue of gold in terms of the relevant EXIM Policy. Respondent is further liable to pay interest with effect from 8th December 1995. Total amount of custom duty calculated @ 72.5% on 2 kgs gold delivered on 25th April 1994 comes to Rs. 6,23,500/ while interest on the value of that gold @ 25% p.m. with effect from 25th April 1994 to 7th December 1995 comes to Rs. 6,01,529/-. Similarly, sum of Rs. 9,35,250/- is the amount of custom duty @ 72.5% while amount of Rs. 9,00,769/- is the interest @ 25% with effect from 26th April 1994 to 7th December 1995 in respect of 3 kgs gold given on 26th April 1994. Rs. 86,625/- are alleged to be the additional surcharges recoverable for the year 1993-94. The total amount thus calculated of 5 kgs gold comes to Rs. 52,91,576/-. It is alleged that the claim of petitioner in regard to cost of gold and other charges is the subject matter of arbitration before the Arbitral Tribunal. Respondent has no legal right to withhold the said quantity of gold. It is alleged that in the event the respondent, sells or alienates said quantity of gold belong- ing to the petitioner, it will have no assets to recover the decretal amount in case its claim is upheld by the arbitrators. It was prayed that respondent be directed to handover 5 kgs. gold/ornaments to the petitioner and till the time the gold/ornaments are not handed over, he be restrained from selling or alienating it.

2. Respondent has contested the application by filing reply. By way of preliminary objections it is alleged that arbitration proceedings between the parties are pending before the Arbitral Tribunal comprising of Justice Jaspal Singh, Justice G.C. Mittal and Justice M.L. Verma (Retd) and the respondent has also preferred counter claims against the petitioner. Application is alleged to be not signed and filed by a competent person on behalf of petitioner. On merits, it is alleged that the value of gold as also custom duty as claimed in the application, are notional. There was no agreement for payment of interest @ 25% p.a. It is alleged that the petitioner has been holding the title deeds of immoveable property of respondent and in view of totality of circumstances the respondent has a right of lien on 5 kgs gold. It is further alleged that according to the petitioner, the respondent was to repurchase gold within 90 days under the export import policy providing for a period of 120 days for export of gold but the petitioner acted in breach of the said policy by reducing the period of export from 120 days to 45 days in addition to further violating the said policy by themselves becoming the exporter instead of acting as canalising agency for facilitating exports.

3. I have heard Sh. Sanjeev Puri for petitioner and Sh. Arun Arora for respondent.

4. In response to Para No.7 of the application the respondent in reply has not denied receipt of 5 kgs gold on loan from the petitioner. It is also not in dispute that the respondent did not export gold jewellery against the said quantity of gold nor did he return gold by purchasing similar quantity of gold to the petitioner within the stipulated period from the issue of gold in terms of EXIM policy operating at the relevant time. Obviously, for failure to export gold jewellery and return by the respondent of gold, the petitioner had been deprived of the use of money worth the price of 5 kgs gold for all these years after June 1994 and it has further been exposed to pay custom duty allegedly @ 72.5% on the price of said quantity of gold. Copy of the order dated 28th August 2000 passed by the Arbitral Tribunal placed on the file goes to show that counter claim raised by the respondent before the Tribunal now stands terminated. Submission advanced on behalf of respondent mainly was that O.M.P. has not been signed, verified and filed by a duly authorised person on behalf of petitioner and that the relief claimed in this application is beyond the purview of OMP. In support of former limb of argument reliance was placed on the decisions in M/s. Nibro Ltd. Vs. National Insurance Co. Ltd. and M/s. Raj ghria Paper Mills Ltd. Vs. General Manager, Indian Security Press & another, . In my opinion, said objection in regard to OMP being not signed, verified and filed by a duly authorised person on behalf of petitioner primarily pertains to the merits of case and, therefore, cannot be examined at this juncture. It will not be out of place to state that the application under disposal is signed by Sh. P.K. Das, General Manager of the petitioner company who is alleged to be an authorised signatory. As regards second limb of argument referred to above, it may be noticed that in OMP one of the reliefs claimed in prayer clause (A) is that respondent be directed to deposit in court such sums as may be sufficient to satisfy the claim of petitioner. Obviously, this prayer is larger compared to prayer made in the application. Moreover, it is always open to the court to mould the relief to be granted to a party depending upon the facts and circumstances of case. At any rate, the application under disposal which has been filed under section 9 of the Arbitration and Conciliation Act, 1996 cannot in strict sense be treated as an interlocutory application in a suit. According to petitioner, the collateral security of immoveable property furnished by the respondent for Rs.25 lakhs has now been rendered inadequate as the dues including interest by this time against it have gone to the extent of approximately Rs.1 crore. In the light of said facts and circumstances, it would be just and proper that respondent furnishes additional security of immoveable property in the sum of Rs. 75 lakhs to the satisfaction of Registrar of this court and on failure to do so, he is made to deposit 5 kgs gold/jewelery with the petitioner.

5. Accordingly, the respondent is directed to furnish additional security of immoveable property in the sum of Rs. 75 lakhs to the satisfaction of the Registrar of this court within four weeks from today failing which he would deposit with the petitioner 5 kgs gold/jewellery within a week after the expiry of four weeks time allowed for furnishing security. Deposited gold/jewellery will be kept in safe custody by the petitioner.

Application stands disposed of.