Esskay Machinery Pvt. Ltd vs Industrial Promotion & ...
2021 Latest Caselaw 11999 Ori

                 IN THE HIGH COURT OF ORISSA AT CUTTACK

                              W.P.(C) No.5984 of 2014
                               (Through hybrid mode)

            Esskay Machinery Pvt. Ltd.              ....             Petitioner

                                                    Mr.A.Patnaik, Advocate
                                        -versus-

            Industrial Promotion & Investment ....        Opposite Parties
            Corporation of Orissa Ltd. and
            others
                                          Mr.L.Pangari (Senior Advocate)
                                                               (O.P.no.1)
                          Mr.P.C.Panda, Addl. Govt. Advocate (O.P. no.2)


                      CORAM: JUSTICE ARINDAM SINHA
                                       ORDER

23.11.2021 Order No.

29. 1. Mr. Patnaik, learned advocate appears on behalf of petitioner and submits, the writ petition was filed pursuant to order dated 25th November, 2013 made by the Supreme Court. Said order is quoted in paragraph-25 of the petition. The order mentions petitioner to have grievance against letter dated 27th September, 2013, whereby bank guarantee of Rs.70,00,000/- was encashed and further sum of Rs.51,47,704.97 demanded. Said Court observed that it would be open to petitioner to challenge validity of said letter by filing a writ petition before the High Court.

2. He draws attention to judgment dated 20th August, 2010 delivered by a Division Bench of this Court in W.P.(C)

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no.996 of 2004 (petitioner's own case). He submits, one time settlement failed. The industrial unit was put to auction and bid received for Rs.230 lakhs. Share of opposite party was 69.69% of bid amount, calculated at Rs.160.29 lakhs. This was more than lapsed OTS amount of Rs.129.18 lakhs. Hence, the earlier writ petition to compel opposite party to accept the OTS amount and not the higher percentage amount of auction bid amount.

3. Mr. Pangari, learned senior advocate appears on behalf of opposite party no.1 and submits, his client continues to be secured creditor of petitioner. He draws attention to interim order dated 17th May, 2006 passed in said writ petition [W.P.(C) no.996 of 2004] and submits, direction was that if petitioner makes deposit of Rs.160.29 lakhs with his client, it shall release the unit in favour of petitioner, without prejudice to the rights and contentions raised in the writ petition and subject to result of it. On deposit of the amount the unit was to be released within a week, subject to terms and conditions to be fixed by his client. His client fixed the terms and conditions as per release letter dated 29th August, 2006. The terms and conditions of release are reproduced hereinbelow:

" (I) Release of the assets are in terms of order dated 17.05.2006 and 17.7.2006 of the Hon'ble High Court of Orissa.

(II) M/s. Esskay Machinery Pvt. Ltd. is liable to pay an amount of Rs.28,03,538.00 towards interest on the OTS amount from 3.3.2004 to 31.3.2006.

(III) The company is also liable to pay an amount of Rs.23.91 lakhs towards equity investment of IPICOL

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in the company with return as per the terms of the equity agreement.

(IV) The company is also liable to pay interest @ 14% p.a. i.e. an amount of Rs.6148/- (Rupees six thousand one hundred forty eight) only per day from 1.4.2006 till the date of payment. The company is also liable to pay the legal, seizure, security and insurance etc., expenses incurred by IPICOL in this case.

(V) IPICOL shall continue to have first charge over the assets of the company till payment of all the dues of IPICOL or till final orders on the writ petition and the implementation thereof."

Mr. Patnaik responds to submit, opposite party issued 'No Due Certificate' dated 22nd October, 2008. After that it cannot claim anything from his client. Text of the 'No Due Certificate' is reproduced below:

"In compliance of interim order of Hon'ble High Court, Orissa dated 27.06.2008 and dated 24.09.2008 in W.P.(C) 996/2004 and 12323 of 2008 and consequent upon the submission of Bank Guarantee No.0665808BG0000067 dated 30-8-2008 of State Bank of India, we, IPICOL do hereby certify that there is no dues of IPICOL as on the date against said company (Esskay Machinery (P) Ltd.) subject to further order(s) of Hon'ble High Court order. Since order dated 26-09- 2008 is a continuation or part of the order dated 26-07- 2008, the no due certificate (NDC) and return of documents are without prejudice to the right and contention of IPICOL before the Hon'ble High Court in the above matter."

4. It appears from said judgment dated 20th August, 2010 that as on 15th August, 2004, total loan outstanding was Rs.69.80 lakhs and arrear interest had become Rs.412.51 lakhs, to be aggregate Rs.482.31 lakhs. Opposite party became agreeable for settlement of account on payment of Rs.160.29 lakhs as OTS value on sacrificing interest to tune of Rs.332.45

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lakhs. It is on this basis that interference with Rs.160.29 lakhs as OTS amount was not made and the writ petition dismissed. It appears from the judgment that there was settlement on increase of OTS value, from Rs.129.18 lakhs to Rs.160.29 lakhs, as was found by the Division Bench. It is significant that only auction bid was considered as benchmark. There is no mention in said judgment of auction bidder having expressed earnest intention to purchase.

5. It is clear, opposite party during pendency of the earlier writ petition did not see things that way, raised further demand and approached Court. There was further interim direction upon petitioner to furnish bank guarantee of Rs.70 lakhs with corresponding direction upon opposite party to release the asset in favour of petitioner. The bank guarantee was furnished and there was also reciprocal release. Subsequently, opposite party encashed the bank guarantee and claimed the further sum. It is against this aggregate claim, of bank guarantee value and further sum that petitioner is now before Court.

6. W.P.(C) no.996 of 2004 was dismissed. All interim orders merged in the order of dismissal. It is to be seen whether conditions in the release letter, imposed pursuant to interim direction made in the writ petition, survived dismissal of the writ petition itself. To answer the question it is necessary to appreciate that there were monies claimed as outstanding in condition nos. (II) and (III) of release letter. Condition no.(V) said that opposite party shall continue to have first charge over the assets of the company till payment of all dues or till final orders in the writ petition and implementation thereof. The writ

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petition having been dismissed, it is to be seen whether all dues of opposite party, as claimed in the release letter, were or were not paid. To ascertain the position, one must look at the 'No Due Certificate'. It says that the certificate and return of documents are without prejudice to the rights and contentions of opposite party before the High Court in the writ petition [W.P.(C) no.996 of 2004]. The writ petition stands dismissed. The order of dismissal has been accepted by all. It does not appear that any security or first charge against the claim of opposite party, survived thereafter.

7. As a result, petitioner appears to have a claim that the bank guarantee was wrongfully invoked by opposite party, who says it has further residual claim against petitioner. Both parties have monetary claims against each other. Opposite Party cannot say it is secured creditor in respect of its residual claim. As such parties are relegated to suit, to pursue their claims against each other.

8. The writ petition is disposed of.

(Arindam Sinha) Judge RKS