Allowed

Aluminium Industries Ltd. v. State Bank of India

Kerala HC17 Jun 2022WP(C)/6101/2021

Case brief

AI extract

What is this about?

The High Court allowed the writ petition filed by a company seeking release of security amounts retained by the State Bank of India against expired bank guarantees. The court directed the bank to release the funds pending the execution of an indemnity bond by the petitioner.

What did the court decide?

The respondent Bank is directed to release the amount retained as security for the bank guarantees mentioned in Exhibit P4 immediately, subject to the petitioner executing and submitting an indemnity

Aluminium Industries Ltd. Vs State Bank of India — Company and Corporate | Kerala HC (2022)

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WP(C).6101/21

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE V.G.ARUN

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FRIDAY, THE 17^TH DAY OF JUNE 2022 / 27TH JYAISHTA, 1944 WP(C) NO. 6101 OF 2021

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PETITIONER/S:

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ALUMINIUM INDUSTRIES LTD KUNDARA, KOLLAM - 691501, REPRESENTED BY ITS DIRECTOR AND COMPANY SECRETARY, K.JAYAKUMAR.

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BY ADVS. M.GOPIKRISHNAN NAMBIAR SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.KURYAN THOMAS SRI.PAULOSE C. ABRAHAM SRI.RAJA KANNAN SRI.E.K.NANDAKUMAR (SR.)

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RESPONDENT/S:

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STATE BANK OF INDIA REPRESENTED BY ITS CHIEF MANAGER, KUNDARA BRANCH, RAJAN TOWERS, KUNDARA P.O, KOLLAM - 691501. BY ADV SRI.R.S.KALKURA

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 17.06.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C).6101/21

V.G.ARUN, J.

----------------------------------------------W.P(C).No. 6101 of 2021

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Dated this the 17^th day of June, 2022

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JUDGMENT

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The petitioner is a Company registered under the Companies Act, 1956. While the Company was functional, it had executed bank guarantees in favour of various beneficiaries, the details of which are as under;

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Sl.No.	Guarant ee No.	Beneficiary	Date of Expiry	Amount (Rs.)
1	26/92	Project Emp. Corp. Financial	12/01/95	Rs.27,50,000 .00
2	36/92	MSEB, Bombay	30/06/01	Rs.33,36,700 .00
3	12/93	TNEB Madras	15/08/96	692240.00
4	16/94	Karnataka SEB	30/06/96	34900-00
5	18/94	MSEB, Bombay	30/09/02	1068875-00
6	21/80	MPEB Jabalpur	17/03/94	427965-00
7	02/84	MPEB Jabalpur	30/03/94	15445-00
8	05/84	MPEB Jabalpur	30/09/94	50250.00
9	20/84	Collector of Customs, Bombay	20/06/96	51283.23

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10	21/84	Collector of Customs, Bombay	20/06/96	140759.78
11	22/84	Collector of Customs, Bombay	20/06/97	90791.15
12	23/84	MPEB Jabalpur	20/06/96	54140.00
13	31/84	MPEB Jabalpur	30/03/94	198925.00
14	22/85	MPEB Jabalpur	30/03/94	11000.00
15	44/86	MPEB Jabalpur	31/08/02	133970.00
16	20/87	MPEB Jabalpur	30/03/94	122000.00
17	39/87	MPEB Jabalpur	30/03/94	79150.00
18	12/89	KSEB Trivandrum	31/03/01	50000.00
19	27/89	KSEB Trivandrum	31/03/01	150000.00
			TOTAL	94,58,394.16

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The above amount was collected by the respondent Bank and

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kept in a separate account for securing payment to the beneficiaries. As on 17.2.2021, the amount with accrued interest is Rs.2,35,96,317/-.

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The Company was closed down for 20 years from 1998 and re-commenced functioning on 1.12.2017. Thereafter, the petitioner requested the respondent Bank to release the security amount and also offered to submit Exhibit P4 bond, promising to indemnify the bank for future claims, if any, raised by the

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WP(C).6101/21

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beneficiaries. The request was turned down on the premise that the amount will be released only after obtaining specific orders from the Court. Aggrieved, this writ petition is filed.

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Learned Counsel for the petitioner referred to Annexures R1(c) to R1(u) letters issued by the Bank informing the beneficiaries that, retention of the document embodying the guarantee after expiry of its validity period does not confer any right upon the beneficiary. The beneficiaries were also requested to return the obsolete document of guarantee to the Bank to be retained in its records for audit purposes. Admittedly, none of the beneficiaries responded to the notice. It is contended that the validity period of the Bank guarantees having expired and the beneficiaries not having invoked or claimed the amounts secured by the bank guarantees, the security amount is bound to be returned.

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According to the learned Standing Counsel for the Bank, the amount was not released on the apprehension that the beneficiaries may raise claims in future, since the original bank guarantees are with them.

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I find substantial merit in the contention of learned Counsel for the petitioner that the validity period of the bank guarantees having expired and the beneficiaries not having claimed the proceeds during the validity period or even

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WP(C).6101/21

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thereafter, there is no justification for retaining the security amount. All the more so, when the petitioner has expressed its willingness to furnish an indemnity bond.

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In the result, the writ petition is allowed. The respondent Bank is directed to release the amount retained as security for the bank guarantees mentioned in Exhibit P4 immediately, subject to the petitioner executing and submitting an indemnity bond for the amount. The petitioner is at liberty to raise its claim for release of other amounts before the appropriate forum.

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Sd/V.G.ARUN, JUDGE

vgs

WP(C).6101/21

APPENDIX OF WP(C) 6101/2021

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PETITIONER EXHIBITS

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EXHIBIT	P1 TRUE COPY OF THE LIST OF BANK GUARANTEES ISSUED BY THE RESPONDENT BANK MENTIONING THE BENEFICIARIES AND THE DATE OF EXPIRY.
EXHIBIT	P2 TRUE COPY OF THE STATEMENT ISSUED BY THE RESPONDENT BANK DATED 14.10.2019 TO THE PETITIONER.
EXHIBIT	P2(A) TRUE COPY OF THE BANK STATEMENT ISSUED BY THE RESPONDENT BANK IN RESPECT OF ACCOUNT NUMBER 67370175200 DATED 17.02.2021.
EXHIBIT	P3 TRUE COPY OF THE PETITIONER'S LETTER DATED 17/10/2019 SUBMITTED BY THE PETITIONER BEFORE THE RESPONDENT BANK (WITHOUT ENCLOSURES)
EXHIBIT	P4 TRUE COPY OF THE INDEMNITY BOND DATED 15.01.2020 EXECUTED BETWEEN THE PETITIONER AND THE RESPONDENT BANK.
EXHIBIT	P5 TRUE COPY OF THE STATEMENT FOR THE ACCOUNT NUMBER 57036991087 ISSUED BY THE RESPONDENT BANK DATED 03.02.2021.
EXHIBIT	P6 TRUE COPY OF THE RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS OF THE PETITIONER COMPANY HELD ON 19.01.2021.
EXHIBIT	P7 TRUE COPY OF THE ORDER DATED 02.02.2021 ISSUED BY THE RESPONDENT BANK TO THE PETITIONER COMPANY.

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RESPONDENT EXHIBITS

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Exhibit R1 A TRUE COPY OF THE OF THE PROHIBITORY ORDER NO. D10-2019/4651/01 ISSUED BY THE TAHSILDAR (R.R), KOLLAM DATED 24.09.2019

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Exhibit	R1 B	THE TRUE COPY OF LIST OF BANK GUARANTEES ISSUED TO VARIOUS BENEFICIARIES BY THE RESPONDENT FOR AND ON BEHALF OF THE PETITIONER .
Exhibit	R1 C	TRUE COPY OF THE LETTER DATED 30.1.2021 ISSUED BY THE RESPONDENT TO COLLECTOR OF CUSTOMS, MUMBAI IN RESPECT OF BANK GUARANTEE NO.20 OF 1984.
Exhibit	R1D	TRUE COPY OF THE LETTER DATED 30.1.2021 ISSUED BY THE RESPONDENT TO COLLECTOR OF CUSTOMS, MUMBAI IN RESPECT OF BANK GUARANTEE NO.21 OF 1984.
Exhibit	R1 E	TRUE COPY OF THE LETTER DATED 30.1.2021 ISSUED BY THE RESPONDENT TO CHIEF ACCOUNTS OFFICER, MAHARASHTRA STATE ELECTRICITY BOARD IN RESPECT OF BANK GUARANTEE NO.18 OF 1994.
Exhibit	R1 F	TRUE COPY OF THE LETTER DATED 30.1.2021 ISSUED BY THE RESPONDENT TO SENIOR ACCOUNTS OFFICER, MADHYA PRADESH ELECTRICITY BOARD IN RESPECT OF BANK GUARANTEE NO.21 OF 1980.
Exhibit	R1 G	TRUE COPY OF THE LETTER DATED 30.1.2021 ISSUED BY THE RESPONDENT TO SENIOR ACCOUNTS OFFICER, MADHYA PRADESH ELECTRICITY BOARD IN RESPECT OF BANK GUARANTEE NO.2 OF 1984.
Exhibit	R1 H	TRUE COPY OF THE LETTER DATED 30.1.2021 ISSUED BY THE RESPONDENT TO SENIOR ACCOUNTS OFFICER, MADHYA PRADESH ELECTRICITY BOARD IN RESPECT OF BANK GUARANTEE NO.5 OF 1984.
Exhibit	R1 I	TRUE COPY OF THE LETTER DATED 30.1.2021 ISSUED BY THE RESPONDENT TO SENIOR ACCOUNTS OFFICER, MADHYA PRADESH ELECTRICITY BOARD IN RESPECT OF BANK GUARANTEE NO.22 OF 1984.
Exhibit	R1 J	TRUE COPY OF THE LETTER DATED 30.1.2021 ISSUED BY THE RESPONDENT TO SENIOR

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		ACCOUNTS OFFICER, MADHYA PRADESH ELECTRICITY BOARD IN RESPECT OF BANK GUARANTEE NO.23 OF 1984.
Exhibit R1	K	TRUE COPY OF THE LETTER DATED 30.1.2021 ISSUED BY THE RESPONDENT TO SENIOR ACCOUNTS OFFICER, MADHYA PRADESH ELECTRICITY BOARD IN RESPECT OF BANK GUARANTEE NO.22 OF 1985.
Exhibit R1	L	TRUE COPY OF THE LETTER DATED 30.1.2021 ISSUED BY THE RESPONDENT TO ASSISTANT COLLECTOR OF CUSTOMS, COCHIN IN RESPECT OF BANK GUARANTEE NO.31 OF 1984.
Exhibit R1	M	TRUE COPY OF THE LETTER DATED 30.1.2021 ISSUED BY THE RESPONDENT TO SENIOR ACCOUNTS OFFICER, MADHYA PRADESH ELECTRICITY BOARD IN RESPECT OF BANK GUARANTEE NO.44 OF 1986.
Exhibit R1	N	TRUE COPY OF THE LETTER DATED 30.1.2021 ISSUED BY THE RESPONDENT TO SENIOR ACCOUNTS OFFICER, MADHYA PRADESH ELECTRICITY BOARD IN RESPECT OF BANK GUARANTEE NO.20 OF 1987.
Exhibit R1	O	TRUE COPY OF THE LETTER DATED 30.1.2021 ISSUED BY THE RESPONDENT TO SENIOR ACCOUNTS OFFICER, MADHYA PRADESH ELECTRICITY BOARD IN RESPECT OF BANK GUARANTEE NO.39 OF 1987.
Exhibit R1	P	TRUE COPY OF THE LETTER DATED 30.1.2021 ISSUED BY THE RESPONDENT TO SENIOR ACCOUNTS OFFICER, MADHYA PRADESH ELECTRICITY BOARD IN RESPECT OF BANK GUARANTEE NO.12 OF 1989.
Exhibit R1	Q	TRUE COPY OF THE LETTER DATED 30.1.2021 ISSUED BY THE RESPONDENT TO SENIOR ACCOUNTS OFFICER, KERALA STATE ELECTRICITY BOARD IN RESPECT OF BANK GUARANTEE NO.27 OF 1989.
Exhibit R1	R	TRUE COPY OF THE LETTER DATED 30.1.2021 ISSUED BY THE RESPONDENT TO THE PROJECT EQUIPMENT CORPORATION OF INDIA IN

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RESPECT OF BANK GUARANTEE NO.26 OF 1992.

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Exhibit R1 S TRUE COPY OF THE LETTER DATED 30.1.2021 ISSUED BY THE RESPONDENT TO THE CHIEF ACCOUNTS OFFICER, MAHARASHTRA ELECTRICITY BOARD IN RESPECT OF BANK GUARANTEE NO.36 OF 1992. Exhibit R1 T TRUE COPY OF THE LETTER DATED 30.1.2021 ISSUED BY THE RESPONDENT TO THE CHIEF ACCOUNTS OFFICER, TAMILNADU ELECTRICITY BOARD IN RESPECT OF BANK GUARANTEE NO.12 OF 1993. Exhibit R1 U TRUE COPY OF THE LETTER DATED 30.1.2021 ISSUED BY THE RESPONDENT TO THE CHIEF ACCOUNTS OFFICER, KARNATAKA ELECTRICITY BOARD IN 28 RESPECT OF BANK GUARANTEE NO.16 OF 1994.

Aluminium Industries Ltd. v. State Bank of India

Case brief

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Aluminium Industries Ltd. v. State Bank of India

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