Disposed

The Managing Director, Shahabad Dugdh Utpadak Sahkari Sangh Ltd. v. M/s Engineering India Ltd.

Patna HC3 Apr 2019MA/1105/2018

Case brief

AI extract

What is this about?

In an appeal under the Arbitration Act against a stay order, the High Court modified the impugned order to declare the underlying miscellaneous case infructuous as the respondent offered and produced bank drafts equivalent to the bank guarantee value.

What did the court decide?

The appeal was disposed of; the impugned order in the miscellaneous arbitration case was modified to dismiss it as infructuous.

The Managing Director, Shahabad Dugdh Utpadak Sahkari… — Company and Corporate | Patna HC (2019)

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IN THE HIGH COURT OF JUDICATURE AT PATNA Miscellaneous Appeal No.1105 of 2018

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The Managing Director, Shahabad Dugdh Utpadak Sahkari Sangh Ltd., Post Katira, Ara.

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…. Opposite party No.4-Appellant 2. Bihar State Milk Co-operative Federation Limited through its Managing Director, Dairy Development Complex, P.O.- Bihar Veterinary College, Patna- 800014.

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The Managing Director, Bihar State Milk Co-operative Federation Limited, Dairy Development Complex, P.O.- Bihar Veterinary College, Patna- 800014.

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The General Manager, Bihar State Milk Co-operative Federation Limited, Dairy Development Complex, P.O.- Bihar Veterinary College, Patna- 800014.

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… Opposite party Nos. 1 to 3-Appellants

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... ... Appellant/s

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Versus

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M/s Engineering (India) Ltd. (Government of India Enterprises), Having it s Head Office at 43 Scope Complex, Lodi Road, New Delhi-110003 & Local Office at Subhago Kothi, 1^st Floor, Kalyanpur Colony Ward No. 33, Chuna Bhatta, Near Railway Station, Dehri on Sone- 821307, through its General Manager Sri Sanjib Kumar Biswas, Son of Late B.C. Biswas, Resident of 19/C, Ashok Nagar, Ranchi.

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... ... Appellant -Respondent/s

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====================================================== Appearance : For the Appellant/s : Mr. Nikesh Kumar, Advocate For the Respondent/s : Mr. P.K. Sahi, Senior Advocate : Mr. Vikas Kumar, Advocate

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======================================================

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CORAM: HONOURABLE MR. JUSTICE JYOTI SARAN and HONOURABLE MR. JUSTICE ARVIND SRIVASTAVA ORAL JUDGMENT (Per: HONOURABLE MR. JUSTICE JYOTI SARAN)

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Date : 03-04-2019

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Heard Mr. Nikesh Kumar, learned counsel for the appellants and Mr. P.K. Shahi, learned Senior counsel appearing for the respondent assisted by Mr. Vikash Kumar, Advocate on record.

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This appeal under Section 37(1)(b) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’) is directed against the order dated 05.12.2018

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Patna High Court MA No.1105 of 2018 dt.03-04-2019 2/7

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passed by the learned District Judge, Patna in Miscellaneous (Arbitration) Case No. 05 of 2018 whereby on an application filed by the sole respondent (M/s. Engineering Projects India Limited) under Section 9 of ‘the Act’ praying for stay of the invocation/encashment of the Bank Guarantee executed by the respondent in favour of the appellant, the District Judge, Patna by the order impugned stayed the operation of the order dated 03.11.2018 whereby the contract entered between the parties had been rescinded by the appellants in its entirety.

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In the nature of order that we propose to pass it is not found necessary to delve into the merits of the challenge because of the development that have taken place since after this appeal was taken up on 18.01.2019 and the issue raised on behalf of the appellant to assail the order of the learned District Judge, Patna, noted, which practically resolves the issue so raised by the respondent before the court below through miscellaneous case in question.

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Mr. P.K. Shahi, learned Senior counsel appearing on behalf of the respondent did make a submission that the respondent was willing to remit the amount equal to the Bank Guarantees so executed through RTGS in the account of the appellants and whereupon there would be no occasion for the

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Patna High Court MA No.1105 of 2018 dt.03-04-2019 3/7

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appellants to seek encashment of the Bank Guarantees nor would invite an opinion from this Court on the inter party merits. It was also the submission of Mr. Shahi that this concession of the appellants would be without prejudice to right of the respondent to assail the order rescinding the contract before the appropriate forum in an appropriate application.

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Since, in our opinion, the offer made by Mr. Shahi, learned Senior counsel appearing for the respondent was fair and practically resolved the issue which remains pending in the Miscellaneous (Arbitration) Case No. 05 of 2018 before the learned District Judge, Patna, we allowed Mr. Nikesh Kumar, learned counsel appearing for the appellants to file response on behalf of the appellants to the offer so given. The matter after passing through stages has been finally resolved resulting in production of Bank Drafts which taken together is valued at Rs. 22,30,49,500.00 (Twenty Two Crores Thirty Lakh Fourty Nine Thousand Five Hundred rupees only) i.e. the total value of Bank Guarantee against the mobilization adavance as per the work order No. 2420 dated 13.09.2014.

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As observed above, we had directed the appellants to file their response to the offer, by way of affidavit which is

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Patna High Court MA No.1105 of 2018 dt.03-04-2019 4/7

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filed today and we are persuaded to reproduce paragraph Nos. 3, 4 and 5 thereof whereby the appellants while accepting the Bank Drafts, inform that appropriate direction has been issued to the Bank i.e. Indian Overseas Bank, R.K. Puram Branch, Palika Bhawan, Sector-13, New Delhi-110066. The statements are supported by the Advance Pre -Receipt issued by the Managing Director, Shahabad Dugdh Utpadak Sahkari Sangh Ltd as well as the advisory to the Bank vide letter dated 01.04.2019 enclosed as Annexures-16 and 17 respectively, to return the Bank Guarantees which are seven in numbers and together valued at Rs. 22,30,49,500.00 (Twenty Two Crores Thirty Lakh Fourty Nine Thousand Five Hundred rupees only), details of which find mention not only at paragraph -4 of the affidavit but also find mention in the letter dated 01.04.2019, which are reproduced by us hereunder:

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“3. That in view of the fact that the respondent has submitted several bank drafts to the tune of Rs. 22,30,49,500/ (Rupees Twenty Two Crore Thirty lakh Forty Nine Thousand Five Hundred) only, equivalent to the seven bank guarantees issued in favour of the appellant in respect of mobilisation advance relating to work order no. 2420 dated 13.09.2014 and in this respect, the deponent has already issued the Advance Receipt giving details of bank drafts with stipulation that subject to realisation of the bank drafts, he would issue advisory to the concerned bank i.e. Indian Overseas Bank, R.K. Puram Branch, Palika Branch stating therein that the appellant after realisation of the aforesaid bank drafts, shall not invoke the encashment of these bank guarantees, which are already submitted

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Patna High Court MA No.1105 of 2018 dt.03-04-2019 5/7

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(to the bank for encashment) and with further request to the bank to return those bank guarantees in original which are seven in numbers to the respondent.

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Photo Copy of Advance Pre- Receipt is being annexed and marked as Annexure-16.

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That it is humbly submitted that in view of the direction of this Hon’ble Court, though the aforesaid bank drafts are not been realised in the account of the appellant, but the appellant has already issued advisory to the bank concerned by virtue of letter no….. dated 01.04.2019 with stipulation that consequent upon directions/ order of the Hon’ble The Patna High Court in case No. MA/1105 of 2018 and further deposit of bank drafts by the M/s Engineering Projects (India) Ltd (EPIL) amounting to Rs. 22,30,49,500/- (Rupees Twenty Two Crore Thirty Lakh Forty None Thousand Five Hundred) before the Hon’ble Court, we hereby withdraw our revocation claim on encashment of the following seven bank guarantees issued by your bank against the mobilisation advance as per terms of work order no. 2420 dated 13.09.2014 and we further undertake that there shall no claim of amount on these seven bank guarantees and these may be returned to M/s EPIL.

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Sl	BG Numbers	BG Amount	BG Validity	Claim Date
1.	040871217000042 dt. 25.7.17	Rs. 4,00,00,000.00	31.01.2019	31.07.2019
2.	040871217000043 dt. 25.7.17	Rs. 4,00,00,000.00	31.01.2019	31.07.2019
3.	040871217000044 dt. 25.7.17	Rs. 4,00,00,000.00	31.01.2019	31.07.2019
4.	040871217000045 dt. 25.7.17	Rs. 4,00,00,000.00	31.01.2019	31.07.2019
5.	040871217000046 dt. 25.7.17	Rs. 2,00,00,000.00	31.01.2019	31.07.2019
6.	040871217000047 dt. 25.7.17	Rs. 2,00,00,000.00	31.01.2019	31.07.2019
7.	040871217000048 dt. 25.7.17	Rs. 2,30,49,500.00	31.01.2019	31.07.2019
		Rs, 22,30,49,500.00

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Photo copy of letter No. 868 dated 01.04.2019 is enclosed and marked as Annexure----17

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That it is thus humbly submitted that in view of the aforesaid facts and circumstances, this Hon’ble Court may pass appropriate order/orders which may be

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Patna High Court MA No.1105 of 2018 dt.03-04-2019 6/7

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deemed fit and proper in the facts and circumstances of the case.”

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In the circumstances discussed above where the Bank Drafts have been produced by Mr. Shahi, learned counsel appearing for the sole respondent and the Advance Pre-Receipt of the same is already present in the affidavit filed today on behalf of the appellant, we allow Mr. Nikesh Kumar, learned counsel appearing for the appellant to acknowledge the Bank Drafts, the details of which are available in the pleadings and which would bring the cause raised by the sole respondent through Miscellaneous (Arbitration) Case No. 05 of 2018 insofar as the invocation/encashment of Bank Guarantees is concerned, to an amicable settlement.

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We accordingly modify the order of the learned District Judge, Patna dated 05.12.2018 passed in Misc. (Arbitration) Case No. 05 of 2018, put to question in this appeal to dispose of the Misc. (Arbitration) Case No. 05 of 2018 as infructuous.

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Before parting, we would clarify that since we have not expressed ourselves on the inter party merit of the order rescinding the contract dated 03.11.2018, the parties litigating shall be at liberty to test its veracity before the appropriate forum by filing an appropriate application and the

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Patna High Court MA No.1105 of 2018 dt.03-04-2019 7/7

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settlement arrived at in this appeal in between the parties, would not prejudice the rights and interest of the respondent in pursuing its claim before the forum concerned.

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With the observation above, this miscellaneous

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appeal is disposed of.

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(Jyoti Saran, J)

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( Arvind Srivastava, J)

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Brajesh/-
AFR/NAFR	A.F.R.
CAV DATE	NA
Uploading Date	24.04.2019
Transmission Date

The Managing Director, Shahabad Dugdh Utpadak Sahkari Sangh Ltd. v. M/s Engineering India Ltd.

Case brief

What is this about?

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The Managing Director, Shahabad Dugdh Utpadak Sahkari Sangh Ltd. v. M/s Engineering India Ltd.

Case brief

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