GAMMON INDIA LTD Vs. ANDHRA BANK
LAWS(DR)-2005-9-8
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on September 20,2005

Appellant
VERSUS
Respondents

JUDGEMENT

Pratibha Upasani, - (1.) THIS appeal is filed by the appellants/original defendants being aggrieved by the judgment and order dated 18th November, 2003 passed by the learned Presiding Officer of the DRT-I, Mumbai in Original Application No. 1277/2000. By the impugned judgment and order, the learned Presiding Officer partly allowed the original application in favour of the Bank with proportionate costs and ordered the defendants/present appellants to pay to the applicant Bank a sum of Rs. 75,43,053.28 with future interest at the rate of 17.5.% per annum from the date of original application till realization of the amount. The learned Presiding Officer directed issuance of recovery certificate in the above stated terms. Being aggrieved, the present appeal is filed by the defendants/present appellants.
(2.) Few facts, which are required to be stated are as follows: The defendant was a constituent of the applicant Bank and had entered into divers agreements for construction with the State of Andhra Pradesh and in terms of the said agreements had to furnish Bank guarantees. Pursuant to the request of the defendant, the applicant Bank had during the period from 1976 to 1980 issued 42 Bank guarantees aggregating to Rs. 73,90,320/-. The defendant had in turn executed counter-guarantees in favour of the applicant Bank. During the validity period of the said guarantees, the State of Andhra Pradesh invoked all the 42 guarantees, under a notice dated 27th May, 1985. The applicant Bank did not make the payment. On 14th June, 1984, the "defendant filed three suits under Section 20 of the Arbitration Act against the State of Andhra Pradesh for appointment of an Arbitrator and for referring the dispute to the Arbitrator. Under the said suits, the defendant had prayed for an injunction restraining the State of Andhra Pradesh for enforcing the said 42 guarantees. On 29th June, 1985, the State of Andhra Pradesh filed four suits against the applicant Bank and defendants for recovery of diverse amounts aggregating to Rs, 73,90,320/- guaranteed by the applicant Bank under the said 42 guarantees. On 16th September, 1985, the Court allowed injunction applications filed by the defendant in the arbitration suits filed by it and restrained the State of Andhra Pradesh from invoking the said guarantees till the disposal of the said suits. The State of Andhra Pradesh had preferred an appeal against the said order in the High Court. However, the said appeal was dismissed on 14th March, 1988. The State of Andhra Pradesh preferred special leave petition in the Hon'ble Supreme Court and on 17th March, 1994, the Hon'ble Supreme Court was pleased to set aside the orders passed by the Trial Court and High Court and vacated the injunction restraining the State of Andhra Pradesh from encashing the guarantees. In May, 1984, the defendant deposited the entire amount of Rs. 73,90,320/- in the Court where the suit filed by the State of Andhra Pradesh against the applicant Bank and the defendant for recovery of the said amount was pending. The applicant Bank thereafter filed an application in the said Court contending inter alia that since the entire amount was desposited by the defendant, all the suits were liable to be dismissed. The said application however, was opposed by the State of Andhra Pradesh on the ground that the applicant was liable to pay interest on the amount of Rs. 73,90,320/- from the date of filing of the said suits till 4h May, 1994, the date on which the amount was actually paid. This contention of the State of Andhra Pradesh was upheld and the applicant Bank was directed to pay interest at the rate of 15% per annum from the date of the suit till 4th May, 1994. In view of the said orders, the applicant Bank had to pay a sum of Rs. 81,01,122.80 to the State of Andhra Pradesh. On this background, it was contended by the applicant Bank that they were entitled to receive the said amount along with future interest at the rate of 17.5% per annum plus costs. The defendant however, declined to pay the said amount on demand and hence, the original application was filed by the applicant Bank. The applicant Bank had quantified their claim at Rs. 96,03,270.80 and also claimed future interest at the rate of 17.5% per annum from 1st April, 2000 till realization of the amount.
(3.) THE defendants/appellants herein opposed the said original application by filing their written statement. Various contentions were taken inter alia contending that the original application was barred by limitation etc. etc. It was contended that the amounts, which the applicant Bank was required to pay to the State of Andhra Pradesh in those four suits filed by the State of Andhra Pradesh were required to be paid on account of the applicant Bank's own wrongful actions. It was contended that the State of Andhra Pradesh had invoked the Bank guarantees under a notice dated 27th May, 1985 and the applicant Bank ought to have made the payments under the said guarantees but the applicant Bank without any justifiable reason had refused to pay the amounts under said guarantees requiring the State of Andhra Pradesh to file those suits. It was contended that had the applicant Bank paid the amount under Bank guarantees, the State of Andhra Pradesh would not have been required to file the suits at all. THErefore, the applicant Bank was liable to pay the interest on the sum of Rs. 73,90,320/- from the date of filing of the application till the amount was actually paid at the rate of 12% per annum. It was contended that as the cause of action for filing the said suits was wrongful refusal on the part of the applicant Bank to pay the amounts under Bank guarantees, the defendant was not liable to pay the said amount. It was also contended that competent Civil Court had already declared and held that the defendant was not liable to pay the interest and the costs. THErefore, the DRT could not sit in appeal over the orders passed by the competent Civil Court at Hyderabad. On this ground, it was prayed that the original application be dismissed with exemplary costs.;


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