Decided on February 21,2006



K.J.Paratwar, - (1.) THIS application/appeal under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'SRFAESI Act') takes exception to the notice dated 24.2.2005 issued by the respondent No. 1 Bank under Section 13(2) of SRFAESI Act and taking to possession, albeit symbolic, Flat No. 23, on 5th Floor (with car parking space), Kashmira Amrita Co-operative Housing Society (CHS), Queens Barracks Estate Scheme, Cadastral Survey No. 7/1 of Fort Division, J. Bhosle Marg, Nariman Point, Mumbai-400021 pursuant to the notice.
(2.) The applicant has rested its case on these facts. The respondent No. 3 entered into agreement with respondent No. 2 for construction and maintenance of rural road under the Pradhan Mantri Gram Sadak Yojana (PMGSY) in Khandwa District (M.P.). The respondent No. 2 in turn entrusted part of work to the extent of Rs. 489.89 lakh. A formal agreement thereto was entered on 17.8.2004. Under the agreement, respondent No. 4 received a mobilisation advance of Rs. 25 lakh and loan of Rs. 25 lakh from respondent No. 2. The respondent No. 4 (sub-contractor) was required to issue Bank guarantee in favour of respondent No. 2 for Rs. 50 lakh, The respondent No. 1 Bank, at the behest of respondent No. 4, thereupon issued the two Bank guarantees. The respondent No. 4 executed work of about Rs. 93 lakh and raised running bills but respondent No. 2 did not make the payment. The respondent No. 2, also withdrew the contract and floated new tender on 6.1.2005 for the same job. The respondent No. 4 came to know on or about 14.1.2005 that respondent No. 3 issued a letter to respondent No. 2 stating that respondent No. 2, by sub-letting the job, had violated condition of agreement between them. The respondent No. 2 by letter dated 27.1.2005 formally terminated contract with respondent No. 4. Subsequently, by letter dated 2.2.2005, respondent No. 3 terminated contract with respondent No. 2 in respect of the job on the ground of breach of contract.
(3.) IN the aforesaid circumstances, the respondent No. 2 by letter to respondent No. 1 dated 4.2.2005 invoked the two Bank guarantees and demanded payment. The respondent No. 4, brought to the notice of respondent No. 2, the fraud played by respondent No. 2 and asked the Bank not to pay Rs. 42.50 lakh (Rs. 50 lakh minus margin money Rs. 7.5 lakh). But, the respondent No. 1 did not pay any heed whereupon the respondent No. 4 filed application on 7.2.2005 under Section 9 of the Arbitration and Conciliation Act, 1976 against respondent Nos. 1 to 3 before the Hon'ble High Court Bench at INdore. The applicant's grievance is that because of deception played by respondent No. 2 on respondent No. 4 and particularly during the pendency of the aforesaid application, the Bank was not under legal obligation to pay. Subsequently, that is on 14.2.2005, respondent No. 2 also filed similar application under Section 9 of the Arbitration and Conciliation Act also before Hon'ble High Court Bench at INdore against respondent No. 3 and Punjab and Sind Bank for restraining from making payment of Rs. 42.50 lakh under the two Bank guarantees given by above Bank for respondent No. 2 in favour of respondent No. 3 in respect of the jobs.;

Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.