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TMI Blog2001 (2) TMI 970X X X X Extracts X X X X X X X X Extracts X X X X ..... ciary under the guarantee - SPIC for the establishment of an ammonia terminal facility and in pursuance of that contract, an unconditional and irrevocable bank guarantee, as aforesaid, came to be furnished. The guarantee provided that it had been issued towards the faithful performance of the contractual obligations assumed by the respondent and that any amounts certified by SPIC as due and payable shall be accepted as conclusive evidence by the petitioner. It may only be noted that another bank guarantee No. 93 of 1981, had been issued by the petitioner in favour of SPIC in the amount of Rs. 50,00,000 but, that is not the subject-matter of these proceedings. On 5-5-1980, the respondent issued a counter guarantee in favour of the petitioner in consideration of the issuance of the bank guarantee by the petitioner to SPIC. This was lodged by the respondent with the petitioner by a letter dated 5-5-1980, together with a board resolution dated 19-4-1980, of the respondent-company in support thereof. The bank guarantee issued by the petitioner was renewed from time to time, the last of the renewals being up to 31-3-1983. By a letter dated 24-12-1982, SPIC, the beneficiary under the bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which forms the subject-matter of the present proceedings is concerned. It must be noted that the petitioner-bank had duly contested the proceedings before the learned Single Judge as well as before the Division Bench of the Madras High Court and it was the case of the bank that the guarantee had stood discharged. The suit having been decreed by the learned Single Judge, that judgment has, as stated earlier, been affirmed in appeal. On 2-5-1997, after the judgment came to be delivered by the learned Single Judge of the High Court, the bank made the payment to SPIC which was due and payable under the terms of the guarantee and in accordance with the judgment and order passed by the learned Single Judge of the Madras High Court. It has been stated in the company petition that SPIC had instituted an execution application being Application No. 77 of 1997, to enforce the decree and order of the learned Single Judge upon which; payment was made by the petitioner and a receipt came to be executed on 5-5-1997, by SPIC. 4. On 9-6-1997, the petitioner invoked the undertaking executed by the respondent on 13-1-1995, and called upon the respondent to make the payment of the amount under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1983, filed by M/s. Southern Petrochemical Industries Corporation Ltd. against Syndicate Bank, till the said suit is finally decided by the Honourable High Court of Madras . [Emphasis supplied]. 7. The memorandum of understanding provides that the petitioner would release all the securities held by it, including personal guarantees of the directors of the company. However, on 7-10-1993, when the memorandum of understanding was signed, the suit filed by the SPIC against the petitioner before the Madras High Court on the two bank guarantees which had been issued by the petitioner, was pending. The memorandum of understanding thus, contemplated specifically that the counter guarantee/personal guarantees issued by the respondent and its directors pertaining to the two bank guarantees, including banking guarantee No. 11 of 1980, which was the subject-matter of these proceedings before the Madras High Court will continue to remain in force until the suit was finally decided by the Madras High Court. 8. On 14-1-1995, the petitioner released all the personal guarantees executed in its favour by the erstwhile and present directors of the respondents and its associate concerns conse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nter guarantees and personal guarantees of the respondent and the directors of the respondent in relation to the bank guarantee in question, would continue to subsist. Indeed, it would be significant to note that on 13-1-1995, the respondent had furnished a solemn undertaking to the petitioner to pay the petitioner the amount of the bank guarantee upon the decision of the Madras High Court. The counter guarantee issued by the respondent on 5-5-1980, and the undertaking issued by the respondent on 13-1-1995, were thus, not affected by the memorandum of understanding dated 7-10-1997. 10. The next defence was that, it was the contention of the petitioner itself in the Madras High Court that the bank guarantee had been discharged. There is no merit in this submission also, for the simple reason that the petitioner duly espoused its legal remedies by defending the suit before the Madras High Court. All the contentions, which were open to the petitioner, were raised before the Madras High Court and against the judgment of the learned Single Judge, even an appeal was filed by the petitioner. The appeal was dismissed by the Division Bench of the Madras High Court and the decree and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... still to be implemented, the provisions of section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, will apply and the winding up petition is not maintainable. In the rejoinder, which has been filed on behalf of the petitioner, at exhibit 6 is annexed an order dated 22-12-1995, passed by the BIFR in which it has been stated that as a result of the measures which have been adopted under the provisions of the Act, the respondent-company has made its net worth positive as on 31-3-1995. The BIFR concluded that the company has ceased to be a sick industry within the meaning of the Act and its case no longer required to be dealt with by the BIFR. The proceedings before the BIFR have been closed. The fact that as stated on behalf of the respondent, certain payments out of the proceeds of the immovable property at Mulund are still to be made to ECGC, cannot be a ground for invoking the provisions of section 22 of the Act. 12. The petitioner has filed a suit against the respondent being Suit No. 4655 of 1998, which is pending in this court for recovering the proceeds of the bank guarantee. In my view, there is a debt due and payable by the respondent to the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X
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