M/S. KSB MIL CONTROLS LIMITED v Union of India & others (W.A. No. 1931 of 2019)

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM** ## **&** **THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI** **WEDNESDAY, THE 04TH DAY OF SEPTEMBER 2019 / 13TH BHADRA, 1941** **WA.No.1931 OF 2019** ## **AGAINST THE JUDGMENT IN WP(C) 22903/2018(K) OF HIGH COURT OF KERALA** ## **APPELLANT/WRIT PETITIONER :** **M/S. KSB MIL CONTROLS LIMITED** **FORMERLY KNOWN AS MIL CONTROLS LIMITED, MELADOOR, ANNAMANADA, THRISSUR DISTRICT, KERALA 680 741, REPRESENTED BY ITS DEPUTY GENERAL MANAGER (F AND A), SHRI SUBHASH.S.** **BY ADVS. SRI.M.GOPIKRISHNAN NAMBIAR SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.KURYAN THOMAS SRI.PAULOSE C. ABRAHAM SRI.JAI MOHAN** ## **RESPONDENTS/RESPONDENTS:** **1 UNION OF INDIA REPRESENTED BY ITS SECRETARY, MINISTRY OF CORPORATE AFFAIRS, SHASHTRI BHAWAN, RAJENDRAN PRASAD ROAD, NEW DELHI 110 001.** **2 MR. SAVAN GODIAWALA RESOLUTION PROFESSIONAL M/S. LANCO INFRATECH LIMITED DELOOITTE TOUCHE TOHMATSU INDIA LLP, 19TH FLOOR, SHAPATH V SG ROAD, AHMEDABAD 3800 15.** **3 HDFC BANK LTD., SL PLAZA, PALARIVATOM, COCHIN 682 035, KERALA, REPRESENTED BY ITS BRANCH MANGER.** **SRI SANTOSH MATHEW FOR ASGI SRI KRISHNA S.CGC SRI. T. RAJESH SC FOR HDFC** **THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 04.09.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **W.A.No. 1931 of 2019** **2** ## **“C:R”** ## **C.K. ABDUL REHIM & R. NARAYANA PISHARADI, JJ.** **----------------------------------------------W.A.No. 1931 of 2019 ---------------------------------------------------** _Dated this the 4[th] day of September, 2019_ ## **JUDGMENT** ## **Abdul Rehim,J** Petitioner in WP(C) No. 22903/2018 is the appellant herein, challenging judgment of the Single Judge, dated 11.06.2019. The respondents herein are the respondents in the writ petition. 2. The appellant had entered into a contract for manufacture and supply of pumps and valves for a company named M/s. Lanco Infratech Limited, which is represented before this court by the 2[nd] respondent, the 'Resolution Professional'. There arose dispute between the parties to the contract with respect to execution of the supply undertaken. The appellant filed the writ petition seeking the following reliefs: _i). Issue a writ of mandamus or any other appropriate writ, order or directions, directing the 2[nd] respondent to refund a sum of Rs.16,40,000/- obtained by way of invocation of Ext.P5 Advance Bank Guarantee dated_ **W.A.No. 1931 of 2019** **3** _07.09.2016 and declare that the invocation of Ext.P5 Advance Bank Guarantee vide Ext.P11 letter dated 24.04.2018 is illegal and unlawful;_ _ii). Call for the records leading to Ext.P10 updated list of operational creditors dated 16.01.2018 wherein an amount of Rs.2,99,30,260/- out of the petitioner's claim of Rs.2,99,80,000/- was stated as being rejected, and quash the same by the issuance of a writ of certiorari or such other writ, order or direction;_ _iii). Issue a writ of mandamus or any other appropriate writ, order or directions, directing the 2[nd] respondent to reconsider the claims of the petitioner submitted vide Ext.P9 after affording an opportunity of hearing to the petitioner. iv). Declare that in the facts and circumstances of the case the 2[nd] respondent cannot invoke Ext.P6 Performance Bank Guarantee dated 07.09.2016;_ _v) Issue an order of injunction restraining the 2[nd] respondent from invoking Ext.P6 Performance Bank Guarantee dated 07.09.2016 submitted by the petitioner pending disposal of this writ petition._ ” 3. The Single Judge was pleased to admit the writ petition and to grant an interim relief, on 10.07.2018, restraining the 2[nd] respondent from invoking Ext.P6 “Performance Bank Guarantee” dated 07.09.2016, for a period of two months, subject to condition of the appellant/writ petitioner keeping the Bank Guarantee alive. **W.A.No. 1931 of 2019** **4** The interim order was extended periodically, thereafter. On 11.06.2019 when the writ petition came up for consideration it was noticed that, the jurisdiction to adjudicate upon the issues agitated is fully vested with the 'National Company Law Tribunal', Hyderabad and this court cannot assume jurisdiction to entertain the writ petition. Hence the learned Single Judge was not inclined to permit continuance of interim order. Presumably, on the request of the appellant, the writ petition was dismissed as withdrawn, by leaving open liberty to the appellant to approach the 'National Company Law Tribunal', Hyderabad. In the impugned judgment it was made clear that, all the questions of facts and law raised in the writ petition are left open for agitation. The learned Judge specifically ordered that; “ _since the invocation of the bank guarantee was stayed by this court, the petitioner is directed to keep the bank guarantee alive at the earliest possible, if not already done_ ”. The appellant is challenging the above said direction, in this appeal. 5. Heard; counsel appearing for the appellant and the counsel appearing for the 2[nd] respondent. 6. Evidently, the appellant had instituted the writ petition and obtained an interim relief and continued to enjoy benefit of **W.A.No. 1931 of 2019** **5** the said order for nearly one year, with respect to a matter upon which the above said Tribunal alone is vested with jurisdiction. Therefore it is clear that the appellant had enjoyed the benefit of the interim relief obtained from a wrong forum, which is not having jurisdiction in the matter. Under normal circumstances, the appellant could not have been permitted to withdraw the writ petition. However, considering the fact that the appropriate forum having jurisdiction to adjudicate upon the matter is the Tribunal, this court had permitted such withdrawal. But the interest of the respondent need to be protected from not being prejudiced, because of the existence of the interim order, which continued in force for a period of nearly one year, by permitting a withdrawal of the writ petition with liberty reserved to approach the appropriate forum. ## 7. In the decision of the Honourable Supreme Court in **Abhimanyoo Ram v. State of Uttar Pradesh and another [(2008) 17 SCC 73]** it is held as follows: _**“** 5.The assumption of the appellant that the High Court has made any unwanted or unwarranted observation or issued any direction which is uncalled for, while dismissing his petition as not pressed, is not correct. The High Court has merely spelt out expressly, the consequences of the dismissal of the_ **W.A.No. 1931 of 2019** **6** _writ petition. Such explicit directions have become necessary to check a raising trend among litigants to secure the relief as an interim measure, and then avoid adjudication on merits, particularly in matters relating to examinations and recruitment. The modus operandi adopted in such matters is as follows: The litigant approaches the court in the last minute for relief with an interim prayer. He persuades the court to grant the interim relief by highlighting the urgency, irreparable loss and balance of convenience. He obtains interim relief and secures the desired benefit with the help of such interim order. Once the purpose of securing the interim order is achieved (particularly where the interim order granted is the same as the final relief prayed), he makes an innocuous submission to the court that he does not want to press the petition and gets the matter disposed of, thereby achieving the goal of securing relief without adjudication. He takes advantage of the fact that invariably courts do not spell out the consequences, when dismissing the petitions as not pressed. The result is that in many cases, a litigant who would not get the relief on detailed scrutiny of his claim during a contested final hearing, gets away with undeserved relief secured by way of an interim order._ _6. Any attempt by a litigant to retain the benefit of the interim order by avoiding final adjudication, requires to be deprecated. In fact, it requires to be dealt with sternly. Courts should bestow caution while dismissing cases where interim relief had been granted, as not pressed or as withdrawn. The courts_ **W.A.No. 1931 of 2019** **7** _cannot proceed on the assumption that all concerned would know about the legal consequences of dismissal and therefore, it is not necessary to make any order in regard to the interim relief already granted. Even though the legal effect of dismissal on withdrawal, is vacation of the interim order, the concerned respondents not being aware of the legal consequences, will not take consequential action but continue the benefit extended to the petitioner by the interim order, unless there is a specific direction spelling out the consequences. Sometimes, the concerned departmental officials, on account of collusion with the petitioners who had obtained the interim relief, will not withdraw or reverse the benefit granted to the petitioner in pursuance of the interim order, when the petition is withdrawn or dismissed as not pressed. Therefore, appropriate consequential directions cancelling or vacating the interim order should be passed so as to restore status quo ante. In cases where the prayer for dismissal (as not pressed or withdrawn) is made even before the respondent is served, then the order vacating the interim order should be communicated to the authority against whom the interim order was issued, so that any benefit extended as a consequence of the interim order, can be withdrawn or reversed. The only exception is where the respondents agree for the continuance of the interim order as a final relief, or agree that the benefit of the interim order already granted need not be disturbed, in which event, the court should record such submission and pass_ **W.A.No. 1931 of 2019** **8** ## _appropriate consequential orders”._ The above decision was followed by a learned Judge of this court in **Vasavan V. Kerala State Electricity Board (2017 (1) KLT 87).** The principle emerging out of the decisions is that, the court is at liberty to insist upon any consequential direction while cancelling or vacating the interim order, so as to restore the status-quo ante or to protect the interest of the respondents who suffered the interim order for quite a long time, inorder to protect their interest from not being defeated by virtue of dismissal of the writ petition as withdrawn. 8. Contention of the appellant is that, the 2[nd] respondent had failed to invoke the Bank Guarantee within the appropriate time and therefore they cannot be permitted to invoke the same as of now. This is an issue which cannot be decided on merits by this court, since the writ petition was withdrawn on the finding that jurisdiction is vested with another forum. The insistence for keeping alive the Bank Guarantee was only to serve the purpose as mentioned above. Such insistence cannot be assailed successfully on the fact situation enumerated as above, based on the dictum contained in the rulings cited above. 9. However, we notice that, in the impugned judgment there is no specific restriction imposed against the 2[nd] respondent **9** ## **W.A.No. 1931 of 2019** from encashing the Bank Guarantee, until the appellant approaches the National Company Law Tribunal, Hyderabad and until the said Tribunal passes any appropriate interim order. We think it only appropriate to impose such a restriction for a reasonable time, in order to facilitate the appellant to obtain appropriate orders from the Tribunal. Therefore, while declining interference with the impugned judgment, we are adding a modification by restricting the 2[nd] respondent from encashing the 'Performance Bank Guarantee' for a period of two months from today, provided the appellant keeps the Bank Guarantee alive, if already expired, within a period of two weeks from today. ## **Sd/-C.K. ABDUL REHIM, JUDGE** . **Sd/-R. NARAYANA PISHARADI, JUDGE** . ## **lsn**