NATIONAL TEXTILES CORPORATION SOUTH MAHARASHTRA LIMITED Vs. TAMIL NADU COOPERATIVE MARKETING FEDERATION LIMITED

JUDGEMENT

(1.) The judgment and order of a Division Bench of the High Court at Bombay is the subject-matter of this appeal.

(2.) The appeal arises in the following circumstances, shortly put. On 4th February, 1991, the appellant entered into an agreement with the first respondent. Thereunder the appellant was to procure 'kapas'; the kapas would be processed at the first respondent's ginning factory and it would be sold to the appellant. The agreement required the appellant to give an irrevocable bank guarantee of the value of Rs. 50 lakhs in favour of the first respondent to cover the price of the kapas. Similar agreements were entered into from time to time for subsequent periods, the last being on 25th April, 1995. The first bank guarantee was procured by the appellant from the second respondent. It was dated 11th April, 1991, and it was extended from time to time until 1st October, 1995.

(3.) With effect from 18th October, 1983, the management of the textile undertakings specified therein was vested in the Central Government by virtue of the Textile Undertakings (Taking Over of Management) Act, 1983. The Textile Undertakings (Nationalisation) Ordinance, 1995 was promulgated on 27th June, 1995. It was replaced by the Textile Undertakings (Nationalisation) Act, 1995 (hereinafter referred to as the 'Act'). The aforesaid textile undertakings were, thereby, vested in the appellant with effect from 1st April, 1994.