VRA ROAD LINES Vs. BANK OF BARODA

JUDGEMENT

(1.) BY the captioned writ petition a challenge has been laid to the order dated 27.08.2004 passed by the Debt Recovery Tribunal (in short 'DRT') in OA No. 11A/1996 and the order in appeal passed by the Debt Recovery Appellate Tribunal (in short 'DRAT') dated 11.02.2011.

(2.) FOR the disposal of this writ petition the following brief facts require to be noticed: The respondent no. 1, i.e., the Bank of Baroda, had advanced cash credit facilities to respondent no. 2, a private limited company, namely, M/s Stich Arts Exports Pvt. Ltd. These cash credit facilities were enhanced from time to time. Respondent no 1/bank at the request of respondent no. 2 opened, it appears, various letters of credit. 2.1 FOR the purposes of the instant case it would be important to note that letters of credit were opened by respondent no. 1/bank in favour of four (4) entities located in Salem in the State of Tamilnadu. These entities being: M/s Gajalazmi Exports, M/s Umakant Trading Company, M/s Kala Creation and M/s Money Enterprises. The purpose of opening the letters of credit in favour of aforesaid four (4) entities was to enable respondent no. 1/bank to purchase cloth from the entities, who were beneficiaries of the letter of credit, in order to enable it to manufacture garments for the purposes of its export business. 2.2 Importantly, as per the letters of credit the four entities/ beneficiaries of the letter of credit were required to dispatch the goods in issue to the stated destination, in terms of the request of defendant no. 1 through a transporter. The petitioner before us was the transporter who had been entrusted with the consignments of goods in issue valuing approximately ' 8,55,191.161/- for a consideration. The petitioner being the carrier had issued negotiable motor transport receipts in respect of the goods entrusted to it. 2.3 Thus the four (4) entities/ the beneficiaries of the letter of credit were able to obtain payment of the goods sold by them to respondent no. 2 against the letters of credit opened by respondent no. 1/ bank on delivery of the original motor transport receipts along with all other documents of title in original, as detailed out in the letter of credit to the respondent no. 1/bank. 2.4 Therefore, as per the arrangement in vogue respondent no. 1/ bank would present to respondent no. 2 the documents of title including the original motor transport receipt for the purposes of enabling respondent no. 2 to retire the same against payment made to it by respondent no. 2. On payment being received by respondent no. 1/bank from respondent no. 2 the said documents of title including the original motor transport receipt was required to be delivered by respondent no. 1/bank to respondent no. 2, who in turn would take delivery of the goods in issue from the petitioner.

(3.) BEFORE us Mr Rajiv Khosla argued that the petitioner could not have been held liable for payment of monies to respondent no. 1/bank in view of the fact that there is an admission to the effect that, respondent no. 2 had received the goods in issue. Mr Kholsa further submitted that it has also come on record by way of evidence that the petitioner had sold its business to respondent no. 6, therefore, the liability, if any, qua the dues of respondent no. 1/bank would be that of the respondent no. 6. The last contention of Mr Khosla was that the respondent no. 1/bank had filed alongwith the present action, which is, represented by OA NO. 11A/1996 three (3) other suits against entities, which were run by the family members of respondent nos. 2 to 5, who have been impleaded in the instant action in their capacity as guarantors. It was thus contended that in those suits/actions, the respondent no. 1/bank had arrived at a compromise whereby, it was to receive ' 4 crores with simple interest at the rate of 13.5% per annum w.e.f. 13.06.1996. By virtue of a settlement recorded on 16.01.1997 by the DRT the said suits/actions were to be withdrawn; the mortgaged property was to be released; and the other defendants in those suits/actions including the guarantees and securities furnished were to be released. Mr Khosla submitted that respondent no. 1/bank having compromised its claim in those suits was unnecessarily and oppressively seeking to recover dues from the petitioner when, the goods in issue had been handed over to respondent no. 2.