PANCHAMY PACK (P) LTD Vs. TRAVANCORE DEVASWOM BOARD REPRESENTED BY ITS SECRETARY TRAVANCORE DEVASWOM BOARD NANTHANCODE THIRUVANANTHAPURAM

JUDGEMENT

(1.) AN award was passed in favour of petitioner and against the respondent for recovery of Rs. 18,86,95,499/- with interest. Respondent, invoking Sec.18 of the Micro, Small and Medium Enterprises Development Act, 2006 (for short, "the Act") filed O.P.(Arbitration) No.34 of 2012 before the learned I Additional District Judge, Thiruvananthapuram to set aside that award. In view of Sec.19 of the said Act, respondent deposited Rs. 14,15,21,624/- being 75% of the amount due under the award. Petitioner filed I.A.No.324 of 2012 before the learned Additional District Judge for release of 50% of the said amount. Learned Additional District Judge passed Ext.P5, order dated 22.03.2012 allowing petitioner to withdraw 50% of the said sum (of Rs. 14,15,21,624/-) subject to the conditions that petitioner shall furnish sufficient bank guarantee before court to pay back the said amount in the event of the award being set aside or modified and on executing bond for the said amount with two solvent sureties. There was a further direction to deposit the remaining 50% of the amount in deposit in fixed deposit in a nationalized bank until disposal of the original petition. Petitioner is aggrieved by the condition directing it to execute bond with two solvent sureties and has challenged that condition in this Original Petition filed under Article 227 of the Constitution.

(2.) LEARNED Senior Advocate appearing for petitioner contends that the condition requiring petitioner to execute bond with two solvent sureties is very harsh as it is very difficult to get two solvent sureties for that much amount. It is also the submission of learned Senior Advocate that since a bank guarantee (Ext.R(a) is its photocopy) has already been furnished before learned Additional District Judge for 50% of the amount which learned Additional District Judge has allowed petitioner to withdraw, that is sufficient guarantee before the court to pay back the said amount in the event of the award being set aside or modified. LEARNED Senior Advocate has invited my attention to the effect of bank guarantee, relying on the decision in Syndicate Bank v. Vijay Kumar, ((1992) 2 SCC 330).

(3.) LEARNED Senior Advocate for the respondent in response would contend that even as Ext.R(a) would reveal, it is dependant on the amount that is being withdrawn by the petitioner from the court as is disclosed by Clause (ii) of the condition that "it is a bank guarantee fully secured against the proceeds of the instrument/cheque/DD to be released by the court". LEARNED Senior Advocate has also objection to the former part of the said condition.