HARYANA TELECOM LIMITED Vs. ALUMINIUM INDUSTRIES LIMITED

JUDGEMENT

(1.) This writ appeal is by the first respondent in the writ petition, and is directed against an interim order made in W.P.M.P. No. 14131 of 1994 made absolute by the learned single judge by his impugned order. As learned counsel for the writ petitioner (i.e., first respondent herein) submitted that a case that writ appeal was allowed and the stay granted by the learned single judge was vacated the writ petition would become infructuous, we decided to hear the writ petition itself on the merits with the consent of learned counsel for the parties.

(2.) The first respondent herein is a public limited company, having its factory at Hyderabad also. It is engaged in the business of manufacturing cables and conductors and also undertakes to manufacture machinery required in cable industry. The appellant is in the business of manufacturing telecommunication equipment and in particular jelly-filled telephone cables. It is also a public limited company. The appellant gave to the first respondent herein its purchase order dated 14/10/1991, for supply of certain mentioned therein subject to the terms and conditions therein printed. In pursuance of one of the terms and conditions of the said purchase order the first respondent herein furnished bank guarantee No. 27 of 1993, dated 9/07/1993, issued by the second respondent herein. It appears that some dispute arose between the parties and, therefore, treating the first respondent herein as liable for the claim raised by the appellant, the latter tried to invoke the said bank guarantee on 24/06/1994. The first respondent herein, thereafter, rushed to this court with its Writ Petition No. 632 of 1994 and made a prayer to direct the appellant herein or refrain from encashing the aforesaid bank guarantee No. 27 of 1993 by issuing an appropriates writ in that regard. It also filed an application for interim direction against the appellant and the bankers not to encash the said bank guarantee. As the interim relief was granted and the vacation application was rejected, the appellant, which was the first respondent in the writ petition, filed this writ appeal.

(3.) It was not disputed before us, nor disputed before the learned single judge, that somewhere in the 80s the first respondent herein, became a sick industry under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (in short, "the Act"), and it was so declared by the Board for Industrial and Financial Reconstruction (in short, "the BIFR") in Case No. 93 of 1987 in the year 1987. It was also not disputed that the scheme under section 18 of the Act was framed by the BIFR and has been put in implementation with effect from 1/11/1989, and is said to be for a period of ten years. In view of the fact that the first respondent herein is a sick industry, it was urged on behalf of the writ petitioner (i.e., the first respondent herein) that in view of the provisions of section 22(1) of the Act, the appellant herein could not take out proceedings for enforcing the bank guarantee, because it was in the nature of an execution or distress. The argument prevailed before the learned single judge and, accordingly, the appellant herein was restrained from encashing the bank guarantee pending disposal of the writ petition on the merits.