ORISSA INDUSTRIES LTD., REGISTERED OFFICE AT LATHIKATA, P.O. LATHIKATA, DIST: SUNDARGARH (ORISSA) Vs. ROURKELA STEEL PLANT AND OTHERS

JUDGEMENT

(1.) IN both the writ petitions, the Petitioner is one and the same. In O.J.C. No. 7558 of 2001, the Petitioner has made a prayer for quashing Annexure -9 by which the D.G.M. (F and A), Rourkela Steel Plant, Rourkela sent a fax message to the E.D. (F and A), B.S.P., Bhilai, G.M. (F and A), B.S.L., Bokaro and the G.M. (F and A), D.S.P., Durgapur requesting them to recover Rs. 33.46 lakhs from the pending bills of the Petitioner Company if any and pass on the credit to the Rourkela Steel Plant, Rourkela (for short 'RSP'). Further prayer of the Petitioner is to direct the opposite party -RSP to pay Rs. 17.61 lakhs along with interest at the rate of 20% since 25.09.1989 amounting Rs. 1,51,80,307/ - . In W.P.(C) No. 20857 of 2010 the prayer of the Petitioner is for a direction to opposite party No. 2 -General Manager (F&A), Durgapur Steel Plant, AT/PO: Durgapur to release the withheld amount due to the Petitioner Company within a specified period.

(2.) THE facts of the Petitioner's case in a nut shell are that the Petitioner is a Company incorporated under the Indian Companies Act, 1956. The Petitioner has a refractory unit at Lathikata where refractory bricks of high Magnesium quality are manufactured. The refractory bricks of such nature are generally used in blast furnaces in different factories all over the world. Since its bricks can withstand high temperature under high pressure such bricks are of high demand in industrial sector. During the course of its business, the Petitioner -Company had supplied such bricks to RSP as per their orders. RSP at no point of time raised objection to the quality and specification of the bricks supplied by the Petitioner Company to RSP. All of a sudden, the Petitioner Company received a letter on 09.02.1989 issued by RSP wherein it was indicated that the L.D. Converter No. 5 had collapsed after 89 blows and the said converter was built up by the Magnesium bricks supplied by the Petitioner Company. On such allegation, the officials of the Petitioner Company as well as RSP hold a meeting and agreed to go for a chemical analysis of the supplied bricks to ascertain the quality and accordingly on 25.02.1989 the minutes were recorded fixing the modalities for conducting such chemical analysis. Pursuant to such meeting, a joint verification was conducted to ascertain the quality of the bricks supplied and accordingly on 02.03.1989 the Scientist of RSP conducted the chemical analysis of the bricks supplied in their Research Laboratory and certified that the bricks supplied by the Petitioner Company were as per the specifications and quality. They further pointed out that the collapse of the Converter might have been for other reasons. The said chemical analysis report is annexed as Annexure -5 to the writ petition. However on 25.09.1989 RSP intimated the Petitioner Company that 50% of the landed cost of the bricks used in L.D. Converter No. 5 was to be withheld and an independent enquiry committee was to look into the matter and on the basis of its report the question of withholding of 50% amount would be decided. Accordingly, Rs. 17.61 lakhs was withheld by RSP from the bills of the Petitioner -Company.

(3.) IT is argued that in the meantime, the Petitioner Company has become sick and its financial condition deteriorated beyond repair. Since the future of the shareholders of Company was at stake and also the future of almost 1400 employees working under the Petitioner -Company were in distress condition the Petitioner Company approached the Board for Industrial and Financial Reconstruction (for short, BIFR') vide reference No. 327 of 1999 and the Petitioner Company was declared to be sick industry by BIFR by its order dated 13.12.2000. The Industrial Development Bank of India has been appointed by the BIFR as the operating agency to find out a suitable rehabilitation package. While the Petitioner was declared to be a sick industrial Company and the BIFR is in seisin over the matter for its revival and rehabilitation, the opposite party RSP sent the fax message dated 19.04.2001 under Annexure -9 to stop payment of Rs. 33.46 lakhs to the Petitioner and not to release the same to it.