JAMMU AND KASHMIR BANK LIMITED vs ETA Engineering Pvt Ltd Rep By Director And Others on 1 August 2023

1. Jammu and Kashmir bank Limited, Rep. By this Senior Executive

…Resp/ Applicant in OA

2. ETA Engineering Private Limited

-- R1/D1 in OA

Represented by its Director,

3. Emirates Trading Agency LLC, Rep. by its Director,

…Resps/Resps/D-1&2

ORDERS ON IA No-1372/2022 filed by the Garnishee (respondent no-28) This is an IA filed by the Garnishee under sec 19(25) of the DRT Act. The garnishee is not a party to the original proceedings.

1. Heard the ld senior counsel for DMRC Sh.JayeshDolia and Sh.ChetanSagar for the respondent no-1 and Sh. Jose appearing for Respondent no-2 in this IA.

2. The genesis of this application is found from the order passed by the Ld predecessor dt 9.5.2022 which reads as under (in OA-496/2018 now renumbered as TA-47/2022) Counsel for both parties present.Exhs.A1 to A5, A7 to A23, A26 to A37, A39 to A132, A134 to A147. A149, A150, A152, A155, A156 and A169 to A189 marked. A6,A24,A25,A38,A133,A148,A151,A153,A154,A157 to A168 subject to proof. IA 737/2018 is an application filed by the applicant with a prayer to pass an order restraining the respondents from paying amount to 1st defendant and direct the respondents to deposit the amounts in the loan account of 1st defendant. This IA is considered along with IA 738/2018. R3, R9, R27, R57 and R58 had filed their counter admitting amounts payable to the 1st defendant. R6, R21, R22, R24, R25, R37, R40, R41, R43, R45, R46, R60, R63, R65 and R6 had filed their counter stating that no amount is payable to the 1st defendant and hence petition against said respondents is dismissed. Other respondents had not filed any counter. Hence, IA 737/2018 allowed restraining R2 to R5, R7 to R20, R23, R26 to R36, R38, R39, R42, R44, R47 to R59, R61, R62, R64 from disbursing any amount payable to the 1st defendant until further orders. Post this matter for on 16.06.2022 for hearing in IA 738/2018 and for filing CPA.

3. DMRC has filed the present IA with a prayer to lift the Garnishee order . The said IA is supported by the affidavit duly sworn in by the General Manager Legal. It is stated that the garnishee had awarded a contract to respondent no-2 company concerning the public works at the cost of 48.08 Crores on 17.6.2021 now revised to 50.66 Crores.

4. It is also sworn by the petitioner in the IA that the works are being carried out by different contractors which requires interface among them. Any missing link in the chain would stall the public project. It is also stated that restraining the present petitioner from paying the amounts to respondent no-2 would cause hindrance in the above project. It is also stated that non-payment would lead to stoppage of works by respondent no-2 and would further delay the whole project resulting in wastage of public money causing inconvenience to the public. It is also stated that it may result in huge claims against DMRC by other contractors who are linked to complete the project. It is also submitted that the contract was awarded to Joint venture ETA- Trikolite JV concerning contract CE-23 and not to the respondent no-2 alone.

5. It is also submitted in the IA that the respondent no-2 may be the beneficiary but is in the joint venture project. The project is of National importance and if delayed would tarnish the reputation of the Garnishee DMRC.

6. This IA is opposed by the bank ( the respondent no-1- applicant in OA).

7. In the counter the bank took a stand that the applicant has no locus to seek modification or withdrawal of the order dt9.5.2022 . The second respondent is evading the payments and the applicant bank has the rights to seek such payments to be attached towards the secured debt .The second respondent in the IA has not properly disclosed the amount due under each of the contracts. The trade receivables are the part of the debt. It is submitted that the money payable by the petitioner in the IA to respondent no-2 be directed to be deposited in the Tribunal under the order dated 9.5.2022 ,so as to secure the debt. It is also submitted that since 30.6.2016 not a single penny is deposited by the R1 towards the loan account therefore the bank prays for dismissal of the IA.

8. Having heard the ld counsel on the aspect of the demand to modify /issue further orders consequent to the earlier order, the Tribunal notes that such an application came to be filed on 13.7.2022 itself. Thereafter an endeavour was made by the parties to go for OTS which was responded properly both by the borrower and the bank. Though it is reported that the OTS offer needs improvement by the ld counsel for the bank, it is also submitted that parties are likely to explore an amicable settlement in the near future.

9. The ld counsel appearing for the borrower (R2 in the IA) submits a tabulation of amounts payable on 5 projects. The 5th project is not yet invoiced . However, four projects and the amount due payable by the DMRC to R2 is shown. Shri.Jose , the ld counsel submits that the amounts due is not the entire cake to the share of his client but it forms part of the amounts payable to the vendors of his client , the workmen and the sundry taxation like GST and the local taxes. This submission cannot be dismissed as illogical.

10. The ld senior counsel appearing for DMRC along with its senior Law officer would submit that the continuation of the order blocking the payment would render the public utility projects to a standstill and therefore it is submitted that taking note of the consecutive effect of such blockade like the impediment to the interface among other contractors, the modification of such order is imminent.

11. The ld counsel for the bank no doubt is justified in submitting that the public exchequer is under strains. It is to be noted that the Tribunal is yet to adjudicate the debt. The submission that the amounts payable to the borrower under contracts forms the secured debt cannot be accepted for the following reasons at this stage.

a. The debt is yet to be adjudicated.

b. The amounts payable by the contractor includes the wages to the workmen, payments to the suppliers, the statuary obligations etc; and the net profit under the contract receivable by the respondent no-2 is not properly ascertained. Since there is no definite sum to arrive at receivable by the respondent no-2 though raised the bills under the invoices, the same cannot be treated as the legal dues of R2 under the contract in its wholesome.

c. That the certain payments are not exclusively payable to respondent no-2 by DMRC since it is clarified by DMRC that some contracts are given under joint venture as disclosed in their counter .

d. Blocking the payments would lead to the difficulties in interface with the other contractors and the same leads to the stalling of public utility projects and may also lead to further litigation.

12. However to ensure the safety valve in preventing to evade the payments by the borrower to the bank, the ld counsel for respondent no-2 submits that his client would account for the sums legally payable to his vendors, the statuary dues etc. and the reminder portion that comes to the share of the respondent no-2 which his client would not appropriate for itself but would ensure to be kept in the no lien account with the applicant bank in the OA i.e J&K Bank.

In view of the above the present IA stands disposed of by the following directions.

1. The garnishee DMRC is permitted to release the payments to the respondent no-2 ( defendant no-1 in the OA) concerning the bills raised by it for the works executed.

2. Upon receipt of such payments , the defendant no-1 in the OA is directed to furnish the monthly accounts duly certified by the chartered accountants showing the expenses incurred in executing such contracts including the payments of wages and the payments made to the vendors concerning such contracts and the reminder portion of the amounts left to the account of the defendant no-1 in the OA.

3. Upon such disclosure, the reminder portion of the amount be deposited by the borrower in the no lien account of the applicant bank in the OA.

Put up for counter in IA- 1109/2022 to be filed by the D1 and for further orders by 5.9.2023.

Sd/-

(A.S.JAYACHANDRA) PRESIDING OFFICER DRT-I, CHENNAI