1 MSS IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE APPELLATE SIDE APPELLATE SIDE CIVIL APPLICATION NO. 285 OF 2007 IN LETTERS PATENT APPEAL (ST.) NO. 451 OF 2006 IN WRIT PETITION NO. 3705 OF 2005 TOLIA INDUSTRIES .. APPELLANTS Vs. ENGINEERING & METAL WORKERS UNION RESPONDENTS Mr. C. U. Sing, Sr. Advocate with Mahesh Londhe i/b M/s Sanjay Udeshi & Co. for Appellants Mr. Bhavesh Parmar for respondents CORAM:SMT.RANJANA DESAI & D. B. BHOSALE, JJ. DATE: 24/7/2008 P.C. . On 20/2/06, we disposed of Letters Patent Appeal (ST.) No. 451 of 2006 by a speaking order. Paragraph No. 3 thereof being relevant may be quoted: "Mr. Singh, on instructions, from Mr. Viresh Tolia - partner of the appellant-firm states that the 2 appellant-firm shall not sell or part with possession or create third party interest in the land and factory building situated at Wagle Estate, Thane till such time as the instant writ petition is heard and disposed of. So far as machinery is concerned, the appellant-firm can replace or carry out repairs to the same but shall not dispose it of without permission of the Court. Mr. Viresh Tolia, the partner of the appellant-firm shall file an undertaking in this Court within one week from today stating that the appellant-firm shall not sell or part with possession or create third party interest in the land and factory building situated at Wagle Estate, Thane, till such time as the instant writ petition is heard and disposed of. He shall also file an undertaking that as far as the machinery is concerned, the appellant-firm will not dispose it of without permission of this court. All undertakings and bank guarantee be filed in the writ petition. 3 The letters patent appeal is disposed of". 2. It is the case of the appellants that they want to enhance their working capital limits to the extent of Rs.300 lacs. Letter dated 26/6/07 addressed by the Bank of India to the appellants is annexed to the application at Exhibit ’2’. By the said letter the bank has requested the appellants to provide equitable mortgage of their factory premises as collateral security to consider their request for enhancement of working capital favourably. It is in these circumstances that the appellants have approached this court for modification of our order dated 20/2/06. The appellants want to furnish land and factory building as collateral security for loan. They have prayed for the following reliefs: (a) The Civil Applicants be permitted to furnish the said loan for land with factory building as collateral security for raising loan from the bank; (b) Therefore, Civil Applicants be relieved from the undertaking as furnished by the Civil Applicants to this 4 Hon’ble Court pursuant to the order dated 20th February, 2006. 3. Shri Viresh Tolia, the partner of the appellants has filed an undertaking dated 19th July, 2008. The relevant portion of the said undertaking may be quoted: "I say that for the Cash/Credit facility of Rs.3.00 Crore only land & building of the applicant firm has to be offered as collateral security & as far as the Plant & Machinery of approximately Rs.1.50 Crore is concerned there is no charge or any encumbrance upon the same & I along with all the partners undertake that the same shall remain unencumbered during the pendency of this petition". 4. Mr. Singh, learned counsel for the appellants states that inasmuch as the appellants are offering only land and building as security and insofar as plant and machinery are concerned no charge or any encumbrance will be created thereon, this court may modify the order. Such order will protect the workers. 5 5. We must also mention that all the partners of the appellants have filed affidavit dated 14th July, 2008. Paragraphs 4 and 5 may be quoted: "4. We say that for the purpose of expansion of business, the Applicant needs finance and therefore, have made an application for loan to Bank of India to the tune of Rs.3,00,00,000/- (Rupees Three Crores Only). We say that as a precondition of sanction of loan Bank of India has asked us to furnish our Factory Premises as collateral security. We say that in this circumstances the Applicants have taken out above Civil Application for modification of order dated 20th February, 2006 whereby seeking permission to furnish Factory Premises as collateral for raising loan from Bank of India. 5. We say that the value of the Factory Premises as on date is approximately Rs.11 Crores and the value of Plant and Machinery of Applicant Company approximately is Rs. 1.5 Crore. We say that the Respondents have themselves furnished the detail of workers dues, 6 whereby on their own showing dues of the workers are approximately Rs.1,45,00,000/- as on March, 2008. We say that value of Land and Plant and Machinery of Applicant is far above the alleged dues of Respondents in above matter". 6. As per this affidavit the value of the Factory Premises as on date is approximately Rs.11 Crores and the value of Plant and Machinery of Applicant Company approximately is Rs. 1.5 Crore. 7. In view of this, Mr. Parmar, learned counsel for the respondents submits that considering the dues of the respondents in the circumstances of the case, this court may only permit the appellants to create charge on the land and building to the extent of Rs.300 lacs and not on the plant and machinery. 8. We have carefully perused the civil application as well as reply of the respondents. In our opinion, in the circumstances of the case following order will meet the ends of justice. a) Order dated 20/2/06 is modified to the 7 following extent; . The appellants are permitted to create charge on the land and/or building by way of equitable mortgage only to the extent so as to securing loan of Rs.300 Lacs. In other words, the appellants are not allowed to create charge on the entire land and/or building, which according to them, is worth 11 crores and, they are permitted to create charge only to the extent for securing Rs.300 Lacs. b) The undertakings in the affidavit dated 14/7/08 and 19/7/08 are accepted by this court. c) We direct the appellants to forward copy of this order to the Bank of India. d) Civil Application is disposed of in the aforestated terms. JUDGE JUDGE