KBP 2114-09.sxw 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.2114 OF 2009 The Municipal Corporation for City of Thane, Through its Commissioner ..Petitioner Vs. M/s.Atlanta Infrastructure Ltd. Through its Managing Director, Shri.Rajendra Barot ..Respondents ......... Mr.A.R.Pitale, for petitioner. Mr.M.M.Vashi i/b.Mr.M.P.Vashi and Associates, for respondents. ......... CORAM : A.S.OKA, J.. DATE : 27 th August, 2009. P.C. : 1] Heard learned counsel for the petitioner and leaned counsel for the respondent. Parties were put on notice that the petition will be disposed of finally at the stage of admission. 2] The respondent is the original plaintiff and the petitioner – Corporation is the original defendant. The respondent was given a work order on 13 th January, 1997, for construction and widening of a road. According to the case of the respondent the work was completed in terms of the work order and a final bill in the sum of Rs.96,40,920/- was submitted by the respondent to the petitioner. According to the case of the respondent, the petitioner acknowledged that a sum of Rs.62,98,455/- was due and payable to the respondent. As the said amount was not paid, a suit was filed for recovery of amount of Rs.62,98,455/- together with interest thereon. The suit is being KBP 2114-09.sxw 2 contested by present petitioner and a written statement has been filed. 3] An application was made at exhibit 31 by the respondent plaintiff contending that during the pendency of the suit there were talks between the parties for amicable settlement and a letter dated 24 th February, 2004 was issued by the petitioner stating that a sum of Rs36,54,000/- was payable by the petitioner to the respondent. A prayer was made in the said application exhibit 31 seeking a direction to the petitioner to deposit the said amount. The said application was contested by the petitioner. It was pointed out in the reply that the said amount was offered by the petitioner by way of settlement, however, the respondent did not come forward to enter in to the settlement. By order dated 22 nd December, 2004, said application was allowed by the trial court directing the petitioner to deposit a sum of Rs. 36,54,000/-. The said order was not challenged by the petitioner. On 24 th February, 2005, the respondent made an application exhibit 40 seeking permission to withdraw the said amount. The said application was contested by the petitioner. By the impugned order dated 1 st January, 2009 the application was allowed and the respondent was permitted to withdraw the said amount of Rs.36,54,000/- on furnishing a bank guarantee for the said amount for a period of two years. The operative part of the said order reads thus: “1. Application is allowed. 2. Plaintiff is permitted to withdraw amount of Rs. 36,54,000/- lying at C.No.1781, on furnishing bank guarantee for 2 years with a condition that in case plaintiff failed to succeed in the suit he will return the amount with interest @ 6% p.a. From the date of withdrawal, till the deposit in the court.” KBP 2114-09.sxw 3 This order is the subject matter of challenge in this writ petition under Article 227 of the Constitution of India. 4] The learned counsel for the petitioner invited my attention to the communication dated 24 th February, 2004 issued by the City Engineer of the petitioner in which it was stated that the Municipal Commissioner has directed that the case shall be settled at Rs.36,54,000/-. A request was made to the respondent to confirm the settlement. It is pointed out by the learned Counsel that the respondent never accepted the settlement in terms of offer stated in the said letter. It is submitted that what is stated in the said letter is an offer for settlement and not an admission of liability on the part of petitioner. He submitted that there was no occasion for the petitioner to challenge the earlier order. It is further submitted that the order of the trial court permitting the respondent to withdraw the said amount is unjust. It is further submitted that the bank guarantee ordered to be furnished is only for a period of two years. In case the respondent fails in the suit, the amount will have to be refunded with interest at least at the rate of 8% per annum, and therefore, the bank guarantee ought to have been for a higher amount which will cover the interest at least for a period of two years. 5] Learned counsel for the respondent submitted that the earlier order dated 22 nd December, 2004 is pased in exercise of power under Rule 10 of Order XXXIX of the Code of Civil Procedure, 1908. He pointed out that the said order proceeds on the basis of admission of partial claim by the petitioner and the said order has attained the finality. 6] I have considered the submissions. Perusal of letter dated 24 th February, 2004, shows that, according to the petitioner – Corporation, the bill amount payable to the respondent was in the sum of Rs.36,54,000/-. The claim made in the suit is for much higher amount. Considering the language KBP 2114-09.sxw 4 used in the said letter the trial Court has directed the petitioner to deposit the said amount way back in the year 2004 and the said order has attained finality. Going by the said letter it is obvious that, even according to the case of the petitioner the said amount is due and payable to the respondent. Therefore, it is not possible to find fault with the impugned order by which permission has been granted in favour of the respondent to withdraw the amount. However, the conditions imposed in the impugned order are not adequate to safeguard and protect the interests of the petitioner in the event the respondent fails in the suit. If the interest at the rate of Rs.8% is calculated on the amount deposited in the court for a period of two years, the total amount approximately comes to Rs.42,00,000/-. The respondent will have to furnish a bank guarantee in the sum of Rs.42 lacs. The bank guarantee will have to be kept alive till the disposal of the suit and the bank guarantee cannot be restricted only to two years. The bank guarantee will have to be of a nationalised bank. Therefore, the conditions imposed in the impugned order need modification. 7] Hence, the Writ Petition is disposed of by passing following order: (a) The impugned order dated 1 st January, 2009 is modified. (b) The respondent is permitted to withdraw the amount of Rs.36,54,000/-, subject to the furnishing a bank guarantee in the sum of Rs.42,00,000/- of any nationalised bank. The bank guarantee shall be kept valid till the disposal of the suit. Before accepting the bank guarantee, the trial court will hear the petitioner. (c) It is made clear that deposit of amount of Rs.36,54,000/- by the petitioner shall not be construed as any admission on the part of the petitioner of its liability and all KBP 2114-09.sxw 5 questions on the liability of the petitioner are kept open. (d) Hearing of the suit is expedited and the trial shall be concluded preferably on or before July, 2010. (e) No order as to costs. ( A.S.OKA, J. )