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ORISSA HIGH COURT, CUTTACK.
W.P. (C). No.21850 of 2015
In the matter of an application under Articles 226 & 227 of the Constitution
of India.
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M/s. Sri Hardev Steels Private Limited Having its Head office at IDCO, Plot No.28, Old Industrial Estate, Jagatpur, Cuttack represented by its Managing Director ... ... Petitioner
-Versus-
State Pollution Control Board, Odisha
and another. ... ... Opp. Parties
For Petitioner : M/s.Deepali Mohapatra & M.Sahoo.
For Opp.Parties M/s.Amiya Kumar Mishra-2,Dinesh Kumar
Pnda-1, Mohammed Tarik Hossain
(O.P.2)
M/s. S.K.Mishra & S.K.Joshi (O.P.1)
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PRESENT :
THE HONOURABLE MR. JUSTICE BISWANATH RATH
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Date of Hearing :26.4.2016 Date of order :17.5.2016 Biswanath Rath, J. Through this writ petition, the petitioner, a Company incorporated under the Companies Act sought for quashing the notice dated 6.11.2015 and letter dated 24.11.2015 vide Annexures- 10 and 13 respectively and in the alternate sought for a direction against the opposite party no.1 not to act upon Annexures-10 and 13 during pendency of the appeal with an alternate prayer to extend the time frame for installation of the Online Stack Monitoring System by the State Pollution Control Board-opposite party no.1 to a reasonable period of time recording the undertaking of the petitioner not to start commercial production until installation of the aforesaid system.
22. The petitioner at the first instance came to this Court avoiding the statutory appeal provision against such orders in Water (Prevention & Control of Pollution) Act, 1974 read with Air (Prevention & Control of Pollution) Act, 1981 by filing W.P. (C) No.20587 of 2015 which matter was disposed of by the order dated 20.11.2015 of this Court with leave to the petitioner to agitate the issue by way of appeal before the competent authority. Following the aforesaid direction, the petitioner preferred appeal before the appellate authority. Unfortunately, for non-functioning of the appellate authority, the petitioner was again constrained to move this writ petition for the relief(s) indicated hereinabove.
3. The factual matrix as available from the pleadings and the submissions of the parties are as follows:-
The petitioner-company was established in the year 2007 by setting up a Sponge Iron Plant with other integrated facilities at Suniamuhan, Bali Athagarh, Cuttack with investment of about eight crores and with capacity of production to the tune of 30,000 tons per annum upon receipt of necessary consent order from the opposite party no.1 in exercise of power under Section 25 of the Water (Prevention & Control of Pollution) Act, 1974 read with Section 21 of the Air (Prevention & Control of Pollution) Act, 1981. While the matter stood thus, Central Pollution Control Board in its letter dated 5.2.2014 instructed all State Pollution Control Board to ensure that all plants running under the State Pollution Control Board should install the Online Stack Monitoring System. Consequent upon receipt of the above communication, opposite party no.1 by letter dated 12.5.2014 directed the petitioner-Company for installation of the Online Stack Monitoring System by 31.3.2015 and for this, the petitioner was required to furnish performance bank guarantee to the tune of Rs.3,50,000/- i.e. 25% of the proposed cost of installation at least by 31.3.2015 with a further condition that failing installation of the system, the bank guarantee shall automatically be forfeited and also with threat to initiate appropriate action 3 against the company for such non-compliance. Following the aforesaid direction, the petitioner in order to comply the direction given therein, furnished a bank guarantee of Rs.3,50,000/- on 21.5.2014 with the opposite party no.1 and the bank guarantee stood valid for two years i.e. up to 20.6.2016. Depending upon submission of the bank guarantee, opposite party no.1 issued a consent order to operate the plant for the year 2015- 2016 on 19.3.2015 and the consent order was to remain valid for the period 1.4.2015 to 31.3.2016. Simultaneously, the opposite party no.1 also issued another consent order to operate the plant without any directive. The time stipulation for installing the system by 31.3.2015 was further extended up to 30.6.2015 by virtue of a letter of the opposite party no.1 dated 6.4.2015. The petitioner submitted that following such restriction and submission of the bank guarantee assuring compliance of the installation the system, the petitioner in the meantime called for the quotations for supply of all the machineries for putting the system in place. In the process, M/s. Prima Equipment, Vadodora, Gujrat, the supplier of the machine placed the sales order conformation -cum- proforma invoice addressed to the petitioner for a consideration amount of Rs.8,49,150.00 paise with a demand of 25% of the entire cost of the machine, as advance thereby M/s. Prima Equipment also assured the petitioner for making available the machine within a period of three to four weeks. This fact was also brought to the notice of the opposite party no.1. Further case of the petitioner is that while the petitioner was making all arrangements for installation of the machine, the petitioner- company faced a labour unrest resulting closure of developmental work in the plant since 1.4.2015 which could ultimately resolved by virtue of a memorandum of settlement on the intervention of District Labour Officer, Cuttack on 2.6.2015 which facilitated the petitioner-company to request M/s. Prima Equipment for delivery of the machine with a view to install the same within the target period i.e. 30.6.2015. In the meantime, the company is required to deliver the machine meant for the petitioner, delivered the same 4 to some other company and in the process intimated the petitioner for permitting it some more time for supply of the machine. Thus facing the situation stated above, the petitioner was compelled to write a letter to the opposite party no.1 on 22.6.2015 requesting for grant of more time for installation of the machine indicating therein the developments taken place in the meantime. Petitioner's further case is that when the petitioner was preparing for commencement of the company i.e. production activities, the labourers again resorted to strike from 15.10.2015 demanding higher salary and other financial benefits thereby unilaterally causing stoppage of work. Since the situation was beyond the control of the petitioner and apprehending that the time stipulation fixed by the opposite party no.1 i.e. 30.6.2015 was going to lapse, the petitioner had no other option than to request the opposite party no.1 for extension of time. It is alleged that to the misfortune of the petitioner, the opposite party no.1 with an unrealistic approach rejected the request of the petitioner. In the meantime on intervention of the Labour Officer, Cuttack in the matter, there was an attempt for resolving the labour dispute and to the utter surprise of the petitioner, in the meanwhile, the petitioner was served with a notice dated 6.11.2015 thereby bringing to the notice of petitioner-company that the bank guarantee of Rs.3,50,000/- furnished by the petitioner has been forfeited with a further show cause notice under Section 31 (A) of the Air (Prevention & Control of Pollution) Act, 1981 directing the petitioner for showing cause within fifteen days as to why consent to operate granted in favour of the petitioner till 31.3.2016 shall not be revoked and as to why other appropriate legal actions should not be initiated against it. Upon receipt of the aforesaid intimation as well as the show cause, the petitioner in its reply dated 12.11.2015 intimated the opposite party no.1 that the factory has been practically remained close since 1.4.2015 resulting the management failing installation of the machines and in the said response petitioner also undertook that he shall not start the factory until installation of 5 the Online Stack Monitoring System to be in place and thereby petitioner once again requested the opposite party no.1 not to forfeit the amount under the Bank guarantee. In the meantime, the petitioner-company approached this Court against such orders and as indicated hereinabove, based on the permission of this Court, petitioner withdrew the writ petition filed earlier and approached the appellate authority against the impugned order under Annexure-10.
4. During pendency of the appeal, the petitioner received a letter dated 24.11.2015 issued by opposite party no.1 (Annexure-13) declining to extend the time stipulation on the plea that the Central Pollution Control Board declined to extend the time beyond 30.6.2015. In assailing the orders under Annexures-10 and 13, Miss Deepali Mohapatra, learned counsel appearing for the petitioner-company contended that the bank guarantee remaining valid till 30.6.2016. The opposite partyno.1 is well aware of the labour situation prevailing in the petitioner's factory premises since 1.4.2015 which is a reason for petitioner's not being able to move ahead for installation of the particular system. In spite of intervention of the Labour Officer, the labour dispute could not be resolved for quite a long time. Necessary machineries have already been dispatched to the petitioner through the invoice dated 9.3.2016. In the meantime, the petitioner has already installed Online Stack Monitoring System and commissioned the same on 18.3.2016. The petitioner further contended that finding the installation of the machineries, the Pollution Control Board being satisfied has already renewed the consent order in the meantime for the period from 1.4.2016 to 31.3.2017 for operationalisation of the plant. The plant is ready to commence its production with effect from 21.3.2016. In view of no negligence on the part of the petitioner-company, the matter should not have been viewed liberally by the opposite party no.1. Further, in view of the grant of consent order for the period 2015-2016 to 2016-2017, all the issues involving the bank guarantee remained infructuous. It is in these 6 premises, Miss. Mohapatra, learned counsel appearing for the petitioner- company prayed this Court for interfering in the impugned actions of the opposite party no.1 and for issuing suitable direction for treating the matter concerning installation of the Online Stack Monitoring System as complete and allow the bank guarantee to be recalled in favour of the petitioner- company.
5. In opposition, the opposite party no.1 in filing a counter affidavit contended that the petitioner has failed in making a ground for interference of the Court in the impugned orders under Annexures-10 and 13. The petitioner taking resort to labour strike for its not been able to commission the system is not a ground for considering the case of the petitioner. In spite of repeated request of the opposite party no.1 to the petitioner, the petitioner did not comply the required direction and as such there is no illegality at the instance of this opposite party. Notice for invocation of the bank guarantee has been issued in strict compliance of conditions agreed by both the parties. In view of the strict conditions in the decision for commissioning of the system, there is no requirement for compliance of natural justice before invoking the bank guarantee. While denying all the allegations against this opposite party, the opposite party no.1 vehemently contended that petitioner since failed to comply the conditions, required in the commissioning of the system, the orders under Annexure-10 and 13 remain valid and there is no scope for interfering in the same. Specifically arguing on the question of forfeiture of the bank guarantee, learned counsel appearing for the State Pollution Control Board vehemently urged that in view of the decision of the Hon'ble Apex Court in the case of Hindustan Steel Works Construction Ltd. v. Tarapore and Co. and another, AIR 1996 SC 2268 and a decision of this Court rendered in the case of National Aluminum Co. Ltd., v. M/s.R.S.Builders (India) Ltd. and others, AIR 1991Orissa 314 submitted that the scope of interference of the Court in such matters are limited to only fraud or where irretrievable injustice would 7 be done. It was argued that this Court has no scope for interference in the matter. During pendency of the writ petition, the petitioner filed an affidavit disclosing therein that consequent upon intervention of District Labour Officer, a settlement was arrived on the disputes raised by the workmen. Further, on receipt of assurance of the labourers to join work, in the meantime, the petitioner has made full payment towards cost of the pollution control equipment. The supplier also in the meantime dispatched all the equipments. By filing an additional affidavit, the petitioner further contended that in the meantime, the Monitoring System is already installed and commissioned on 18.3.2016 and the opposite party no.1 has been intimated regarding each development by letter dated 18.3.2916, consequent upon which the Board i.e. the opposite party no.1 in the meantime has renewed the consent order for the period from 1.4.2016 to 31.3.2017.
6. By filing an additional counter affidavit enclosing therein a photo copy of the inspection report dated 19.3.2016, the opposite party submitted that upon receipt of the letter from the petitioner regarding installation of the Online Stack Monitoring System, the opposite party no.1 made an inspection on the spot of the Company on 19.3.2016 and upon receipt of the report, the opposite party-Board has already granted a consent to operate in favour of the petitioner up to 31.3.2017 as appearing under Annexure-18. On the basis of this additional counter affidavit, Sri Mishra, learned counsel further urged that the period for forfeiting of the bank guarantee remains valid and there is no scope for interfering in the same.
7. Heard learned counsel for the parties. The undisputed fact remains that the State Pollution Control Board depending on the consent order granted in favour of the petitioner vide Board's letter No.4135 dated 21.3.2014 intimated the petitioner furnishing a performance bank guarantee for installation of the Online Stack Emission Monitoring System and the consent order to operate beyond 30.6.2014 was to be considered only after receipt of bank guarantee amount as to be determined by the Court. In 8 issuing this letter, petitioner was directed to complete the installation and commissioning the above system by 31.3.2015. consequent upon submission of bank guarantee with the opposite party no.1, the State Pollution Control Board granted the consent order on 19.3.2015 under Sections 25 of the Water (Prevention & Control of Pollution) Act, 1974 and under Section 21 of the Air (Prevention & Control of Pollution) Act, 1981 and the consent order was to remain valid for 1.4.2015 to 30.3.2016. While the matter stood thus, by letter dated 6.4.2015, considering the prevailing situation in the plant site of the petitioner and considering the direction of the Central Pollution Control Board, the opposite party no.1 intimated the direction part of the Central Pollution Control Board contained in communication dated 17.3.2015 reads as follows:-
"(a)All the industries will submit bank guarantee of 100% of the cost of the online monitoring systems (emission and effluent whichever applicable) for ensuring timely installation of online monitoring systems by 30.6.2015 and such bank guarantee will be discharged if they install the system before June 30,2015.
(b) If the industries will not install the online monitoring system by June 30, 2015 their consent to operate of the industry shall be withdrawn and bank guarantee shall be forfeited.
Issued direction to the petitioner to complete installation of online monitoring system at its plant covered under the bank guarantee as well as consent conditions stipulated by the Board and ensure uploading of real time data to the server of the SPBC and CPBC by 30th June, 2015 failing which consent to operate guaranteed to your plant 9 shall be revoked and bank guarantee shall be forfeited."
8. Factual matrix as available from the pleadings as well as the submissions of the respective parties, at this stage of the matter, is that while the petitioner had already placed its order for purchase of online stack monitoring system in order to ensure that the online stack monitoring system reaches the plant site before the time stipulation at the instance of the opposite party no.1. In the meantime, on 10.3.2015, M/s.Prima Equipment also issued the sales order conformation-cum-proforma invoice addressing the petitioner for a consideration amount of Rs.8.94,150.00 paise. This fact was also even brought to the notice of the opposite party no.1. It is, when the machine was planned to be installed in the plant site within the stipulated period, the petitioner-company witnessed labour unrest and incidental problems involving the management and the workmen of the company, things become so critical that none of the workmen joined their work resulting complete closure of the plant site since 1.4.2015. The workmen even went to lock the plant from all its entry point and did not even allow the management representative to get an entry to the plant premises. On its approach to the District Labour Officer, the management arrived in a sort of settlement with the workmen on 2.6.2015 whereby it was mutually agreed to allow the operationalisation up to plant site. As per the petitioner, it could only be possible at this point of time for making a request to M/s. Prima Equipment to deliver the online stack monitoring system to be installed by 30.6.2015. To the ill luck of the petitioner, the company intimated the petitioner that it had already delivered the machine meant for the petitioner to some other company as the petitioner-company was not in a position to receive the same for its engagement in a labour problem. Petitioner under the circumstances requested the opposite party no.1 for grant of some more time, but the request was rejected by the opposite party no.1 by its letter dated 13.7.2015. This Court is unable to find a reason as 10 to when the opposite party was aware that the petitioner-company is in fact in a soup and not in a position to install the particular system in time, as to why such request of the petitioner was turned down. This court is of the view that looking to the difficulties arose at that point of time and which fact was even well within the knowledge of the opposite party no.1, nothing prevented the opposite party no.1 to take up the matter with the Central Pollution Control Board and obtaining an extension order. The factual matrix further reveals that when the petitioner was gearing up to install the required system and to resume its production activities, the labourers again resorted to strike from 15.10.2015 demanding higher salary including other financial benefits and unilaterally restrained themselves from doing any work. Necessitating the intervention of the District Labour Officer again made a joint inquiry in presence of both the sides on 3.11.2015, 20.11.2015 and 11.12.2015 and 11.12.2015. It is at this point of time, the impugned order under Annexure-10 involving forfeiture of the bank guarantee was issued. There is no denial to the fact that there was in fact labour unrest in the petitioner unit from time to time. It also clearly reveals from the documents attached to the additional counter affidavit filed by the opposite party no.1 on 22.4.2016. From the document under Annexure-A/1 along with the additional counter affidavit of opposite party no.1, an inspection report conducting an inspection of the plant site on the direction of the State Pollution Control Board through one of its Regional Officer, there clearly reveals the date of inspection as 19.3.2016. The report under the heading "Operational Status" reads as follows:
"The plant was under shut down since 15.10.2015 due to labour strike and not started operation till date of inspection."
From the very inspection report under heading "Status of installation of Online Stack Monitoring" reads as follows:
"The unit has installed online stack monitoring system in the stack attached to common ESP of DRI Klin I& II for the parameter PM & SO2."11
From the reading of inspection report, it clearly reveals that the plant remained shut down from 15.10.2015 till 19.3.2016 and that in the meantime, the unit has already installed such online stack monitoring system. A document filed by the petitioner along with affidavit dated 16.3.2016 in support of its case, the petitioner has made a categoric statement in paragraph-4 of the said affidavit that it is only on 1.3.2016 the labourers given their consent to join their work and further they requested the petitioner Management to start production work awaiting for a settlement of the issue subjudice of a dispute before the District Labour Officer, Cuttack. It is only, on this assurance, the petitioner made full payment of the cost of the machineries in favour of M/s. Prima Equipment, on this assurance, the petitioner made full payment of the cost of the machineries in favour of M/s. Prima Equipment on 9.3.2015 and having response by filing an additional affidavit dated 6.4.2016, the petitioner in paragraph-4 has made a categoric statement that the online stack monitoring system was installed and commissioned on 18.3.2016 in the plant of the petitioner and getting intimation of the said installation, the opposite party no.1 renewed the consent order from 1.4.2016 to 31.3.2017.
9. From the above narrations, it is amply clear that the petitioner was facing a situation all through which was not only beyond its control but was even within the full knowledge of the opposite party no.1. The opposite party no.1 even though filed an additional counter affidavit on 22.4.2016, nowhere denied the above claims of the petitioner. It is in view of the above and reading of the inspection report prepared by none else than an Officer of the opposite party no.1, it is made clear that the plant of the petitioner was shut down since 15.10.2015 due to labour strike and following the installation of the Online Stack Monitoring System, already in place and for its granting renewal consent order for the period from 1.4.2016 to 31.3.2017, it is quite clear that the opposite party no.1 was all through aware of the situations/impediments faced by the petitioner and on the 12 grant of consent order for the period from 1.4.2016 to 31.3.2017, operationalisation of the plant to the satisfaction of the system required is already put in place by the petitioner even before commencement of production. This Court feels that the situation for not being able to put the system in place was beyond the control of the petitioner and the petitioner cannot be found faulted. Further, from the reading of the communication made by the State Pollution Control Board, Odisha dated 24.11.2015, appearing at annexure-13, the reason assigned by the opposite party no.1 in the matter of forfeiture of bank guarantee is for refusal to grant of extension by the Central Pollution Control Board beyond 30.6.2015 but in absence of any material to support it, this Court doubts as to if any attempt in this regard has been made or not. The additional counter affidavit filed by the opposite party no.1 lacks any such supporting. Therefore, this Court finds the communication dated 24.11.2015 remains unsupported.
10. Now, coming to the decision cited from the side of the opposite paerty no.1. In the case of Hindustan Steel Works Construction Ltd. v. Tarapore and Co. and another (supra), the Hon'ble Supreme Court in considering a matter of revocation of bank guarantee made it clear that interference of the court is possible only in exceptional cases that is to say, in the case of fraud or in a case where irretrievable injustice would be done, if bank guarantee is allowed to be encashed.
In paragraph- 23 of the decision, the Hon'ble Supreme Court held as follows:
"We are, therefore, of the opinion that the correct position of law is that commitment of banks must be honoured free from interference by the Courts and it is only in exceptional cases, that is to say, in case of fraud or in a case where irretrievable injustice would be done if bank guarantee is allowed to be encashed, the Court should interfere. In this case fraud had not been pleaded and the relief for injunction was sought by the contractor/respondent No.1 on the ground that special equities or the special circumstances of the case required it. The special circumstances and/or special equities which have been pleaded in this case are that there is a serious dispute on the question as to who has committed breach of the contract, that the contractor 13 has a counter claim against the appellant, that the disputes between the parties have been referred to the arbitrators and that no amount can be said to be due and payable by the contractor to the appellant till the arbitrators declare their award. In our opinion, these factors are not sufficient to make this case an exceptional case justifying interference by restraining the appellant from enforcing the bank guarantees. The High Court was, therefore, not right, in restraining the appellant from enforcing the bank guarantees."
11. From the scan of the facts involved in the case and on consideration of the submission of learned counsel appearing for the respective parties reading together with the view of the Apex Court noted hereinabove, this Court finds the case of the petitioner falls in the compass of irretrievable injustice. The bank guarantee remained in force for continuing interim direction passed by this Court even continuing as on date. Consequently, while declaring the impugned orders dated 6.11.2015 and 24.11.2015 vide Annexures- 10 and 13 as bad in law, the same are quashed. So far as prayer no.2 is concerned, in view of the admitted position that the petitioner has already installed the Online Stack Monitoring System, the petitioner- company, if not started production, be permitted to start its commercial production forthwith.
12. The writ petition stands allowed with the observation and direction made hereinabove but with no order as to cost.
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Biswanath Rath, J.
Orissa High Court, Cuttack.
The 17th day of May, 2016/sks