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Bombay High Court
G.F.COUTO
Board of Trustees of the Port of Mormugao - Appellant
Versus
Chowgule and Company Pvt.Ltd., Mormugao Harbour, Gao - Respondent
Decided On : 03/23/1984
CIVIL PROCEDURE CODE - SECTION 145 - ENFORCEMENT OF UNDERTAKING - INHERENT POWERS OF THE COURT - BOND EXECUTED BY RESPONDENTS - SUIT DECIDED AGAINST RESPONDENTS - RESPONDENTS BOUND TO PAY THE DIFFERENCE OF RATES - BOND NOT ENFORCEABLE UNDER SECTION 145 C.P.C. - COURT HAS INHERENT POWERS TO ENFORCE THE BOND - REVISION APPLICATION ALLOWED.
Fact of the Case:
Petitioners and respondents entered into a contract in 1959, empowering the Portuguese Overseas Minister to grant the respondents the right to construct and operate a mechanical ore handling plant (MOHP) at the Mormugao Harbour. The respondents were to pay Rs. 1.375 per tonne of iron ore exported through the plant. In 1967, the respondents started manufacturing iron ore pellets and began exporting them through the MOHP at the concessional rate of Rs. 1.375 per tonne. Petitioners objected, claiming that pellets were not covered by the contract and sought to charge Rs. 3.35 per tonne. The respondents filed a suit seeking a declaration and a permanent injunction restraining the petitioners from collecting the enhanced rates. The trial court granted an ex parte injunction and directed the respondents to submit half-yearly statements of the pellets exported and to produce a suitable security for the difference between Rs. 1.375 and Rs. 3.35 per tonne. The respondents executed a Bond undertaking to pay the difference if the suit was decided against them. The trial court confirmed the injunction and refused to stay the suit. The petitioners appealed to the Judicial Commissioner's Court, but the appeal was dismissed. The respondents filed a Special Civil Suit seeking a declaration that the petitioners' resolution to charge Rs. 3.35 per tonne was not binding on them. The petitioners filed a counterclaim for the differential amount between the two rates. The trial court dismissed the petitioners' application for enforcement of the Bond. The petitioners filed a revision application challenging the trial court's order.
Finding of the Court:
The court held that the Bond executed by the respondents was not enforceable under Section 145 C.P.C. because it was not an order for payment of money and was not given by a third party. However, the court held that the court had inherent powers to enforce the Bond and that the petitioners were entitled to the differential amount between the two rates. The court set aside the trial court's order and directed the trial court to enforce the Bond.
Issues: 1. Whether the Bond executed by the respondents was enforceable under Section 145 C.P.C.? 2. Whether the court had inherent powers to enforce the Bond?
Ratio Decidendi: 1. Section 145 C.P.C. applies only when security is furnished or a guarantee is given by a third party and not by a party to the suit. 2. The Bond executed by the respondents was not enforceable under Section 145 C.P.C. because it was not an order for payment of money and was not given by a third party. 3. The court has inherent powers to enforce an undertaking or Bond given to the court, even if it is not enforceable under Section 145 C.P.C.
Final Decision: The revision application was allowed. The trial court's order dismissing the petitioners' application for enforcement of the Bond was set aside. The trial court was directed to enforce the Bond and dispose of the application in accordance with law.
2. In order to correctly understand the case of the petitioners, it will be convenient to state the relevant facts that led to the making of the impugned order.
On 4th September, 1958, while the territories of Goa, Daman and Diu were still under the Portuguese rule, the Portuguese Government enacted the Decree Law No. 41816, inter alia, empowering the then Overseas Minister to enter into contracts with the West of India Portuguese Guaranteed Railway Company Ltd. and to grant to the latter the right to construct and operate at the Mormugao Harbour a mechanical installation for the storage and handling of ores. In exercise of such enabling powers, the Portuguese Overseas Minister entered, on behalf of the Portuguese Government, into a contract with the respondents on 30th March, 1959. Under the terms and conditions of the said contract, respondents were to construct and operate a mechanical ore handling plant (hereinafter called MOHP) for the purposes of loading and handling ore and a sum of Rs. 4/- would be charged on each tonne of iron or exported through the said plant. It was further agreed that out of the sum of Rs. 4/-, 2/3rd would go to the respondents and the remaining 1/3rd to the West of India Portuguese Guaranteed Railway Company Ltd. Thus, the respondents would be liable to pay only Rs. 1.375 paisa per each tonne of iron ore exported by them. Pursuant to this contract, respondents constructed, in or about 1957, the said MOHP for the export of iron ore, whether theirs or other exporters, and started its operation. In or about April, 1967, respondents started manufacture of iron ore pellets and began to export such pellets through the said Plant on the concessional rate of Rs. 1.375 per tonne. Petitioners objected to this on the ground that pellets, being a manufactured product from iron ore, were not falling within the meaning of iron ore in Cl.30 of the Contract dated 30th March, 1959 and since the respondents did not agree, it was suggested that the matter be referred to arbitration as envisaged in the said Contract. Again, the respondents did not agree with this suggestion and hence, petitioners, on 9th July, 1969, decided that the export of pellets would be permitted only on payment of a rate of Rs. 3.35 per tonne, this decision having been communicated to the respondents by letter dated 11th July, 1969.
3. Respondents reacted to decision by filing, on or about 11th August, 1969, the aforesaid Special Civil Suit No. 46/1969, inter alia, praying that the petitioners/ defendants in the said suit be permanently restrained by a perpetual injunction from acting upon or in pursuance of the said letter dated 11th July, 1969 and from recovering from them any sum in excess of Rs. 1.375 per tonne in respect of the export of iron ore pellets. Respondents also sought an interim injunction in the same terms of the prayer for permanent injunction. The learned trial Judge granted ex parte the sought interim injunction and further issued, on 14-8-1969, a notice to the petitioners/ defendant to show cause why the said injunction should not be made absolute. Petitioners showed cause against the confirmation of the ex parte injunction and also prayed for the stay of the said suit under S.34 of the Arbitration Act in view of the provisions regarding arbitration contained in the Contract entered into on 30th March, 1959. The learned trial Judge, however, by his Order dated 18th April, 1970, refused to stay the
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