M/S Ncubate Logistic & Warehousing Pvt. Ltd. and Anr v. Union of India & Ors

RAJIV SAHAI ENDLAW, J. FEBRUARY 08, 2021 'bs'

* IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of decision: 8th February, 2021. + W.P.(C) 7302/2013 & CMs No.2673/2014 (for stay) & 17133/2017 (u/S 151 of the CPC) NCUBATE LOGISTIC & WAREHOUSING PVT. LTD. AND ANR ..... Petitioners Through: Mr. Abhinav Vasisht, Sr. Adv. with Mr. R. Jawahar Lal, Mr. Siddharth Bawa, Mr. Shyamal Anand and Ms. Priya Singh, Advs. Versus UNION OF INDIA & ORS ..... Respondents Through: Mr. P.S. Singh, Adv. for R-1/UOI. Mr. H.S. Parihar and Mr. Kuldeep S. Parihar, Advs. for R-2/RBI. Mr. Karan Khanna and Ms. Asmita Kumar, Advs. for R-3 to 5/IOB. AND + CS(COMM) 829/2016 & IA No.8202/2016 (u/O XXXIX R-1&2 of the CPC) INDIAN OVERSEAS BANK ..... Plaintiff Through: Mr. Karan Khanna and Ms. Asmita Kumar, Advs. Versus NCUBATE INDIA SERVICES PVT LTD & ORS ..... Defendants Through: Mr. Abhinav Vasisht, Sr. Adv. with Mr. R. Jawahar Lal, Mr. Siddharth Bawa, Mr. Shyamal Anand and Ms. Priya Singh, Advs. for D-1(A),5&6. Mr. H.S. Parihar and Mr. Kuldeep S. Parihar, Advs. for RBI. Mr. Pallav Saxena, Adv. for D-4. CORAM: HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW 1. Ncubate Logistic & Warehousing Pvt. Ltd. (Ncubate) and its Director Alok Goswami filed W.P.(C) No.7302/2013 seeking mandamus, directing the respondents Union of India (UOI), Reserve Bank of India (RBI) and Indian Overseas Bank (IOB), to honour the following Bank Guarantees (BGs): Date Number Amount 14th February, 2013 1436/ILG/12/2013 Rs.2 crores 6th March, 2013 1436/LG/18/2013 Rs.2 crores 6th March, 2013 1436/LG/19/2013 Rs.1 crore 26th March, 2013 1436/LG/26/2013 Rs.2 crores issued by IOB in favour of the Ncubate and to pay the amounts thereof together with interest @ 18% per annum, from 1st June, 2013, being the date of invocation of the BGs and till payment. 2. It was the case of Ncubate in the writ petition, (i) that Ncubate is a part of "SAR Group of Companies"; (ii) that Ncubate was promoted by Rakesh Malhotra and Navneet Kapoor, who have 85% and 15% shareholding respectively in Ncubate; (iii) that Ncubate is engaged in import sourcing, warehousing, logistic services and solutions, distribution to different customers, of various goods and products such as telecom consumer electronics, durables like water purifiers and air conditioners' stabilizers etc.; (iv) that Global Brands Enterprise Solutions Pvt. Ltd. (GBESPL), promoted by Pranay Dhabhai, Sidhant Dhingra, Sanchay Dhingra and Ashok Arjan Vaswani, had the marketing and distribution rights for India, of electronic consumer goods marketed under the name "AKAI"; (v) that GBESPL was however not able to capitalize on the business opportunity and was struggling to meet its existing obligations with the lenders; (vi) that in or about the year 2012, GBESPL approached the SAR Group, for collaboration, support and expansion of its business operations, by using Ncubate's pan India network for selling and distribution of products under the brand name 'AKAI'; (vii) GBESPL and Ncubate entered into an Import and Sourcing Agreement dated 5th May, 2012 whereunder GBESPL engaged Ncubate as its supplier and Ncubate agreed to source, import, warehouse, maintain inventory of and/or otherwise supply the products to GBESPL, based on purchase orders placed and/or instructions given by GBESPL from time to time, by issuance of Letter of Credit (LC) to Ncubate's vendors; (viii) that the aforesaid agreement entailed Ncubate incurring substantial financial exposure on account of inventory procured and held by Ncubate on GBESPL's purchase orders and monies recoverable from GBESPL against the goods sold; (ix) that to safeguard Ncubate against the said exposure, GBESPL was required to provide a security deposit of Rs.5 crores to Ncubate along with arranging for issuance of an unconditional and irrevocable BG for an amount of Rs.20 crores in favour of Ncubate; (x) that an addendum dated 7th May, 2012 to the agreement dated 5th May, 2012 was also executed by GBESPL and Ncubate; (xi) that under the aforesaid agreements, GBESPL and its