Shyam Sel and Power Ltd. vs Coal India Limited and Others

Soumen Sen, J.—This interlocutory application has been filed by the plaintiff praying, inter alia, for a direction upon the respondent No. 2 to execute fuel supply agreement in furtherance of the Letter of Assurance (in short "LOA") dated 3rd/10th September, 2008.

The plaintiff has taken steps for setting up an integrated steel and power plant in Village-Jamuria, District-Burdwan, in the State of West Bengal. The plaintiff says that for the purpose of setting up a captive power plant and ultimately making it functional, the plaintiff requires assured supply of fossil fuel. In view thereof, they approached the first and second defendant. Pursuant to such request, the second defendant issued a letter of assurance whereby the second defendant agreed to supply 4,52,000 tonnes per annum of Gr.-''E'' coal for 3X10 MW power plant to be located at village Jamuria on certain terms and conditions. The said letter of assurance required the plaintiff to complete all the activities as mentioned in Annexure - ''1'' to the said LOA within the period of 24 months from the date of issuance of the LOA and each activity within the time period mentioned against it. The said activities are described as milestones. The respondent No. 2 agreed to supply the assured quantity of coal on condition that the petitioner will furnish a commitment guarantee in the form of bank guarantee for a sum of Rs. 4,06,80,000/-. The said commitment guarantee shall remain valid until 4 months after the expiry of LOA period of twenty months. Thereafter, the CG shall stand converted into the Contract Performance Guarantee (CPG) that would be condition precedent to signing to the Fuel Supply Agreement (FSA) in which the validity of the CG shall be extended in accordance with the terms of the FSA. In the event, milestone is not duly performed or completed by the Assured within the time stipulated against each such activity/milestone, as specified in Annexure-''1'', then the Assured would be required to furnish to the respondent No. 2 one tenth (1/10th) of the amount of CG for each such non-performed incomplete milestone, as additional CG, within fifteen days from the date of such activity/milestone falling due for completion. In the event that any of the activities/milestones is delayed beyond the period specified against each of such activity/milestone in Annexure-''1'' and the Assured fails to furnish the additional CG to the Assurer in accordance with Clause 3.3 of the LOA that is to say one tenth of the amount of CG for each of such non-performed incomplete milestone or the Assured after furnishing the additional CG had failed to fulfil the activity/milestone within the total period of twenty four months as specified in Annexure-''1'', the Assurer that is the respondent No. 2 shall have the right to cancel or withdraw the LOA after duly notifying the Assured in writing at least seven days in advance. The LOA was to remain valid for a period of twenty four months from the date of issue of the LOA, unless extended for three months in accordance with Clause 3.5 of the LOA and shall stand annulled upon expiry of such period.

The plaintiff contended that there has been a substantial compliance of the conditions mentioned in the LOA and, accordingly, the cancellation of LOA by the second defendant by the letter dated 22nd March, 2011 was unjustified.

By the letter of cancellation the defendant No. 2 invoked the bank guarantee. The said invocation of bank guarantee is the subject matter of challenge in this suit. In the suit the plaintiff has also claimed for a mandatory injunction directing the defendant No. 2 to forthwith execute fuel supply agreement with the plaintiff in terms of the letter dated 10th September, 2008.

In an interlocutory application filed challenging the invocation of bank guarantee initially an order of injunction was passed restraining the Central Coalfields Limited from realizing the said amount. The operative portion of the order dated 6th April, 2011 is setout below:-

"Since it is evident that the plant is in the process of being commissioned and substantial work has been carried out and since the withdrawal of the letter of assurance would put the project in serious jeopardy, the letter of termination dated March 22, 2011 is stayed unconditionally for two days and from April 9, 2011 onwards subject to the deposit of a sum of Rs. 4,06,80,000/- by the plaintiff with Advocate representing the defendants. The relevant instrument of payment should be a bankers cheque or demand draft and not a personal cheque and should be made out in favour of the Central Coalfields Limited. The instrument may be encashed by the payee but the proceeds will not be immediately appropriated. There will be an order of unconditional injunction restraining the defendants from receiving the payment under the bank guarantee, if not already received, till April 8, 2011. If the deposit is not made by the end of working hours on April 8, 2011, the Central Coalfields Limited will be at liberty to receive payment under the bank guarantee and the withdrawal of the letter of assurance will become effective."

The said application was finally heard and disposed of by a detailed judgment and order dated 15th February, 2012 by which the interim order passed on 6th April, 2011 was confirmed.

While disposing of the matter the learned Single Judge held that it would be very unjust if after all the efforts that the plaintiff has taken to achieve the milestones and in setting up its integrated plant, they are now deprived of the supply of coal. The learned Single Judge after taking into consideration the objections raised with regard to the enforceability of the said agreement under Section 14(1)(a) of the Specific Relief Act read with Section 41(e) of the said Act and the judgments cited on behalf of the defendant No. 2 held that there has been substantial compliance of the conditions laid down in the LOA.

There were activities or milestones to be achieved by the plaintiff over a period of twenty four months. It is not that any of the milestones would be performed in 24 months. There were specific time limits for the accomplishment of each of the milestones. Each of these accomplishments had to be supported by supporting documents like certificates, transfer documents, applications filed, certificate of incorporation.

In the communication dated 6th December, 2010 the petitioner reiterated that by the earlier letters dated 27th October, 2010, 29th October 2010 and 30th November, 2010 the petitioner requested the respondent No. 2 to execute the FSA for its 90 MWCPP situated at Jamuria. It was further reiterated that the petitioner had achieved all the milestones pertaining to the said LOA and all necessary documents have already been submitted to the said authority. The said respondent, however, once again submitted point wise compliance of milestone for 90 MWCPP. The learned Single Judge in the said application considered the extent of achievements of these milestones and after considering the documents disclosed in the proceeding held that there is substantial compliance. The relevant observations of the learned Single Judge in relation thereto are stated below:-

"Clause 2 of the LOA stipulated that the plaintiff undertook to accomplish the milestones mentioned in the annexure to the letter, as modified later within 24 months from the date of its issuance. Under Clause 2.2 the plaintiff was required to submit a statement whether the milestones had been achieved within the time stipulated. 2.3 reserved the right to the second defendant to verify this statement. Each of the milestones mentioned in the annexure had a different time limit for its accomplishment. It was specified in Clause 3.4.1 that if any milestone was delayed beyond the specified time, the second defendant would have the right to cancel the LOA. Such cancellation could be put into effect by giving the plaintiff at least seven days'' notice. If all the milestones, were achieved within the stipulated time the second defendant would sign a fuel supply agreement with the plaintiff within three months of expiration of the validity period of the LOA, as provided in Clause 1.2.

In my opinion, these representations were conditional, yet clear and unequivocal."

SUBSTANTIAL COMPLIANCE:

But, a situation may arise when there are innumerable conditions to be fulfilled, as in this case. There is one time period for one condition or milestone, another time period for another. For example, land had to be obtained within six months, forest clearance within 24 months, environment clearance within 12 months. What should be in law the position of the party who upon acting on the representations has fulfilled a substantial part of the conditions? Would the position of that person be the same as the one who has been unable to fulfil a single condition, as a result of which an LOA is cancelled? Should substantial compliance with the conditions, be taken as, acting in terms of the representations and altering one''s position? If the law were that in spite of fulfilling the conditions in a substantial way, a person could be deprived by the representor of the benefits of the representations, it would indeed produce quite unjust results. Therefore, in a case like this when there are several conditions attached to the representations, the doctrine of substantial compliance applies.

Now, the question to be answered is whether the plaintiff was able to achieve the milestones; substantially?

It appears that on 17th November, 2008, the plaintiff wrote a letter to the General Manager (Sales and Marketing) of the second defendant. They mentioned in the letter that according to the LOA a bank guarantee for Rs. 4,06,80,000/- had been furnished. The extent to which the milestones had been achieved was mentioned in an annexure to the letter. Each milestone is referred to against its serial number.

It appears from this annexure that the plaintiff asserted that they were a lawfully incorporated company thus complying with serial No. 1. Their Board of Directors had taken the necessary decision under serial No. 2 to make the investment for which the supply of coal was sought. Necessary documents were also attached in support of the above claim. With regard to serial No. 3 of the milestones a technical feasibility report was furnished. With regard to the status of land acquisition in serial No. 4 the plaintiff was able to assert possession of land. Serial No. 5 related to environmental clearance. The plaintiff stated that a final clearance from the Central Government agency would be furnished in due course. With reference to forest clearance in serial No. 6 the plaintiff was able to assert that they had obtained the recommendation for forest clearance and would achieve it in 12 months. Serial No. 7 related to water allocation. With reference to this serial number the plaintiff said that the water allocation letter had been issued by the Irrigation and Waterways Department, Government of West Bengal and that they would be able to get the sanction letter from the State Water Supply Authority. With regard to the funding, commissioning of plants etc. required by serial Nos. 8, 9, 10 and 11, the plaintiff submitted the resolution of the Board of Directors, copies of agreement loan sanction letter and so on to satisfy the second defendant.

It seems that the second defendant was satisfied with the progress made by the plaintiff in its achievements with regard to environment and forest clearance. In their letter dated 21st January, 2009 the second defendant reacted to the above submission of the documents made by the plaintiff by saying the following:-

"1) Environment clearance (Sl. No. 5) :: Approval for environmental clearance for air and water from State Pollution Control Board for the year 2008-2009 not submitted.

2) Forest Clearance (Sl. No. 6) :: Forest clearance not submitted. NOC from State Forest Department is mandatory."

They had nothing to say regarding compliance with the work against other serial number.

The plaintiff replied by their letter 6th February, 2009. An extract of this letter is quoted above. It appears that the plaintiff was convinced that they would be able to obtain the environment and forest clearances soon.

By their letter dated 22nd March, 2011, the second defendant cancelled the LOA. They said at the outset that the letter of LOA had expired on 9th September, 2010. The plaintiff had failed to submit documents to testify the achievement of all the milestones before the expiry of the LOA. For milestone No. 1, 3, 6, 7, 8 the second defendant said that the documents were submitted after the validity period of the LOA. Nothing was said regarding Item No. 2, 4, 9, 10 and 11. Referring to the milestone No. 5 relating to environment clearance they said that environment clearance was obtained for 2# 250 MW CTP whereas the LOA was issued for 3# 30 MW CPP.

In my opinion no case can attract the principles of promissory estoppel more profoundly than this case. The plaintiff, on the available evidence has been able to show substantial compliance with the conditions or milestones, thereby altering their position. After an entrepreneur had taken all the steps to get the integrated steel and power plant set up, it would be denied supply of coal because some documents were submitted later. In my judgment the second defendant ought to have accepted the belatedly submitted documents and further, should have asked the plaintiff to regularise the environment clearance. Without doing that they cancelled the LOA which means that they have taken back their representations, as a result of which the plaintiff will be deprived of supply of coal.

The second defendant and its holding company the first defendant Coal India Ltd. and their group entities are monopoly distributors of coal to factories and plants in our country. Being monopoly suppliers they should be most careful in making representations and even more careful in resiling from those representations. This kind of an unreasonable retraction is bound to cause substantial loss to a party who has substantially complied with the conditions. The plaintiff is one such party. I think it would be very unjust if after all the efforts that the plaintiff has taken to achieve the milestones and in setting up its integrated plant, they are deprived the supply of coal."

This application has been filed after disposal of the earlier interlocutory application.

In this application, the petitioner has prayed for a mandatory order directing the respondent No. 2 to execute Fuel Supply Agreement (in short "FSA") in furtherance of the Letter of Assurance (in short "LOA") dated 3rd/10th September, 2008.

It is stated that in the petition that due to non-execution of the petitioner is not being to start operation. The petitioner has already invested Rs. 325 crores for setting up the plant and getting the first phase ready for commissioning certified by a chartered accountant. For the aforesaid facilities, the petitioner has not only arranged funds internally but also obtained loans/credit facilities from banks, particulars whereof are given in Paragraph 30 of the Petition.

It is submitted that in view of the finding in the earlier interlocutory proceeding the petitioner has substantially complied with the LOA, the plaintiff is entitled to seek a mandatory injunction.

Mr. Anindya Kumar Mitra, the learned Senior Counsel, appearing with Mr. Samit Talukdar, Senior Advocate, argued that the documents disclosed in the proceedings would in fact show that all formalities were complied with within the stipulated period and having regard to such compliance, the defendant No. 1 is required and obliged to execute FSA in favour of the plaintiff. The two alleged deficiencies as indicated in the letter dated 21st January, 2009 of the second defendant, with regard to Clauses 5 and 6 of the milestones have been duly addressed and the two alleged deficiencies were explained by the plaintiffs in their letter dated 6th February 2009. The following were stated regarding environmental and forest clearance:

Environmental Clearance (Sl. No. 5 of Milestone Chart) -since our composite project is 1.10 million tonne Steel plant along with 500 MW power plant at the 1st phase, it is treated as category ''A'' Project and Expert Appraisal Committee(EAC) of MoEF(Central Govt) has approved the terms of reference(ToR). A copy from the Website of MoEF is enclosed. It is expected that the official letter from MoEF will reach us within a week when we shall be able to send you the same.

Forest Clearance(Sl. No. 6 of Milestone chart) - Total area of land acquired for the project are private land and fall under "Tenancy Land" category that is why we have earlier vide our letter No. SSL/Januria-CPP/CCL/LOA/08-09 Dated 17.11.2008 submitted a self-certified declaration on the issue. However, for your convenience a copy from State Authority would be submitted soon..."

It is submitted that the plaintiff submitted documents for 145.37 acres on 17th November, 2008 and on 30th October, 2009 photocopy of land purchased/leased documents for 8.39 acres. Subsequently, on a clarification sought by Defendant No. 2, it was stated by the plaintiff that land requirement for 90 MWCPP is 105 Acres. Moreover, the plaintiff acquired lands which do not form part of any forest land and accordingly no forest clearance is required for those lands. It is submitted that on 17th November, 2008, CCL was duly informed that the acquired land do not have forest land and no forest clearance is required for this land. In the waiver clause of the milestone chart, it is clearly mentioned that in case of private land being purchased from the owner directly, notification under section 6 or section 11 would not be applicable and in such case, land registration/transfer deed/land lease agreement would only be applicable. It is submitted that the minutes of the review committee would not show that the said review committee has arrived at any definite finding, that the petitioner has failed to achieve any milestone. Although the said review committee recorded that as per clause 4 of the LOA, the validity period of 24 months has already expired on 9th September, 2010, and the same has annulled upon the expiry of such period, the learned Senior Counsel wonders how the review committee could use the expression ''annulled'', although the impugned letter dated 22nd March, 2011 refers it as ''cancellation/withdrawal of Letter of Assurance(LOA) and encashment of commitment guarantee''. It is submitted that in such circumstances the petitioner in the instant application is seeking an order which is in the nature of mandatory injunction. If no order is passed, the petitioner who has made investments to the tune of Rs. 750 to 800 crores and has generated employment for almost 4000 unemployed local youths, the entire investment shall become unviable for the petitioner since the major investment made by the petitioner are borrowed funds and has to make payments of huge sums to financial institutions by way of interest. It is fit case where the Court should exercise its discretion while passing order in the nature mandatory injunction since the petitioner has altered its position by investing almost Rs 750 to 800 crores and has provided employment to 4000 employees on the basis of assurance and representation given by CIL.

Per contra, Mr. P.C. Sen, the learned Senior Counsel appearing on behalf of the respondent submitted that the contract is terminable in nature inasmuch as the reliefs claimed in the petition are in the nature of final reliefs which can only be decided at the trial of the suit. It is submitted that the contract is not specifically enforceable inasmuch as one of the issues that is required to be decided at the trial of the suit, is, whether, in fact, the respondent has achieved the milestones in terms of LOA. The learned Senior Counsel has referred to the New Coal Distribution Policy issued by the Government of India, Ministry of Coal dated October 18, 2007 and submits that in terms of the policy for new consumers, the allottee of LOA would be required to fulfill certain stipulated conditions and meet the milestones within this period and thereupon approach coal companies for entering into FSA. Such FSA would be completed within three months. Further, with a view to ensure that only serious and committed consumers approach for LOA, they would be required to furnish an "Earnest Money Deposit" (in short "EMD) in the form of Bank Guarantee and would stand discharged once FSA is concluded within the stipulated period. However, on failure, the EMD would be forfeited. The said LOA would be valid for 24 months. It is submitted even on the basis of the representation made by the petitioner it would be evident that all the milestones could not be achieved by the petitioner within the period prescribed and in view thereof the said LOA was terminated by the letter dated 22nd March, 2011.

In an earlier proceeding, a finding was arrived at that the plaintiff has substantially performed this obligation. Although an attempt was made on behalf of the defendant in this proceeding to argue on matters, namely, lack of financial capacity and sanction of bank loan as one of the grounds for cancellation but it would appear that the LOA was not cancelled on those grounds. The letter of cancellation must stand or fall only on the grounds and/or reasons stated therein. The defendants cannot alter the reasons and deviate from the grounds and supply new grounds than what is stated in the letter of cancellation.

The only issue requires to be decided at this interlocutory stage is whether any exceptional circumstances exist for granting a mandatory order in favour of the petitioner.

Mr. P.C. Sen, the learned Senior Counsel has referred to the Hon''ble Division Bench Judgement of this Court in Nandan Pictures Ltd. Vs. Art Pictures Ltd. and Others, AIR 1956 Cal 428 and decisions of the Hon''ble Supreme Court in Dorab Cawasji Warden Vs. Coomi Sorab Warden and others, AIR 1990 SC 867 : (1990) 1 JT 199 : (1990) 1 SCALE 166 : (1990) 2 SCC 117 : (1990) 1 SCR 332 and Metro Marins and Another Vs. Bonus Watch Co. Pvt. Ltd. and Others, (2004) 4 CTC 712 : (2004) 7 JT 394 : (2005) 141 PLR 638 : (2004) 7 SCALE 581 : (2004) 7 SCC 478 : (2004) AIRSCW 7349 : (2004) 6 Supreme 518 , argue that it is well-settled of a mandatory injunction is granted only in presenting and restoring status quo of the last non-contested status which preceded the pending controversy until the final hearing when full relief may be granted or to compel the undoing of these acts that have been illegally done or the restoration of that which was wrongfully taken from the party complaining. It is granted only to restore the status quo and not granted to establish a new set of things differing from the state which existed at the date when the suit was instituted. The learned Senior Counsel had relied upon a Supreme Court judgment in Indian Oil Corporation Ltd. Vs. Amritsar Gas Service and Others, (1990) 4 JT 601 : (1990) 2 SCALE 1056 : (1991) 1 SCC 533 : (1990) 3 SCR 196 Supp : (1991) 1 UJ 96 for the proposition that the contract of this nature falls under Section 14(1)(c) of the Specific Relief Act which specifies the contracts which cannot be specifically enforced and one of which is "a contract which is in its nature determinable". It is submitted that just because the respondent No. 1 may be held to be an instrumentality of the suit that per se would not attract Article 14 of the Constitution of India and action of the respondent No. 1 cannot be reviewed based on public law principle. The matter is required to be decided strictly in terms of the LOA and the rights of the parties are to be decided in terms of the agreement arrived at between the parties. It is in the realm of the private law and the provisions of Contract Act and Specific Relief Act shall apply in determining the mutual rights and enforceability of such right.

Her Highness Maharani Shantidevi P. Gaikwad Vs. Savjibai Haribai Patel and Others etc. etc., AIR 2001 SC 1462 : (2001) 4 JT 43 : (2001) 2 SCALE 647 : (2001) 5 SCC 101 : (2001) 2 SCR 590 : (2001) AIRSCW 1240 : (2001) 2 Supreme 516 was cited for the proposition that contracts which involved performance of continuous duty is not enforceable in view of Section 14(1)(d) of the Specific Relief Act. It is argued that the said contract was terminable prior to execution of FSA if the defendant failed to achieve milestones as specified in the LOA and, accordingly, no direction can be passed at this interlocutory stage which would in effect result in execution of FSA. It is argued that it was open for the plaintiff in the earlier proceeding to seek the self-same relief and in view of the fact that such relief was not sought for and no order has been passed in the earlier proceedings it should be held that the present relief is barred by the principle of res judicata. In this regard, Mr. Sen has relied upon a decision of the Hon''ble Supreme Court in Hope Plantations Ltd. Vs. Taluk Land Board, Peermade and Another, (1998) 7 JT 404 : (1998) 6 SCALE 19 : (1999) 5 SCC 590 : (1998) 2 SCR 514 Supp .

The issue as to whether there has been a substantial compliance of the conditions of LOA is conclusively decided in the judgment dated 1st February, 2012 and it operates as res judicata in so far as the present proceeding is concerned. The judgment cited on behalf of the respondent in Hope Plantations (supra) clearly lays down the said law. It becomes an issue estoppel which operates at any subsequent proceedings in the same suit in which the issue had been determined. The said judgment of the learned Single Judge was not interfered with by the Hon''ble Appellate Court, save and except, the direction with regard to the deposit of amount was modified and by reason of the order of the Hon''ble Division Bench dated 8th April, 2013, the defendant No. 1 is holding a sum of Rs. 4,06,80,000/- and was directed to keep the said sum in a suitable interest bearing fixed deposit to be kept renewed from time to time till disposal of the suit.

The power of the Court to pass mandatory order has been considered by this Court in Soumyendra Roy Choudhury Vs. UCO Bank, (2014) 185 CompCas 330 . In the said judgment after considering the case laws I have held that in an appropriate case, the Court can pass a mandatory order at the interlocutory stage. The relevant paragraphs are stated below:-

"Now comes the issue of granting a mandatory order at the interlocutory stage. Mr. Anindya Kr. Mitra, the learned Senior Counsel has submitted that at the interlocutory stage, the Court should not pass a mandatory order. It was submitted that the plaintiff has failed to make out a strong case for trial. The balance of convenience is not in favour of the plaintiff and no irreparable or serious injury has been shown by the plaintiff. The mandatory injunctions are generally granted in case of wrongful dispossession from immovable property and for restoration of possession thereof. In order to get a mandatory order, the plaintiff would be required to demonstrate that the wrongful conduct of the respondent authorities are manifestly unjust and the materials-on-record would on the face of it would establish that nothing remains for the parties to go to trial on the said issue.

Justice Megarry in Woodford (supra) held that the wrongful deprivation of a right to vote even at a meeting of a mere private association, is no trivial matter. If the plaintiff is able to establish a manifest injustice being caused to the plaintiff and for which no further evidence is called for, in my view, the Court is not precluded from passing a mandatory order which would have the practical effect of granting the sole relief claimed. The cases are not restricted only to the preservation of property. In Woodford (supra) Justice Megarry has gone to the extent saying that there is nothing to prevent the Court in a proper case from granting on motion substantially all the reliefs claimed in the action. The Court in such a situation would be required to look at the case as a whole and if the Court is satisfied with the grounds made out in the petition, the Court should not refuse to grant injunction.

In Acrow (supra) it was reiterated that at the interlocutory stage, it may call for virtually deciding the action, but that often happens considering the nature of the controversy and the action brought before the Court. In that case the Court of Appeal on a finding arrived at that the defendants have unlawfully interfered with the plaintiffs'' business passed an injunction in the mandatory form directing the defendants to use all reasonable endeavours to supply the plaintiffs with the chain needed for the manufacture of ''lo-tow'' equipment disregarding the instruction received from SI Inc. It was found that there was no just cause or excuse for the defendants not to supply the chain to the plaintiff and the SI Inc acted unlawfully in interfering with the supply to be affected by the defendant to the plaintiff in breach of the implied term of the licence agreement. The defendants were found to have obeyed SI Inc''s instructions in breach of its obligations to the plaintiff.

In Heywood (supra) the Court of Appeal dealt with the objection that to vacate the land charge would be equivalent to giving judgment on an interlocutory application in the action in favour of exactly the relief which the plaintiffs would obtain at the eventual hearing of the action in the ordinary way by reiterating the principle that although the general rule is that the Court will not grant, on motion, that relief which ought to be granted at the hearing, yet it will do so in some cases. The ratio of the decision seems to be that the order would largely depend on the circumstances and the convenience of the matter. It was stated at Page 1067 of the report that "the matter of substance to which I referred is whether it is proper on an interlocutory application - this would apply equally whether the application were by way of motion or by way of summons - to make an order which has the effect of granting the plaintiffs substantially the whole of the relief claimed in the action. That is the real complaint of substance which has been put before us. My lord has already referred to the two cases cited to us, Bailey v. Ford (1843) 13 Sim. 495) and the recent case before this Court of Bailey (Malta), Ltd. v. Bailey ("The Times," May 29, 1963). Those cases, I think, do show that it is only in unusual circumstances that the court ought to take the step of granting substantially the whole relief claimed in the action on an interlocutory application. But they equally show that that is a procedure which, in a proper case, is available. In my judgment, having regard to the admitted fact that the alleged contract registered was no contract at all, this is one of those cases in which it is proper and appropriate to grant by way of interlocutory application the relief which the judge has granted. In those circumstances I agree that the judge came to the right conclusion, and that the appeal should be dismissed".

The aforesaid principles have been followed by our Courts also and if any reference is called for one can refer to the following decisions:-

1) Indian Cable Company Limited Vs. Smt. Sumitra Chakraborty, AIR 1985 Cal 248 : (1985) 1 CALLT 153 : (1985) 1 CHN 428 : (1985) 2 CompLJ 64 : 89 CWN 559

2) Premier Industries (India) Ltd. Vs. Alliance Credit and Investments, (1998) 2 CALLT 562 : (2000) 102 CompCas 456

In Premier (supra) it was held that it has been the consistent view that when there is no dispute as to the right of the plaintiff to the property there is no bar to passing an interim order even if it amounts to decreeing the suit.

In fact, large number of English decisions were referred to and considered in Dorab Cawasji (supra) in considering the power of the Court to grant such interlocutory mandatory injunction. It was held in Dorab Cawasji (supra) that in certain special circumstances, the Court can pass such mandatory order the interlocutory stage.

Mr. Mitra has relied upon Paragraphs 14 and 15 of the said decision which states as follows:-

"14. The relief of interlocutory mandatory injunctions are thus granted generally to preserve or restore the status quo of the last non-contested status which preceded the pending controversy until the final hearing when full relief may be granted or to compel the undoing of those acts that have been illegally done or the restoration of that which was wrongfully taken from the party complaining. But since the granting of such an injunction to a party who fails or would fail to establish his right at the trial may cause great injustice or irreparable harm to the party against whom it was granted or alternatively not granting of it to a party who succeeds or would succeed may equally cause great injustice or irreparable harm, courts have evolved certain guidelines. Generally stated these guidelines are:

(1) The plaintiff has a strong case for trial. That is, it shall be of a higher standard than a prima facie case that is normally required for a prohibitory injunction.

(2) It is necessary to prevent irreparable or serious injury which normally cannot be compensated in terms of money.

(3) The balance of convenience is in favour of the one seeking such relief.

Being essentially an equitable relief the grant or refusal of an interlocutory mandatory injunction shall ultimately ret in the sound judicial discretion of the Court to be exercised in the light of the facts and circumstances in each case. Though the above guidelines are neither exhaustive or complete or absolute rules, and there may be exceptional circumstances needing action, applying them as prerequisite for the grant or refusal of such injunctions would be a sound exercise of a judicial discretion."

The principle laid down in the aforesaid paragraphs is not restricted to a case of preservation of a right in respect of wrongful dispossession from immoveable property. It is equally settled that if the unlawful act has been committed and an order restraining its commission is, therefore, meaningless, justice can sometimes be done by issuing a mandatory injunction ordering the act to be undone. (Hanbury and Martin: Modern Equity) As mentioned earlier, the right to contest election is a valuable right and such right should not be ordinarily interfered with and the authorities concerned cannot prevent an eligible contestant from contesting the said election on unreasonable grounds. The importance of representation of shareholder director in the Board is the requirement of the statute which the said bank is obliged to ensure and not to deny such right on flimsy ground. The denial of right to the petitioner on the aforesaid two grounds invariably cause a serious prejudice to his right to stand for election and seek election under the category of shareholder director. The respondent authorities have failed to explain as to why a different approach was adopted in 2013, although the said aforesaid grounds were available to them in 2010 when the plaintiff contested and lost the election. Initially, the UCO Bank informed the petitioner by a communication dated July 12, 2011 that the bank had received various representations containing allegations/claims and counterclaims/allegations against the petitioner in view of the nature of such allegations the Nomination Committee of the Board directed the bank to make intensive examination of alleged facts and also to make reference to the Government of India for clarification with regard to the fit and proper status of the candidates. It was on that basis the Agenda Item No. 3 relating to the election of director mentioned in the notice dated June 3, 2011 was withdrawn giving rise to the filing of the earlier suit. Just prior to the said communication, the Chairman and Managing Director of UCO Bank addressed a letter to the UCO Bank to make applications seeking clarification with regard to the candidature of the petitioner which reads as follows:-

"Sri S. Roy Choudhury, another contesting candidate is a retired employee of the Bank and drawing pension. We have received two legal opinions having conflicting views about whether a pensioner, of the Bank, holds Office of profit. Further, in terms of Gazette of India-Extraordinary dated 29.12.2000 issued by Ministry of Finance, Government of India, do not permit an employee of the Bank to contest the election as shareholder director. In view of the fact that position of employee is considered as holding office of profit. As mentioned, Mr. Suman Roy Choudhury is a retired employee of the Bank and a pensioner. Taking this fact into consideration whether it would be appropriate to consider Mr. Roy Choudhury to be holding an "office of profit".

Moreover, Mr. Suman Roy Choudhury, is an office bearer of an officer association representing the interest of officers. As there is a separate provision Officer Employees to be represented on the Board by statute, can Mr. Suman Roy Choudhury representing an association of employees represent the category of shareholders on the Board."

The petitioner was not, however, found an unfit person under the RBI guidelines.

In any event, the enquiry of the bank as to the clarification is restricted to the issues mentioned in the said letter which is in no way connected with the grounds on which the Nomination Committee found the petitioner ineligible. The order of the Appellate Court in connection with the earlier suit records that the bank withdrew the Agenda and sought clarification from Reserve Bank of India. It further appears that the learned Counsel representing the bank on instructions submitted that the Reserve Bank of India already clarified to the extent that two of the contestants were not holding any office of profit, however, the question of integrity was not gone into. Accordingly, as on 8th April, 2013, the situation as it stood was that the Nomination Committee was required to consider the integrity of the candidates. It was further stated before the Hon''ble Division Bench that the Agenda was kept in abeyance awaiting decisions of the Reserve Bank of India. The bank did not disclose the decision of the Reserve Bank of India. On the contrary, the several annexures to supplementary affidavit would show that the RBI did not issue any instruction which would disqualify the petitioner from contesting the election on the grounds on which the Nomination Committee found the petitioner ineligible. The entire set of facts, if taken together, would show that the petitioner has suffered demonstrable prejudice and arbitrariness at the hands of the authorities concerned. Wider the power there is always an apprehension of misuse of such power and in view thereof the Court is not precluded from finding out if such discretion has been properly exercised. Considering the object of the Acquisition Act and the Reserve Bank guidelines, in my view, the Nomination Committee does not have any unfettered and unlimited discretion. If a wide power is conferred upon administrative authority, it must be exercised reasonably.

Apart from the three well-known tests of illegality, arbitrariness and procedural impropriety, the other facet of challenge to such action is arbitrariness. The petitioner should have been allowed to contest the election in 2011 itself. The respondent authorities are citing different reasons at different times to present the petitioner from contesting the election. The decision of the Nomination Committee is based on extraneous consideration and suffers from perversity.

Mr. Mitra would remind this Court that a mandatory injunction is, however, seldom granted before the hearing, though when the case is clear and free from doubt it may be had upon interlocutory application. Prompt action is essential if a mandatory injunction is the desired remedy. I think it is one of those cases which is clear and one which the Court thinks ought to be decided at once since there is no necessity to prolong the said proceeding. The tenure of the shareholder director would expire in the middle of 2014. The plaintiff was prevented from contesting the said election in 2011 would be again deprived to seek the election if a prolong trial takes place. Since the issues involved can be conveniently decided at this interlocutory stage without having the luxury of a ritualistic trial which in the instant case is wholly unnecessary, in my view, the plaintiff who had already suffered in the hands of the defendant authorities should not be made to suffer any further. The law cannot be a lame duck and would not allow its power and jurisdiction to be fettered on a perception that the Court should not grant a mandatory injunction. The Court can issue temporary injunctions in a mandatory form. All that the Court is required to ensure that the plaintiff is able to make out a case for mandatory injunction. It all depends upon the facts of each case. If the Court is satisfied on the basis of the materials on record that the issue involved in the interlocutory application can be finally and conclusively decided without going through the rigmarole of a trial and the plaintiff has been able to satisfy the Court that the case is clear and free from doubt and does not require any further trial on the said issue. The Court is not precluded from passing a temporary injunction in a mandatory form. In the instant case, as discussed above, the legality and validity of the order passed by the Nomination Committee can be decided on the basis of the available record and it ex facie shows that the Nomination Committee has completely misdirected its mind and has arrived at a conclusion which is perverse. In deciding the said issue, no witness action is required."

The decision was upheld by the Hon''ble Division Bench. The decision is reported at UCO Bank Vs. Saumyendra Roy Chaudhury, (2014) 3 CALLT 510

In order to obtain an order in the mandatory form, the plaintiff would be require to establish exceptional circumstances and the manifest illegality of the order forming the subject-matter of challenge in the suit. Moreover, the Court would be required to exercise a discretion which should be based on sound legal principle. Although, a finding is arrived at that there has been a substantial compliance but the said decision is not final and dependent upon a definite finding being arrived at the trial of the suit. It cannot also be disputed that at least one of the milestones could not be achieved by the plaintiff within 24 months. The considerations of passing a final relief is different from the consideration based on which an interlocutory order is passed. At the interlocutory stage, the Court is not required to hold a mini trial. The Court is required to be satisfied that the plaintiff has been able to make out a strong prima facie and an arguable case on merits.

In Israil Vs. Shamser Rahman reported at Israil Vs. Shamser Rahman, (1914) ILR (Cal) 436 while expressing the view that the High Court was competent to issue an interim injunction in a mandatory form it was held that in granting an interim injunction the Court would be required to determine was whether there was a fair and substantial question to be decided as to what the rights of the parties were and whether the nature and difficulty of the questions was such that it was proper that the injunction should be granted until the time for deciding them should arrive.

The plaintiff at the ultimate trial on full disclosures of all materials may or may not succeed. The purpose of an interlocutory order is to preserve the right of the plaintiff and to secure the plaintiff from the consequences that are likely to follow in the event the order under challenge is given effect to.

Under the LOA, the petitioner is required to achieve and complete all the activities within 24 months from the date of the issue of LOA. The defendant No. 2 reserved the right to independently verify the status of each milestone and in the event of any significant or reasonable discrepancy found by the said defendant in respect of the status report and documentary evidence submitted by the petitioner, the defendant would be required to notify the plaintiff forthwith upon which the plaintiff would be required to correct the discrepancy within 7 days. In the event of failure on the part of the petitioner to correct the discrepancy, the petitioner would be liable to submit additional commitment guarantee as per Clause 3.3. Even if it is admitted that there has been substantial compliance of the milestones but for the milestones which could not be achieved within the stipulated time, namely, water allocation being delayed by twenty one days, additional commitment guarantee was not furnished by the petitioner. The respondent as assured can cancel or withdraw the LOA after duly notifying the assured in writing at least 7 days in advance. My reading of the said Clauses would mean that if there is any breach or non-compliance, the assured would be required to give a notice in writing to remedy such breach or comply with the conditions in terms of Clause 2.3 read with Clause 3.4.1 of the said LOA. It prima facie appears that the cancellation was not done in terms of Clause 3.4.1. Under Clause 4 of the LOA, the LOA would remain valid for a period of 24 months from the date of issue of the said LOA unless extended for three months in accordance with Clause 3.3 (wrongly printed as Clause 3.5) and shall stand annulled upon expiry of such period. The expression "annulled" used by the Review Committee appears to have been borrowed from Clause 4. The fact, however, remains that if it is found that the validity of the LOA is extendable in the instant case for a period of three months then admittedly all the milestones have been achieved. The letter of cancellation and/or withdrawal appears to have not taken into consideration the said clauses inasmuch as the decision of the Review Committee also appears to be cryptic and has failed to take into consideration the said clauses as well. Under such circumstances, in my view, the letter of cancellation cannot be given effect to and shall remain stayed.

The authorities concerned shall review the matter afresh taking into consideration the documents produced by the petitioner and the representation made by the petitioner on 6th December, 2010. The Review Committee shall decide the matter afresh. The petitioner if desires can make any further representation to the Review Committee within two weeks from date. The Review Committee shall decide the matter within a period of 12 weeks from the date of communication of this order upon giving a reasonable opportunity of hearing and shall dispose of the representation by a reasoned order. The Review Committee shall communicate its decision to the petitioner within a week from the date of passing of the order.

The application, accordingly, stands disposed of with the aforesaid direction. However, there shall be no order as to costs.

Urgent xerox certified copy of this judgment, if applied for, be given to the parties on usual undertaking.