{"id":187245,"date":"2008-10-15T00:00:00","date_gmt":"2008-10-14T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/state-of-u-p-vs-hindustan-unilevers-ors-on-15-october-2008"},"modified":"2018-08-09T08:30:37","modified_gmt":"2018-08-09T03:00:37","slug":"state-of-u-p-vs-hindustan-unilevers-ors-on-15-october-2008","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/state-of-u-p-vs-hindustan-unilevers-ors-on-15-october-2008","title":{"rendered":"State Of U.P vs Hindustan Unilevers &amp; Ors on 15 October, 2008"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">State Of U.P vs Hindustan Unilevers &amp; Ors on 15 October, 2008<\/div>\n<div class=\"doc_author\">Author: &#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;J.<\/div>\n<div class=\"doc_bench\">Bench: R.V. Raveendran, Mukundakam Sharma<\/div>\n<pre>                                  IN THE SUPREME COURT OF INDIA\n\n                         CIVIL APPELLATE JURISDICTION\n\n                          CIVIL APPEAL NO. 6126 OF 2008\n                         [Arising out of SLP(C) No.3146\/2006]\n\nSTATE OF U.P.                                                    .......APPELLANT(S)\n\n                                                   Versus\n\nHINDUSTAN UNILEVERS LTD. &amp; ORS.                                  .....RESPONDENT(S)\n\nWITH\n\nC.A. NO. 6127 OF 2008\n(Arising out of SLP(C) No.25725\/2008 @ CC.NO.3609\/2006)\n\n\n\n                                      ORDER\n<\/pre>\n<p>                            Leave granted. Heard the learned counsel.\n<\/p>\n<\/p>\n<p>2.        The U.P.     Cooperative Spinning Mills        Federation Ltd.     (hereinafter<\/p>\n<p>&#8216;Federation&#8217;, for short) invited applications for private placement of debenture bonds in<\/p>\n<p>the year 1998 representing that the repayment thereof was unconditionally and<\/p>\n<p>irrevocably guaranteed by the U.P. Government.          The State Government issued<\/p>\n<p>Government Order dated 12.8.1998 guaranteeing the repayment of the principal and<\/p>\n<p>interest in respect of debenture bonds issued by the U.P. Cooperative Spinning Mills<\/p>\n<p>Federation Ltd.\n<\/p>\n<\/p>\n<p>3.        Acting on the invitation for private placement of applications, and in view of<\/p>\n<p>the guarantee by the State Government, the first respondent invested Rs.15,00,000\/-<\/p>\n<p>                                                                                  &#8230;&#8230;..2.\n<\/p>\n<p><span class=\"hidden_text\">                                          -2-<\/span><\/p>\n<p>(Rupees fifteen lakhs only) from the provident fund deposits of its employees, in the<\/p>\n<p>said bonds. The Federation issued an allotment letter dated 25.12.1998 confirming that<\/p>\n<p>the amount invested will carry interest @ 14.9% p.a. and the bonds will be redeemed at<\/p>\n<p>the end of 48 months, 54 months and 60 months at the rate of 33%, 33% and 34%<\/p>\n<p>respectively.\n<\/p>\n<\/p>\n<p>4.        The Federation sustained losses and went under liquidation. It did not redeem<\/p>\n<p>the bonds as agreed and undertaken, inspite of demands. The amounts due were not<\/p>\n<p>paid except part payment of Rs.1,73,980\/- and Rs.1,15,118\/- in all Rs.2,89,098\/- towards<\/p>\n<p>interest. As the amounts due under the bonds and interest were not paid by the State<\/p>\n<p>Government in terms of guarantee, inspite of demand for payment, the respondent<\/p>\n<p>approached the Delhi High Court for relief.         The High Court, by order dated<\/p>\n<p>21.11.2005, directed the State Government, as guarantor, to pay the sum of<\/p>\n<p>Rs.15,00,000\/- (Rupees fifteen lakhs) with interest at the rate of 14.9% (the rate agreed<\/p>\n<p>under the bonds) less amounts already paid. The said order is challenged in these two<\/p>\n<p>appeals by the State Government and the Federation.\n<\/p>\n<\/p>\n<p>5.        Though several contentions were urged by the State Government and the<\/p>\n<p>Federation, when the matter came up today, the learned counsel for the State<\/p>\n<p>Government handed over a Pay Order for Rs.15,00,000\/- (Rupees fifteen lakhs) to the<\/p>\n<p>learned<\/p>\n<p>                                                                                &#8230;&#8230;&#8230;..3.\n<\/p>\n<p><span class=\"hidden_text\">                                           -3-<\/span><\/p>\n<p>counsel for respondent towards the refund of the principal amount.        In regard to<\/p>\n<p>interest, the learned counsel for the Federation and the State Government submitted that<\/p>\n<p>as the Federation is under liquidation and as the State Government has paid the<\/p>\n<p>principal amount, the respondent should be relegated to other remedies in law for<\/p>\n<p>recovery of interest.\n<\/p>\n<\/p>\n<p>6.         Such a contention is not tenable. The amount invested by first respondent<\/p>\n<p>belongs to the workmen of first respondent. The amount was invested in the bonds of<\/p>\n<p>the Federation in view of the express guarantee by the State Government that the same<\/p>\n<p>will be repaid with interest upto 15.5% p.a. The very purpose of the State Government<\/p>\n<p>guarantee is to ensure payment in case the Federation was not able to make payment. In<\/p>\n<p>the circumstances, the fact that the Federation is in financial difficulties cannot be a<\/p>\n<p>ground for the State Government to say that it will not make payment of interest, even<\/p>\n<p>though it had guaranteed the repayment with interest. If such a contention is accepted,<\/p>\n<p>the very purpose of the guarantee will be defeated. We are indeed surprised that such a<\/p>\n<p>plea is put forward on behalf of the State of Uttar Pradesh.<\/p>\n<p>7.         In the circumstances, we are of the view that the State Government should pay<\/p>\n<p>the interest also. However, on the facts and circumstances, we are of the view that<\/p>\n<p>interest<\/p>\n<p>                                                                                  &#8230;&#8230;4.\n<\/p>\n<p><span class=\"hidden_text\">                                            -4-<\/span><\/p>\n<p>should be paid at the rate of 14.9% p.a. for a period of five years from the date of<\/p>\n<p>deposit and thereafter at the rate of 9.5% per annum (which is equal to the minimum<\/p>\n<p>rate of interest that is payable by the first respondent to its workers on the provident<\/p>\n<p>fund dues). The above concession regarding interest is granted on the peculiar facts of<\/p>\n<p>these appeals. Three months&#8217; time is granted to the Government of Uttar Pradesh to pay<\/p>\n<p>the balance of interest.\n<\/p>\n<\/p>\n<p>8.         Appeals are disposed of accordingly. Parties to bear their respective costs.<\/p>\n<p>                                              &#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;J.<\/p>\n<pre>\n                                              ( R.V. RAVEENDRAN )\n\n\n\nNew Delhi;                              ...........................J.\nOctober 15, 2008.           ( DR. MUKUNDAKAM SHARMA )\n<\/pre>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India State Of U.P vs Hindustan Unilevers &amp; Ors on 15 October, 2008 Author: &#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;J. Bench: R.V. Raveendran, Mukundakam Sharma IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 6126 OF 2008 [Arising out of SLP(C) No.3146\/2006] STATE OF U.P. &#8230;&#8230;.APPELLANT(S) Versus HINDUSTAN UNILEVERS LTD. &amp; ORS. &#8230;..RESPONDENT(S) WITH [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-187245","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>State Of U.P vs Hindustan Unilevers &amp; Ors on 15 October, 2008 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/state-of-u-p-vs-hindustan-unilevers-ors-on-15-october-2008\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"State Of U.P vs Hindustan Unilevers &amp; 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