Andhra Pradesh High Court - Amravati

M/S. Klsr Infratech Limited, vs The Reserve Bank Of India, on 19 January, 2021

Bench: U.Durga Prasad Rao

IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
TUESDAY , THE NINTEENTH DAY OF JANUARY
TWO THOUSAND AND TWENTY ONE :
:PRESENT:
THE HON'BLE SRI JUSTICE U. DURGA PRASAD RAO

I. A. Nos.1, 3 and 4 of 2020
IN
WRIT PETITION NO: 20420 OF 2020

Between: ,

M/S. KLSR Infratech Limited, Rep. by its Authorized person Sri Allu Nagesh, hy Tas
S/o. Rama Rao, aged about 51 years, Regd office at H. No.2-56/D/213/9B, Flat No.3B,

KLSR Towers, Near YSR Statue, Ayyappa Society, Madhapur, Hyderabad -81.

Petitioner
AND

4. The Reserve Bank of India Rep. by its Regional Director, Regional office at 6-1-56,
Secretariat Road, Saifabad, Hyderabad.

2. Union Bank of India (Formerly known as The Andhra Bank) Represented by Chief
Manager, Nellore Main, Nellore SPSR Nellore District, A.P.

3. M/s. OFB Tech Private Limited Rep. by its Authorised signatory, Registered Office
Shop No.G-22, C (UGF) D-1 (K-84) Green Park Main, New Delhi, South Delhi DL
110016.

Respondents
Petition under Article 226 of the Constitution of India praying that in the
circumstances stated in the affidavit filed therewith, the High Court may be pleased to
issue a writ or order or direction or writ of Mandamus, declaring the action of the 4%
respondent restraining the relief of moratorium only in certain cases and not extending
the benefit to all kinds of transactions by applying the principle of force major clause
inspite of declaration of pandemic Covid- 19 by the Government of India and action of
2°¢ respondent allowing the bank guarantees 0384191GPER0053 and
0384191GPER0054 to be invoked by the 3" respondent as illegal, arbitrary, malafide,
unmindful and contrary to Principle of Force majeure applied in contractual matters and
consequently direct the 2™7 Respondent not to allow the 3 respondent to invoke the
respective bank guarantees for a reasonable period in the interests of justice.

IA NO: 1 OF 2020

Petition under Section 151 CPC praying that in the circumstances stated
in the affidavit filed in support of the petition, the High Court may be pleased to direct
the respondents No.2 and 3 not to invoke the babnk guarantees ie.,
0384191GPER0053 and 0384191GPER0054, pending disposal of WP No. 20420 of
2020, on the file of the High Court.

1A NO: 3 & 4 OF 2020
Between
M/s. OFB Tech Private Limited Rep. by its Authorised signatory, Varun Bhutany, S/o.
Surender Bhutani, Registered Office, Shop No.G-22, C (UGF) D-1 (K-84) Green Park
Main, New Delhi, South Delhi DL-110016.
Petitioner in both |.As
Respondent No.3 in WP No.20420 of 2020
on the file of the High Court

AND

1. M/S. KLSR Infratech Limited, Rep. by its Authorized person Sri Allu Nagesh,
S/o. Rama Rao, aged about 51 years, Regd office at H. No.2-56/D/213/9B, Flat No.3B,
KLSR Towers, Near YSR Statue, Ayyappa Society, Madhapur, Hyderabad -81.

2. The Reserve Bank of India Rep. by its Regional Director, Regional office at 6-1-56,
Secretariat Road, Saifabad, Hyderabad.

3. Union Bank of India (Formerly known as The Andhra Bank) Represented by Chief
Manager, Nellore Main, Nellore SPSR Nellore District, A.P.

Respondents in both IAs

Petitioner & Respondent Nos.1 & 2

. in WP No.20420 of 2020
on the file of the High Court

IA NO: 3 OF 2020

Petition under Section 151 CPC praying that in the circumstances
stated in the Counter affidavit filed in herein, the High Court may be
pleased to vacate the interim stay in |.A. No.1 of 2020 in WP No.20420 of
2020 dated 04.11.2020 and dismissed this petition with exemplary costs.

IA NO: 4 OF 2020

Petition under Section 151 CPC praying that in the circumstances stated
in the Counter affidavit filed in herein, the High Court may be pleased to direct for
extension of time of the Bank Gurantee issued in favour of this petitioner/vacate stay
petitioner/respondent No.3 vide BG No.038419IGPERO054, DATED 27.06.2019 and
BG.No.038419IGPER0053 which are due for expiry on 24.12.2020 and 26.12.2020 in
the interest of justice.

These petitions coming on for hearing, upon perusing the petitions
and the affidavit and counter affidavit filed in Writ Petition No. 20420 of 2020
and the interim orders of the High Court dated 04.11.2020 made in I.A No.1 of
2020 in WP No.20420 of 2020 and upon hearing the arguments of Sri S. Ravi,
Senior Counsel for Sri K.V. Bhanu Prasad, Advocate for Petitioner in |.A No.1 of
2020 and Respondent No.1 in |.A Nos.3 & 4 of 2020 and of Sri A. Chandra
Shaker, Advocate for Respondent No.3 in I.A. No.1 of 2020 and petitioners in |.A
Nos.3 & 4, the Court made the following:

ORDER:

HON'BLE SRI JUSTICE U. DURGA PRASAD RAO

I.A.Nos. 1,3 AND 4 OF 2020 IN W.P.No.20420 OF 2020

COMMON ORDER:

The petitioner filed the instant writ petition seeking writ of mandamus declaring the action of the 1° respondent ~ Reserve Bank of India restricting the relief of moratorium only to certain cases and not extending the said benefit to all kinds of transactions by applying of principle of force majeure in spite of declaration of pandemic COVID-19 by the Government of India and the action of 2™ respondent -- Union Bank of India allowing the bank guarantees to be invoked by the 3™ respondent, as illegal, arbitrary and mala fide and contrary to the principle of force majeure and for consequential direction to the 2" respondent not to allow the 3 respondent to

invoke the respective bank guarantees for reasonable period.

2. The petitioner's case, succinctly, is thus:- |

(a) The petitioner is a registered company and a Class-I contractor who undertakes works of government departments like municipalities, irrigation, etc. for which it purchases required materials. The petitioner placed purchase orders with the 3" respondent for supply of various kinds of pipes. The 3" respondent insisted for bank guarantees for supply of the materials under various purchase orders. The petitioner submitted bank guarantees through the 2"! respondent-bank to the 3" respondent. Due to COVID-19, though

the petitioner undertook government works, still bills are not cleared.

The lockdown imposed by the Government of India brought about a

grinding halt in all walks of life. Under those circumstances, non- payment of amounts to the 3" respondent is not wilful on the part of the petitioner, but attracts force majeure clause. However, since the 1 respondent granted relief of moratorium only in respect of discharge of loans, the banks are taking coercive steps against the customers in respect of other transactions by withdrawing letters of credit, invoking bank guarantees etc.

(b) The further case of the petitioner is that due to non-payment of amounts, the 3™ respondent, taking advantage of bank guarantees, trying to invoke them and the 2™ respondent also is ready to pay the amounts on the pretext that it is their contractual obligation and they cannot withhold the claim of the 3% respondent. The principle of force majeure is not at all respected by respondents 2 and 3. The bank

guarantees offered to the 3" respondent are:

SI.No. BG Number Amount BG Expiry Ol. | 0384191GPER0054 8,00,00,000 26-12-2020

02. | 0384191GPER0053 12,00,00,000 27-12-2020

The 3 respondent, because of non-payment for supplies made, invoked bank guarantees by making a claim with the 2™ respondent on 02.11.2020 and the latter is about to honour the claim. In fact, the demand of the 3™ respondent is with regard to non-payment of interest and penalty. For that purpose, the 3 respondent sent a mail on 30.10.2020 showing the details of principal, interest and penalty. For those components, the 2™ respondent -- bank should not go to the extreme step of declaring the account as Non-Performing Asset.

Hence, the writ petition.

3. Along with the writ petition, the petitioner filed I.A.No.1 of 2020 seeking interim direction to respondents 2 and 3 not to invoke the two bank guarantees mentioned supra pending disposal of the writ petition, and this Court, in its order dated 04.11.2020, directed the 2™ respondent not to invoke the bank guarantees by following the order dated 01.05.2020 in I.A.No.3 of 2020 in W.P.No.6573 of 2020 of the High Court of Telangana. The said order is being extended

from time to time.

4. The 3™ respondent filed I.A.No.3 of 2020 seeking to vacate the stay in which it filed its counter. The counter allegations precisely are thus:-

(a) The transaction between the writ petitioner and the 3" respondent is a private contract over which this Court cannot exercise writ jurisdiction. Further, in view of the clause in the bank guarantee, the jurisdiction of all the Courts except the Courts at Delhi is ousted.

(b) It is further contended that as per the writ averments, the main grievance of the petitioner is against the 1" respondent -- R.B.I. for not granting moratorium, but the petitioner and the 3" respondent being private entities and there is no public law element involvement, the writ petition is not maintainable in respect of the consequential relief. The writ petition is not maintainable also for the reason that the

writ petitioner has an alternative remedy by way of arbitration.

(c) The bank guarantee offered by the 2™ respondent on behalf of the petitioner 1s an irrevocable and unconditional one which has to be honoured within the period of expiry.

(d) The lock down cause shown for non-payment of amounts to the 3" respondent i.e., even if agreed to be true for argument sake, cannot be a- ground to evade payment to _ the 3" respondent. The writ petitioner, in fact, admitted its liability and sought time to clear the payment by 30.11.2020 vide its letter dated 30.10.2020 but resorted to the writ and obtained interim order. When the petitioner not paid the amounts, the 3 respondent made a claim with the 2™ respondent ~ bank on 02.11.2020, but it also failed to honour the claim. In the matter of offering bank guarantees, neither there was an element of fraud nor irretrievable damages, and therefore, bank guarantees cannot be stopped from invocation. It is further contended that the principle force majeure has no application to the present case. The 3" respondent, thus, prayed to dismiss the

writ petition and vacate the stay.

5. The writ petitioner filed reply and contended that earlier the writ petitioner had contracts with one M/s.Oxyzo Company for supply of materials and in that context bank guarantees were given. However, the bank guarantees which are the subject matter in the writ petition are not related to the present contract that it is a loan transaction. The letter dated 30.10.2020 filed by the respondent

would clearly show that it is a loan transaction but not a contract with

regard to supply of any material. It was wrongly projected in the vacate petition that the bank guarantees were given for supply of certain material. No such invoices, bills, gate passes, etc., are filed to show that supplies were made to the petitioner. In fact, out of business relations of the petitioner with M/s.Oxyzo Financial Services Private Limited, the petitioner sought for loan and the said company introduced the petitioner to the 3" respondent which is a trading company and accordingly, the 3" respondent granted loan of Rs.10.00 crores to the petitioner on 03.06.2019 and another Rs.10.00 crores on 25.06.2019 on execution of promissory notes. Though the 3" respondent is a trading company and not a non-banking financial institution, still it granted loan to the petitioner on obtaining bank guarantees. Thus, the bank guarantees were issued not in respect of performance guarantee but as a financial guarantee. The writ petitioner made a statement in the writ petition that the bank guarantees were issued for the supplies made only to know how the 3" respondent would fairly react by stating the true facts.

(a) It is further averred that in the pandemic situation, an expert committee headed by Sri K.V.Kamath known as Kamath Committee was appointed which gave its recommendations on 07.09.2020 selecting certain sectors for recommending financial concessions. The construction, roads, building material, etc., are also included in the report. Hence, the petitioner would also fall under the categories

recommended by Kamath Committee. As the matter is under the

consideration, the invocation of bank guarantees is absurd and the vacate petition is liable to be dismissed.

(b) It is to be noted that this Court, having heard the arguments on 14.12.2020 in I.A.No.1 of 2020, reserved the matter for orders. Thereafter, the 3" respondent filed I.A.No.5 of 2020 to reopen the matter on the submission that pending orders, the two bank guarantees i.e., 0384191GPER0053 and 0384191GPERO0054 are due for expiry on 24.12.2020 and 26.12.2020 respectively, and therefore, those bank guarantees need to be extended and that he filed a separate petition I.A.No.4 of 2020 seeking a direction for extension of the time of the two bank guarantees.

(c) The writ petitioner did not file counter in I.A.No.5 of 2020 and so the said petition was allowed and the matter was reopened. However, the writ petitioner filed counter in I.A.No.4 of 2020 and opposed the petition on the ground that the prayer in the petition is vague. It is contended that a bank guarantee will be given by the bank only upon taking counter guarantee from the writ petitioner. Hence,

the extension of bank guarantee is not an automatic event.

6. Heard learned senior counsel Srl S.Ravi, for Sri A.Chandrasekhar, learned counsel for the petitioner/the 3" respondent in the Interlocutory Applications and Sri K.V. Bhanu Prasad, learned counsel for respondent/writ petitioner.

7. Learned senior counsel, Sri S.Ravi, would argue that the

contract between the writ petitioner and the 3" respondent is purely a

private contract inasmuch as the petitioner placed purchase orders for construction materials and the 3" respondent supplied the same and in that context the writ petitioner got issued two bank guarantees through the 2™ respondent -- bank. He would further submit that the terms of the bank guarantees would clearly disclose that in the context of purchase of raw materials by the petitioner from the 3 respondent, the 2™ respondent -- bank issued the two bank guarantees on the request of the writ petitioner. Learned counsel would vehemently argue that in that view, it is highly preposterous for the petitioner to contend that the bank guarantees were obtained in the context of a loan transaction but not in respect of performance contract.

(a) Learned counsel further argued that the contract between the parties is purely a private contract and the involvement of the State or its instrumentalities is absent, and as such, the writ petition itself is not maintainable at least against the 3" respondent. Consequently, the stay

order restraining the 3"

respondent from invoking bank guarantees is also not maintainable. He would submit that the order in I.A.No.3 of 2020 in W.P.No.6573 of 2020 passed by the Hon'ble High Court of Telangana, is in different context, where the transactions were between the bank and the writ petitioner therein. However, that is not the case here.

(b) Nextly, relying upon several judgement of the Apex Court, the learned senior counsel contended that Courts generally will not

interdict or injunct upon invocation of bank guarantees unless noticed

the involvement of fraud or irretrievable injury. He cited:

1. Hindustan Steel Works Construction Limited v. Tarapur and Co.!

2. U.P. State Sugar Corporation v. M/s.Sumac International Limited"

3. Federal Bank Limited v. V.M.Jog Engineering Limited and Others'

4. Harbin Power Engineering Co. Limited v. State Bank of India' and

5. Ansal Engineering Project Limited v. Tehri Hydro Development Corporation Limited and Another"

The learned senior counsel would further argue that even before the expiry of bank guarantees period, the 3" respondent issued invocation letter dated 02.11.2020 and the same was pending with the bank. However, the petitioner obtained stay from this Court which is being extended from time to time. In the meanwhile, the period of the bank guarantees was over. In this backdrop, since there was no fault of the petitioner in making a timely invocation, which, but for the stay order, ought to be honoured by the bank, this Court has every power to either direct the writ petitioner to extend the two bank guarantees through the 2" respondent for a further reasonable period or direct the bank to honour the letter dated 02.11.2020 and pay the amount covered by the bank guarantees. He placed reliance on the judgment of the High

Court of Andhra Pradesh in Municipal Corporation, Rajahmundry v.

High Tension Green Energy'.

8. Per contra, Sri K.V.Bhanu Prasad, learned counsel for the

respondent/writ petitioner, argued that the contract between the parties

' AIR 1996 SC 2268

* AIR 1997 SC 1644

32001 (1) SCC 663

49013 SCC Online (AP) 823 > 1996 (5) SCC 450

° 2019 (1) ALD 171

is not a performance contract but purely a loan transaction, as such the bank guarantees, which were issued in the context of earlier performance contracts, cannot be invoked for non payment of the loan amount. He submitted that, in his reply affidavit, he has clearly mentioned the facts relating to the loan transaction.

(a) Nextly, learned counsel argued that though the moratorium declared by the 1° respondent is essentially applicable to the banks and non banking financial institutions, however, in view of the recommendations made in the report of Kamath Committee, the moratorium is applicable to the activities of constructions, roads, building material etc., and thereby the petitioner also deserves the said benefit which is to be decided after hearing the parties in the main Writ Petition. He strenuously argued that, since the said aspect is pending adjudication, the 3 respondent cannot invoke the bank guarantees.

(b) Learned counsel further argued that the prayer in I.A. No.4 of 2020 is vague as it is only prayed therein to direct for extension of 'time of the bank guarantees without further mentioning as to who has to extend the bank guarantees. Learned counsel would argue that the extension of bank guarantee is not a matter of course and unless the writ petitioner offers counter guarantee, the bank cannot extend the original bank guarantee. He thus prayed to dismiss the I.A.Nos.3 and

4 of 2020.

9. The point for consideration is whether there are merits in the

Interlocutory Applications to allow?

10. Point: As can be seen, the writ petition is filed seeking a declaration that the action of the 1" respondent/RBI in restricting the relief of moratorium only to banks and other non banking financial institutions and not applying to private contracts as bad and illegal and to extend such benefit by applying the principle of force majeure in view of Pandemic COVID-19 and for a consequential relief directing 2"! respondent not to allow the 3™ respondent to invoke the bank guarantees for a reasonable period. It is the vehement contention of writ petitioner that though initially the RBI limited the application of moratorium to banks and non banking financial institutions, however, subsequently the Kamath Committee recommended the application of moratorium also to other sectors like construction, roads, building materials etc., and the same is pending consideration. The 3% respondent is not justified in invoking the bank guarantees.

The contention of the petitioner/respondent No.3 is that this Court relying upon the order dated 04.11.2020 in ILA. No.3 of 2020 in W.P. No.6573 of 2020 passed by the High Court for the State of Telangana, directed the 2™ respondent not to invoke the bank guarantees. The said order is challenged by the 3 respondent by filing ILA. No.3 of 2020 seeking to vacate the stay. The transaction between the writ petitioner and 3" respondent is a private contract for

supply of construction material and since the writ petitioner failed to

" a

pay the amounts, 3" respondent addressed letter dated 02.11.2020 to the 2" respondent/bank invoking the bank guarantees. Knowing the same, the writ petitioner hurriedly filed the Writ Petition and obtained the stay. His further contention is that since the bank guarantees were issued for performance of the contract and as the writ petitioner failed to perform its part of contract by paying the price of the materials purchased, and as there is no involvement of element of fraud or

irretrievable injury, this Court may not exercise writ jurisdiction.

11. I gave my anxious consideration to the respective pleadings and arguments. So far as the applicability of moratorium to the private contracts is concerned, admittedly, as on today, the Central Government or RBI has not issued any positive directions in that regard. As rightly argued by learned counsel for the 3" respondent, whether the RBI and for that matter Government, can regulate the . terms of a private contract including the bank guarantees issued in that connection is highly a doubtful issue. At any rate, that aspect can be heard and resolved in the main Writ Petition only after the respondents filed their counters. Running the risk of pleonasm, there is no specific order by the RBI or Government in that regard as of now. Therefore, the petitioner cannot take shelter of moratorium to interdict the 3" respondent from invoking the validly issued bank guarantees.

The next contention of writ petitioner is that the subject bank

guarantees were issued in respect of the earlier performance contracts

but not in respect of the present contract, which is purely a loan transaction between the petitioner and the 3" respondent. It is argued in vehemence that as per the letter dated 30.10.2020, issued by the 3" respondent, the subject contract is only a loan transaction where under the writ petitioner is allegedly liable to pay loan amount to the 34 respondent. In that view, the 34 respondent cannot invoke the bank guarantees which were earlier issued in respect of a performance contract ie., for supply of material by the 3 respondent to the petitioner.

The above contention does not hold much water as the writ petitioner blows hot and cold. In the Writ Petition at Para 3, it is clearly averred that the 3" respondent insisted for bank guarantees for the supply of the materials i.e., different sizes of the pipes under various purchase orders. Then in Paragraphs 3 to 5 it is further averred that due to Pandemic COVID-19, the writ petitioner could not make payments to the 3™ respondent but the 3" respondent is trying to invoke the bank guarantees.

As against the above pleadings, in the reply affidavit, the writ petitioner took altogether different pleadings. It is stated that the petitioner contracted with one Oxyzo Company for supply of materials and in that context bank guarantees were given. It is further stated that the subject bank guarantees are not related to present contract but they were issued previously. The present transaction is only a loan transaction but not a contract for supply of any material.

Due to the business relations between the writ petitioner and

M/s.Oxyzo Financial Services Private Limited, the petitioner asked for a loan and the said company introduced the petitioner to the 3 respondent and though the 3" respondent is a trading company, it advanced Rs.20/- crores to the petitioner in two tranches. Hence, the bank guarantees cannot be invoked for non payment of loan amount. Needless to emphasize, the pleadings of the petitioner at two different stages are quite contradictory. A perusal of the copies of bank guarantees No.0384191GPER0054 dated 27.06.2019 and bank guarantees No.0384191GPER0053 dated 25.06.2019, which are filed along with material papers would show, they were issued by the 2" respondent on behalf of the 3 respondent towards purchase of raw materials. These documents would prima-facie show that the two bank guarantees were issued in respect of performance contract but not against a loan transaction. It is true that in the letter dated 30.10.2020 addressed by the 3™ respondent to the petitioner it is stated that there is a total overdue of Rs.22,62,60,592/- i.e., principal Rs.19,99,98,747/-, interest Rs.1,20,76,522/- and delayed interest Rs.1,41,85,323/-. A repayment schedule was mentioned requesting the petitioner to pay accordingly as otherwise bank guarantees would be invoked, However, in view of the clear mentioning in the bank guarantees itself to the effect that they were issued in respect of purchase of materials, this letter cannot be given primacy. In that view, it does not lie in the mouth of writ petitioner to contend that the

bank guarantees cannot be invoked in respect of loan transaction.

It is trite law that in the matter of a bank guarantee, the interference of the Courts is in rare instances when such guarantee is vitiated by fraud or causes irretrievable damage to the party. This aspect has been clearly delineated by Hon'ble Apex Court in Hindustan Steel Works Construction Limited case (1 supra) thus.

"92. 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."

The other decisions cited by counsel for petitioner/3 respondent also reiterate the same position. Be that it may, in the instant case, prime-facie, the writ petitioner has not established fraud or irretrievable damage to sustain the order in 1.A.No.1 of 2020 interdicting the invocation of bank guarantees. As already observed supra, the bank guarantees were seemingly issued in respect of performance contract i.e., for purchase of construction material and the writ petitioner admittedly did not pay the amount apparently due to lockdown and consequential retardation of business activities. That cannot be a ground to restrain the 3" respondent from invoking bank guarantees. Then the only ground left over for the writ petitioner is the application of moratorium to the subject contract, which depends upon a decision to be taken by the 1° respondent and the Government in future. Hence, such a future uncertain event cannot be a ground to

interdict the invocation of bank guarantees.

Then coming to I.A.No.4/2020, the 3 respondent submits that when I.A.Nos.1 & 3 of 2020 were reserved for orders on 14.12.2020, in the meanwhile, the two bank guarantees were due for expiry on 24.12.2020 and 26.12.2020 respectively and hence, they may be directed to be extended. It is submitted that even long before their expiry dates, the 3 respondent submitted invocation letters dated 02.11.2020 to the 2™ respondent claiming to deposit the amounts covered by the bank guarantees in its account. In this regard, the main plank of argument of the learned Senior counsel S.Ravi is that in the entire gamut of events there was no fault of the 3" respondent as he scrupulously forwarded revocation letters well in advance on 02.11.2020 and subsequently the writ petitioners obtained the stay of invocation on 04.11.2020. Therefore, following the principle 'Actus curia neminem gravabit', the extension of bank guarantees for a suitable period may be ordered. Per contra, the contention of writ petitioner is that extension is not a matter of course and it requires the production of counter guarantee by the petitioner and therefore, extension cannot be ordered.

On a conspectus of the chronology of the facts, I find no substance in the contention of the writ petitioner. As can be seen, the Bank Guarantee No.0384191GPER0053 was due for expiry on 24.06.2020, whereas Bank Guarantee No.0384191GPER0054 was to expire on 26.12.2020. The record further shows that the 3" respondent addressed two letters dated 02.11.2020 to the 2"° respondent

requesting the Bank to remit the amounts covered by the bank

guarantees to its account. Thus, the 3" respondent invoked the bank guarantees long prior to the dates of their expiry. However, the petitioner filed the instant writ petition and in I.A.No.1/2020, obtained interim stay against invocation of bank guarantees on 04.11.2020. Therefore, as rightly submitted by the learned Senior Counsel, the 3" respondent was interdicted from invoking the bank guarantees by dint of Court order. In similar circumstances, in the case of Municipal Corporation of Rajahmundry (6 supra), a Division Bench of the High Court of Andhra Pradesh directed the appellant therein, who, pending the appeal obtained stay of the invocation of Bank Guarantee,

to restore the Bank Guarantees. It observed thus:

"25, We are afraid, we cannot accept this stand taken on behalf of the appellant for the reasons already discussed above. But for the interim order granted by this Court in this appeal, respondent No.1 would have been able to encash the said Bank Guarantee before its validity expired. Since respondent No.1 is succeeding in this appeal, it is entitled to be placed in the same position as it would have been but for the interim order granted by this Court on the analogy of principle of restitution and also by applying the doctrine of Actus curia Neminem gravabit (an act of the Court should prejudice no one)."

Needless to emphasize, the above decision applies with all its fours to

the case on hand.

13. Accordingly, the following order is passed:

(i) L.A.No.4 of 2020 is allowed and the writ petitioner and respondent No.2 Bank are directed to extend the bank guarantees No.0384191GPER0053 and 0384191GPER0054 for a further period of one (1) year from their respective dates of expiry within one (1) week from the date of this order and shall continue to extend the aforesaid bank

guarantees till disposal of the writ petition.

(ii)On their failure to extend as stated above, I.A.No.1/2020 shall be deemed dismissed and correspondingly

1.A.No.3/2020 shall be deemed allowed, whereupon, the gn respondent Bank shall honour the invocation letters dated 02.11.2020 submitted by the 2" respondent and deposit the amounts covered by the two bank guarantees stated above

with the bank account of the 2" respondent. No costs.

Sd/- M. SURYANATHA REDDY

ASSISTANT REGISTRAR IITRUE COPYI/ Ky

For ASSISTANT REGISTRAR To

1. The Regional Director, Reserve Bank of India, Regional office at 6-1-56, Secretariat Road, Saifabad, Hyderabad.

2. The Chief Manager, Union Bank of India (Formerly known as The Andhra Bank) Nellore Main, Nellore SPSR Nellore District, A.P.

3. One CC to Sri K. V. Bhanu Prasad, Advocate (OPUC)

4. One CC to Sri A. Chandra Sekhar, Standing Counsel (OPUC)

5. One spare copy.

Tvr

HIGH COURT

UDPRJ