Andhra Pradesh High Court - Amravati
Sl. Office vs Unknown on 25 November, 2021
HIGH COURT OF ANDHRA PRADESH AT AMARAVATHI
MAIN CASE No.W.P.No.27807 of 2021
PROCEEDING SHEET
Sl. Office
ORDER
No DATE Note
1 25.11.2021 RRR, J
The petitioner, who had entered into a
contract with the respondents 1 and 2 dated
23.03.2005, had filed O.S.No.76 of 2008 in the
Court of the Commercial Court-Cum-Principal
District Judge, Nellore, for various reliefs being
aggrieved by the non-payment of dues to the
petitioner, as well as the cancellation of the
contract, by a letter dated 10.12.2007. This suit
was subsequently renumbered as C.O.S.No.1 of
2017 and partly decreed by a judgment and
decree dated 10.02.2020. The petitioner was
entitled to recover a sum of approximately Rs.12
crores from the respondents 1 to 3 by virtue of
this decree. Aggrieved by the said judgment and
decree, the respondents 1 to 3 herein filed
C.O.M.C.A.No.6 of 2021, before this Court and
sought stay of execution of the decree in I.A.No.1
of 2021. This Court by an order dated
15.04.2021 had granted stay of execution of the
decree, on condition of payment of ½ of the
decretal amount + costs within a period of 12
weeks from 15.04.2021. Respondents 1 to 3 had
thereafter filed I.A.No.2 of 2021, seeking
extension of time granted under the order dated
15.04.2021. This application was allowed on
24.07.2021, granting four more weeks from
24.07.2021, for depositing ½ of the decretal
amount and costs.
The petitioner contends that no payment
has been made till today and a further
application appears to have been filed for
extension of time.
While the matter stood thus, the 3rd
respondent issued letter dated 05.11.2021,
calling upon the petitioner to revalidate 21 bank
guarantees, amounting to Rs.524.07 lakhs given
towards performance bank guarantee of the work
that was to be executed under the above
contract. In reply to this letter, the petitioner
addressed a letter to the 3rd respondent dated
09.11.2021, contending that in view of the
judgment and decree in C.O.S.No.1 of 2017,
there is no necessity for the petitioner to
revalidate the said bank guarantees on or before
21.11.2021, and that the respondents 1 to 3 in
fact need to deposit the amounts directed by this
Court in the above orders.
The petitioner has now approached this
Court being aggrieved by the letter dated
05.11.2021 of the 3rd respondent, on the ground
that the 3rd respondent has already issued
instructions in the impugned letter of
05.11.2021 to the respondents 4 to 6 to pay out
the bank guarantee amounts by 28.11.2021,
without any further indent being required from
the 3rd respondent.
Sri P.Kamalakar, learned counsel for the
petitioner submits that all disputes and issues
arising out of the execution of the contract
entered between the petitioner and the
respondents 1 to 3 have been resolved by way of
a judgment and decree of the trial Court in
C.O.S.No.1 of 2017 and in fact the respondents 1
to 3 have to pay a sum of approximately Rs.12
crores to the petitioner. He submits that in such
circumstances, the question of invocation of
performance bank guarantees cannot and will
not arise. He further submits that even otherwise
the respondents 1 to 3 owe a sum of Rs.12
crores to the petitioner and as such, any claims
of the respondents can always be adjusted
against the said sum, if it is permissible.
Sri P.Kamalakar, learned counsel for the
petitioner also submits that the renewal of the
said bank guarantees involve huge costs and
brings to the attention of this Court the fact that
the banks are insisting for additional margin
money for renewal of the bank guarantees. He
would also bring to the notice of this Court, the
decree of the trial Judge directed reimbursement
of the bank charges incurred for renewal of bank
guarantees and submits that the action of the 3rd
respondent in issuing impugned notice is an
attempt to armtwist the petitioner for a
settlement of the ongoing dispute and to cause
huge loss to the petitioner.
The learned Government Pleader for
Irrigation, appearing for the respondents 1 to 3
submits that the 3rd respondent had merely
requested the petitioner to review the bank
guarantees and informed that failure to renew
would result in invocation of the bank
guarantees. He submits that it is always open to
the petitioner to renew the bank guarantee
which would ensure that there is no further
coercive step of invocation against the petitioner.
He further submits that the issue of
whether the petitioner has to perform any
further act under the agreement or whether any
amounts can be recovered from the petitioner on
account of cancellation of the termination of the
contract requires to be gone into.
Having heard both sides, there is a prima
facie case in favour of the petitioner that the
issues raised in the execution of the contract
dated 23.03.2005 have been resolved by the
decree and judgment of the trial Court in
C.O.S.No.1 of 2017 and in all probability, there
would be no requirement for the petitioner to
continue the bank guarantees.
However, the aforesaid issue requires to be
gone into after appropriate pleadings are
complete. In the circumstances, any blanket stay
of invocation could also result in expiry of the
bank guarantee by 28.11.2021, leaving the
respondent without any further avenue of
recovery.
In the circumstances, balancing both
interests, it would be appropriate to direct the
respondents, including respondents 4 to 6 not to
invoke or pay out the bank guarantees issued on
behalf of the petitioner by these respondents in
relation to the works undertaken by the
petitioner for the respondents 1 to 3 till further
orders, subject to the condition that the
petitioner renews the Bank Guarantees on or
before 28.11.2021.
It is further directed that the bank charges
incurred by the petitioner, on account of the
revalidation will abide by the result in this writ
petition, and the respondents 4 to 6 shall also
not insist on any further margin money over and
above the margin money which is presently
maintained against these bank guarantees.
Learned counsel for the petitioner is
permitted to take out personal notice to the
respondents by RPAD and file proof of service by
the next date of hearing.
Post this writ petition along with
C.O.M.C.A.No.6 of 2021 after obtaining
instructions from the Hon'ble The Chief Justice.
_________
RRR, J
Note:
Issue CC today.
B/o
RJS
