M/S. Bhrunda Infra Private ... vs The State Of Andhra Pradesh
2022 Latest Caselaw 1922 AP

      HIGH COURT OF ANDHRA PRADESH AT AMARAVATI

MAIN CASE No.W.P.No.11060 of 2022

                        PROCEEDING SHEET

Sl. DATE                                ORDER                               OFFICE
No.                                                                          NOTE
    21-04-2022   DVSS, J

                                     IA.No.1 of 2022

                        Heard    the     learned     counsel    for   the
                 petitioner and the learned Standing counsel for
                 respondent No.2 to 5.

Sri P. Veera Reddy, learned senior counsel appearing for the petitioner raises serious issues about the performance of the main contract. He submits that the site was not handed over in time and that there are delays in the payment of bills. Extension of time was also not granted and that the affect of Covid-19 in the execution of work is also not being considered. In these circumstances, the learned senior counsel submits that the petitioner addressed a letter dated 26.03.2022 to the chief engineer requesting him to grant enhancement of rates and extension of time etc. It is his contention that the said letter is still pending for consideration by the chief engineer. In the interregnum period the impugned letter was issued by the executive engineer directing the petitioner to commence the work. It is also stated that if the petitioner does not commence the work, the bank guarantee/EMB will be forfeited. Learned Senior Counsel's submission is that till the decision is taken by the chief engineer, the impugned letter cannot be issued. As far as the issue of bank guarantee is concerned, he also relies upon the judgment in "Himadri Chemicals Industries LTD., v. Coal

tar Refining co.1", "State Trading Corporation of India Ltd., v. State Bank of India & Ors.2" and "Adani Agri Fresh Limited v. Mahaboob Sharif and others3". Learned Senior Counsel submits that the exceptions recognized by the Hon'ble Supreme Court in cases of invocation of bank guarantee are fraud and irretrievable injustice. As per the learned senior counsel, the petitioner's case falls within the second exception. He states that if the bank guarantee is invoke, the petitioner's credit- worthiness will take a serious beating and stigma will be attached to them. It is also asserted that they will not get any credit facilities or the bank guarantees from other banks. Therefore, the learned senior counsel submits that there should be an interim order atleast till Chief Engineer takes a decision.

In reply to this, the learned Standing Counsel submits that there are serious defaults on the part of the petitioner contractor. According to him, the petitioner has only completed 12 percent of work and has failed to complete the balance work. He also asserts that despite the gross failure, many benefits were given by the petitioner but he has not commenced the work. The request made to the Chief Engineer, the learned Standing Counsel submits that it is contrary to the agreed terms of the contract which provides a price variation clause. Therefore, he submits that the current request of the petitioner which is contrary to the terms of the contract, cannot be granted. He also states that all the terms and conditions were agreed upon and the petitioner cannot

(2007)8 Supreme Court Cases 110

2013 SCC Online Del 935

(2016) 14 Supreme Court Cases 517

seek relief contrary to the agreed terms. Lastly he submits that any dispute can only be filed before the competent civil Court as per the clause in the contract.

Court: Coming to the issue of the bank guarantee, no case is made out. The law on the bank guarantee is well settled. Only two exceptions are a) fraud into the formation of bank guarantee which will vitiate the fact bank guarantee (it is not pleaded or proved in this case) b) irretrievable injustice in the form of irretrievable injustice.

Learned senior counsel made an attempt to convince the Court, the petitioner will suffer irretrievable injustice in this case. Case law cited by him includes the decision of the Hon'ble Supreme Court of India in "Adani Agri Fresh Limited v. Mahaboob Sharif and others4 wherein it is clearly held that three (3) normal principles are grant for injunctions namely 'prima facie case', 'balance of convenience' and 'irreparable loss' are not applicable in the cases of invocation of bank guarantee. Therefore, it is clear that the Hon'ble Supreme Court itself recognizes that these are special contracts which are to be decided on their own terms.

In that view of the matter, this Court is of the opinion that granting of injunction or an order would be contrary to law. As far as irretrievable injustice is concerned, this Court notes that in "Himadri Chemicals Industries LTD., v. Coal tar Refining co.5" itself the question of irretrievable injustice is considered in paragraph 13 of the said judgment. In the opinion of this Court, the case does not meet the standards

(2016) 14 Supreme Court Cases 517

(2007)8 Supreme Court Cases 110

laid down by the Hon'ble Supreme Court in the said decision and in particular paragaraph 13, wherein the ITEK Corporation case was dismissed.

Considering the above, this Court is of the opinion that the petitioner is not entitled to interim order as prayed for, as the case of the petitioner does not fall within the two exceptions which were heard out by the Hon'ble Supreme Court.

Interlocutory Application is therefore dismissed after hearing both the learned counsel.

                 W.P.No.11060 of 2022

         For     counters,       list    the    matter      on
13.06.2022 in motion list-1.

                                                     _______
                                                     DVSS,J

AG