Calcutta High Court

M/S. Kse Electricals Private ... vs The Project Director Bangladesh ... on 10 May, 2021

OD-1, 2 & 3
                                    ORDER SHEET

                         IN THE HIGH COURT AT CALCUTTA
                          Ordinary Original Civil Jurisdiction
                                   ORIGINAL SIDE

                                   AP 230 of 2021

             M/S. KSE ELECTRICALS PRIVATE LIMITED
                              VS
    THE PROJECT DIRECTOR BANGLADESH RURAL ELECTRIFICATION
                        BOARD AND ANR


                                   AP 231 of 2021

             M/S. KSE ELECTRICALS PRIVATE LIMITED
                              VS
    THE PROJECT DIRECTOR BANGLADESH RURAL ELECTRIFICATION
                        BOARD AND ANR

                                   AP 232 of 2021

             M/S. KSE ELECTRICALS PRIVATE LIMITED
                              VS
    THE PROJECT DIRECTOR BANGLADESH RURAL ELECTRIFICATION
                        BOARD AND ANR


BEFORE:
The Hon'ble JUSTICE SHEKHAR B. SARAF
Date: May 10, 2021.

[Via Video Conference]

                                                                               Appearance:
                                                         Mr. Sabyasachi Chowdhury, Adv.
                                                                 Mr. Rajarshi Dutta, Adv.
                                                                   Mr. V V V Sastry, Adv.
                                                                    Mr. Tridib Bose, Adv.
                                                                        ..for the petitioner


The Court :


   1. These three matters relate to the same petitioner and same

       respondents. All these applications are Section 9 applications under

the Arbitration and Conciliation Act, 1996. Upon perusal of the three

petitions it is clear that they are similar in nature and can accordingly

be taken up conjointly.

2. Mr. Sabyasachi Chowdhury, Advocate appearing on behalf of the

petitioner has moved these applications ex parte and indicated to this

Court that an order had been passed on May 7, 2021 in AP No. 229 of

2021 by Arindam Mukherjee, J. in relation to the same petitioner and

the same respondents except the bank in Kolkata which is the

respondent no.2 herein. He further submits that the factual matrix

being similar in the present applications to AP No. 229 of 2021,

similar order may be passed granting an ad interim protection to the

petitioner in the three petitions.

3. I have perused the order passed on May 7, 2021 by the Co-ordinate

Bench and would like to quote the reasoning of the order below:

"The petitioner says that the said contract contains an arbitration agreement in clause 10.2 of the GCC. The arbitration proceedings have to be conducted in accordance with UNCITRAL Arbitration Rules 2010 and the governing law is that of the purchaser's country being laws of Bangladesh. The petitioner says that this is an international commercial arbitration as defined in Section 2(e) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the said Act).

The petitioner also says that since the seat of arbitration is not specified this Court being the High Court as enumerated in Section 2(e) of the said Act is a competent Court to receive, entertain and try an application under Section 9 of the said Act filed by the petitioner seeking injunction against the invocation of the bank guarantee. The petitioner also intends to move this

instant application ex parte in view of the urgency and that the respondents and in particular the respondent no. 1 on being served are likely to take such steps to render the application infructuous.

Considering that the matter pertains to invocation of bank guarantee where immediate and urgent reliefs are warranted, I allow the petition to be moved ex parte. I am also prima facie satisfied that this Court has the jurisdiction to receive, entertain and try the instant application.

Although the retention money from which the liquidated damages subject to maximum of 10% as may be imposed under the contract can be fully adjusted on the petitioner's failure to perform stands in a completely different footing from the performance security against which the bank guarantee has been given but depending on the fact scenario of the instant case and in particular that the goods were supplied by October, 2017 when invocation is sought to be made in May, 2021 that too after the petitioner has paid a sum of USD38,785 against the demand made by the respondent no. 1 by its letter dated 7th April, 2021 and the liquidated damages even if imposed is fully secured, I am inclined to injunct the respondent no. 1 from invoking the bank guarantee at this stage. Even after considering the limited scope for granting injunction against invocation of an irrevocable bank guarantee my views remain the same. The bank guarantee even though in the instant case is an irrevocable one and can be invoked even without assigning any reason and the invocation thereof is also not dependent upon the performance of the main contract to which issue I am live, yet am inclined to pass the order of injunction because refusal thereof will cause the petitioner irretrievable injustice. Finding that on one hand the petitioner on invocation will be out of pocket by a huge sum which the petitioner may be entitled to realise in a long drawn arbitration

proceeding and on the other the respondent no.1 is otherwise secured does not permit my conscience to allow the invocation even after keeping in mind the limited scope of granting injunction. There is also no assertion for damages even after three years from the side of the respondent no.1 which may persuade me to refuse the injunction. The respondent no. 1 at the present at the highest can realise liquidated damages in case of failure on the part of the petitioner which is quantified under the contract. Such quantified amount is otherwise secured. The respondent no. 1 at the present has no other claim as damages apart from liquidated damages having not yet been asserted and its claim under the letter dated 7th April, 2021 has already been paid. After such payment when the petitioner seeks for release of the bank guarantee and demands payment of the retained amount, the invocation is sought to be made that too after more than three years from the supplies being effected. The series of events give rise to a prima facie doubt as to the conduct of the respondent no. 1. The invocation of the bank guarantee, according to my prima facie view based on the facts of the instant case unless a contrary view is established on disclosure of further facts, if allowed will be permitting the respondent no. 1 to unjustly enrich itself at this stage. Even if, I take into consideration the object for which a performance security is given in an international commercial contract my view to grant injunction remains unchanged. The judgment reported in 1999 (8) SCC 436 also support this view of mine. The petitioner has been able to make out a strong prima facie case, the balance of convenience and inconvenience is also in favour of the petitioner and refusal of injunction will cause irreparable prejudice to the petitioner at this stage."

4. I am of the view that the order passed by the Co-ordinate Bench was a

most reasonable order to sub-serve the ends of justice and to ensure

protection of all the parties. In light of the same, I direct the

respondent no.2 in all the three petitions to restrain itself from

making any payment and/or disbursement under the bank

guarantees that have been invoked by the respondent no.1 in the

respective petitions until May 25, 2021.

5. Considering the fact that the respondent no.1 is situated in

Bangladesh, the petitioner is directed to immediately within a period

of three days serve copy of these applications along with order passed

in Court today.

6. The petitioner shall also take immediate steps to proceed for