Modern Construction vs The State Of West Bengal And Others
2022 Latest Caselaw 5936 Cal

26th August,
  2022
  (AK)
   17



                                 W.P.A 19015 of 2022

                                 Modern Construction
                                            Vs.
                          The State of West Bengal and others


                           Mr. Ayan Banerjee
                           Mr. Pralay Kar
                           Mr. Soumo Chaudhury
                                                      ...for the petitioner.

                           Mr. Sirsanya Bandyopadhyay
                           Mr. Arka Kumar Nag
                                        ...for the respondent nos.2 to 4.

Learned counsel for the petitioner has raised an

issue as to whether there was any termination of the

contract entered into by the respondent authorities with

the petitioner at any point of time.

Learned counsel submits that, by virtue of a

communication dated June 14, 2021 (page-93 of the writ

petition), it was intimated to the petitioner that the

respondent authorities have no other option but to

"recommend for termination of the contract" as per

provision of SBD Clause no.52.

It is submitted that subsequently, however, there

was a request from the end of the respondent authorities

on September 3, 2021 for renewal of the Bank guarantee

earlier granted by the petitioner "for further one year for

the above-mentioned work".

Learned counsel contends that in view of the vague

language of recommendation in the communication dated

June 14, 2021, read in conjunction with the request for

further renewal of the bank guarantee on September 3,

2021, that is, after the expiry of the contract period and

also after the alleged recommendation of termination,

indicates that there was no termination in fact at all.

Hence, the invocation of the Bank Guarantee by the

respondent authorities on June 13, 2022, which has been

challenged in the present writ petition, was bad in law.

It is submitted that if there is patent fraud, the

invocation of bank guarantee can also be restrained by a

court.

Learned counsel appearing for the respondent

authorities, by pointing out to Clause 25 of the contract

between the parties, submits that there was a two-tier

alternative remedy available to the petitioner.

First, the said clause envisages that the concerned

engineer had to be approached with the dispute.

Secondly, the matter was to be referred to arbitration.

As such, the remedy, if at all, of the petitioner lay

before the concerned court having jurisdiction to take up

matters under Section 9 of the Arbitration and

Conciliation Act, 1996.

Learned counsel cites the judgment of a Supreme

Court reported at (2016) 10 SCC 46 (Gujarat Maritime

Board vs. Larsen and Toubro Infrastructure Development

Projects Limited and another), in support of the

proposition that between the appellant and the Bank, the

decision of the appellant therein as to the breach shall be

absolute and binding on the Bank.

It was observed that an injunction against the

invocation of an absolute and unconditional bank

guarantee cannot be granted except in situations of

egregious fraud or irretrievable injury to one of the parties

concerned.

The Supreme Court went on to hold that on being

satisfied that the first respondent had failed to perform

his obligations as covenanted, the appellant therein

cancelled the LoI and resultantly invoked the bank

guarantee.

Whether the cancellation was legal and proper and

whether, on such cancellation, the bank guarantee could

have been invoked on the extreme situation of the first

respondent justifying its inability to perform its

obligations under the LoI, etc. are not within the purview

of an inquiry under Article 226 of the Constitution of

India.

Learned counsel next contends that in any event,

the best allegation of the petitioner in the writ petition

could be that the termination of the agreement was not in

terms of the contract between the parties.

Even if such an allegation is made, the appropriate

forum for the petitioner would be the competent civil

court, with a claim for damages.

Hence, the writ petition ought to be dismissed, it is

argued.

A perusal of the documents annexed to the writ

petition, prima facie, shows that the respondent

authorities sought a renewal of the bank guarantee from

the petitioner on September 3, 2021 (annexure-P10 at

page-95 of the writ petition).

Such request was made subsequent to the expiry of

the original tenure of the agreement and also subsequent

to the termination being purportedly recommended vide a

communication dated June 14, 2021 (at page-93 of the

writ petition), hence, a doubt arises as to whether there

was any termination in the present case at all of the

contract between the parties.

Hence, the ratio as laid down by the Supreme Court

in the cited judgment does not squarely apply, since it is

argued in the writ petition as to whether there was

egregious fraud in the present case on the part of the

respondent authorities insofar as invocation of the bank

guarantee prematurely, before actual termination, is

concerned.

The argument of the respondent authorities to the

effect that the termination was decided upon finally by

the respondent cannot help the respondent authorities

much on the issue involved in the writ petition, simply

because a "termination" of contract implicitly includes a

communication of such termination to the other

contracting party.

Hence, a strong prima facie case has been made out

by the petitioner.

However, since the bank guarantee already stands

invoked, no injunction can be passed at this juncture as

per the prayer of the petitioner in respect of such bank

guarantee, since an order directing refund of the amount

will tantamount to granting the final relief to the

petitioner.

Inasmuch as the question of cancellation is

concerned, the respondent authorities ought to be given

an opportunity to explain and/or bring sufficient

materials before court to indicate whether there was,

actually, any termination of the contract between the

parties at all.

Hence, the respondents are directed to file their

affidavits-in-opposition within three weeks from date.

Reply, if any, shall be filed within one week thereafter.

The matter shall next be enlisted for hearing on

September 28, 2022 before the regular Bench taking up

these matters.

All action taken in the meantime shall abide by the

result of the writ petition.

It is, however, made clear that the question of

maintainability on the ground of availability of alternative

relief by way of damages is kept open to be argued by the

parties at the final hearing of the writ petition.

The prayer of learned counsel for the petitioner to

stay the hands of the respondent authorities in respect of

grant of a further tender to a third party cannot be

granted, since the nature of the work is of public utility

and it is well-settled by several judgments of the Supreme

Court as well as this court that such works ought not to

be readily stayed by courts of law.

However, the above direction of the intervening

action abiding by the result of the writ petition should

take care of the petitioner's apprehensions sufficiently.

(Sabyasachi Bhattacharyya, J.)