Delhi High Court
Green Delhi Bqs Ltd vs Delhi Transport Corporation on 19 April, 2010
Author: S.Ravindra Bhat
$~40
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 19.04.2010.
+ CS(OS) 790/2009
GREEN DELHI BQS LTD ..... Plaintiff
Through : Mr. S. Ganesh, Sr. Advocate with Ms. Megha
Mukherjee, Advocates, for plaintiff/applicant.
versus
DELHI TRANSPORT CORPORATION ..... Defendants
Through : Mr. Parag Tripathi, ASG with Ms. Avnish Ahlawat, Mr.
A. Bhandari and Mr. Shreshth Sharma, Advocates, for DTC.
Mr. Sarojanand Jha, Advocate, for Defendant No.3.
Ms. Manjira Dasgupta, proxy counsel for Mr. Shyel Trehan,
Advocate, for MCD.
CORAM:
MR. JUSTICE S. RAVINDRA BHAT
1.
Whether the Reporters of local papers Yes.
may be allowed to see the judgment?
2. To be referred to Reporter or not? Yes.
3. Whether the judgment should be Yes.
reported in the Digest?
S.RAVINDRA BHAT, J. (OPEN COURT)
I.A. No.4874/2010 (Under Order 39 Rule 1 and 2)
1. Issue notice. Ms. Avnish Ahlawat, Advocate accepts notice on behalf of Defendant No.1;
Mr. Sarojanand Jha, Advocate accepts notice on behalf of Defendant No.3 and Ms. Manjira
Dasgupta, Advocate accepts notice on behalf of MCD, and state that the application may be
disposed of today, after hearing the defendants.
2. Heard counsel for the parties. The plaintiff/applicant seeks a temporary injunction in
respect of the letter dated 06.04.2010, issued by the defendants (hereafter referred to as the
I.A. No. 4874/2010 in CS(OS) 790/2009 Page 1
"DTC"), the principal defendant in the above proceedings.
3. The plaintiff in the suit seeks several reliefs, including permanent injunction, to restrain
DTC from invoking the bank guarantees, dated 22.05.2008 and 29.09.2008. The plaintiff's
applications for temporary injunction were heard and by ad interim orders dated 01.05.2009 and
05.05.2009, (subject to fulfillment of conditions spelt-out by the Court), the invocations were
stayed/suspended. This Court, by its judgment dated 05.04.2010 vacated the said orders, after
rendering prima facie findings that DTC's action could not be characterized as wrongful or
illegal and also that the invocation was in terms of the bank guarantee. The plaintiff argues that
in the circumstances, the bank guarantees could not have been invocated as the contract which
had been fulfilled in terms of the understanding too were rejected.
4. It is urged that the plaintiff carried the matter in appeal; the Division Bench disposed of
the appeal on 15.04.2010, after being apprised of the circumstance that another letter dated
06.04.2010, invoking the bank guarantee, had been issued by DTC. The Division Bench order
dated 15.04.2010 in FAO (OS) 219/2010 is to the following effect:
"XXXXXX XXXXXX XXXXXX
Learned Additional Solicitor General, on instructions, states that there had been
fresh invocation of the Bank Guarantee, keeping in perspective the arguments
addressed by the learned Senior Counsel for the Appellant to the effect that the
bank guarantees were in favor of the Chairman-cum-Managing Director of the
Delhi Transport Corporation, but were invoked by the Chief General Manager
(Technical). Learned Senior Counsel for the Appellant states that since his appeal
has confined itself only to the Bank Guarantee and not to other findings of the
learned Single Judge, it may be disposed of without prejudice to the rights of the
Appellant to file fresh proceedings assailing the fresh invocation.
Accordingly, Appeal is dismissed as withdrawn.
Learned Additional Solicitor General, on instructions, states that no sum of
money shall be demanded from the bank till the closing of banking hours on
Tuesday i.e. 20th April, 2010.
I.A. No. 4874/2010 in CS(OS) 790/2009 Page 2
XXXXXX XXXXXX XXXXXX"
5. Learned senior counsel for the plaintiff makes two-fold submissions, stating that the bank
guarantees have to be stayed. The first is that the tenor of the invocation indicates that it is
merely an extension or a reminder of the previous invocation dated 01.05.2009 and, therefore,
the same does not fulfill the requirement of a valid invocation. The second submission is that in
the alternative, even if the said letter is deemed to be a fresh invocation, same cannot stand in
law as it is not in terms of the bank guarantee itself. It is further argued that the DTC could have
invoked the bank guarantee legitimately on the ground that the plaintiff had committed default
during the operation period of the contract. It is, therefore, urged that since such terms are not
indicated in the invocation issued now, the same has to be stayed and the DTC appropriately
injuncted.
6. The DTC argues, on the other hand, through learned Additional Solicitor General that
prima facie findings expressed by the Court in the order dated 05.04.2010 vis-à-vis the
termination of the contract and the non-fulfillment of essential contractual conditions by the
plaintiff have not been disturbed by the Division Bench and that a fair reading of the documents,
i.e. invocation impugned by this application would indicate that the intention of the party issuing
it was to treat it as a fresh one. DTC resists the submission that the invocation is an extension of
the previous one and submits that the letter dated 06.04.2010 fulfills all the criteria of a valid
letter by the beneficiary, and points out that the issue of the invocation not mentioning that the
plaintiff had defaulted during the contract operation period, was not urged earlier and, therefore,
cannot be permitted as a ground now.
7. For an appropriate appreciation of the controversy, it would be essential to extract the
impugned invocation, which is in the following terms:
I.A. No. 4874/2010 in CS(OS) 790/2009 Page 3
"XXXXXX XXXXXX XXXXXX
No.Sr.Mgr.(Civil)/BQS/BOT-1/HQ/10/104 Dated: 06.04.10
Branch Incharge
M/s. Yes Bank Limited
487-Nyaya Marg,
Chanakya Puri,
New Delhi-110 021
Sub: Encashment of Bank Guarantee
1. Bank Guarantee No. 003GM01082730002
Issue date 29th Sept.2008
Revalid upto 30th April, 2010
Amount of Guarantee Rs.2,11,05,000/-
(Rupees Two Crores Eleven Lacs & Five
Thousand only).
2. Bank Guarantee No. 003GM01081430002
Issue date 22nd May 208
Amended date 15th Oct, 2008
Revalid upto 30th April, 2010
Amount of Guarantee Rs.4,22,10,1000/-
(Rupees Four Crores Twenty Two Lacs &
Ten Thousand only)
Dear sir,
Reference letter No.Sr.Mgr.(Civil)/BQS/BQT/BOT-1/HQ/09/136 dated
1.5.09 received by you on the same date i.e. 1.5.2009 for encashment of Bank
Guarantees indicated above and pay a sum of Rs.6,22,15,000/- through Demand
Draft in favour of CMD, Delhi Transport Corporation immediately as the
concessionaire has failed to discharge his obligations under the concessionaire
agreement. In the letter under reference it was also pointed out that
approximately an amount of Rs.11.50 Crores has become outstanding from the
concessionaire and concessionaire is also not offering 48 nos. of constructed
BQSs for COD, the concessionaire has committed a default as per terms of the
agreement. The concessionaire was asked to cure the default within 30 days of the
preliminary notice dated 30.3.2009 issued by DTC and received by the
concessionaire on 31.3.2009.
Since the concessionaire failed to cure the default within 30 days notice
for encashment of Bank Guarantees (indicated above) was issued under Article
16.2(1) of the agreement. The concessionaire approached the Court by filing Suit
No.790 of 2009 and also moved an application for the stay of the encashment of
I.A. No. 4874/2010 in CS(OS) 790/2009 Page 4
Bank Guarantees indicated above. The High Court vide its order dated 5.5.2009
stayed the operation of letter No.Sr.Mgr. (Civil)/BQS/BOT-1/HQ/09/136 dated
1.5.09 till the next date of hearing.
The matter was adjourned on number of times. The Court vide its
judgment, order dated 5.4.2010 dismissed the applications filed by the
concessionaire seeking the stay of the above indicated Bank Guarantees.
In view of the default committed by the concessionaire as indicated in
letter dated 1.5.09, you are once again, in terms of Clause-3 of the Bank
Guarantee, requested to pay a sum of Rs.6,22,15,000/- through Demand Draft in
favour of CMD, Delhi Transport Corporation as the concessionaire has failed to
discharge his obligations under the contract.
Thanking you,
Yours faithfully,
Sd/-
(NARESH KUMAR)
Chairman-cum-Managing Director
XXXXXX XXXXXX XXXXXX"
8. This Court has carefully considered the submissions. Rather than to proceed on
nomenclature, it would be useful to consider the documents, i.e. the above letter, as a whole.
There is no doubt that the alleged default of the plaintiff has been mentioned in the first three
paragraphs of the letter. The fourth paragraph mentions Clause-3 of the bank guarantee and
demands the release of Rs.6,22,15,000/-, in favor of the Chief Managing Director, DTC. In this
context, it would be pertinent to mention that the plaintiff had apparently questioned the findings
contained in this Court's order dated 05.04.2010 on the ground inter alia that the invocation was
by a person or officer other than the designated one, i.e. the Chairman-cum-Managing Director
(CMD). Apparently, in the light of such submissions, the impugned invocation was issued by the
CMD himself.
9. This Court is of the opinion that the entire tenor of the letter, on an overall reading of the
I.A. No. 4874/2010 in CS(OS) 790/2009 Page 5
documents, indicates the intention of the DTC that the proceeds of the bank guarantee were to be
paid. In DTC's opinion, the plaintiff had committed default and "failed to discharge" its
obligations under the contract. Now, there is no magic in any letter of invocation - it is not the
plaintiff's submission that there is any set or stereotyped format which the beneficiary has to
apply in, nor can such a contention be reasonably urged. In all such cases, in this Court's view,
the document should categorically indicate that the contractor or the persons at whose instance
the guarantee is issued, has committed a default or that some of the conditions spelt-out in the
bank guarantee are fulfilled. Once such a requirement is apparent from the document, other
contents have to be seen in the context. So viewed, reference to previous invocation, in the
opinion of the Court, is merely historical and does not lead one to conclude that the letter dated
06.04.2010 is an extension or reminder to the previous invocation dated 01.05.2009.
10. As far as the second contention, i.e. that even if the impugned invocation were to be
treated as fresh one, the lack of anything in its terms, indicative of the plaintiff's default during
the operation period is not a ground available, to be urged. This is because the plaintiff never
made any such issue when the original invocation took place, on 01.05.2010. Furthermore, the
plaintiff seeks declaration that there was no default in the performance of its obligations during
the operation period. As observed earlier, the Court's prima facie findings/observations with
regard to the performance of the plaintiff, in the working-out of the contract, are matters of
record, and have not been disturbed.
11. In the light of the above discussion, the Court is satisfied that there is no merit in the
present application and that the fresh invocation dated 06.04.2010 need not be interdicted. I.A.
No. 4874/2010 is accordingly rejected.
12. Order dasti under signatures of Court Master.
I.A. No. 4874/2010 in CS(OS) 790/2009 Page 6
CS(OS) 790/2009
13. List on the date fixed, i.e. 14.07.2010.
S. RAVINDRA BHAT
(JUDGE)
APRIL 19, 2010
'ajk'
I.A. No. 4874/2010 in CS(OS) 790/2009 Page 7
