Indu Projects Ltd. vs Union Of India
2013 Latest Caselaw 4617 Del

$~46

*      IN THE HIGH COURT OF DELHI AT NEW DELHI
%                                  Judgment delivered on : 04.10.2013
+      O.M.P. 1005/2013
       INDU PROJECTS LTD.                           ..... Petitioner
                     Through: Mr Parag Tripathi, Sr. Adv. with Mrs
                     Ginny J. Rautray & Mr A. Ganguli, Advs.

                          versus

       UNION OF INDIA                              ..... Respondent
                     Through: Mr Sanjiv Kr. Saxena, Mr Mukesh Kr.
                     Tiwari & Ms Ramneek Mishra, Advs.

CORAM:
HON'BLE MR. JUSTICE RAJIV SHAKDHER
RAJIV SHAKDHER, J.

IA No. 16089/2013 (Exemption) Allowed subject to just exceptions.

OMP No. 1005/2013

1. The captioned matter was listed before this court on mentioning.

2. Mr Tripathi, learned senior counsel for the petitioner seeks stay of the bank guarantee in issue, solely, on the following ground. No other grounds are pressed. The letter of invocation dated 03.10.2013 is not in terms of the bank guarantee in issue. For this purpose, he draws my attention to the said letter, which is appended at page 88 of the documents file. Mr Tripathi has also relied upon an order passed in OMP No. 783/2013, in a matter

concerning the same parties, dated 12.08.2013.

3. To be noted, in OMP No. 783/2013, an interim order against encashment of the bank guarantee was passed. Mr Tripathi seeks to contend that the said matter is on all fours, in so far as the interim relief is concerned, with the present matter. He also contends that the respondent was required to state that the amount was due and payable towards loss occasioned or that which was likely to occur apart from being obliged to quantify the said loss. In other words, he says that the bank concerned cannot treat the amount reflected by the bank guarantee „as due‟, in terms of the letter of invocation served upon it by the respondent.

4. In my view, the submission of Mr Tripathi, qua the relief of interim stay of the bank guarantee in issue cannot be granted. In OMP No. 783/2013, the letter of invocation did not state either that a loss had been caused or that it was likely to be caused. All that it stated was: "...And whereas there has been a breach by the contractor of the terms and conditions of the Agreement....". This was set out in the letter dated 07.08.2013 issued by the respondent to the concerned bank. A copy of the letter has been placed on record in court today, by Mr Tripathi. 4.1 In the present invocation letter, in the captioned petition, however, the respondent has stated as follows:

"....And whereas there has been a breach by the contractor of the terms and conditions of the Agreement and by virtue of such breach there would be loss/ damage caused to the Government by reason of such breach by the contractor which in the estimate of the DGMAP will exceed the value of the said Bank Guarantee Bond..."

4.2 Having seen the operative terms of the bank guarantee in issue, according to me, the invocation is in order. The operative part of the bank guarantee in issue is contained in paragraph 2, which reads as follows:

"....We, State Bank of India do hereby undertake to pay the amounts due and payable under this guarantee without any demur, merely on a demand from the Government stating that the amount claimed is due by way of loss or damage caused to or would be caused to or suffered by the Government by reason of any breach by the said Contractor of any of the terms or conditions contained in the said agreement or by reason of contractor‟s failure to perform the said Agreement. Any such demand made on the bank shall be conclusive as regards the amount due and payable by the bank under this guarantee. However, our liability under this guarantee shall be restricted to an amount not exceeding Rs. 6,09,70,000/- (Rupees six crores nine lakhs and seventy thousand only)....."

(emphasis is mine)

5. A bare perusal of the above shows that it covers even those losses, which are likely to be caused. The respondent in the letter of invocation has stated that there is breach of contract, and that, loss and damage to be caused to it by reason of such breach is estimated to exceed the value of the bank guarantee in issue. In my view, since it is in the realm of a likely loss, there cannot be an exact quantification, nor is it required under the bank guarantee in issue. What the letter of invocation does indicate, is that, the loss /damage would exceed above the amount indicated in the bank guarantee in issue.

5.1. Mr Saxena, learned counsel for the respondent, at this stage informs me that the contract has been terminated vide letter dated

03.10.2013.

6. In these circumstances, the concerned bank, i.e., State Bank of India, Commercial Branch, Bank Street, Koti, Hyderabad - 500 095, shall forthwith remit the amount to the respondent. A copy of this order be sent by the registry, without process fee, to the concerned bank.

7. Mr Tripathi says that there are other reliefs, which are sought in the petition and, therefore, may be taken up alongwith OMP No. 783/2013.

8. Having perused the prayers closely, I find all prayers pertain to the bank guarantee in issue. Since, I have declined the prayer for injunction, in my view nothing survives in the petition, the same is accordingly dismissed.

9. Dasti.

RAJIV SHAKDHER, J OCTOBER 04, 2013 kk