Delhi High Court
M/S Simplex Infrastructures Ltd vs National Highways Authority Of ... on 11 August, 2016
$~1
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(COMM) 16/2016
M/S SIMPLEX INFRASTRUCTURES LTD ..... Plaintiff
Through: Mr. Jayant Bhushan, Sr. Advocate
with Mr. Yash Anand, Mr. David A.
& Mr. Yash Singhal, Advs.
Versus
NATIONAL HIGHWAYS AUTHORITY
OF INDIA & ANR ..... Defendants
Through: Mr. Sudhir Nandrajog, Sr. Adv. with
Mr. Mukesh Kumar & Ms. Bhavana
Duhoon, Advs. for D-1.
Mr. Tarun Aggarwal, Adv. for D-2.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
ORDER
% 11.08.2016
IA No.383/2016 (under Order XXXIX Rule 1&2 CPC)
1. Vide ex parte ad-interim order dated 11th January, 2016, this Court
was pleased to restrain the encashment of bank guarantee subject to plaintiff
keeping the same alive.
2. However it appears that the bank guarantee was encashed on 25th
January, 2016 and which resulted in filing of Contempt Cas (C) No.93/2016
and vide order dated 2nd February, 2016 wherein the defendant no.1 National
Highways Authority of India (NHAI) was directed to deposit the amount in
this Court subject to further orders in this suit.
3. In the order dated 28th April, 2016 a doubt was expressed as to
whether the suit has become infructuous since the bank guarantee had been
encashed but in my view, since there was an injunction in force and the bank
guarantee was encashed in violation thereof and the amount has been
directed to be deposited in this Court, it cannot be said that the suit has
become infructuous.
4. The application of the plaintiff for interim relief and on which ex parte
relief was granted has to be considered.
5. The counsel for the plaintiff however, instead of arguing the
injunction application, states that the amount lying deposited in this Court
pursuant to the order aforesaid be released to the plaintiff. He contends that
since the bench deciding the contempt petition had stated that the plaintiff
can apply to this Court therefor, that amount should be released to the
plaintiff.
6. The question of releasing such amount to the plaintiff would not arise
if the injunction application were to be ultimately dismissed and which the
counsel for the plaintiff is not choosing to argue.
7. The contention of the counsel for the defendant no.1 NHAI that the
suit has indeed become infructuous cannot be accepted as for whatsoever
reason the encashment of the bank guarantee was in violation of the order of
the Court.
8. The counsel for the plaintiff has been heard on the application for
interim relief.
9. The plaintiff has instituted the suit i) for declaration that the defendant
no.1 NHAI has not suffered any damages or costs beyond the pre-bid
processing charges of Rs.77,000/- and is not entitled to forfeit the bid
security amount in the form of bank guarantee deposited by the plaintiff as
punitive costs; ii) for declaration that the order dated 17th November, 2015 of
the defendant no.1 NHAI is unlawful, illegal and non enforceable as the
defendant no.1 NHAI has not quantified the actual damage / loss suffered
due to plaintiff's participation in the pre-bidding of the contract; and, iii) for
permanent injunction to restrain the defendant no.1 NHAI and the defendant
no. 2 Bank from encashing the bank guarantee.
10. The suit came up first before this Court on 11th January, 2016 when
vide ex parte ad-interim order, the defendant no.1 NHAI was restrained from
encashing the bank guarantee No.00291GPER08215 dated 17 th July, 2015
for a sum of Rs.8.14 crores.
11. As aforesaid, the bank guarantee was encashed, according to the
counsel for the defendant no.1 NHAI for the reason of the plaintiff having
not complied with Order XXXIX Rule 3 of the CPC, and the amount of
Rs.8.14 crores received by the defendant no.1 thereunder. Again as
aforesaid, pursuant to order dated 2nd February, 2016 in Contempt Cas (C)
No.93/2016 filed by the plaintiff, the said amount was ordered to be
deposited by the defendant no.1 NHAI in this Court and is reported to have
been so deposited.
12. It is the case of the plaintiff in the plaint i) that in pursuance of a
tender floated by the defendant no.1 NHAI on 10th June, 2015, the plaintiff
had submitted a bid and in accordance with the tender conditions also
submitted a bank guarantee of Rs.8.14 crores issued by the defendant no.2
Bank of Baroda (BoB) in favour of defendant no.1 NHAI; ii) that in
pursuance to the opening of the bids on 21st July, 2015, the plaintiff on 23rd
July, 2015 was intimated to come for an oral discussion in relation to certain
clarifications; iii) clarifications were sought from the plaintiff in relation to
debarment by the defendant no.1 NHAI of the joint venture company of
which the plaintiff was a part; iv) that though the plaintiff submitted its
clarifications but the defendant no.1 NHAI on 29 th July, 2015 intimated the
plaintiff that the plaintiff's bid had been rejected and declared the plaintiff
ineligible for bidding and also informed the plaintiff of forfeiture of the bid
security of Rs.8.14 crores; v) that the plaintiff instituted W.P.(C)
No.7335/2015 which was entertained and disposed of vide order dated 7 th
October, 2015 with a direction to the defendant no.1 NHAI to on or before
30th November, 2015 take a decision afresh on its claim for the sum of
Rs.8.14 crores against the plaintiff and if persists in the said claim, to
communicate the same with reasons to the plaintiff and with clarification that
if defendant no.1 NHAI persist in its claim, the plaintiff shall be entitled to
contest the same by instituting a suit / arbitration; vi) that though the plaintiff
submitted further clarification but the defendant no.1 NHAI vide its
communication dated 17th November, 2015 to the plaintiff persisted in its
demand for Rs.8.14 crores against the plaintiff and of forfeiture of the bid
security; vii) that the defendant no.1 NHAI even in the decision
communicated vide letter dated 17th November, 2015 did not quantify any
damage suffered by the defendant no.1 NHAI owing to the plaintiff's
participation in the bid process; viii) contending that the defendant no.1
NHAI without having suffered any loss cannot invoke the bank guarantee,
this suit has been filed.
13. The counsel for the plaintiff during the hearing relies on the order
dated 7th October, 2015 in W.P.(C) No.7335/2015 instituted by the plaintiff
and argues that since this Court had directed a decision to be taken by the
defendant no.1 NHAI and since the defendant no.1 NHAI in the said
decision also has not disclosed having not suffered any loss, defendant No.1
NHAI is not entitled to the sum of Rs.8.14 crores and the plaintiff is entitled
to stay of encashment of bank guarantee.
14. However the counsel for the plaintiff while contending so forgets the
law relating to encashment of bank guarantee.
15. The said bank guarantee is found to be an unconditional one;
thereunder the defendant no.2 BoB had irrevocably and without any
reservation undertaken to, upon a demand made by the defendant no.1 NHAI
and irrespective of whether the claim of the defendant no.1 NHAI was
disputed by the plaintiff, on first demand, pay the guaranteed amount to the
defendant no.1 NHAI, with the decision of the defendant no.1 NHAI in this
regard being final.
16. The senior counsel for the plaintiff argues i) that though this Court in
the order dated 7th October, 2015 had directed defendant no.1 NHAI to
communicate the reasons for persisting with the demand but in the letter
dated 17th November, 2015 no such reasons were stated; ii) that though the
bank guarantee given was an unconditional and unequivocal one but because
of the order dated 7th October, 2015 became a conditional bank guarantee;
iii) that though the judgment dated 7th October, 2015 (of the undersigned)
could not have changed the well settled law relating to bank guarantee but
since it is binding inter se parties, the plaintiff is entitled in this peculiar
situation to an order injuncting the encashment of the bank guarantee.
17. I am unable to agree.
18. Fraud of an egregious nature, which is the only exception to the law
of, no interference of court in encashment of bank guarantee, has to be in
obtaining the bank guarantee and not subsequent to the bank guarantee, as is
contended.
19. As far as the contention, of the bank guarantee having become
conditional owing to the order dated 7 th October, 2015, I may state that the
purport of the order is not so. There is no intention reflected therein or any
discussion therein on the matter of encashment of bank guarantee. Rather,
the order expressly provides that if the plaintiff is unable to obtain stay on
encashment of bank guarantee, the defendant no.1 NHAI shall be entitled to
invoke the same.
20. The well settled law is that if the encashment of the bank guarantee is
wrongful, the person on whose instance the bank guarantee is furnished is
entitled to make a claim for refund of the monies wrongfully realized under
the bank guarantee. That right exists in favour of the plaintiff also and
particularly in terms of the judgment in GVR Infra Projects Ltd. Vs. NHAI
2015 SCC Online Del 11924 and order dated 18th March, 2015 of the
Supreme Court in Civil Appeal No.3053/2015 titled as NHAI Vs. MEIL-
EDB LLJ (JV).
21. However the same would still not entitle the plaintiff to injunction
against encashment of bank guarantee.
22. Resultantly, the IA No.383/2016 is dismissed and the ex parte ad-
interim order is vacated.
23. With the aforesaid order, IA Nos.2279/2016, 2795/2016 and
4069/2016 have become infructuous and are disposed of.
CS(COMM) No.16/2016
24. The application for interim relief having been dismissed, the amount
of Rs.8.14 crores lying deposited in this Court with interest accrued thereon
be released in favour of the defendant no.1 NHAI after 29/08/2016.
25. Though the suit for the relief of permanent injunction has become
infructuous and the suit for the relief of declaration without the consequential
relief of recovery of monies realized under the bank guarantee would not be
maintainable but the senior counsel for the plaintiff states that the suit be not
disposed of today to enable the plaintiff to consider whether to amend the
plaint to incorporate the relief of recovery of Rs.8.14 crores realized by the
defendant no.1 NHAI and /or for any other reliefs.
26. List on 31st August, 2016.
RAJIV SAHAI ENDLAW, J
AUGUST 11, 2016
'gsr'
(corrected and released on 19/08/2016)
