Vfs Global Services Private ... vs South Delhi Municipal ...
2016 Latest Caselaw 2229 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI
                                  Judgment reserved on February 17, 2016
                                 Judgment delivered on March 21, 2016
+                    IA 1668/2016 in CS(OS) 52/2016

VFS GLOBAL SERVICES PRIVATE LIMITED       ..... Plaintiff
                  Through: Mr.C.A.Sundaram, Sr. Adv.
                           and Ms. Maninder Acharya,
                           Sr. Adv. with Mr.Samar
                           Singh Kachwaha &
                           Mr.Raghavendra M. Bajaj,
                           Advs.
                  versus

SOUTH DELHI MUNICIPAL CORPORATION       ..... Defendant
                  Through: Mr.Sanjay Poddar, Sr.Adv.
                           with Mr. Mukesh Gupta, Ms.
                           Pavni Poddar & Mr. Govind
                           Kumar, Advs.
CORAM:
HON'BLE MR. JUSTICE V.KAMESWAR RAO
V.KAMESWAR RAO, J.

IA 1668/2016 (under Order 39 Rules 1 and 2 CPC)

1. By this order, I would decide the application filed by the plaintiff

under Order 39 Rules 1 and 2 read with Section 151 CPC. The prayers

made in the application are as under:

"(a) Pass an appropriate ex parte, ad interim order, restraining the defendant from seeking to enforce against the plaintiff, any obligation under the erstwhile licence agreements, including but not limited to, payment of monthly licence fees, encashment of bank guarantee, forfeiture of security deposit, encashment of any post-dated cheque, or taking any punitive action such as issuance of show cause notice, blacklisting etc.,

pending disposal of the suit.

(b) Pass an appropriate ex parte, ad interim order, directing the defendant to deposit with this Hon'ble Court the post dated cheques furnished by it to the plaintiff".

2. The suit filed by the plaintiff is for declaration, damages,

mandatory and permanent injunction. The declaration sought is that, the

52 licence agreements granted to the plaintiff by the defendant are void

ab-initio on account of material misrepresentations and suppression of

vital facts.

3. Ms. Maninder Acharya, learned Sr. Counsel, who had initially

argued for the plaintiff would submit that vide NIT dated April 10, 2015,

the defendant invited bids for allotment of 71 authorized parking sites

under the jurisdiction of South Delhi Municipal Corporation (SDMC),

the details in that regard were in Annexure No. 13 of the NIT. A pre-bid

meeting was called by the defendant on April 23, 2015, wherein the

plaintiff participated, when it was asked by the bidders, Q.) What will

happen if under any circumstances, the SDMC fails to give possession to

H-1 bidder who had deposited/completed formalities.

A.) SDMC shall ensure handing over the possession of the parking site

to the contractor in full earnest.

Q.) Whether the department will hand over the possession of the site on

the spot in day time, in presence of nominated person of association as

well as local police.

A.) The department will hand over the peaceful possession to the

declared H-1 bidder on the spot. According to her, on April 30, 2015, a

corrigendum was uploaded/issued by the defendant stating that the maps

of 17 sites have been changed so as to comply with an order of the

National Green Tribunal. She states, no details of the said order was

disclosed to the bidders. It is her case, that the reference to a particular

NGT direction, made one think that the corrigendum has been brought

pursuant to the same routine and operational issue, that was clarified by

the NGT. According to her, this disclosure of the NGT order was crucial

for being disclosed to the bidder. After the financial bids were opened, it

was found that for 42 sites, the plaintiff was the sole bidder; out of

which, against 6 sites, the plaintiff had bid below the reserved MLF.

Finally, the plaintiff was allotted 52 sites and a letter was issued on May

26, 2015. The sites were allotted on payment of licence fees of Rs.

3,05,25,715/- per month for a period of 3 years with effect from June 16,

2015. Ms. Acharya would state that the plaintiff was of the belief that

the sites offered by the defendant were clear and would be handed over

to the plaintiff to enable it to perform its function. She states that the

allotment letters were issued on June 15, 2015 and a purported hand over

of all 52 sites took place on the same date at the office of the defendant,

the permission taken with the belief, they are clear sites. Immediately,

problems were noticed. She would refer to a letter dated June 18, 2015

of the plaintiff to the defendant pointing out problems conflicting/rival

claims and encumbrances in respect of 7 sites and made a formal request

to the defendant to act upon assurances and hand over peaceful

possession of the sites. In the letter dated June 18, 2015, a special

mention was made to the South Extension, Part II site, stating that the

police has sealed the site on account of NGT order. She has stated, the

plaintiff was under the impression, it is one site only, which would be

effective by an order of NGT. She also refers to subsequent letter of the

plaintiff dated June 22, 2015 pointing out similar problems and

conflicting claims had arisen with respect to 29 sites, and the plaintiff

has elaborated the problems at each site and again requested, the

peaceful possession of the parking sites. She draws my attention to the

reply of the defendant dated June 24, 2015, to state, instead of handing

over the peaceful possession of the sites, has stated that all the problems

have been sorted out. According to her, no reference was made to the

order of the NGT impacting the licence agreement. Even in its response

dated July 3, 2015, the defendant has stated that, the plaintiff, for each

site, should approach the local police authorities. This letter of the

defendant had come as a shock, rather than addressing the grievance of

the plaintiff, the defendant had asked the plaintiff to approach the police

authorities. On July 10, 2015, the defendant issued a letter to the

plaintiff, if within 3 days, the plaintiff does not issue the indemnity

bonds, signed agreements and post dated cheques, for the MLF for the

entire 3 years licence period for all 52 sites, the defendant shall initiate

action against the plaintiff. The plaintiff furnished to the defendant bank

guarantee for a sum of Rs. 5,60,51,430/- and 36 post dated cheques in

respect of monthly licence fees being Rs.3.05 Crores per month to the

defendant. Upon monthly payment of the licence fees, the defendant

would return the post dated cheques corresponding to the said month.

On payment of the licence fees in respect of June, July, August,

September, 2015, four post dated cheques have been returned. She

would state, a total of 32 post dated cheques, drawn by the plaintiff for

an aggregate sum of Rs. 97.68 Crores are lying with the defendant.

Noting no improvement at the sites, the plaintiff once again made a fresh

request to the defendant to hand over clear and unencumbered

possession of the 52 sites, pointing in a chart, the problems being faced

at each site. She would state, that the defendant in its letter dated August

28, 2015, took a stand that it is the plaintiff which has to sort out the

problems with various authorities. She would also highlight claims being

raised by DMRC at various sites already taken over by DMRC; claims of

RWA/local market associations, claiming either that land does not

belong to the defendant or it does not have any right to collect parking

charges in respect of cars parked thereon, inter alia, on account of prior

vested rights and claims from entities who had paid one time parking

charges to the MCD/defendant/previous contractor. She states, in one

case, M/s. Aurbindo Place Association filed a writ petition, claiming that

the orders passed by this Court in a previous writ petition, the defendant

herein had been directed, not to grant any fresh contract for parking in

the concerned area, without considering the proposal of the market

associations. She states, that, the defendant went ahead with the tender

process in respect of that area, that site. She also refers to the Lodhi

Road Institutional Area-I & II, the NBCC filed a writ petition in this

Court being W.P.(C) 3029/2011, wherein this Court, had passed an order

dated September 6, 2011 recording a settlement giving up the site in

favour of the NBCC, which would take over the site and run the parking

on the site. She states, deliberate suppression and concealment of the

order dated November 26, 2014 passed by the NGT in OA 21/2014,

wherein the NGT had ordered that the defendant shall ensure that Tarred

Roads are not permitted to be used for parking and that, in all markets in

Delhi, only one side parking shall be permitted and parking shall not be

permitted in a manner that two way free flow of traffic is impossible.

The tendered documents includes Tarred Roads within the area allotted

and also expressly states that the two sided parking shall be permitted in

market areas. In the light of the NGT order, the entire tendered process is

vitiated on account of material suppression and misrepresentations of

facts. She has drawn my attention to the survey drawings of the parking

sites to clearly indicate and specify how violations of NGT order dated

November 26, 2014 would have taken place if parking was permitted in

the manner provided in the licence agreements. Out of 52 sites, 45 sites

are on tarred roads. Furthermore, in 41 parking sites, either two side

parking has been allowed in such a manner that there is no free space left

for even single lane movement of traffic or single lane parking has been

allowed but the road is so narrow that no space is left for free passage of

regular traffic. She states, that, the police authorities were approached

several times, however, no action was taken, more so, since the

defendant did not offer any support whatsoever in spite of its contractual

obligations and unequivocal assurances in pre bid meeting of April 23,

2015. She had referred to a letter dated 23.9.2015 from the Deputy

Commissioner (RP Cell), SDMC to the various Assistant Commissioners

of SDMC, wherein, it was mentioned that, the problems being faced by

the plaintiff are also being faced by the contractors in respect of 71 sites,

to contend, that the problems faced by the plaintiff were real and

genuine. She would refer to letter dated September 7, 2015, wherein the

plaintiff had sought the hindrance free sites or in the alternative, to treat

the licences as cancelled forthwith being void and non-est.

4. The defendant in response on April 29, 2015, had made bald

denials and called upon to sort out the issues through meetings with the

officers. Despite meeting, on September 28, 2015, no solution was

forthcoming. As the plaintiff had suffered a loss of Rs. 12.2 Crores and

recurring loss in excess of Rs. 4 Crores, per month, the plaintiff had to

approach this Court by way of W.P.(C) 9407/2015. While hearing the

writ petition, the learned Single Judge of this Court vide order dated

November 4, 2015 had restrained the defendant from encashing any

cheque or bank guarantee till the next date of hearing. She would also

highlight the order passed in appeal, filed against the order dated

November 4, 2015 being LPA No. 829/2015, wherein the Division

Bench of this Court had observed that if the writ petition is dismissed,

the cheque as well as the bank guarantee can be encashed by the

appellant. Hence, it is clear that bank guarantee could only be encashed

if the writ petition being 9407/2015 is dismissed. She has also drawn my

attention to the judgment dated 11.12.2015 of the learned Single Judge

of this Court in W.P.(C) 9407/2015, wherein, substantial prayers of the

plaintiff were granted. She highlights paragraph 27, 28, 29 till 37.

According to her, from a reading of para 35, there is a clear conclusion

that the licence agreements were voidable at the option of the plaintiff

and in terms of para 37, the plaintiff had a right to declare all 52 licence

agreements as void, which the plaintiff had exercised with regard to 45

sites vide its letter dated January 12, 2016 and sought a restitution for a

sum of Rs.10,96,79,308/- and reserved its right to seek further damages.

Insofar as the balance 7 sites are concerned, it is their submission that the

plaintiff reserved its right to address the defendant qua those sites after

the expiry of three months. She state, that, in the LPA 41/2016, on being

asked by the Court, whether it is ready to hand over the remaining 7

sites, and the answer being in the affirmative, the plaintiff was to file an

affidavit, which it did and noting the said affidavit, the Division Bench

in its order dated January 27, 2016, had recorded that the plaintiff is

ready to hand over the remaining sites as well, granted liberty to the

parties to initiate proceedings for enforcement of various claims against

each other and the Court hearing such claims shall not be prejudiced by

the order dated December 11, 2015. The defendant despite such an order,

in complete violation of the earlier orders passed by the Court, sought to

encash the bank guarantee vide letter of invocation dated January 28,

2016. On coming to know, about the invocation, the plaintiff filed a CM

3416/2016 in LPA 416/2016. The Division Bench vide order dated

January 29, 2016 directed the defendant to keep the letter of invocation

in abeyance for 10 days to enable the plaintiff to seek appropriate

remedy. In sum and substance, it is her submission that the interim relief

sought for in the application for encashing the bank guarantee/security

deposit and the cheques by the defendant, would not be tenable

inasmuch as there was a stay in favour of the plaintiff, since the day one,

when it filed a writ petition being 9407/2015; (2) the Writ Petition

(Civil) 9407/20115 has been allowed by the detailed judgment, wherein,

it has been concluded that the plaintiff has a right to declare the licence

agreement as null and void at its option. According to her, the defendant

calling the plaintiff defaulters is untenable. Further, she would urge that

the fraud has been played by the defendant concealing the various

impeding factors for running the parking sites. The aforesaid facts

would also reveal special equities in favour of the plaintiff. It is a case

that the 45 sites are effected by the NGT order. She would rely upon the

following judgments:

        (i)      200 (2013) Delhi Law Times 283 (DB), State
                 Trading Corporation of India Ltd. Vs. State Bank
                 of India and Ors.
        (ii)     (2008) 1 SCC 544, Vinitec Electronics Pvt. Ltd.
                 Vs. HCL Infosystems Ltd.

         (iii)    AIR 2006 Delhi 169, M/s. Hindustan Construction Co.

                 Ltd. and Anr. Vs. M/s. Satluj Jal Vidyut Nigam Ltd.

5. On the other hand, Mr. Sanjay Poddar, learned senior counsel for

the defendant would state that NIT dated April 10, 2015 was issued for

allotment of 71 authorised parking sites against the payment of licence

fees. It also issued corrigendum dated April 30, 2015 whereby modifying

and correcting the layout of the parking in respect of 17 parking sites and

the said corrigendum along with corrected parking sites was put up in the

public domain. The correction was due to the objections raised by the

Delhi Police based on the directions of the National Green Tribunal.

According to him, the said bid was open till May 8, 2015. The bidders

including the plaintiff, submitted their bids pursuant to the said NIT for

71 sites. In the pre-bid meeting it was made clear that the parking sites

are being given on "as is where is basis". According to him, it was made

clear, that the answering defendant will not be responsible for any

decline in the revenue at the parking sites for any reasons whatsoever.

The NIT, stipulated the bidder to conduct survey of the existing site and

make independent evaluation of the scope of work. He would state that

the bidder was required to visit the parking site to understand the field

operation and current revenue administration. He would state that the

parking contractors were required to install and maintain computers at all

sites to capture all data of parking. The contractor was required to

clearly mark out the parking area by putting six inches wide strips of

thermoplastic paint within four weeks of taking over the site. The

issuance of parking site slips by hand held devices is a mandatory

requirement in terms of the NIT and the contractor was required to

submit a certificate evidencing use of hand held device to R.P.Cell

within a week from the date of taking over the parking sites. The

successful bidder was required to produce documentary evidence of

having procured these machines before the start of parking operation.

According to Mr. Poddar the successful bidder was to manage the site by

its own staff and shall not outsource work to any third party. He also

highlighted various stipulations of the contract. According to him, the

plaintiff was issued separate allotment letters in respect of 52 sites on

June 15, 2015. The possession of the 52 sites were handed over to the

plaintiff individually and separately on June 16, 2015. Out of 17 parking

sites mentioned in the corrigendum dated April 30, 2015, the plaintiff

was found successful in respect of 11 parking sites and the possession

was taken over by the plaintiff in terms of the corrigendum and not in

terms of the original maps issued along with the NIT. The plaintiff

never raised any objection for reduction/modification of the area at any

point of time including in the pleadings in the writ petition. In other

words, according to him, the bidders were fully aware of the NGT order.

He states no complaint/grievance has been received by the defendant

from the parking contractors to whom remaining six parking sites were

allotted out of 17 sites mentioned in the corrigendum dated April 30,

2015. Besides, there is no letter received from the police authorities till

date after this corrigendum and allotment of the parking sites citing any

issue relating to the NGT order. He would also state, the plaintiff took

possession of all the sites with its complete satisfaction and without any

objection. In so far as the letter dated June 18, 2015, which pointed out

certain difficulties being faced by it from local market association or the

residents is concerned, he would state, taking cognizance of such

complaint, a joint survey was conducted on June 23, 2015 along with the

staff of the plaintiff. The problems were sorted out on the spot to the

satisfaction of the said staff of the plaintiff. On July 3, 2015, a point

wise reply was furnished. It is only thereafter that the agreement was

signed on July 9, 2015. Admittedly, the possession of parking sites were

given on June 16, 2015. It is his case, there has been breach of the

agreements in respect of 52 sites. He states that notices were issued to

the plaintiff from time to time. It is his submission that as a counter blast

and to cover up its own lapses the plaintiff started raising frivolous

objections pointing difficulties faced by it. He would also state in para

21 of the writ petition, a chart was annexed indicating the difficulties and

hindrances faced in respect of each of the 52 parking sites, but would

state that barring one or two sites all the hindrances and objections

alleged by the plaintiff were not attributable to the defendant or to any

other government agencies but are because of the plaintiff's own

failures. With regard to DMRC work at the Munirka parking site is

concerned, the work was completed as on September 18, 2015. At the

time of inspection, the site was found to be in a running condition by the

plaintiff. Besides this, he would state that the defendant in consultation

with the DMRC sought restoration charges so that the claim of the

plaintiff if any, would be adjusted. As far as Aurobindo Place parking

site is concerned, the claim of the plaintiff was found to be wrong at the

time of the inspection on September 20, 2015. The allegation of the

plaintiff about the pendency of the writ petition is irrelevant in as much

as no court order has prevented the answering defendant or the plaintiff

from running the parking sites. In so far as South Extension is

concerned, he states that the NGT order is not affecting the parking site

inasmuch as the NGT order only stipulates that no regular vehicular

traffic is to be affected on tarred road and parking is to be provided only

on the one side tarred road meant for vehicular traffic. The South

Extension Par-II parking site is not situated on the tarred road meant for

regular vehicular traffic. As a matter of fact, it is only on the one side of

the ring road and parking is allowed only on the parking area which is

inside the market complex. He would state, the plaintiff is confusing the

internal metallic road with tarred road meant for regular traffic

movement. The defendant has not received any objection/hindrance

from Delhi Police other than the 17 parking sites. The objection based

on the NGT order for this solitary parking site is also not tenable and

have been raised by incorrect reading/interpretation of the NGT order.

According to Mr. Poddar, with a view to assist the plaintiff, the matters

were taken up with the concerned government agencies. General notices

to all the police authorities /Zonal authorities /local RWA's and market

associations have been issue by the defendant. He states that the

defendant has not committed any breach of the agreements. He states,

the plaintiff cannot avoid the agreements merely on the ground that it is

unable to make profit as expected by it. He would state the plaintiff was

not entitled to surrender 52 parking sites after a period of nine months

starting from June 15, 2015 and was required to give 90 days notice for

surrender of the parking sites. He states that the plaintiff was required to

pay the licence fees for a period of one year w.e.f. June 15, 2015 which

works out to be Rs.36,63,08,580/- and after deducting the total amount

received i.e. Rs.15,76,28,575/- a sum of Rs.20,86,77,005/- is due and

payable by the plaintiff. He denies that contract is void. He would also

state, the invocation of bank guarantee cannot be stayed being a separate

contract. He would rely on the following judgments in support of his

submission:-

(i) 2012 (8) SCC 197 Punjab Urban Planning and Development Authority and ors vs. Raghunath Gupta and ors;

(ii) 2013 (5) SCC 470 Rajasthan State Industrial Development and Investment Corporation and anr. Vs. Diamond and Gem Development Corporation Ltd. and Anr.

(iii) 2011 (6) RAJ 169 (Del) MSTC vs. M/s Jain Traders and ors;

(iv) 1994 (1) SCALE 715 Assistant Excise Commissioner and Ors. etc. vs. Issac Peter and ors

(v) 2015 (3) AD (Del) 586 JCL Infra Ltd. (Formerly known as J. Sons Co Ltd) vs. Govt. of NCT Delhi through Chief Secretary and Anr;

(vi) 2011 (2) RAJ 216 (Del) Emaar MGF Construction Pvt. Ltd. vs. DDA;

(vii) 2014(1) RAJ 735 (Del) Indu Projects Ltd. vs. Union of India;

(viii) 1997 (1) SCC 568 UP State Sugar Crp. Vs. Sumac International Ltd.;

(ix) 2008 (1) SCC 543 Vinitech Electronics Pvt. Ltd. vs. HCL Infosystems Ltd.

(x) (2013) 5 SCC 455 Bhagwati Developers Private Limited vs. Peerless General Finance Investment Company Limited and ors;

(xi) 2013(6) RAJ 725 (Del) DSC Limited vs. Rail Vikas Nigam Limited and ors.

6. Mr. C.A.Sundaram, learned senior counsel responding to the

submissions made by Mr. Poddar, would submit that there is an error in

the arguments of Mr. Poddar. He states, the defendant has assured the

plaintiff, of free sites, as is clear from page 133 of the documents, the

defendant had assured the plaintiff handing over of the possession of the

parking site to the contractor in full earnest and in fact, it was

represented by the defendant, they would hand over the peaceful

possession on the spot. Despite such assurances, noting that, the 45

parking sites, had, one or the other impediment for being handed over,

the representation of giving peaceful possession is misrepresentation.

He has also drawn my attention to pages 37, 19 (at C), 20 (at 15) to

contend certain eventualities have been laid down; which need to be

adhered to by the contractor; including order of the Court. According to

him, 45 parking sites are in violation of NGT order. He also states that

the corrigendum map is dated April 20, 2015. The same was given to

the plaintiff on May 1, 2015. In the pre-bid meeting held on April 23,

2015, this aspect of the NGT order and the corrigendum map was not

disclosed. He has also drawn my attention to order dated September 23,

2015 of the SDMC, wherein their own field staff has confirmed that

there are encroachments in many of the parking sites and the contractors

are approaching the department for removal of encroachments. He states

this is the version of the defendant themselves as late as September 2015.

To contend otherwise now, is a misrepresentation. He would state, it is a

case of misrepresentation to entice the plaintiff to enter into a contract.

He has referred to a set of maps filed by way of a compilation to submit

that these maps having not been disputed demonstrates that, the 45 sites

are in violation of NGT order and could not have been allotted as

parking sites. In substance, it is his submission that it is a case of fraud

underlying the contract. He states, the judgments referred to by Mr.

Poddar more specifically related to bank guarantees are where the cases

were filed seeking injunction against bank guarantees only unlike this

case where the prayer in the suit is for declaration, damages and

restitution and a prayer is made in an application for interim relief under

order 39 Rules 1 and 2. He seeks the prayers as made in the application.

He would also refers to the judgments as noted above.

7. Having heard, the learned counsel for the parties, there is no

dispute that the application under consideration is under order 39 Rules 1

and 2 CPC. The prayers primarily are for a restraint order against the

defendant, seeking to enforce any obligation under the licence

agreements, including monthly licence fees, encashment of bank

guarantee, forfeiture of security deposit, encashment of any post dated

cheques. Such an application, need to be decided keeping in view the

principles governing grant of interim order.

8. Before I deal with the submissions made by the counsels for the

parties, I note much reliance was placed by the learned counsel for the

plaintiff on the judgment of this Court in WP no.9407/2015 dated

December 11, 2015. Suffice to state in para 6 of the order dated January

27, 2016, the Division Bench in LPA no.41/2016, has, by granting

liberty to both the parties to work out the other remedies available under

law regarding their claims and counter claims including recovery of

licence fees/damages, made clear that any such proceedings initiated by

either party shall be decided without being influenced by any of the

observation/findings recorded in the order dated December 11, 2015. So

this Court need to consider the plea raised by the parties independently

and not to go by the conclusions in order dated December 11, 2015.

9. The case of the plaintiff as canvassed by the learned senior

counsel, that the licence agreements entered by them with the defendant

was by way of concealment suppression and fraud on the part of the

defendant and hence voidable and have been rightly declared so.

According to them, the parking sites clearly indicate violation of NGT

order dated November 26, 2014, at least 45 are on tarred roads.

Furthermore, in 41 of the parking sites, two sides parking has been

allowed in such a manner that there is no free space left for even single

lane movement of traffic. That apart, a case of conflicting claims has

also been set up by the counsels, like de-notification of site by the MCD;

notification of the site by the DMRC; sites in respect of which

defendant/MCD/their previous contractors had collected from

RWA's/institutions present in the area, lump sum one time parking

charges preventing the plaintiff from performing the functions under the

agreements; unauthorised encroachments.

10. The stand as canvassed by Mr. Poddar, primarily is of denial of

the pleas urged on behalf of the plaintiff. According to him, the

defendant is not responsible for any hindrances for the running of the

parking site. The submissions noted in para 5 primarily being the stand

of the defendant, on the objections raised by the plaintiff on parking

sites, prima facie appears to be a plausible reasoning till such time the

plaintiff establishes its case in the trial wherein, the scope of NGT order

and its effect thereof need to be analysed including the nature and

relevance of the third party claims. Till such time, the plaintiff

establishes its case, whether the interim order, as sought by the plaintiff

need to be granted, is the moot question in the application. The relief

sought by the plaintiff is primarily (i) against the encashment of bank

guarantees; (ii) forfeiture of security deposit; (iii) restraining from

encashment of post dated cheques and (iv) restraining from taking any

punitive action such as issuance of show cause notice, black listing of the

plaintiff pending disposal of the suit.

11. Insofar as the encashment of bank guarantees is concerned, I am

unable to accept the plea of Mr. Sundaram that the judgments relied

upon by Mr. Poddar primarily relates to the cases wherein only relief of

injunction was sought against the encashment of bank guarantees, unlike

the case in hand, wherein, the primary relief of the plaintiff is of

declaration of the 52 licences agreements as void, and only as an interim

measure the relief of stay of bank guarantees has been sought. It is a

settled position of law that the contract of bank guarantees is a separate

and independent contract and the relationship between the beneficiary

and the bank is regulated by the same, and surely the same shall be

applicable while determining plea of stay of bank guarantee as an interim

measure, as the position of law would not vary/different in any

eventuality.

12. Insofar as the judgments relied upon by Mr. Sundaram in that

regard, are concerned in Vinitec Electronics Pvt. Ltd.(supra), in para 25,

on which reliance was placed by Mr. Sundaram, the Supreme Court has

held that the fraud, if any must be of egregious nature so as to vitiate the

underlying transaction. The Supreme Court went on to hold, that

pleadings suggest, no such case was made out. In any case, the reliance

placed by Mr. Sundaram that "fraud must be of egregious nature so as to

vitiate the underlying transaction" need to be established by the plaintiff

in this case, before any reliance can be placed on the judgment. The said

judgment would have no applicability.

13. That apart, in Hindustan Construction Co. Ltd. and Anr. (supra),

wherein, the reliance was placed by Mr. Sundaram on paras 20 & 21 of

the judgment is primarily an exposition of law by this Court. The

reliance also placed by him on para 25 of the judgment stating that no

injustice would be caused to the defendants, if the bank guarantees are

not permitted to be encashed at this stage, subject to the condition they

are kept alive by the plaintiff, as, by invocation of the same, the plaintiff

would suffer irretrievable injustice and injury because they may not be

able to bear such financial imbalance is concerned, suffice to state, this

case is distinguishable on facts, inasmuch as, in the said case, it was

noted by the Court that the claims of the petitioner in that case, were

allowed against the respondents by the domestic adjudicating process

prescribed under the terms of the Contract. Further, this court was of the

view that the concept of irretrievable injustice or damages or special

equities would come into play where a party to a Contract having been

provided with internal adjudicative mechanism, attempt to frustrate

result of such internal adjudication by recourse to encashment of bank

guarantee, particularly when the terms and conditions of the Contract

including the terms of the guarantee, such determination is final. There

is no final determination in this case as yet, for the plaintiff to take

advantage of the case cited. The judgment is also not applicable.

14. Insofar as the reliance placed by Mr. Sundaram in the case of State

Trading Corporation of India Ltd. (supra), the same would not be

applicable on facts, inasmuch as there is a finding of the Court that there

was no breach of Contract by the sellers and the quality of grain, which

had been supplied by the respondent No.3 to the petitioner was as per

contractual obligation. The Court held, it was incumbent upon the

petitioner to have first entered into a negotiation with respondent No.3

before it could have invoked the bank guarantee. The Court noted that

the petitioner has received the payment of the bank guarantee from

respondent No.1 on January 21, 1998. At this time, the order of the

Swiss Court injuncting respondent No.2 from making payment to

respondent no.1 was in operation. Respondent No.3 had also invoked

the arbitration clause against the petitioner on December 22, 1997.

There is a finding of the Court that all these facts were well within the

knowledge of the petitioner. But it still insisted upon invoking the bank

guarantee. It was in this background, this Court had held that the

decision of the Swiss Court and the GAFTA having been upheld, the

petitioner had abused his power by invoking the bank guarantee. No

such facts are available in this case. Suffice to state, this Court has also

held that it is difficult to draw any straight jacket formula, which would

universally apply to all cases of bank guarantees. I would not like to

reiterate the law on bank guarantees, which is well settled. Suffice to

state, the invocation of bank guarantee being unconditional and it is not

the case of the plaintiff that invocation was not in terms of the same, the

defendant is within its right to invoke the same.

15. That apart, insofar as the plea of forfeiture of security deposit is

concerned, the Contract stipulates in case of surrender of the site, the

amount deposited towards Performance Guarantee/security deposit shall

not be adjusted against the license fee of the remaining months and shall

be forfeited, refunded or adjusted, as the case may be, after the

determination of Contract. The amount against the bank guarantee is for

a sum of Rs.5,60,51,430/- and the security deposit is for a sum of

Rs.3,55,25,715/-. The issue whether the plaintiff is entitled to the relief

as prayed and could have surrendered the sites to the defendant

prematurely need to be decided in the trial. Till such time, the plaintiff

cannot seek a restraint order of forfeiture of security deposit.

16. Insofar as the encashment of post dated cheques are concerned,

there is no dispute that the plaintiff has surrendered all the sites to the

defendant. The plea urged by the defendant is, surrendering the sites is

contrary to the terms of the Agreement. There is also no denial by the

defendant that the sites have been surrendered. If that be so, the plaintiff

is not operating the parking sites. In fact, I note, it is also the stand of

the defendant that the plaintiff enjoyed the possession of 52 sites till

January 27, 2016 and the defendant has taken a stand that the plaintiff is

liable to pay a sum of Rs.20,86,77,005/- plus interest thereon and the

defendant is entitled to recover the same by encashing the bank

guarantee in question. The defendant has also referred to a claim of

Rs.48,11,695/-. Suffice to state, the defendant refers to recover the sum

through bank guarantee and not through encashment of post dated

cheques.

17. In view of my above discussion and taking into consideration that

the defendant herein is a local body being South Delhi Municipal

Corporation and keeping in view the position of law, its right to invoke

the bank guarantee in the facts, cannot be questioned. At the same time,

noting the pleas urged, to balance the equities, this Court is of the view

that the defendant, on encashment of bank guarantee (as already invoked

by it), shall keep the amount of the bank guarantee as well as the security

deposit in an interest bearing fixed deposit till the culmination of the

proceedings, so that the benefits thereon enure to the successful party in

these proceedings.

18. Insofar as the prayer of encashment of the post dated cheques is

concerned, in view of the stand taken by the plaintiff surrendering the

parking sites and the fact, the plaintiff is not operating the parking sites,

which aspect has not been denied by the defendant and the post dated

cheques, primarily to be used for payment of minimum license fee,

suffice to state, the defendant cannot encash them. As no submission has

been made with regard to the prayer seeking restraint order against black

listing of the plaintiff, the same is rejected.

19. In view of my conclusion above, it may not be necessary for me to

refer to the judgments, as relied upon by Mr. Poddar. The application IA

1668/2016 is disposed of in above terms.

20. The defendant shall file written statement within four weeks from

today. The replication, thereto be filed within two weeks thereafter. List

before Joint Registrar on May 9th, 2016 for further proceedings.

(V.KAMESWAR RAO) JUDGE

MARCH 21, 2016 Akb/ak