Delhi High Court
Regen Powertech Private Limited vs Green Infra Wind Solutions Assets ... on 29 November, 2017
$~30
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ O.M.P.(I) 25/2017
Date of decision: 29th November, 2017
REGEN POWERTECH PRIVATE LIMITED ..... Petitioner
Through Mr.Jayant Mehta, Mr.Anshul
Raajan and Mr.S.Aravindan,
Advs.
versus
GREEN INFRA WIND SOLUTIONS ASSETS LIMITED
& ANR. ..... Respondents
Through Mr.Abhinav Vasisht, Sr. Adv.
with Mr.Shankh Sengupta,
Ms.Tine Abraham and
Ms.Prerna Jain, Advs.
CORAM:
HON'BLE MR. JUSTICE NAVIN CHAWLA
NAVIN CHAWLA, J. (Oral)
1. This petition under Section 9 of the Arbitration and Conciliation
Act, 1996 (hereinafter referred to as the 'Act') has been filed by the
petitioner seeking an order restraining respondent No.1 from invoking
or receiving money under the Performance Bank Guarantees bearing
Nos.0993017BG0000153 dated 21.07.2017 and N81GPGE171850001
dated 04.07.2017.
OMP(I) 25/2017 Page 1
2. Learned counsel for respondent No.1 had entered appearance on
advance notice and has been heard in objection to the petition. As a
very limited order of protection is intended to be granted in favour of
the petitioner, I deem it appropriate not to seek formal reply from
respondent No.1. Respondent No.2 is stated to be only a proforma
party.
3. The respondent No.1, being desirous of setting up and
developing 75 MW Wind Power Project in Karadikonda District in the
State of Andhra Pradesh, had placed a purchase order on the petitioner
for supply of 50 numbers of Wind Turbine Generators(WTGs) and for
this purpose, the parties had entered into inter-alia a Wrap Agreement
dated 30.07.2016 (hereinafter referred to as the 'Agreement'). In
terms of Clause 1.7 of Schedule-III of the Agreement, the petitioner
has submitted irrevocable and unconditional bank guarantees for
securing performance of the Agreement. It is submitted by the
petitioner that subsequent to the execution of the above agreement, the
parties agreed to reduce the quantity of WTGs to 33 instead of and in
place of 50 as has been mentioned in the agreement. This fact is not
disputed by learned senior counsel for the respondent No.1.
4. It is submitted by learned counsel for the petitioner that WTGs
have been duly commissioned as would be evident from the
Commissioning Letter dated 30.04.2017 and "STPT Certificate-Green
Infra Wind Solutions Limited" dated 03.08.2017 which certifies that
the 'Average Machine Availability' over the period 18.07.2017 to
23.07.2017 was 99.74%. He further draws my reference to Clause
1.7(b) of Schedule-III to the Agreement to submit that the bank
OMP(I) 25/2017 Page 2
guarantees can be invoked by the respondent only "to recover
undisputed payment due by the supplier to the owner under this
agreement". He submits that as no claim has been made against the
petitioner by the respondents, there is no such undisputed payment due
from the petitioner as on today. Further, relying upon Clause 11, 12
and 13 of the Schedule-III to the agreement, learned counsel for the
petitioner submits that as the WTGs have been commissioned and
STPT Certificate issued showing the due performance of the same,
these bank guarantees cannot, as on today, be invoked in any case. He
further submits that no "Notice of Default" in terms of Clause 17 of
the agreement has been issued by the respondent to the petitioner till
date. He submits that though, Notice of Default has been issued to the
petitioner under the Operation and Management Agreement (O&M
Agreement), the same is an independent agreement. He submits that
even if a default is presumed under the said agreement, the present
bank guarantees cannot be invoked.
5. The present petition has been filed by the petitioner on a mere
apprehension as the bank guarantees have not been invoked by the
respondent No.1 till date. The apprehension of the petitioner is that
the respondent No.1, without issuing notice of default, may proceed to
invoke the bank guarantees for its alleged disputes in relations to the
O&M Agreement. He further submits that, in similar agreements in
relation to other territories, the respondent has invoked the bank
guarantees. In some of them, the petitioner could approach the Court
in time and ad-interim order of protection was granted in favour of the
petitioner, however, in certain other cases, the bank guarantees stood
OMP(I) 25/2017 Page 3
invoked without the knowledge of the petitioner because of which the
petitioner could not approach the Court in time and, therefore, the
same were encashed by group companies of Respondent No.1. He
submits that such invocation and encashment was contrary to the
terms of the agreement. He further submits that thereafter the
petitioner had approached this Court for seeking deposit/securing the
amount so received by Respondent No.1 and its group companies on
such encashment of bank guarantees, however, this Court has rejected
such prayer. He submits that the petitioner will be left remediless in
case, at least, limited protection is not granted in favour of the
petitioner at this stage.
6. On the other hand, learned senior counsel for the respondent
No.1 submits that Respondent No.1 is not the respondent in other
matters referred by the petitioner and therefore, the encashment of
Bank Guarantees in other cases has no relevance. He further submits
that certain payments were released in favour of the petitioner only on
the security of the bank guarantees in question and therefore, any
order of restraint would leave the respondent unsecured. It is
submitted that the bank guarantees are unconditional, unequivocal and
irrevocable in nature and therefore, no order of restraint can be passed
against the respondent from invoking the same. He further submits
that the respondent No.1 is within its right to invoke the bank
guarantees. He submits that any order of protection that may be
granted in favour of the petitioner, in fact, would amount to re-writing
the agreement between the parties. He submits that mere
apprehension, does not amount to a cause of action and therefore, in
OMP(I) 25/2017 Page 4
the absence of cause of action, present petition is not maintainable;
admittedly, as no invocation has been done till today, there is no cause
of action. It is submitted that there can be no remedy without
entitlement, therefore, the petitioner is not entitled for any order of
protection. Relying upon the judgment of Bombay High Court in
Mohit Minerals Pvt. Ltd. v. Maharashtra Small Scale Industries
Development Corporation Ltd., 2012 SCC Online Bom 1054, he
submits that the agreement does not envisage any hearing or notice
being given to the petitioner before invocation of the bank guarantee
and therefore, this Court cannot and ought not to grant any such relief
prayed by the petitioner.
7. I have considered the submissions of learned counsels for the
parties. It is not disputed before me that as on today there is no notice
of default issued by the respondent No.1 to the petitioner. Learned
senior counsel for the respondent No.1 is not even in a position to state
whether respondent No.1 intends to invoke the bank guarantees in
immediate future. In fact, his submission is that such decision has not
been taken by respondent No.1, and that is why the petition is pre-
mature and is not maintainable. Equally, the Court cannot lose sight
of the fact that the group of companies of respondent No.1, under
similar situation, had invoked the bank guarantees and encashed the
same, even before the petitioner could approach the Court of law for
seeking protection. Whether the petitioner at all would have been
entitled to seek any order of protection in those cases or in the present
case is not the question; the question only is whether the petitioner at
this stage has a valid apprehension that respondent No.1 may, only to
OMP(I) 25/2017 Page 5
defeat any right of legal remedy to the petitioner, invoke the bank
guarantees behind its back so as to leave the petitioner remediless. As
noted above, it is not disputed before me that till date there is no
notice of default under the agreement issued by the respondent No.1 to
the petitioner, therefore, the petitioner cannot even be said to be aware
of the alleged default, if any, on part of the petitioner which may
entitle the respondent No.1 to invoke the bank guarantees.
8. Though, submissions have been made by the learned counsel
for the parties submitting that there is or there is not a default of the
agreement committed by the petitioner, in my opinion, same is pre-
mature in nature in absence of a Notice of Default issued by the
respondent No.1 to the petitioner. Taking into the account that
encashment of bank guarantees has a civil consequence in the
economic scenario today, I am of the opinion that the petitioner, at
least, is entitled to a notice of default before the bank guarantee is
invoked. In M/s Gangotri Enterprises Ltd. Union of India, AIR 2016
SC 2199, Supreme Court had drawn the distinction between the
general principles relating to the bank guarantee and the right of a
contracting party to invoke such bank guarantee towards the claim of
damages against other.
9. In view of the above, I am of the opinion that at the present
stage, the equity between the parties can be balanced by directing the
respondent No.1 to give a notice of five working days to the petitioner
before invoking the bank guarantees. My above order is not to be
construed as expression on merits to the claim of either party and
would not bind either party in any future litigation that may ensue
OMP(I) 25/2017 Page 6
upon invocation of the bank guarantee or otherwise by the respondent
No.1 or the Petitioner. It is re-emphasised that the present order of
grant of limited protection to the petitioner is being passed as the bank
guarantees are not yet invoked and even notice of default has not been
issued by the respondent No.1.
10. Learned senior counsel for the respondent No.1 submits that
grant of such interim protection would in fact leave a door open to
similar litigations in other cases by the persons giving such bank
guarantee to approach this Court seeking similar relief without any
valid apprehension. I am not persuaded by such submissions. The
present order is being passed on its peculiar facts and would not be a
binding precedent for other cases. Each case has to be considered on
its own merits and this order certainly would not mean that in other
cases as well, the party to the contract is entitled to an advance notice
before invocation of the bank guarantee.
11. The petition is allowed in the above terms.
NAVIN CHAWLA, J
NOVEMBER 29, 2017/vp
OMP(I) 25/2017 Page 7
