Delhi High Court
Gammon Engineers And Contractors ... vs Rail Vikas Nigam Limited on 28 February, 2022
$~21 (2022)
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 28th February 2022
+ O.M.P.(I) (COMM.) 68/2022
GAMMON ENGINEERS AND CONTRACTORS
PVT. LTD. ..... Petitioner
Through: Mr Jayant Mehta, Senior
Advocate along with Mr
Subhojit Roy, Ms Sonia Dube,
Mr Ishaan Saha, Mr Satyaki
Mitra, Ms Kanchan Yadav, Ms
Ramanuj Raychaudhuri and Mr
Amrit Singh, Advocates.
Versus
RAIL VIKAS NIGAM LIMITED ..... Respondent
Through: Mr Udit Seth and Mr Anil Seth,
Advocates.
CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
VIBHU BAKHRU, J. (ORAL)
[Hearing held through videoconferencing]
IA No. 3262/2022
1. Exemption is allowed, subject to all just exceptions.
2. The application stands disposed of.
O.M.P.(I) (COMM.) 68/2022
3. The petitioner has filed the present petition under Section 9 of the
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By:Dushyant Rawal
Arbitration and Conciliation Act, 1996 (hereafter 'the A&C Act'), inter
alia, praying that an order be passed restraining the respondent from
taking any further action in terms of the letters dated 11.02.2022 and
16.02.2022.
4. In terms of the said letters, the respondent had called upon the
petitioner to pay an amount of ₹9,21,22,006.33/- failing which, it would
be recovered by encashment of the Bank Guarantees available with the
respondent. The petitioner, thus, also prays that an order be passed
restraining the respondent from making any claim for payment under
the Performance Bank Guarantees submitted by the petitioner.
5. The controversy in this case arises in the following context:
6. The respondent had issued a Notice Inviting Tender (NIT) for
"construction of Behala Bazar, Taratala and Majerhat stations
including all related works (architecture, electrical and mechanical
(E&M), HVAC, fire detection and fire suppression system and Public
health engineering works) in Joka BBD Bag corridor of Kolkata Metro
Railway Line (JMS2)".
7. The petitioner submitted its bid in response to the said NIT on
09.02.2012. The petitioner was selected as the successful bidder and by
a Notice of Award dated 14.04.2012, the respondent awarded the
contract to the petitioner for a total value of ₹1,62,66,53,074/-.
8. In terms of the tender conditions, the petitioner was required to
deposit 10% of the contract amount, being ₹16,26,65,307/- as
performance security as well as an additional performance security of
₹7,26,560/.
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By:Dushyant Rawal
9. The petitioner states that the value of the contract was
subsequently reduced to ₹80.76 crores, however, the Bank Guarantees
furnished by the petitioner were not correspondingly reduced.
10. Mr Mehta, learned senior counsel appearing for the petitioner,
supported the prayers made in the present petition by contending that it
was incumbent upon the respondent to reduce the value of the
Performance Bank Guarantee, as in terms of the tender conditions, the
value of the Performance Bank Guarantee was pegged at 10% of the
contract value. Since the contract value had been reduced by removing
certain works from the scope of works of the petitioner, commensurate
with the reduced value of the contract, the Performance Bank
Guarantees were required to be reduced as well.
11. He further submitted that apart from the fact that the respondent
possessed the Performance Bank Guarantees of higher value, there were
certain amounts due and payable by the respondent to the petitioner and
therefore, there was no question of the respondent invoking any Bank
Guarantee.
12. He submitted that the petitioner had made a claim amounting to
₹156.35 crores, which was being considered by the committee
constituted for resolving the claims as raised by the petitioner. He
submitted that encashment of the Performance Bank Guarantee(s) at
this stage would amount to mulcting the petitioner with an additional
burden while delaying the resolution of the claims made by the
petitioner.
13. Mr Udit Seth, learned counsel appearing for the respondent had
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By:Dushyant Rawal
sought time to take instructions as to whether any amount was otherwise
due and payable to the petitioner for the work done or was under
process. He states that the respondent has since, filed an affidavit clearly
stating that no amount is payable to the petitioner. On the contrary, the
respondent claims a sum of ₹46,46,152.41/- from the petitioner.
14. He submitted that the Performance Bank Guarantee will be
invoked only for a sum of ₹9,21,22,006.33/- as that is the additional
amount incurred by the respondent for executing the works, which were
earlier contracted to the petitioner. He submits that the petitioner could
not complete part of the works and therefore, had requested that certain
works be removed from its scope of works and awarded to another
agency, at its risk and cost. This was done and the respondent is seeking
recovery of the additional amount incurred over and above the value at
which the said work was contracted to the petitioner. He submits that
the amount of ₹9,21,22,006.33/-, recovery of which is sought by the
respondent, is directly relatable to the failure on the part of the petitioner
for executing the works in accordance with the contract.
15. It is at once clear from the above that there are disputes between
the parties in regard to the performance of the contract in question. Both
the parties are claiming that certain amounts are due and payable by the
other.
16. Insofar as the relief regarding interdicting a bank guarantee is
concerned, the law relating to the same is well settled. An unconditional
bank guarantee cannot be interdicted except on the grounds of egregious
fraud and special equities [Svenska Handelsbanken v. M/s Indian
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Charge Chrome and Others: (1994) 1 SCC 502; Himadri Chemicals
Industries Ltd. v. Coal Tar Refining Co.: (2007) 8 SCC 110; and
Larsen & Toubro Limited v Maharashtra State Electricity Board and
Others: (1995) 6 SCC 68]. In the present case, no such ground exists.
17. In view of the above, this Court is unable to accede to the prayer
made by the petitioner for interdicting the Performance Bank Guarantee
furnished by the petitioner.
18. The petition is, accordingly, dismissed.
19. It is clarified that all rights and contentions of the parties are
reserved and nothing stated in this order shall be construed as an
expression of opinion on the merits of the rival claims.
VIBHU BAKHRU, J
FEBRUARY 28, 2022
RK/v
Signature Not Verified
Digitally Signed
By:Dushyant Rawal
