M/S Alectrona Energy Pvt. Ltd vs Kerala State Electricity Board ...
2021 Latest Caselaw 5675 Ker

         IN THE HIGH COURT OF KERALA AT ERNAKULAM

                            PRESENT

              THE HONOURABLE MR.JUSTICE N.NAGARESH

WEDNESDAY, THE 17TH DAY OF FEBRUARY 2021 / 28TH MAGHA,1942

                   WP(C).No.24907 OF 2020(K)


PETITIONER:

              M/s ALECTRONA ENERGY PVT. LTD.,
              REP. BY ITS MANAGING DIRECTOR,
              MR.ROHIT RABINDERNATH,
              S/O.LATE MR.RABINDERNATH,
              AGED 42 YEARS,
              HAVING ITS REGISTERED OFFICE AT 3RD FLOOR,
              BLOCK A, BANNARI AMMAN TOWERS, NO.29,
              DR.RADHAKRISHNAN ROAD,
              MYLAPORE, CHENNAI-600 004

              BY ADVS.
              SRI.M.R.HARIRAJ
              SRI.THANUJA ROSHAN GEORGE
              SHRI.VISHWAJITH C.K
              SMT.GANGA A.SANKAR
              SHRI.CHACKOCHEN VITHAYATHIL
              SMT.GISHA G. RAJ
              SHRI.REJIVUE

RESPONDENTS:

     1        KERALA STATE ELECTRICITY BOARD LTD.,
              A GOVT OF KERALA UNDERTAKING,
              REP. BY ITS CHIEF ENGINEER 9TH FLOOR,
              VYDYUTHI BHAVANAM, PATTOM,
              THIRUVANANTHAPURAM-695 001

     2        STATE OF KERALA,
              REP. BY THE SECRETARY TO GOVERNMENT OF KERALA,
              DEPARTMENT OF ELECTRICITY,
              THIRUVANANTHAPURAM-695 001
 WP(C) No.24907/2020
                             :2 :


       3      DCB BANK LTD.,
              HAVING ITS CENTRAL OFFICE AT 601 AND 602,
              PENINSULA BUSINESS PARK, 6TH FLOOR, TOWER A,
              SENAPATHI BAPAT MARG, LOWER PAREL,
              MUMBAI 400013,
              REP. BY ITS MANAGER NUNGAMBAKKAM BRANCH

              R1 BY ADV. SRI.SUDHEER GANESH KUMAR.R.,SC
              R2 BY GOVERNMENT PLEADER SMT. RASHMI K.M.

     THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD
ON 17.02.2021, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
 WP(C) No.24907/2020
                                :3 :




                        JUDGMENT

~~~~~~~~~

Dated this the 17th day of February, 2021

The petitioner, a Company in the business of

manufacture and installation of Solar Photovoltaic Modules,

Electronic Controls, Solar Inverters and Solar Water pumps, is

before this Court seeking to quash Ext.P19 and to direct the

respondents to allow the petitioner to complete the execution

of agreement.

2. The 1st respondent-KSEB invited tenders for

erection of 1.0 MW solar power plant at Mylatty as per Ext.P1.

The petitioner participated in the tender successfully and was

given Ext.P2 work order on 07.12.2017. The petitioner would

contend that there were certain issues relating to tax structure

which would have affected the price quoted. The said issue

delayed execution of the agreement. Finally, the agreement

was executed in the month of March, 2018 as per Ext.P3. WP(C) No.24907/2020

3. The petitioner submits that the 1st respondent called

a meeting relating to execution of the contract on 21.02.2019.

The petitioner submitted Ext.P5 revised schedule of project

implementation. The petitioner also sent Ext.P6 e-mail with an

update on the AC and DC works. In the said e-mail, the

petitioner informed the respondents of engaging of local

labour as local contractor. The respondents took the

engagement of local labours as sub contract and on that

ground and without issuing any show-cause notice, issued

Ext.P7 terminating the project agreement.

4. By Ext.P8 dated 10.07.2019, the petitioner clarified

to the respondents that what was meant by the petitioner was

only engagement of local labour for the work and it was not a

question of sub contracting.

5. The petitioner challenged Ext.P7 filing W.P.(C)

No.20009/2019. This Court found the said writ petition as

premature and dismissed the writ petition. Thereafter, the

petitioner sought constitution of a Dispute Resolution

Committee by Ext.P10 representation dated 03.10.2019. The WP(C) No.24907/2020

Dispute Resolution Committee was constituted and a meeting

was held on 04.02.2020. In the said meeting, the petitioner

pointed out that the original photovoltaic modules offered in

the contract have become obsolete and the petitioner is ready

to provide their own modules of new model, which are more

efficient, without any additional cost.

6. Subsequently, the petitioner was served with

Ext.P11 minutes of the meeting of the Dispute Resolution

Committee. In Ext.P11, it was stated that the Chair agreed to

the request of the petitioner in principle subject to the

condition that the petitioner shall pay the KSEB an amount

equal to the generation loss (deemed) during the period of

such extension. It was stated in Ext.P11 that the amount

equal to generation loss per year comes approximately to

₹50,57,500/-. Ext.P11 further stated that if the project is not

successfully completed and handed over to the Board as

agreed, the said generation loss will be deducted from the

Bank Guarantee executed in favour of the KSEB. WP(C) No.24907/2020

7. The petitioner was not agreeable to the quantum of

generation loss. Therefore, the petitioner sent Ext.P12

representation dated 03.03.2020 to the Chief Engineer (RE &

ES), KSEB. The 1st respondent required that the Bank

Guarantee submitted by the petitioner through the 3rd

respondent may be extended. The 1st respondent extended

the time of contract by four months as per Ext.P14

communication dated 01.04.2020.

8. The petitioner wold submit that Ext.P14 was served

to the petitioner during the lock down period consequent to

Covid-19 pandemic. When the Company office started

functioning, the petitioner requested the respondents to

confirm if the project could be implemented using the new

modules. However, to the surprise and predicament of the

petitioner, the 1st respondent issued Ext.P19 letter to the 3rd

respondent-Bank demanding that the Bank Guarantee

provided by the petitioner be encashed. It is aggrieved by the

arbitrary and illegal action of the respondents to realise the

Bank Guarantee that the petitioner is before this Court. WP(C) No.24907/2020

9. The learned counsel for the petitioner would submit

that the termination of the agreement without hearing the

petitioner is violative of the principles of natural justice. The

termination of the project agreement is devoid of any

justifiable reason. There was no deficiency on the part of the

petitioner in executing the work. The Dispute Resolution

Committee deemed it fit to extent the time of the contract. The

petitioner also offered to complete the contract with new

technology module. When the petitioner was willing to

complete the project using new technology module and since

there was extension of time to complete the agreed work, the

respondents are not justified in invoking the Bank Guarantee.

10. The respondents defended the writ petition filing

counter affidavit. The respondents contended that the

intention of the petitioner in approaching this Court is not to

carry out the petitioner's contractual obligation in accordance

with the agreement but to delay and prolong the project. In

view of the judgment in Hindustan Steel Construction Ltd.

v. Tarapore & Co. and another [(1996) 5 SCC 34], the WP(C) No.24907/2020

respondents are justified in invoking invoking the Bank

Guarantee. A prior notice or determination or quantification of

loss is not required for invoking Bank Guarantee, contended

the Standing Counsel for the respondents.

11. The Standing Counsel for the respondents further

argued that the offer of new technology module made by the

petitioner is not acceptable to the respondents. The

respondents wanted the petitioner to proceed with the project

using the agreed module. The petitioner has failed to execute

the project within the extended time given by the respondents.

Therefore, the present writ petition is only a ruse to hinder

realisation of Bank Guarantee by the respondents.

12. I have heard the learned counsel for the petitioner

and the learned Standing Counsel appearing for the

respondents.

13. It is to be noted that the work was awarded to the

petitioner on 07.12.2017. However, the petitioner came

forward to execute the agreement only on 01.03.2018.

Subsequently, the petitioner took almost five months to take WP(C) No.24907/2020

over the site for implementation of the project. The project

had to be completed by 13.02.2019. The respondents

granted extension of time to the petitioner-Company. It is the

case of the respondents that the petitioner has not even

started the work. The delay in execution of the work is

therefore attributable to the petitioner.

14. From the pleadings, it is evident that there was

unexplained delay in implementation of the project by the

petitioner at various stages. There was delay in executing the

agreement. There was delay in taking over the site. In spite

of the extension of time granted by the respondents, the

petitioner could not execute the work. On the other hand, the

petitioner has been offering implementation of the project

through alternate technology, which is not acceptable to the

respondents.

15. The pleadings would also indicate that there was

some disputes between the shareholders of the Company

which has delayed the starting of the work. Though the

petitioner had assured the completion of work by 15.05.2019, WP(C) No.24907/2020

that is within three months from 12.02.2019, it was not done.

In the circumstances, this Court is of the considered opinion

that the decision of the respondents to invoke and realise the

Bank Guarantee is justifiable.

16. The petitioner would contend that the Bank

Guarantee had to be reduced to 3% by Exts.P22 and P23

orders issued by the Government of India. I have considered

the said arguments. Paragraph 3 of Ext.P22 order would

show that when there is a dispute or litigations are

contemplated, the amounts of Bank Guarantee are not

expected to be reduced by the authorities.

In view of all the above facts, this Court finds no

reason to interfere with the decision of the respondents in

invoking Bank Guarantee. The writ petition fails and it is

accordingly dismissed.

Sd/-

N. NAGARESH, JUDGE

aks/17.02.2021 WP(C) No.24907/2020

APPENDIX PETITIONER'S EXHIBITS:

EXHIBIT P1 TRUE COPY OF TENDER NO.8/KSEBL/CE (RESS)/SPV-MYLT/1.0MW/ 2016-17

EXHIBIT P2 TRUE COPY OF WORK ORDER NO.4/2017-18 DATED 7.12.2017

EXHIBIT P3 TRUE COPY OF AGREEMENT NO.20/2017-18 DATED 1.3.2018

EXHIBIT P4 TRUE COPY OF MINUTES OF MEETING DATED 21.2.2019

EXHIBIT P5 TRUE COPY OF REVISED SCHEDULE OF PROJECT IMPLEMENTATION SUBMITTED BY THE PETITIONER

EXHIBIT P6 TRUE COPY OF EMAIL SENT BY THE PETITIONER DATED 20.6.2019

EXHIBIT P7 TRUE COPY OF ORDER NO.CE(RESS) PROJECTS/AEE1/SPV MYLATTY/2019-20/532 DATED 2.7.2019

EXHIBIT P8 TRUE COPY OF EMAIL SENT BY THE PETITIONER TO THE FIRST RESPONDENT DATED 10.7.2019

EXHIBIT P9 TRUE COPY OF THE JUDGMENT DATED 30.9.2019 IN WP(C) 20009/2019 OF THIS HONOURABLE COURT

EXHIBIT P10 TRUE COPY OF REPRESENTATION DATED 3.10.2019 WP(C) No.24907/2020

EXHIBIT P11 TRUE COPY OF THE MINUTES OF THE MEETING OF DISPUTE RESOLUTION COMMITTEE ON 4.2.2020

EXHIBIT P12 TRUE COPY OF THE REPRESENTATION DATED 3.3.2020

EXHIBIT P13(A) TRUE COPY OF THE LETTER NO.CE(REES)/ SOLAR/MYLATTY/1MW/2019-20/2045 DATED 19.2.2020

EXHIBIT P13(B) TRUE COPY OF THE LETTER NO.CE(REES)/ SOLAR/MYLATTY/1MW/2019-20/2047 DATED 19.2.2020

EXHIBIT P14 TRUE COPY OF THE LETTER NO.CE(REES)/ PROJECTS/AEEZ/SPV/MYLATTY/2019-20/2341 DATED 1.4.2020

EXHIBIT P15 TRUE COPY OF REPRESENTATION DATED 23.6.2020

EXHIBIT P16 TRUE COPY OF REPRESENTATION DATED 27.6.2020

EXHIBIT P17 TRUE COPY OF REPRESENTATION DATED 29.8.2020

EXHIBIT P18 TRUE COPY OF REPRESENTATION DATED 20.10.2020

EXHIBIT P19 TRUE COPY OF LETTER NO.CE(REES)/ PROJECTS/AE-2/SPU MYLATTY/ 2020-21/888 DATED 12.11.2020

EXHIBIT P20 TRUE COPY OF OM.NO.283/18/2020-GRID SOLAR DATED 13.8.2020.

EXHIBIT P21 TRUE COPY OF OM NO.F.9/4/2020-PPD DATED 12.11.2020 FOR BID SECURITY.

EXHIBIT P22           TRUE COPY OF OM          NO.F.9/4/2020-PPD
                      DATED   12.11.2020       FOR   PERFORMANCE
                      SECURITY.
 WP(C) No.24907/2020



EXHIBIT P23           OM.F.NO.32/645/2017-SPV          DIVISION
                      (PART-3) DATED 07.12.2020.
EXHIBIT P24           TRUE COPY OF THE CERTIFICATE ISSUED BY

THE TUVRHEINLAND FOR THE PRODUCT OF THE PETITIONER EXHIBIT P25 TRUE COPY OF LETTER NO.1016/SHLS-

CFL/SCHEMES/2013-14 DATED 10/12/2020 ISSUED BY TAMILNADU ENERGY DEVELOPMENT AGENCY.

EXHIBIT P26 TRUE COPY OF THE LETTER REFERENCE NO.NREDCAP/SE/SPVPS/ISSUE OF EXPERIENCE CERTIFICATE/2017-18 DATD 23/4/2018 ISSUED BY NEW AND RENEWABLE ENERGY DEVELOPMENT CORPORATION OF ANDHRA PRADESH LTD.

EXHIBIT P27 TRUE COPY OF CERTIFICATE OF COMPLETION REFERENCE NO.3917/CREDA/SSY/2019-20 DATED 19/6/2019 ISSUED BY CHHATTISGARH STATE RENEWABLE ENERGY DEVELOPMENT AGENCY (CREDA) EXHIBIT P28 TRUE COPY OF CERTIFICATE DATED 28/1/2016 ISSUED BY THE CHENNAI PORT TRUST EXHIBIT P29 TRUE COPY OF PERFORMANCE CERTIFICATE DATED 17/1/2017 ISSUED BY GRASSROOT TRADING NETWORK FOR WOMEN, AHMEDABAD, GUJARAT

RESPONDENTS' EXHIBITS:

EXHIBIT R1 A          THE TRUE COPY OF THE BANK GUARANTEES
                      EXECUTED    BY   THE    PETITIONER   DATED
                      03.02.2018.
EXHIBIT R1 B          THE   TRUE     COPY    OF   LETTER   DATED

19.12.2017, E-MAIL DATED 05.01.2018 AND LETTER DATED 05.02.2018 FROM THE PETITIONER SEEKING TIME EXTENSION FOR EXECUTING THE AGREEMENT.

EXHIBIT R1 C THE TRUE COPY OF B.O (FTD) NO.05/2020(CE(REES)/SPV-MYLTY/2019-20) TVPM DATED 06.01.2020 REGARDING FORMATION OF DISPUTE RESOLUTION COMMITTEE.

EXHIBIT R1 D THE TRUE COPY OF B.O(FTD) NO.244/2020/ CE(REES)/SPV-MYLTY/2019-20 DATED, TVM 30.03.2020 REGARDING TIME EXTENSION. WP(C) No.24907/2020

EXHIBIT R1 E THE TRUE COPY OF LETTER AND E-MAIL DATED 01.04.2020 REGARDING THE TIME EXTENSION.

EXHIBIT R1 F THE TRUE COPY OF LETTER DATED 07.06.2018, 08.10.2018 REGARDING THE MAKE OF PV MODULES.

SR