Delhi District Court
Ishan Equipments Pvt. Ltd vs Technip Energies Pvt. Ltd on 29 March, 2025
IN THE COURT OF MS. NEELAM SINGH
DISTRICT JUDGE (COMMERCIAL)-02, SOUTH EAST
SAKET COURTS, NEW DELHI
CS (COMM)-1072/2023
Ishan Equipments Pvt Ltd.
Survey No. 144-145-153-154/1-154/2-154/3,
NH No. 8, Sankarda, Near Manikchand,
District Vadodara, Gujarat-391350 ..... Plaintiff
Versus
1. Technip Energies Pvt Ltd.
Registered office at:
B-22, Okhla Industrial Area,
New Delhi-110020
2. Bank of Baroda
Industrial Estate Branch
Highway Road, Mehsana
Gujarat-384002 .....Defendants
Date of Institution: 24.11.2023
Arguments concluded on : 29.03.2025
Date of Judgment: 29.03.2025
JUDGMENT
The crux of facts stated in brief is noted below:
Case of the plaintiff;
1.1 The plaintiff is a Company incorporated under the provisions of Companies Act, 1956 having its registered office at Survey No. 144-145, Ν.Η No. 8, Sankarda, NR. Police Chowki Vadodara, Gujarat. The Plaintiff is inter alia engaged in the business of undertaking turnkey assignment covering Design, Supply, Installation and Commissioning of Deaertor, Pressure CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 1 of 61 Vessels, Heat Exchangers, Steam Surface Condenser, FW Heater, Storage Tanks etc. etc. 1.2 Defendant No. 1 is a Company incorporated under the provisions of Companies Act, 1956 and is engaged in a full range of design and project development services, from early engagement to delivery. Defendant is involved in Software publishing, consultancy and supply of software, operating systems software, business and other applications software alongwith computer games software for all platforms.
1.3 Defendant No.2 is a Bank registered with the Reserve Bank of India and engaged in the business of Banking and Finance in terms of the Banking Regulation Act, 1949.
1.4 It is the case of the plaintiff that two work orders were issued by Defendant No.1 to the Plaintiff relating to Work Order No. ITIN-SC-0001868 regarding Site Fabrication of SS Vessels for 100136C001 dated 02.02.2022 (hereinafter referred as WO 1) and Work Order No. SC-0001869 regarding In-situ Fabrication of Tanks for 100136C001 dated 31.01.2022 (hereinafter referred as WO 2). It is submitted that plaintiff provided a Bank Guarantee No. 2006IGF003487222 dated 19.12.2022 for an amount of Rs.
1,21,03,912/- for WO 1. It is submitted that for WO 2, defendant has never asked for any bank guarantee. It is submitted that pursuant to Work Order No.1, the plaintiff submitted Advance Bank Guarantee in terms of clause 4 of WO 1. The said Bank CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 2 of 61 Guarantee was issued by the Defendant No.2 (Bank of Baroda). However, no Advance Bank Guarantee was submitted for the Work Order No.2 and the work was executed on a mutual understanding between the parties. The plaintiff started execution of the Work Orders as per the terms of the contract. It is submitted that in the interregnum, WO 1 was canceled after the mutual discussion between the parties and the parties vide minutes of meeting dated 02.02.2023 categorically recorded the settlement arrived between the parties for WO 1.
1.5 It is further submitted that the plaintiff, thereafter, continued with the WO 2 and executed the same as per the terms and conditions mentioned under the same. However, the Defendant No.1 despite work being duly executed by the plaintiff started raising issues with the quality of work and stopped the payment and canceled the WO 2 vide its email dated 21.03.2023. It is submitted that for WO 2, there was no Bank Guarantee issued/submitted by plaintiff. It is further submitted that the Defendant No. 1 has also not provided any justification or clarification or explanation for claiming Rs 314 lakhs from the plaintiff with regard to WO 2.
1.6 It is further submitted that the Defendant No.1 vide email dated 03.11.2023 arbitrarily informed the plaintiff that since no amount has been paid for non-performance of WO 2, the Defendant No.1 will proceed to encash the Bank Guarantee. It is further submitted that Defendant No.1 threatened the Plaintiff to CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 3 of 61 invoke the Bank Guarantee submitted under WO 1 for the alleged non performance of WO 2 which is not only illegal but will amount to unjust enrichment of defendant no. 1. It is further reiterated that Bank Guarantee had been submitted specifically for the purpose of WO 1 and it is an integral part of the said contract, hence the same cannot be arbitrarily utilized for any other purpose.
1.7 It is further submitted that Defendant No. 1 has also not provided any justification or clarification or explanation for the expenses sheet submitted by the defendant no. 1 for claiming Rs 314 lakhs from the plaintiff. The plaintiff through numerous emails, has asked the Defendant No. 1 again and again to provide the detailed justification/back up for expenses occurred but defendant no. 1 intentionally ignored to justify its claim of Rs. 314 lakhs.
1.8 It is further submitted that the invocation of bank guarantee should be in accordance with the terms of the bank guarantee as it is specifically recorded in the Bank Guarantee that the same is issued under WO 1 and will be invoked for the non-performance of WO 1 only. It is further submitted that the invocation of bank guarantee is not justified merely because the party invoking the bank guarantee has some claim of damages against the party who furnished the bank guarantee. The bank guarantee given for searching the performance of one contract cannot be invoked for claims or disputes in another contract between the same parties.
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 4 of 611.9 It is further submitted that Defendant No.1 has time and again informed the plaintiff that they will invoke the Bank Guarantee given under WO 1 to mitigate the disputed claim under WO 2 and for that reason, the present suit has been filed seeking injunction against defendant no. 1 to not invoke the bank guarantee given by plaintiff under WO 1.
Case of the defendant;
2.1 Defendant no. 1 has contested the suit by filing written statement and submitted that the claim of the plaintiff is manifestly vexatious and without any merit. It is submitted that the present suit filed by plaintiff deserves dismissal on the ground of misdescription of defendant no. 1, affidavits not notarized in accordance with the law and also for concealment of material facts at the hands of the plaintiff.
2.2 It is submitted that the Defendant is a world-leading engineering and technology player for the energy transition specializing a full range of design and project development services, from early engagement to delivery. The defendant no. 1 in consortium with Technip France (now Technip Energies France) was awarded a large Engineering, Procurement, Construction and Commissioning (EPCC) contract by Indian Oil Corporation Limited (IOCL) for its Para Xylene (PX) and Purified Terephthalic Acid (PTA) complex project at Paradip, Orissa, on the East Coast CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 5 of 61 of India vide Letter of Acceptance dated April 23, 2021 ("hereinafter referred to as the "Project").
2.3 It is further submitted that the defendant no. 1 being the contractor of the project, appointed the plaintiff as a sub- contractor and issued two work orders as under:-
(a) Work Order for Site Fabrication of SS Vessels for 100136C001 Purified Terephthaic Acid (PTA) Plant (ISBL Licensed Unit of BP Amoco Plant)-EPCC-01 for a capacity of 1.2MMTPA at Paradip Refinery under PX-PTA Project of Indian Oil Corporation Limited (herein referred to as ("WO-I").; and
(b) Work Order for In-Site Fabrication of Tanks for 100136C001-
Purified Terephthaic Acid (PTA) Plant (ISBL Licensed Unit of BP Amoco Plant)-EPCC-01 for a capacity of 1.2MMTPA at Paradip Refinery under PX-PTA Project of Indian Oil Corporation Limited (hereinafter referred to as "WO-2") 2.4 It is further submitted that the WO-2 was to be completed within 10 months from the date of the issue of the work order and the WO-1 was to be completed within 12 months from the date of the issue of the work order. It is submitted that both the work orders pertained to work relating to the PTA Plant at the Paradip Refinery.
2.5 It is submitted that the defendant no. 1 issued WO-1 on February 2, 2022 for a total value of Rs. 22,57,00,000/- and CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 6 of 61 defendant no. 1 had to pay an advance of 10% to the plaintiff on submission of an Advance Bank Guarantee (ABG). It is further submitted that an amended work order was issued by the defendant no. 1 on September 28, 2022 for WO-1 whereby the supply of SS plates was excluded from the scope of work of the Plaintiff and the same was to be issued as a free issue material ("FIM") by the defendant no. 1 and accordingly, the value of the WO-1 was reduced to Rs. 12,10,39,116/- and the billing breakup stated that 10% of the same i.e. an ABG of Rs.1.21 Crores was to be submitted by the plaintiff as against the advance paid by the defendant no. 1 to the plaintiff.
2.6 It is further submitted that pursuant to an amendment to the WO-1, the plaintiff, on December 19, 2022 submitted an ABG of Rs. 1,21,03,912/-and the defendant No. 2 being the Bank issued the ABG. It is submitted that the validity of the ABG was upto September 9, 2023 and the Claim Period was valid upto December 10, 2023.
2.7 It is further submitted that defendant no. 1 issued WO-2 on January 31, 2022 for a total value of Rs. 88,320,982/- and the defendant had to pay an advance of 10% to the Plaintiff on submission of an Advance Bank Guarantee (ABG). It is submitted that an amended work order was issued for WO-2 on September 28, 2022 and whereby the work order for procurement of CS and SS plate was excluded from the scope of work of the Plaintiff and CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 7 of 61 the same was provided by the defendant no. 1 as a Free Issue Material (FIM) and accordingly, the amended value of WO-2 was reduced to Rs. 5,09,74,634/- and the billing breakup stated that the 10% of the same i.e. an ABG of Rs. 50,97,463/-was to be submitted by the plaintiff against the advance paid by the defendant no. 1 to the Plaintiff.
2.8 It is further the case of defendant no. 1 that despite several follow-ups, there was no Advance Bank Guarantee provided by the plaintiff for the WO-2 to defendant no. 1. It is further submitted that defendant no. 1 was under a contractual obligation to conclude the project on a timely basis and it was constrained to release the 10% advance of the total amount of the work order i.e. Rs. 50,97,463/- on the assurance that the ABG for WO-2 would be issued soon and also on the basis of the ABG provided by the plaintiff for WO-1.
2.9 It is further submitted that adhering to its obligation and in the interest of timely completion of the work, the defendant no. 1 released another 10% of the total value of the work order i.e. Rs. 50,97,463/- on February 3, 2023 but no Bank Guarantee was issued even for this advance payment by the plaintiff.
2.10 It is further the case of defendant no. 1 that a commercial settlement was arrived at between the plaintiff and the defendant CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 8 of 61 no. 1 on February 2, 2023 whereby it was mutually agreed that the WO-1 shall stand canceled and a settlement cost of Rs. 95.12 Lacs was agreed upon as consideration to be paid by the defendant no. 1 to the plaintiff based on the actual work performed. It is further submitted that it was agreed between the parties that the defendant no. 1 will return the ABG of WO-1 (for Rs. 1.21 Crores) after the receipt of the ABG of WO-2 as the advance against the WO-2 was released based on the ABG given for WO-1. It is further submitted that defendant no. 1 adhered to the payment of the settlement cost of Rs. 95.12 Lacs to the plaintiff whereas the plaintiff failed to uphold their end of the bargain i.e. submission of the ABG for WO-2.
2.11 It is further the case of defendant no. 1 that due to the poor performance and continuous slippage in the commitment by the plaintiff of WO-2, two default notices dated January 1, 2023 and February 16, 2023 were sent to plaintiff by the defendant no. 1 warning the plaintiff that if there is no visible improvement in site progress in 10 days, the defendant no. 1 would be forced to take contractual actions in accordance with the provisions of the WO-2. It is further submitted that defendant no. 1 also reminded the plaintiff that they have not submitted the ABG for the WO-2 despite of regular follow-ups since 10 months of the placement of the Purchase Order.
2.12 It is further submitted that despite the issuance of the default notices, there was no visible improvement in the progress at the site and the plan was not being executed inline with the CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 9 of 61 Work order schedule. Therefore, the Defendant no. 1 had no choice but to cancel the WO-2 vide cancellation notice dated March 17, 2023 and affirmed its decision to cancel the WO-2 vide email dated March 21, 2023 and requested the plaintiff to start demobilising the site.
2.13 It is further the case of defendant no. 1 that as per the scope of the work orders, issued to the plaintiff, if the performance of the work by the subcontractor will not be satisfactory then defendant no. 1 shall have the right to delete all or any part of the work and defendant no. 1 shall have the right to got the work done through some other agency at the plaintiff's risk and cost. It is submitted that since the plaintiff failed in performing its obligations arising out of WO-2, the defendant no. 1 had to place the work order for Fabrication of Tankages with another sub-contractor, namely Kamlesh Kumar Singh Engineers Pvt. Ltd. and provide them with extra FIM that was included in the scope of work of the plaintiff. It is further submitted that defendant no. 1 worked out all the expenses and shared a total excess cost incurred by the defendant no. 1 with the terms of work order amounting to Rs. 3.14 Crores which was shared with the plaintiff vide email dated October 3, 2023.
2.14 It is further submitted that owing to the aforementioned cancellation of WO-2, defendant no. 1 issued a formal letter to the plaintiff requesting the plaintiff to immediately settle all the claims CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 10 of 61 in order to avoid any contractual remedies. It is submitted that the plaintiff sought some time to process the settlement of the claim of the defendant no. 1 due to some medical emergency. It is further submitted that taking note of such medical exigency, the defendant no. 1, vide email dated November 6, 2023 informed the plaintiff that the ABG submitted for WO-1 (the WO 1 was cancelled on February 2, 2023) was to expire on December 10, 2023 and therefore, requested the plaintiff to extend the validity of the ABG for another 3 months.
2.15 It is further submitted that defendant no. 1 categorically wrote to the plaintiff that if the ABG (for WO-1) is not extended, the defendant no. 1 shall proceed with encashing the ABG. It is submitted that the plaintiff vide email dated November 8, 2023 completely denied its liability of Rs. 3.14 crores and disputed the cancellation of WO-2 by stating that it was a unilateral decision taken by the defendant no. 1. It is further the case of defendant no. 1 that the plaintiff finally applied for the extension of ABG and informed the Defendant No. 1 vide email dated November 20, 2023 and the Bank Guarantee (originally given for WO-1) was finally extended on November 20, 2023 and the plaintiff informed the defendant no. 1 about the "Amended Bank Guarantee" vide email dated November 21, 2023.
2.16 It is further submitted that the defendant no. 1 vide email dated November 21, 2023 invited the plaintiff for settling the extra claims (amounting to Rs. 3.14 crores) and categorically stated that the said email is the final and last effort for settling the claims CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 11 of 61 failing which the defendant no. 1 would proceed with the encashing the Bank Guarantee.
2.17 It is further submitted that plaintiff did not provide a favorable response regarding the settlement of outstanding payments, and considering that the validity of the Advanced Bank Guarantee (ABG) initially issued for WO-1 was extended for the subsequent WO-2 despite the cancellation of WO-1. It is submitted that the defendant no. 1 was compelled to seek Defendant No. 2's assistance in encashing the ABG as there was no alternative options available. It is submitted that in view of the aforementioned facts and circumstances, it is evident that the plaintiff has approached this Court with unclean hands and has mislead this Court since the validity of the ABG which was originally issued for WO-1 was extended after the cancellation of WO-1 which means that the extension of the validity of the ABG bearing no. 2006IGF003487222 for Rs. 1,21,03,912/- dated 19.12.2022 was done for the purpose of WO-2 since there was no Bank Guarantee given for WO-2 by the Plaintiff despite various reminders/follow-ups sent by defendant no. 1.
2.20 It is further submitted that the present suit seeking injunction of the Bank Guarantee on the ground that the encashment is against the terms of the Bank Guarantee is legally unsustainable. It is further submitted that the non-compliance of CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 12 of 61 settlement agreement by the plaintiff, entitles the defendant no. 1 for encashment of ABG. It is further submitted that there is commonality between the work orders issued to the plaintiff. It is further submitted that invocation of bank guarantee has been initiated by defendant no. 1 in accordance with its terms and the Courts are restrained from granting injunction against encashment of bank guarantee in terms of various judgments passed by Hon'ble High Courts and Hon'ble Apex Court.
Defendant no. 2
3. Written Statement has been filed on behalf of defendant no.
2. Defendant no. 2, Bank of Baroda, is a body corporate, constituted under the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970. It is submitted that at the request of Mehsana Co-operative Bank Limited and on behalf of plaintiff company, defendant no. 2 issued bank guarantee no. 2006IGF003487222 valid upto 10.09.2023, claim period valid upto 10.12.2023, for an amount of Rs. 1,21,03,912/- for the consideration of defendant no. 1 company for awarding Work Order to the plaintiff as per terms and conditions mentioned in the work order no. ITIN-SC-0001868 dated 02.02.2022. It is submitted that the bank guarantee was issued with covering letter dated 19.12.2022. Furthermore, Mehsana Co-operative Bank Ltd. vide its Letter dated 20.11.2023 alongwith communication between plaintiff and defendant no. 1 requested defendant no. 2 to CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 13 of 61 extend the bank guarantee and accordingly, defendant no. 2 extended the bank guarantee vide amendment till 10.12.2023 claim period valid upto 10.03.2024. It is submitted that defendant no. 2 has no role to play in the present case except the fact that defendant no. 2 bank has issued bank guarantee at the instance of plaintiff company. It is submitted that defendant no. 2 would abide by any direction/ order passed by this Court.
4. Replication has been filed on behalf of the plaintiff, where it has reiterated the submissions made in the plaint and has denied the submissions made in the Written Statement by the defendants.
5. Upon completion of the pleadings, the following issues were framed on 04.07.2024:
1. Whether the plaintiff has not approached this Court with clean hands and has concealed material facts and documents from this Court? OPD1
2. Whether the terms of ABG issued for Work Order 1 can be unilaterally changed? OPD1
3. Whether the terms of the work order no. 1 can be changed without consent of the plaintiff for Work Order 2? OPD1
4. Whether Bank Guarantee issued for Work Order 1 can be invoked for Work Order 2 in view of settlement agreement dated 02.02.2023? OPD1
5. Whether defendant no. 1 is liable to return the Bank Guarantee CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 14 of 61 No. 20061GF003487222 of Rs.1,21,03,912 dated 19.12.2022 to the plaintiff? OPP
6. Whether the plaintiff is entitled for permanent injunction against the defendant from encashing Bank Guarantee No. 20061GF003487222 dated 19.12.2022? OP Parties
7. Whether the plaintiff entitled for cost of the suit? OPP
8. Relief.
6. (a) The matter then was kept for evidence. In order to prove the case plaintiff has examined Sh. Ramesh Chandra Samriya as PW-1 who tendered his evidence by way of affidavit Ex.PW1/A. He also relied upon the following documents:
1. Board of Resolution dated 18.11 2023 PW 1/1 (OSR).
2. Copy of Work Order 1 is EX. as PW 1/2.
3. Copy of Work Order 2 is EX. PW1/3.
4. Copy of Bank Guarantee dated 19.12.2022 Along with Extension Letter dated 20.11.2023 is EX.PW 1/4.
5. Copy of letter dated 03.01.2023 is Ex.PW 1/5.
6. Copy of Minutes of Mecting dated 02.02.2023 is Ex. P1/6.
7. A copy of final default notice dated 16.02.2023 is as Ex. P1/7.
8. A copy of email dated 21.03.2023 is Ex. P1/8.
9. A copy of letter dated 18.10.2023 is Ex. P1/9.
10. A copy of email dated 03.11.2023 is Ex. P1/10.
11. A copy of email dated 21.11.2023 is Ex. P1/11.
12.A copy of ticket dated 22.11.2023 is Ex. P1/12.CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 15 of 61
(b) PW-1 was cross examined by Ld. Counsel for defendant. Relevant portion of his cross examination is reproduced as under:
"Q. Since when you have been working with the plaintiff company? Ans: - I am working Since 2011 and continue to work in a company. Q. What are your responsibilities as the finance manager of the plaintiff?
Ans: - My responsibilities are to take care of day-to-day affairs of banking, finance and accounts work of the plaintiff company including the projects of the company.
Q. What kind of services does your company provide? Ans: - My company provides the Manufacturing of Process Equipment's (Storage Vessel, Tanks, Heat Exchanger, Columns, Structure work) of stainless Steel, Carbon Steel for chemical industries, Refineries, Water Treatment plants in industries, Power and Gas, Meta allergic Industries, Fertilizers, etc. At this Stage, Affidavit supporting the plaint of PW 1 has been shown to PW-1 From Judicial File.
Q. Can you confirm the affidavit shown to you is belongs to you? Ans: - Yes Q- Do you Know Mr. Harshad Joshi (Adv)?
Ans: - Yes.
Q. Can you confirm whether Adv. Harshad Joshi (G/2101/2019) had identified your signature in the above said affidavit? Ans: - Yes Q. Is Mr. Harshad Joshi is your Authorized Counsel to Represent the plaintiff in this case?
Ans: -Yes Q. Can You show from the Vakaltnama on record which can confirm that Mr. Harshad Joshi is an authorized person to represent you in this case?
Ans: - There is no Signature or Name of Mr. Harshad Joshi (Adv) in the vakaltnama.
Q. Where was Mr. Harshad Joshi when you signed the above said Affidavit?
Ans: - Mr. Harshad Joshi had accompanied me at New Delhi, when I signed the Affidavit.
Q. Do you have any Document on record which suggest or shows that Mr. Harshad Joshi was in New Delhi, when he identified your signature on the affidavit?
Ans: - No Documents is on record; Vol. the Airplane ticket of Adv Harshad Joshi is with me.
It is wrong to suggest Mr. Harshad Joshi is a lawyer practicing in Gujrat and both he and you were in Gujarat at the time of signing of the affidavit and neither of you were in New Delhi; therefore, it is wrong to suggest that your affidavit is not with accordance with law and you are not competent to be witness for the plaintiff in this case.) At this stage, Document at page 30 of plaint paper book from judicial showed to PW-1.
Q. Can you show your signature in the above said document? Ans: - No. It is wrong to suggest that the affidavit under Order XI Rule 6 A of the CPC (as amended by the Commercial Courts Act) which is a mandatory requirement in a commercial suit has not even been signed by you and therefore, you are not competent to depose on behalf of plaintiff.
Q. Can you tell me for which work/services the defendant no 1 wanted to engage the plaintiff company?
Ans: - Our company was engaged for manufacturing of Storage Vessel, Storage Tankages.
Q. Were you the part of any negotiation with defendant no.1 prior to CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 16 of 61 the issuance/ Execution of the Work Orders bearing No. ITIN- SC-0001868 dated 2nd/ Feb/2022 (WO.1) and Work Orders bearing No. ITIN-SC-0001869 dated 31st/ Jan/2022 ( WO.2) Ans: - No. Vol. I was managing the finance department of the company.
Q. Were the Work Orders addressed or signed by you? Ans: - No. Q. Is it correct that you are not privy to or aware of the contents of Work Orders?
Ans: - Yes, I was aware of the contents of Work Orders. It is wrong to suggest that you are aware of the contents of work order. Q. You state in para 7 of evidence affidavit that there were, "Certain issues faced in the work executed" in relation to Work Order 2. What were the issues?
At this stage, Affidavit from judicial filed has been showed to PW-1. Ans: - We were facing the issue of Site Mobilization Q. Did you ever visit the project site at Paradip Refinery, Odisha during the term of Work order 2?
Ans: - No, I did not visit at Paradip Refinery during the work order 2".
Q. Is it correct that Defendant No. 1 claimed an amount of Rs 3.14 Crores for the breach of work order?
Ans: - Yes, the amount of Rs 3.14 Crores was claimed over e-mail. Q. It is correct that as per para 6 of your affidavit, no advance bank guarantee was issued for work order-2 and the work was executed on the mutual understanding of the parties. Can you show from record as to where such mutual understanding was recorded or stated? (At this stage affidavit has been shown to witness from judicial file) Ans: - There is no written document and it was a telephonic conversation.
Q. Were you a part of the above said telephonic conversation? Ans:-I was not a part of the telephonic conversation. Q. As per para 8 of your affidavit you stated minutes of meeting dated 2.2.2023 (EX PW 1/6) "Categorically recorded the settlement arrived between the parties for work order 1". Is it correct that as per clause 3 of the documents an amount of Rs. 95.12 Lakhs was to be paid to plaintiff?
(At this stage affidavit has been shown to witness from judicial file) Ans: - Yes, we have received the amount of Rs. 95.12 Lakhs. Q. Can you show any document from your plaint that you received the above said amount of Rs. 95.12 Lacs?
Ans: - No. (Vol. the above said amount is not necessary/relevant to disclose in the plait).
Q. Pursuant to settlement dated 2.2.2023 (EX PW 1/6) were there any monetary claims against either of the parties in relation to the work order 1?
Ans: - Yes, there were claims in relation to the as per the table( Referred to clause 3) annexed to the settlement/MOM.
Q. Pursuant to the settlement recorded on 02.02.2023 did you ever make a written request seeking the return the ABG (Advance Bank Guarantee) which as per you was given for work order 1? Ans: - No, but I had asked the same over a phone call. Q. With whom and on what date did you make the aforesaid phone call?
(At this stage MOM dated 02.02.2023 @page 127 (Ex-PW-1/6) from the court records has been showed to witness) Ans: - I had spoken to Mr. Vivek Gupta and Mr. Vipin Aggarwal over a call around 3-4 times.
Q. Can you show from the Plaint the averments which show that you made the aforesaid phone calls?
Ans: - No, I have not made any such averments in my Plaint. It is wrong to suggest that since the settlement dated 2.2.2023, you never sought the return of the ABG which you say was given for work order 1.
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 17 of 61Q. Is it correct that on 27.01.2023 you received an advance of Rs 50.97 Lakhs from Defendant No. 1 in relation to work order 2? Ans: - No. At this stage the witness has been confronted with page 45 of List of Documents filed with the Written Statement (Document No. 2) from the Judicial File.
Vol. Yes, I received an amount of Rs. 50.97 Lakhs from Defendant No. 1 in relation to work order 2.
Q. Did you mention or make any averments regarding the receipt of the aforementioned amount in your Plaint?
(At this stage counsel for plaintiff raised an objection- "That the Plaint is in connection with the recovery of ABG given for work order-1 and it has no nexus with the payment given for work order 2".) [At this stage counsel for Defendant No.1 draws attention to Para 4 of the Plaint and Annexure P-2 (@Page 5 of LOD with plaint) ] Q. Is it correct that on 20.04.2023 you received an amount of Rs. 1.13 Crores from Defendant No.1 towards the amount for work order 1? Ans: - Yes. Vol. In April I received the amount of Rs 1.13 Crore and still after receiving the said amount I didn't receive certain pending amount in connection with work order 1.
Q. Have you mentioned or made any averments regarding receiving of the aforementioned amount for work order 1 in your Plaint? Ans: - No. Vol. I did not make any averment as it is regarding ABG with Defendant No. 1.
Q. Is it correct that on 20.11.2023 you applied for an extension of the ABG which as per you was given for work order 1? Ans: - Yes. Vol. Work order 1 was already cancelled and Defendant No. 1 had kept the ABG and was threatening to invoke the same. Q. Have you mentioned or made any averments in your Plaint regarding the extension of ABG?
(At this stage witness has shown the court records) Ans: - No. (At this stage, the counsel of Plaintiff says that the Plaint contains the admitted document wherein the facts have been disclosed.) (At this stage the counsel for Defendant No. 1 in his rebuttal says that the counsel for the Plaintiff cannot attempt to supplant or answer the question on behalf of witness and accordingly, this objection may not be considered and be expunged.) (At this stage an observation is made by the local commissioner that the counsel for Plaintiff is not answering on behalf PW-1 and that he just raised a concern regarding the question relevancy.) [At this stage, witness was confronted with page no 56 of LOD filed with the Written Statement (The application of bank guarantee renewal)].
Q. Is the above confronted document signed and stamped on behalf of the Plaintiff Company?
Ans: - Yes.
Q. Have you filed this document with your Plaint? Ans: - No. Q. How many people were employed/contracted/engaged by Plaintiff for fabrication work that has been done?
Ans: 30-35 people (roughly) in a first role, moreover 5-6 people from engineering staff Vol. This is not an exact figure. Q. How much payment according to you has to be paid by Defendant No. 1 in connection with work order 1?
Ans: - I cannot recall the exact figure.
Q. Can you show from record where you have prayed for payment of outstanding amount?
Ans: - I do not remember.
Q. Was work order 2 ever amended after it was originally issued on 31 Jan 2022?
Ans: - Yes it was amended for only one time.
Q. Was it amended in writing?
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 18 of 61ADN-Yes At this stage witness was confronted with the document marked as ANNEXURE P-2 (@page 51 and 57) of LOD filed by the Plaintiff. Q. Is it correct that the documents at the aforementioned pages dated 28.09.2022 and 01.01.2023 are the only two amendments for work order 27 Ans: Yes, it is correct.
Q. Are there any other amendments to work order 2 apart from those mentioned at pages 51 and 57?
Ans: - No. Q. Is it correct that after the MOM dated 02.02.2023, the Plaintiff received an amount Rs. 50.97 Lakhs on 03.03.2023 for work order 2? Ans: - I have to check.
At this stage the file was shown to the witness (@page no 46) List of Documents filed by Defendant No 1.
Ans: - Yes, we received the payment for work order 2. At this stage, page No 129 (LOD filed by the Plaintiff) was shown to the witness from the court file.
Q. Is the meeting referred to in the aforementioned letter the same meeting which resulted in the MOM dated 02.02.2023? Ans: -No. Q. How many meetings did you have with Defendant No. 1 on 02.02.2023?
Ans: - Only one meeting.
Q. Can you tell us where and to whom did Defendant No. 2 intimate that appropriate action should be taken in terms of Work Order 2? Ans.;- Bank had intimidated the Plaintiff.
At this stage the counsel for Plaintiff had intervened and suggested that there is typographical error and it has to be Defendant No. 1) Q. As per the final default notice of 16.02.2023. Defendant No. I had raised specific issues and allegations against the Plaintiff regarding the non-compliance of work order 2. Did you ever give a Specific Reply/Response?
Ans: Yes, I had sent.
Q. Can you show from the record when you had sent the specific reply? Ans: - No it's not on record. Vol. There are correspondences but the same is not in the Plaint.
It is wrong to suggest that you never had a specific response to the allegations raised by Defendant No. 1 for your non compliance of work order 2 as you were guilty of failing to not perform the obligation for work order 2.
Q. Can you show us where you have mentioned in your Plaint the contents of the table that you have mentioned in para 15 of your affidavit?
Ans:-I have not seen in the Plaint (at this stage the court file has been shown to witness) Ans: - No, it is not mentioned in the Plaint.
It is wrong to suggest that your Affidavit goes beyond your pleadings in the suit which disentitled you to for any relief. Q. Is the table mentioned in para 15 reflecting the disputed amount which as per you is payable by Defendant No. 1 sfor the two work Orders?
Ans: - Yes It is wrong to suggest that you are not entitled to the relief sought and it is also to suggest that you have played fraud of the court by concealing the material information. It is also wrong to suggest that you have taken contradictory stand not only from what is stated in the plaint but also from what has been deposed by PW-1, thereby further corroborating your malafide intention in instituting and perusing the present proceeding, It is wrong to suggest that you are not liable for the return of the bank guarantee has it is your own case that the advance against work order 2 was given against the ABG originally issued for work order 1. Even otherwise the work orders were between the same parties CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 19 of 61 for the same project and were identically verdant. It is also wrong to suggest that a bank guarantee is a independent contract between the bank and beneficiary and you have no locus to seek a return of the same".
7 (a). Plaintiff has also examined Director of the plaintiff company Mr. Jayanti Panchal as PW-2 who has tendered his evidence by way of affidavit Ex.PW2/A and relied upon following documents:
1. Copy of work order 1 Ex. PW2/1.
2. Copy of Work order 2 Ex. PW 2/2.
3. Copy of bank Guarantee dated 19.12.2022 along with extension letter 20.11.2023 is Ex. PW/3.
4. Copy of letter dated 03.01.2023 is Ex. PW 2/4.
5. Copy of Minutes of Meeting Dated 02.02.2023 Ex. PW 2/5.
6. Copy of Final Default Notice dated 16.02.2023 is Ex. PW 2/6.
7. Copy of Email Dated 21.03.2023 is Ex. PW-2/7.
8. Copy of Letter Dated 18.10.2023 is Ex. PW 2/8.
9. Copy of Email Dated 03.11.2023 is Ex. PW 2/9.
10. Copy of Email Dated 21.11.2023 is Ex. PW 2/10.
(b) PW-2 was cross examined by Ld. Counsel for defendant. Relevant portion of his cross examination is reproduced as under:
"Q. What is your name as per Government Records? Ans:- My name is Jayantilal Manilal Panchal. Pw-2 has seen his Aadhar Card at this stage. Q. What is your name as per the MCA (Ministry of Corporate affairs) Records?
Ans: - Jayantilal Manilal Panchal.
Q. Is it correct to say that, "Jayanti Panchal" the name is reflected in your affidavit Ex PW2/A is not your registered name as a director? Ans: - Yes, it is not my registered name as per ROC/MCA Records. Q. your affidavit which reflects your name as "Jayanti Panchal" - Director of the plaintiff company is not your correct name? Ans: - It is my incorrect name.
Q. Is it correct that nobody by the name "Jayanti Panchal" is a director in the Plaintiff company?CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 20 of 61
A. It is correct that there is no such director in the Plaintiff company as "Jayanti Panchal".
Sugg: I put it to you Mr. Jayantilal Manilal Panchal that you are not competent to depose as a director of the Plaintiff company and whatever you say here is not liable to be read in and as evidence. It is incorrect.
Counsel for Defendant No. 1 states that all further questions are without prejudice to the aforementioned suggestions. Counsel for the Plaintiff states that he has no objection for the same. Q. What are your educational qualifications? A. I am a graduate in B.Sc (Industrial Chemistry). Q. Do you understand the legal meaning of the term "cause of action"? As for the TOC, Project, Paradip Odia O. During the operations undertaken in relation to the work ordiers did you ever personally visit the Paradip refinery in Odialiva? A. Yes, I have visited the refinery Q. When and on how many occasions have you visited the said site at Paradip A. I have visited the said site twice, once when the work orders were being issued and thereafter for the site setup.
Q. What work was undertaken while doing the site setup? A. Fabrication work was being done.
Q. What was the purpose for which the Fabrication work was undertaken? A. It is being done for the refinery work.
Q. Is it correct that as per both the work orders, (Clause 4) you were contractually liable to furnish Advance Bank guarantees (ABGs) to Defendant No. 1?
A. Yes, it is correct.
Q. Was your relationship with Defendant No. 1 a business/ for profit relationship or was it a not for profit/ charitable relationship? A. It was a business relationship only.
Q. Since it was a business relationship what is the basis to say that the contractual obligation of providing an ABG in lieu of the advance given by the Defendant No. 1 for Work Order 2 was waived? A. It was waived by Defendant No. 1 and I am not aware on what basis it was waived. However, work order 1 was mutually terminated and our ABG which was with Defendant No. 1 was asked to be returned with all the remaining payments pertaining to work order -1 which was released by Defendant No.1. However, some payments were pending which was subjected to the presentation of documentary evidence but till date the said remaining payment is outstanding.
It is therefore correct that there is no such document on record on the basis of you are claiming that Defendant No. 1 has waived an contractual don which required you to furnish the ABG?
A. It is correct that there is no such documentary evidence qua the same. At this stage the witness has been shown the Para No. 8 of Judicial File. Q. What do you mean by the term "oblique motive" and his affidavit from the attributed the same to the Defendant No. 1? A. Oblique motive means that the ABG for Work order-1 was with Defendant how have you No. 1 and we were demanding the same along with other outstanding payments against Defendant No. 1 for Work Order
2. The same payment was made subsequently but I do not know as to for which work order the said payment was made to us. At this stage the witness has shown the Copy of minutes of meeting dated 02.02.2023 (Ex. Pw-2/5) from the Judicial file. Q. Can you identify the signatures (On top right) on this Document as yours?
A. Yes, the said signatures are mine.
Q. Is it correct that the settlement and cancellation of work Order-1 was recorded and were in accordance with the Minutes of Meeting dated 02.02.2023?
A. No. (Vol. Our Minutes of Meeting was made on 02.02.2023 in which we demanded our outstanding Payment and ABG as both ABG and CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 21 of 61 outstanding payments were with Defendant No. 1 due to which they had created pressure and dominance and had made me sign the above Minutes of Meeting and they called me for a meeting and by creating undue pressure, Defendant No. 1 has terminated Work Order-1. Q. Therefore, does that mean that your evidence affidavit which states that "WO-1, was cancelled after the mutual discussion between the Parties vide Minutes of Meeting dated 02.02.2023 categorically recorded the understanding arrived between the parties for WO-1" is false and incorrect?
A. This statement is true and correct. Vol. We made this Affidavit from the material available with the company and both the aforementioned statements and the response to the abovementioned question are true. Q. Therefore, are you saying that that on one hand the work order 1 was "Cancelled after mutual discussion vide Minutes of Meeting dated 02.02.2023 and that the settlement/cancellation of work order-1 was not in accordance with the MOM dated 02.02.2023 (In terms of your aforementioned answer) are both true, and correct? S(Comm) 10 he Equipment A. Both the versions are correct.
Q. Can you please tell us as to where you have mentioned or averred in the plaint that Defendant No. I had any oblique motive, used any pressure or dominance in while you executed the MOM dated 02.02.2023? A.I have not mentioned it in the Plaint.
Q. Did you ever raise any objection with Defendant No.1 saying that you were made to execute the Minutes of Meeting dated 02.02.2023 under pressure or that D-1 had an oblique motive?
A. No, Vol. I have discussed the issue orally many times. Q. Can you show us where you have mentioned in your Plaint that you discussed the issue regarding signing the MOM under pressure/dominance orally with the Defendant No. 1.
A. No. It is incorrect to suggest that the contents of the para 8 of your affidavit in relation to Defendant No. 1 having an oblique motive and that you signed the MOM under pressure is an desperate afterthought as they have not only not been pleaded in the Plaint but also find no mention in the evidence affidavit of PW-1.
(Vol. when the MOM took place at that time Mr. Ramesh PW-1 was not a part of that MOM.)"
Thereafter, PE was closed.
8. (a) Matter was then kept for defence evidence. In order to prove its case defendant no. 1 has examined Sh. Prashant Sharma as DW-1 who tendered his evidence by way of affidavit Ex.DW1/A. He has relied upon the following documents:
1. Copy of GPA Dated 12.06.2021is EX DW 1/1 (OSR).
2. Copy of Work order 1 is marked as EX DW 1/2 (OSR).
3. Copy of Work order 2 is marked as EX DW 1/3 (OSR).CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 22 of 61
4. Copy of Settlement/ MOM agreement dated 2.2.2023 as DW 1/4 (OSR).
5. Copy of Default Notice dated 1.1.2023 As DW1/5. (OSR).
6. Copy of Default notice dated 16.02.2023 as Dw 1/6. (OSR).
7. Copy of cancellation notice dated 17.03.2023 ex as DW 1/7. (OSR).
8. Copy of Email Dated 3.10.2023 is Ex As DW 1 /8. (OSR).
9. Copy of Email Dated 06.11.2023 is Ex as DW 1/9. (OSR).
10.Copy of Email Dated 8.11.2023 is Ex as DW1/10. (OSR).
11.Copy of Application for extension of advance bank guarantee originally issued for work order 1 dated 20.11.2023 is EX DW 1/11.
12.Copy of email dated 21.11.2023 is EX DW 1/12.
(b) DW-1 was cross examined by Ld. Counsel for plaintiff. Relevant portion of his cross examination is reproduced as under:
"Q. What is your name?
Ans: - My Name is Mr. Prashant Sharma and it is my official name. Q. When did you join the company of Defendant no 1? Ans: - I joined the company in 2006.
Q. Can you show your letter of appointment? Ans: - No I cannot show the same, I am not aware that it is a part of case file. Q. What is your role in the Defendant no 1 company? Ans: - I am the company Secretary.
Q. Have you read the pleadings in the instant matter? Ans: - Yes, I have read the pleadings.
Q. Did you understand the averments and submission made in the plaint before signing the written statement and evidence by the way of affidavit? Ans: - Yes.
Q. Can you show the reliefs sought by the plaintiff in the suit? (At this stage court file has shown to Witness). Ans: - The Witness has pointed out that reliefs are mentioned in page 19 of the Plaint.
Q. Is it correct that the plaintiff has filed the instant suit recovery of Rs 1,21,03,912/- along with interest from Defendant no 1 and permanent injunction against Defendant no 1 from encashing the advance bank guarantee (ABG) No 20061GF003487222 dated 19th Dec 2022 for WO 1?
Ans: - Relief no 1 is for the return of ABG from Defendant no 1 and not for recovery of amount of Rs. 1,21,03,912/- and the interest mentioned in ABG and relief no. 2 is for permanent injunction against defendants for encashment of ABG.
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 23 of 61Q. Is there any other relief claimed in plaint except the above-mentioned relief?
Ans: - No other Specific reliefs are sought in plaint. Q. Is it correct that you have not filed any counter claim against the plaintiff in the instant matter?
Ans: - Yes, Rs 3.14 Crore is mentioned in the Written statement. Q. Can you show from the documents that the court fees claiming Rs 3.14 Crore as counter claims have been deposited or filed? Ans: - I don't recall.
(At this stage witness was confronted with his written statement from the judicial file) At this stage the counsel for defendant raised an objection over the relevancy of above said question.
Ans: - No, there is no documents.
Q. Do you know the meaning of counter claim?
Ans: - Yes, it means if somebody is asking something and you are putting your claim against the same.
Q. Are you aware about the process and procedure of filing the counter claim? Ans: - No I am not aware of procedure.
Q. Is it correct that the amount of Rs 3.14 Crores as mentioned in written statement of Defendant no 1 is related to work order 2? (At this stage the witness has shown the judicial file) Ans: - Yes Q.Is it correct that Defendant no 1 has not initiated any proceedings for the recovery of Rs 3.14 Crores which is related to work order 2? Ans: - Yes, it is correct.
Q. Is it correct that the instant suit is pertaining to ABG no 20061GF003487222 dated 19th Dec 2022 issued for work order 1? Ans: - Yes, it is correct.
I put it to you that you have not filed any counter claim for the recovery of Rs 3.13 Crores against the plaintiff in the instant proceedings as the said amount is allegedly due and payable under work order 2 and the instant proceedings is qua work order 1.
Ans: -It is not fully correct. Vol. we have has initiated the part recovery out of 3.14 Crores by initiating the encashment of the ABG given for work order 1 by the plaintiff. Both the work orders are inter-connected and related to the same project for the same client. This connectivity is established in the settlement agreement/ MOM dated 2nd Feb 2023. Q. Do you understand the legal meaning of a contract? Ans: - Yes, it is the terms agreed between the two parties. Q. It is correct that each and every contract has to be governed by its terms and condition?
Ans: - Yes, it is correct.
Q. Can you show the clause from work order 1 clause seeking the deposit or submission of requirement of submitting the ABG of 10 % of Contract amount?
(At this stage the document at page no 67 of plaintiff list of documents from court file has been showed to witness) Ans: - yes, it is clause 4 of work order 1.
Q. Can you show from the judicial file the ABG issued for work Order 1? (at this stage file has been again showed to witness) Ans: - Yes, it is in court file at page no 116 in plaintiff's list of documents. Q. Can you point out from the above said document any reference to work order 1?
Ans: - yes, it is in the 14th Line of Page no 117 of the plaintiff's list of documents.
Q. Can you show any clause from work order 1 and work order 2 which suggest that both the work order is interlinked? Ans: - Yes, it has been shown in subject clause at page no 5 and 64 of plaintiff's list of documents which is for the same project of IOCL PX-PTA project. VOL. This fact has been subsequently established in the MOM dated 2nd Feb 2023 executed between the parties.
Q. Can you tell the work order no of work order 1 and work order 2?
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 24 of 61(at this stage file has been again showed to witness) Ans: - Yes, the work order 1 no is W.O.NO. ITIN-SC-0001868 dated 2 nd Feb 2022 and the no for the work order 2 is W.O.NO. ITIN-SC-0001869 dated 31 st Jan 2022 again said the no of Work order 2 is SC-0001869 dated 31 st Jan 2022.
Q. Is it correct that IOCL has awarded the contract to the Defendant no 1 at Paradip Refinery to Defendant no 1?
Ans: - Yes, it is correct.
Q. Can you tell us the scope of contract awarded to Defendant no 1 by IOCL at Paradip Refinery?
Ans: - Currently it is going on. Vol. It is for engineering, procurement, construction, Commissioning of PX-PTA project for IOCL at Paradip Refineries.
Q.Is it correct that there is only one consolidated contract executed between IOCL and Defendant no 1 as mentioned above?
Ans: - yes, there is one consolidated contract. VOL. the contract was executed between IOCL and concercium of Technip energies India ltd and Technip France.
Q. Is it correct that the scope of above-mentioned consolidated contract includes Insite fabrication of tanks and Insite fabrication of S.S vessels? Ans: - Yes Q. Is it correct that defendant no 1 executed two work orders, one for fabrication S.S Vessels and 2nd is fabrication of tanks with plaintiff on different dates?
Ans: - Yes, it is correct.
Q. It is correct that the scope, terms and condition of both the work orders were different?
Ans: -No. Vol. The scope of both the work orders were different but for the same project and client and the terms and condition of both work orders were identical except for work order value and related terms. Q. Can you identify the person from work order 1 the signature of authorized person of Defendant no 1?
(At this stage the judicial file has been showed to witness) Ans: - Yes, Mr. Devender Singh and Ebenezer chairmandorai has signed the work order 1 on behalf of defendant no 1.
Q. Can you identify the person from work order 2 the signature of authorized person of Defendant no 1?
Ans: - Yes, Mr. Arjinder Singh and Mr. Ebenezer chairmandorai has signed the work order 1 on behalf of defendant no 1.
Q. Can you tell why defendant no 1 issued two different work orders to plaintiff?
Ans: - I don't know.
Q. Is it correct that you were not a part during the negotiations and execution of the aforesaid work Orders?
Ans: - Yes, it is correct.
I put it to you that two different and independent work orders were issued by concerned authorized persons of defendant no 1 wherein both the work order contains different scope, terms and condition qua its execution as it operates in two different fields.
Ans: - It is wrong. Vol. Though the work orders were separate but it was for the same project, same client with separate scope. Q. is it correct that IOCL is the client of defendant no 1? Ans: - Yes, it is correct.
Q. Is it correct that Defendant no 1 subcontracted the part of work allotted by IOCL by way of one consolidated contract to Defendant no 1, to the plaintiff by way of two different work orders?
Ans: - Yes, It is correct.
Q. Is it correct that for the execution of the project, Defendant no 1 was reporting to the IOCL authority/representatives qua the status of the project? Ans: - Yes.
Q. Is it correct that authorized representative of plaintiff company was not reporting to the IOCL authority/representatives? Ans: -Yes, it is correct. VOL. They were not directly reporting to IOCL CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 25 of 61 Authority, however, IOCL was their principal Employer. Q. It is correct that work order 1 categorically stipulates that ABG equivalent to 10 percent of the contract price required to be submitted by the plaintiff before the release of advance for execution of work? (at this stage court file has shown to witness) Ans: - Yes, it is correct.
Q. Can you point out the value of Work Order 1?
Ans: - Yes, it has been mentioned on page no 64 of list of Documents and the original value was Rs 22.57 Crores and which was amended vide amendment 1 dated 28th Sep 2022 and the amended value was Rs 12,10,39,116. Q. Can you point out the value of ABG given for work order 1? Ans: - Yes, it is Rs. 1,21,03,912.
Q. is it correct that the aforementioned ABG was submitted in terms of the Work Order 1?
Ans: - Yes Q. Is It correct that despite submission of ABG for work order 1 the Defendant no 1 has not released any advance in term of the work order 1? Ans: - I am not sure.
Q. Can you point out from your written statement regarding the same? (At this stage judicial file has been showed to witness) Ans: - No. Vol. It cannot be ascertained from the written statement. Q. Is it correct that plaintiff has executed some work in terms of Work order 1?
Ans: - Yes, it is correct.
I put it to you that despite the receipt of the ABG for work order 1 and despite some work executed or perform by the plaintiff in terms of work order 1 the defendant no 1 never released the advance of 10 percent as stipulated under the work order 1.
Ans: - I am not sure.
Q. What was the total value of Work Order - 2?
Ans. Around 8.8 Cr.
Q. Is it prior to amendment or after the amendment? At this stage judicial file has been shown to the witness. Ans:- 8.8 Cr was the original contract price or amount and 5.09 Cr after the amendment 1.
Q. Is it correct that work order 2 categorically stipulates that ABG equivalent to 10% of the contract price was required to be submitted? At this stage judicial file has been shown to the witness. Ans:- Yes.
Q. What would have been the total value of ABG for Work Order-2? Ans:- It would be 10% of 5.09 Cr. Which will be approx. 50.97 Lacs. Q. When did Defendant No. 1 release the 10% advance under work order-2. At this stage judicial file has been shown to the witness. Ans: - 27.01.2023.
Q. Is it Correct that the Defendant No.1 released the 10% advance despite there being no ABG for work Order-2 on 27.01.2023? Ans:- Yes. Vol. However, Defendant No. 1 already had ABG of Rs. 1.21 Cr. Q. What do you mean by "Your Previous Volunteer statement that Defendant No. 1 already had ABG of Rs. 1.21 Cr."
At this Stage the counsel for the Defendant has raised an objection that the clarification in connection with the volunteer statement is not required as the same is self explanatory.
At this Stage the Local Commissioner had allowed the Counsel for the Plaintiff to ask the same question but not to repeat the same. Ans. The Plaintiff requested to release the advance on the basis of ABG submitted for Work Order-1 and assured that he will replace the ABG of Work Order-1 with ABG for Work Order-2 and provide the work order-2 ABG. Q. Can you show any document on or before 27 th January 2023 wherein the Plaintiff had requested Defendant No. 1 to release the 10 % Advance under Work Order-2 on the basis of ABG submitted for work order-1. At this stage judicial file has been shown to the witness. Ans. It is not in the plaint and it is also not in the written statement. Q. I Put it to you that there is no document prior to 27 th Jan 2023 wherein the CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 26 of 61 Plaintiff had requested Defendant No. 1 to release the 10 % Advance under Work Order-2 on the basis of ABG submitted for work order-1. Ans.- It is Correct. Vol. Plaintiff has requested for release of advance in lieu of ABG issued for Work Order-1 which has been recorded in the MOM/Settlement dated 02.02.2023.
Q. Is it correct that on or before 27.01.2023 the Defendant No.1 never informed in writing to the plaintiff that 10% advance under work order-2 has been released in lieu of ABG submitted for work order-1. ANS:- I don't Know.
Q. Can you show from the records any documents filed along with your written statement reflecting the abovesaid information? At this stage judicial file has been shown to the witness. Ans. There is no document filed along with the written statement. Q. Is it correct that there is a document prior to 27.01.2023 wherein Defendant No.1 informed the Plaintiff qua the release of 10% advance for work order-2 in lieu of ABG given for work order-1. However, you have not filed the same with the written statement.
At this Stage Ld. Counsel for Defendant has raised an objection that the Question which have been asked is a leading question and to support his objection he clarified that the Mode and Manner of the question is not correct but the objective of the question is fine.
At this stage the Local Commissioner allowed the counsel for Plaintiff to ask the same Question.
Ans. I don't recall.
Q. Who on behalf of the Plaintiff assured the Defendant No.1 on or before 27.01.2023 that ABG for the Work Order-1 will be replaced by the ABG for Work Order-2 and accordingly requested for the release of advance of 10% under work order-2?
ANS:- I don't recall the exact name but it was from the Plaintiff Company. Q. Can you specify the date of such assurance? ANS:- No, I cannot specify/recall the date of Assurance. Q. Were you a part of this communication when this assurance was given by the Plaintiff?
ANS:- No. Q. Who was the recipient of such assurance on behalf of the Defendant No. 1? ANS:- I do not know the name but it was someone from the procurement team.
Q. I put it to you that neither the plaintiff requested or nor the Defendant No.1 had informed the Plaintiff to release the 10% advance under work order-2 in lieu on the ABG submitted for work order-1 and there is no documentary proof in that regard on or before 27.01.2023 which demonstrate that the amount of 10% for work order-2 was released on the basis for ABG for work order-1 you have given a false affidavit on oath to mislead the Hon'ble Court for which necessary legal actions should be taken against you. ANS:- No.Q. It is correct that the plaintiff has started the execution of work order-2 even without receiving the 10% for the Work Order-2? ANS:- I don't know.
At this stage the Witness has been confronted document P-5, page No. 126 filed along with Plaintiff's list of Document from judicial file. Q. Is it correct that on 03.01.2023, Defendant No.1 issued a default notice for work order-2 instructing the plaintiff to speed up the work? ANS:- Yes.
Q. Is it Correct that in letter dated 03.01.2023, Defendant No.1 has asked the Plaintiff to submit ABG for work order-2?
ANS:- It is not correct. Vol. We have not asked the Plaintiff to submit the ABG but we have mentioned that Ishan has not submitted ABG in spite of regular follow up.
Q. Is it correct that vide letter dated 03.01.2023 the Defendant no.1 informed the Plaintiff that the Plaintiff has not submitted the ABG for tankages even after 10 months of purchase order placement dated 02.02.2022 which is a serious default.
ANS:- Yes.
Q. Is it correct that from 03.01.2023 till 27.01.2023 the Plaintiff never CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 27 of 61 submitted ABG for work order-2?
ANS:- Yes.
I put it to you that Defendant No. 1 has released the 10% advance for work order-2 without receiving the ABG for Work Order-2 and accordingly waived the contractual condition on the date of release of Advance i.e., 27.01.2023. It is wrong to suggest.
Q. Is it correct that on 02.02.2023, Defendant No. 1 and the Plaintiff terminated the Work Order-1 you were not a part of that Meeting? At this Stage, Ld. Counsel for the Defendant has raised an objection that the contents of the said documents are self explanatory and do not require any further oral evidence by a witness of fact.
At this stage the Ld. Local Commissioner has overruled the Objection, It is correct that I was not a part of that Meeting. Q. Is it Correct that the meeting Dated 02.02.2023 was regarding the Discussions on work order -1.
At this stage Ld. Counsel for Defendant has raised an objection that the question asked by the Counsel for the Plaintiff is seeking to procure oral evidence on an admitted written/electronic document which is not permissible U/s 59 of the Indian Evidence Act and the Corresponding Act of B.S.A Section 54. At this stage the rebuttal for the objection and in rebuttal he clarified that the Witness is Deposing on a basis of Document wherein the understanding of the parties are recorded on the basis of discussion and prior communication wherein the witness is not a part/signatory to the said document then in such scenario it is mandatory to ascertained the basis on which witness is deposing.
At this stage after Listening both the counsel Ld. Local Commissioner has made the observation that asking question from the witness is necessary to establish the position of Law in the case and the same has allowed in the interest of Justice.
At this stage the Witness wants to see the Court File permission granted in the interest of justice.
In the Continuation of his above said answer, "In this Regard reference has been give to serial no. 3 & 5 of the MOM dated 02.02.2023 at Page No. 127 of Plaintiff's Documents from Judicial File. Q. It is correct that on 02.02.2023 there is another meeting between Defendant No.1 and Plaintiff for Work Order-2 wherein the necessary directions for the execution of Work Order-2 were issued to the Plaintiff? ANS:- I cannot recall.
At this Stage the Witness was confronted with the Documents at Page No. 129of the Plaint from the Judicial File.
Q. After Showing the File "Is it correct that on 02.02.2023 there is another meeting between Defendant No.1 and Plaintiff for Work Order-2 wherein the necessary directions for the execution of Work Order-2 were issued to the Plaintiff"
ANS:- It is incorrect. Vol. there was only one common meeting was held on 02.02.2023 the minutes of meeting was duly signed by the Defendant No.1 and the Plaintiff.
Q. Is it Correct that at page No. 129 of the Plaintiff's Document Para 1, 3 rd Line Defendant No. 1 mentioned that on 02.02.2023 the Defendant No.1 granted last opportunity to the Plaintiff to perform on the Tanks Order failing which Defendant No.1 will be forced to terminate the Tankages Order? ANS:- Yes.
Q. Can you show from MOM dated 02.02.2023 page 127 of Plaintiff's Document that the Plaintiff was given the Last Opportunity to Complete the Work Order-2?
At this stage the witness has shown the Judicial File. Ans. It is not there in the MOM.
Q. Can you identify the Person who has signed the MOM on behalf of the Plaintiff?
ANS:- I can identify Mr. Jayanti Panchal, but I can not identify Mr. Anil Singh.
Q. It is Correct that Mr. Jayanti Panchal is the Managing Director of the Plaintiff?CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 28 of 61
ANS:- I do not know.
At this stage the witness is known page No. 129 of the Plaintiff's Document. The Question has been repeated by the counsel for the Plaintiff after confronting the documents to the witness. Q. Is it correct that Mr. Jayanti Panchal is the Managing Director of the Plaintiff.
ANS:- Yes.
Q. Is it correct that alleged claim amount to Rs. 3.14 Cr. is unrelated to the instant suit. Which is for the work order-2 and the ongoing dispute which is the subject matter of the suit revolved around the invocation of ABG dated 19.12.2022 given for work order-1?
ANS:- Its not fully correct. Vol. The advance against the Work Order-2 amounting to Rs. 50.95 Lacs + 50.95 Lacs was given in lieu of ABG held against Work Order-1.
Q. When was the Work Order-1 was cancelled? ANS:- It was cancelled on Meeting dated 02.022023. Q. Was there is any intimation given to the Plaintiff in advance qua the agenda of the said meeting?
ANS:- I cannot recall.
Q. Is it correct that Work Order-2 was cancelled within approx. 45 days from the Meeting dated 02.02.2023.
At this stage the witness has shown the Page No. 48 of List of Documents filed along with the Written Statement from the Judicial File. Ans. Yes.
Q. Is it Correct that ABG for work Order-1 was extended without amending its original terms except the date i.e., Date of Amendment and Date of Expiry. ANS:- Yes.
Q. Is it Correct that Defendant No.1 never asked in writing or orally to the Plaintiff to amend the Work Order-1 which is ITIN-SC-0001868 from the ABG during its subsequent extension.
ANS:- I Don't recall. Vol. However, the Defendant No. 1 has requested plaintiff to provide ABG for work order-2 against which ABG for work order-1 will be replaced. This fact was also recorded in the MOM Dated 02.02.2023.
At this stage the witness has shown page no. 122 of the Plaint from the Judicial File.
Q. Is it correct that this is the extension of the ABG originally issued for Work Order-1. Wherein all the terms and Conditions remains unchanged. At this stage objection has been raised by the Ld. Counsel for Defendant as the Witness is legally incompetent to given oral evidence of this Document as it has been authored by Defendant No. 2 at the request of Plaintiff. Ans. The ABG was extended for Work Order-1. At this stage the Witness has been again confronted with the page no. 129 of the Plaintiff's Document from the Judicial File. At this stage the counsel for the Defendant again raised an objection which is same as above. ANS:- As per the Extension issued by the Bank all terms and Conditions of the ABG remained unchanged.
I Put it to you that at no point of time the Defendant No. 1 has requested the Plaintiff to extend the Terms and Condition as well as the scope of ABG provided for Work Order-1 to be utilized under the Work Order 2. The Plaintiff has never requested the Defendant No.1 to invoke the ABG given for Work Order-1 for satisfying its alleged claim arising out of Work Order-2 hence your entire deposition is false and frivolous which should not be relied upon by the Hon'ble Court and appropriate legal actions should be taken against you for giving false testimony under oath in the Court of Law. ANS:- It is wrong to suggest".
Final Arguments
9. The matter was listed for final arguments. Ld. Counsel for CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 29 of 61 the plaintiff as well as Ld. Counsel for defendants made their respective submissions.
Arguments on Behalf of the Plaintiff:
10.1 It is argued by Ld. Counsel for the plaintiff that tyhere are certain admitted facts in this case. The admitted facts of the parties are as under:
(a) Work Order for Site Fabrication of SS Vessels for 100136C001 Purified Terephthaic Acid (PTA) Plant (ISBL Licensed Unit of BP Amoco Plant)-EPCC-01 for a capacity of 1.2 MMTPA at Paradip Refinery under PX-PTA Project of Indian Oil Corporation Limited. (WO-1)
(b) Work Order for In-site Fabrication of Tanks for 100136C001-
Purified Terephthaic Acid (PTA) Plant (ISBL Licensed Unit of BP Amoco Plant)-EPCC-01 for a capacity of 1.2 MMTPA at Paradip Refinery under PX-PTA Project of Indian Oil Corporation Limited. (WO-2)
(c) Defendant no. 1 issued WO-1 on 02.02.2022. The total value of WO-1 was Rs. 22,57,00,000/- and the defendant no. 1 had to pay an advance of 10% to the plaintiff on submission of an Advance Bank Guarantee (ABG).
(d) An amended work order was issued by defendant no. 1 on 28.09.2022 for WO-1 whereby the supply of SS plates was excluded from the scope of work of the plaintiff and the same was to be issued as a free issue material (FIM) by defendant no. 1. Therefore, the value of WO-1 was reduced to Rs. 12,10,39,116/-
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 30 of 61and the billing break up stated that 10% of the same i.e. an ABG of Rs. 1.21 Crores was to be submitted by the plaintiff as against advance paid by the defendant no. 1 to the plaintiff.
(e) Pursuant to the amendment of WO-1, the plaintiff on 19.12.2022 submitted an ABG of Rs. 1,21,03,912/- and defendant no. 2 being the Bank issued the ABG which was valid upto 09.09.2023 and claim period was valid till 10.12.2023.
(f) Defendant no. 1 also issued WO-2 on 31.01.2022 for a total value of Rs. 88,320,982/- and defendant no. 1 had to pay an advance of 10% to the plaintiff on submission of an ABG.
(g) An amended work order was issued for WO-2 on 29.09.2022 and whereby the procurement of CS and SS plate was excluded from the scope of work of the plaintiff as the same was provided by defendant no. 1 as FIM.
(h) Amended work order was issued by the defendant no. 1 to the plaintiff on 01.01.2023 whereby the approved billing schedule was incorporated by defendant no. 1. The amended WO-2 was reduced to Rs. 5,09,74,634/- and the billing break up stated that the 10% of the same i.e. an ABG of Rs. 50,97,463/- was to be submitted by plaintiff against the advance paid by defendant no. 1 to the plaintiff.
(i) There was no ABG provided by the plaintiff to defendant no. 1 for WO-2.
(j) A commercial settlement was arrived between the plaintiff and defendant no. 1 on 02.02.2023 whereby it was mutually agreed that WO-1 shall stand canceled and a settlement cost of Rs. 95.12 Lakhs was agreed upon as consideration to be paid by the CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 31 of 61 defendant no. 1 to the plaintiff.
10.2 It is argued by Ld. Counsel for the plaintiff that the only point of consideration before this Court on the basis of admitted fact is that plaintiff has issued ABG in favour of defendant for work order no. ITIN-SC-0001868. The said work order was not allotted to the plaintiff, admittedly defendant no. 1 has issued work order no. 2 in favour of plaintiff and for the advances given by defendant no. 1 i.e. 10 per cent of the contract amount, plaintiff has not issued ABG in favour of defendant no. 1, so the foremost point of consideration before this Court is that whether defendant no. 1 is allowed to invoke ABG issued by plaintiff for WO-1 in favour of defendant no. 1 which was admittedly not allotted to the plaintiff and whether defendant no. 1 is allowed to invoke the ABG for a different contract i.e. WO-2, the ABG which was given for WO-1. It is argued by Ld. Counsel for the plaintiff that this position has already been settled by Hon'ble Apex Court in the case of M/s Gangotri Enterprises Ltd. Vs. Union of India & Ors. AIR 2016 Supreme Court 2199 decided on 05.05.2016. Ld. Counsel for the plaintiff has taken me to paragraph 13 of this judgment.
10.3 I have gone through the aforesaid judgment and Hon'ble Apex Court had granted an injunction against the invocation of bank guarantee on the ground that the guarantee in question which was said to be invoked pertain to a different contract altogether. It is submitted that as per this case, Gangotri Enterprises Ltd.
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 32 of 61(Supra), the appellant was awarded two contracts by the respondent, wherein a bank guarantee was submitted by the appellant to the respondent in the second contract. Certain disputes arose between the parties in the first contract and arbitration proceedings thereunder were commenced. The respondent sought to encash the bank guarantee provided under the second contract. The appellant filed applications u/s 9 the Arbitration Act, seeking injunction against the invocation of bank guarantee, which was ultimately rejected by the Hon'ble High Court. In the appeal before Hon'ble Apex Court, injunction was granted restraining the encashment of the bank guarantee, inter- alia, stating that the sum claimed by the respondent from the appellant in the arbitration proceedings did not pertain to the contract under which the bank guarantee was actually furnished, but for another contract (first contract) for which no bank guarantee had been furnished and the bank guarantee in question was in the nature of a performance bank guarantee and the works under the second contract had been satisfactorily completed.
10.4 It is submitted by Ld. Counsel for the defendant that the facts before the Hon'ble Apex Court and before this Court are similar in nature and the defendant no. 1 here in this case on the basis of the judgment (Supra) be restrained from encashing the ABG for WO-2 which was never executed and materialized for WO-2 by the plaintiff.
10.5 The relevant paragraphs of M/s Gangotri Enterprises Ltd.
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 33 of 61Vs. Union of India & Ors. (Supra) is reproduced hereunder:
"2) This appeal is filed against the final judgment and order dated 23.07.2012 of the High Court of Uttar Pradesh Judicature at Allahabad in F.A.F.O. No. 2930 of 2012 whereby the High Court dismissed the appeal filed by the appellant herein and upheld the order of District Judge which had refused to grant an interim injunction restraining encashing of the Bank Guarantee by the respondents herein.
3) In order to appreciate the issue involved in this appeal, which lies in a narrow compass, it is necessary to set out the relevant facts in brief infra.
4) The respondents, i.e., North Central Railway invited tender for doing "earth work in embankment and cutting including provision of machine crushed/blended material blanketing layer and construction of RCC Box type minor bridges at CH-84700M to 114100M", in connection with laying down of Agra-Etawah new BG Rail Line. The appellant-a Limited Company applied for the said tender and its tender being the lowest one was accepted by the respondents on 14.03.2005 and accordingly the letter of acceptance was issued in appellant's favour. The contract agreement No. CE(C) 'North' ALD/A-E/Contract/EW-III dated 22.08.2005 was then signed between the parties. The total value of the contract was Rs.14,62,46,742/-, the date of commencement of work was 14.03.2005 and the date of completion of work was 13.03.2007. As the work could not be completed within the prescribed time, on the request of the appellant-Company, the period of completion of work was extended twice by the respondents, firstly, from 14.03.2007 to 31.12.2007 and again upto 30.09.2008 without levy of penalty and with price variation clause benefit.
5) On 14.07.2006, the appellant-Company was granted another work by the respondents-North Central Railway vide letter No. 74- W/4/1/347/WA/ANVR/SERd./TCR for construction of New Station Building (G+2) circulating area, various service buildings, construction of platform shelters with RCC Column and beam, Underground and Overhead water storage tanks, water supply pipeline network and other misc. works in connection with the Development of New Passenger Terminal at Anand Vihar (East Delhi) [hereinafter referred to as "Anand Vihar works"]. In CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 34 of 61 connection with the grant of the Anand Vihar works, the appellant-Company submitted a Bank/Performance Guarantee bearing No. 12/2006 dated 04.08.2006 from its banker Indian Mercantile Co-operative Bank Ltd., Cantt. Road, Lucknow (hereinafter referred to as 'Bank') for a sum of Rs.1,32,78,820/-.
6) Since the work relating to contract dated 22.08.2005 could not be completed within the prescribed time/extended time by the appellant due to non-availability of site because of the agitation of the farmers and non- supply of the specification or drawing of most of the small bridges by the respondents, as complained by the appellant, the Agra-Etawah contract dated 22.08.2005 was terminated by the respondents vide its letter dated 30.04.2009. After inviting fresh tenders, the rest of the work was allocated by the respondents to another Company, namely, M/s Hanu Infrastructure Pvt. Ltd. Kasganj, Kashiram Nagar for approximately Rs. 11 Crores on 10.06.2011 without giving any information to the appellant- Company.
7) On 30.09.2010, the appellant got the completion certification from the respondents for the Anand Vihar works with a defect liability period of six months, which also came to an end on 30.03.2011. Thus the appellant became entitled to seek the release of the Bank/Performance Guarantee No. 12/2006 submitted by it for the said work from the respondents.
8) On 27.06.2011, the appellant, therefore, wrote a letter to the respondents-North Central Railway for return of the Bank/Performance Guarantee No. 12/2006.
9) On 10.06.2011, the North Central Railway issued an internal circular to all concerned departments of the Railways for withholding of dues of the appellant-Company stating therein that the contract of the appellant- Company dated 22.08.2005 or the New Agra-Etawah BG Line was cancelled and the same had caused the respondents a loss of Rs.5,58,16,036.33. The said circular came to the knowledge of the appellant on 18.07.2011.
10) On 30.11.2011, the respondents through their accounts department wrote a letter to the Bank which had furnished Bank Guarantee No.12/2006 for and on behalf of the appellant for the encashment of the said Bank Guarantee.
11) On 02.12.2011, the final bill for the Anand Vihar works were cleared by the respondents and the payment for the same was released by the respondents.CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 35 of 61
12) Since the disputes had arisen between the parties in relation to and arising out of the contract dated 22.08.2005, the appellant invoked Clause 36 read with Clause 64 of the General Conditions of Contract (in short "GCC") which provided for the settlement of dispute by arbitration.
13) After initiation of the arbitration, the appellant, on 04.01.2012, moved an application under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act") before the District Judge, Allahabad bearing Arbitration Suit No. 411 of 2011 seeking injunction on encashment of the Bank Guarantee deposited by it in the Anand Vihar works, against the respondents. It was inter alia alleged in the application that the respondents-North Central Railway have no right to encash the Bank Guarantee No.12/2006 furnished by the appellant in relation to dispute arising out of another contract dated 22.08.2005. It was alleged that firstly, Bank Guarantee was not furnished by the appellant in relation to contract dated 22.08.2005 but was furnished in performance of another contract dated 14.07.2006 (Anand Vihar works) which is a separate contract and has nothing to do with the contract dated 22.08.2005. Secondly, it was alleged that so far as the contract dated 14.07.2006 (Anand Vihar works) is concerned, the work was completed well within time and also to the satisfaction of the respondents and for which Completion Certificate was also given to the appellant by the respondents on 30.09.2010. Thirdly, it was alleged that since the Bank Guarantee in question was in the nature of performance Guarantee for due execution of contract dated 14.07.2006 (Anand Vihar works) and the same having been performed by the appellant to the satisfaction of the respondents, the appellant-Company was entitled to get its Bank Guarantee No.12/2006 released from the respondents. It was further alleged that in these circumstances, the respondents have no right to encash the Bank Guarantee in relation to any dues arising out of other contract with the appellant. It was also alleged that in any event, so long as the disputes arising out of the contract dated 22.08.2005 are not finally decided by the arbitrator and liabilities of the parties are not ascertained as to, who has to pay how much sum by way of damages and whether any one is at all liable to pay, there is no sum "due" or "payable" either by the appellant to the respondents CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 36 of 61 or/and vice versa and hence the respondents cannot invoke Clause 62(1) of GCC for realization of any money/sum by encashing the Bank Guarantee from the appellant.
14) The respondents resisted the petition and inter alia contended that Clause 62(1) of GCC empowers the respondents to make recovery of any dues from the appellant.
It was contended that since the respondents have a claim/dues for payment of a sum of money against the appellant (contractor), they (respondents) would be entitled to exercise their right of recovery given to them under Clause 62(1) even if such claim is not for a "sum due" and "sum payable" and is a claim for "damages" though disputed by the appellant and remains to be adjudicated upon in a court of law or by the arbitrator. It was contended that the respondents were, therefore, entitled to encash the Bank Guarantee in question in relation to dues/claim made by the respondents against the appellant.
15) By order dated 04.01.2012, the District Judge allowed the application made by the appellant and restrained the respondents from encashing Bank Guarantee till appointment of arbitrator or constitution of Arbitral Tribunal. It may be mentioned here that the respondents did not file any appeal against this order, which attained finality.
16) By letters dated 20.01.2012 and 29.01.2012, the appellant then requested the respondents for return of its Bank Guarantee.
17) On 13.03.2012, an arbitration Tribunal was constituted as per Clause 32 read with Clause 64 of the contract between the parties which comprised of Shri Arun Kumar, CCE/NCR/ALD, Shri A.K. Bijalwan FA&CAO/F&B/NCR/ALD and Shri R. Rajamani Former CCRS & Member/Arbitrator to look into the claims and the counter claims of the parties. The arbitration proceedings are pending.
18) On 21.03.2012, the Deputy Chief General Manager/Const./SE Rd/NDLS wrote to the Branch Manager of the Indian Mercantile Cooperative Bank for extension of Bank Guarantee, which was valid upto 13.01.2012. On the request of the respondents, the Bank extended the period of Bank Guarantee for another six months, i.e., upto 13.07.2012.
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 37 of 6119) On 04.04.2012, the respondents through their accounts office wrote a letter to the Branch Manager of the Bank to encash the said Bank Guarantee in their favour.
20) Since the respondents went on insisting for encashment of the Bank Guarantee again and again saying that order dated 04.01.2012 passed by District Judge no longer survives as its life was only upto the date of constitution of arbitral Tribunal and hence the respondents became entitled to encash the Bank Guarantee, the appellant again filed a petition under Section 9 of the Act bearing Arbitration Suit No. 216 of 2012 before the District Judge, Allahabad seeking injunction against the respondents from encashing the Bank Guarantee.
21) By order dated 12.07.2012, the District Judge dismissed the petition and declined to grant injunction to the appellant. This time, the District Judge accepted the stand taken by the respondents and held that Clause 62(1) empowers the respondents to recover any dues/claim from the appellant and hence the respondents were within their rights to invoke the bank Guarantee and recover the dues relating to other contract.
22) Aggrieved by the said order, the appellant preferred an appeal bearing F.A.F.O. No. 2930 of 2012 before the High Court.
23) By impugned judgment dated 23.07.2012, the High Court concurred with the view taken by the District Judge and dismissed the appellant's appeal.
24) Challenging the said judgment, the appellant has filed this appeal by way of special leave.
25) Heard Mr. B. Adinarayan Rao, learned senior counsel for the appellant and Mr. Atul Chitaley, learned senior counsel for the respondents.
26) Mr. B. Adinarayan Rao, learned senior counsel appearing for the appellant (Contractor) while assailing the legality and correctness of the impugned order reiterated the same submissions, which were urged by the appellant before the two Courts below in support of the application filed by the appellant under Section 9 of the Act. His submission was that since the Bank Guarantee in question was in the nature of performance CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 38 of 61 guarantee furnished by the appellant for due performance of one contract (Anand Vihar works) dated 14.07.2006 and the same having been admittedly performed by the appellant to the satisfaction of the respondents (North Central Railway), as is clear from the completion certificate dated 30.09.2010 issued by the respondents in appellant's favour, the purpose for which the Bank Guarantee had been furnished was over as soon as the Satisfaction Certification was issued by the respondents in appellant's favour. Learned counsel, therefore, contended that the appellant became entitled to claim release of the Bank Guarantee in their favour on and after 30.09.2010 without any fetters on their rights.
27) In the second place, learned counsel urged that the respondents (North Central Railway) had no right to take recourse to Clause 62 of GCC for encashing the Bank Guarantee in question because firstly, the arbitration proceedings which arose out of another contract dated 22.08.2005 were still pending for final adjudication of the liability, if any, and secondly, so long as the liability as to how much sum was payable and if so by whom it was payable was not finally determined in accordance with law in the arbitration proceedings by the arbitrators, there was no "sum due" and nor any "sum payable" in praesanti by the appellant to the respondents and vice versa in connection with another contract.
28) In the third place, learned counsel contended that the District Judge, in the first instance, having rightly granted the injunction to the appellant vide order dated 4.01.2012 and no appeal having been filed against this order by the respondents, the said order had become final and was binding on the parties. It was, therefore, urged that when the appellant moved the second application for grant of injunction after the matter was referred to arbitration because of insistence on the part of the respondents to encash the bank guarantee, the District Judge should have extended the life of first order dated 04.01.2012 instead of again going into the merits of the case.
29) Lastly, learned counsel urged that in the light of this legal position arising in the case, the appellant had made out a prima facie case for grant of injunction against the respondents (North Central Railway) from encashing the bank guarantee in question.
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 39 of 6130) In reply, learned counsel for the respondents (North Central railway) supported the impugned order and contended that no case is made out to interfere in the impugned order and hence it be upheld.
31) Having heard the learned counsel for the parties and on perusal of the record of the case, we find force in the submissions of the learned senior counsel for the appellant.
32) In our considered opinion, it may not be necessary for us to go into more details of the issue because, in our view, the controversy involved in this case remains no more res integra and stands decided by this Court in the case of Union of India vs. Raman Iron Foundry, (1974) 2 SCC 231. Since the issue stands already decided by this Court and hence it is necessary to examine the facts of the case and law laid down therein in detail and then apply the same to the facts of the case at hand.
33) The facts of the case of Union of India (DGS&D) (supra) were that the respondent (Raman Iron Foundry) entered into a contract with the Union of India (DGS&D)-the appellant for supply of certain quantity of "Foam compound". The contract, apart from several other conditions, contained two clauses, namely, Clauses 18 and 24. Clause 24 provided that in the event of any dispute arising between the parties in connection with the contract, the same shall be decided by means of Arbitration. Clause 18 with which we are concerned provided for "recovery of sums due" which reads as under :
"18. Recovery of sums due -- whenever any claim for the payment of a sum of money arises out of or under the contract against the contractor, the purchaser shall be entitled to recover such sum by appropriating in whole or in part, the security, if any, deposited by the contractor, and for the purpose aforesaid, shall be entitled to sell and/or realise securities forming the whole or part of any such security deposit. In the event of the security being insufficient, the balance and if no security has been taken from the contractor, the entire sum recoverable shall be recovered by appropriating any sum then due or which at any time thereafter may become due to the contractor under the contract or any other contract with the purchaser or the Government or any person contracting through the Secretary, if such sum even be not sufficient to cover the full amount recoverable, the contractor shall on demand pay to the purchaser the balance remaining due."CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 40 of 61
34) The performance of the contract ran into difficulties and dispute arose between the parties giving rise to claims by either parties against the other. The respondent contended that the appellant committed a breach of the contract and was, therefore, liable to pay to the respondent a sum of Rs. 2,35,800/- by way of damages suffered by the respondent by reason of the breach of the contract whereas the appellant, on the other hand, said that it was the respondent who committed the breach of the contract and was, therefore, liable to pay to the appellant by way of damages a sum of Rs. 2,28,900/-. In the meantime, the appellant through Assistant Director of Supplies sent a letter to the respondent calling upon the respondent to make payment to them a sum of Rs. 2,28,900/- and threatened that if the said amount is not paid, it will be recovered from several respondents' pending bills in respect of other contracts.
35) The respondent, therefore, filed an application under Section 20 of the Indian Arbitration Act 1940 in Delhi High Court against the appellant for filing the arbitration agreement. The respondent also made an application for an interim injunction restraining the appellant from recovering the amount of damages claimed by it from several pending bills of the respondent. The learned Single Judge dismissed the injunction application on the ground that it could not be proved that there were any pending bills but at the same time allowed the application made under Section 20 of the Indian Arbitration Act and referred the matter to arbitration as per Clause 24 of GCC. This is how the claim/counter claim of the parties became the subject matter of the arbitration proceedings.
36) Pending arbitration proceedings, the appellant made attempt to recover the said amount from the respondent and hence the respondent again made another interlocutory application under Section 41 read with second schedule to the Indian Arbitration Act, 1940 and prayed for status quo in the case. The appellant resisted the application. It was contended that Clause 18 empowers the appellant to make recovery of any amount from the respondent. The learned Single Judge allowed the respondent's application.
He took the view that Clause 18 did not authorize the appellant to appropriate the amounts of any pending bills of the respondent towards satisfaction of its claim for damages against the respondent unless such claim for damages was either admitted by the respondent or adjudicated upon by the arbitrator or suit in civil court. Accordingly, the injunction, as CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 41 of 61 prayed for, was granted to the respondent against the appellant. It is this issue, which was carried by the Union of India to this Court.
37) The questions, which fell for consideration before this Court, were - first, what is the true interpretation of Clause 18; second what is the meaning of the words "sum due" and "may become due" under the contract or any other contract with the purchaser occurring in Clause 18; third, whether Clause 18 empowered the Union of India to make recovery of amount claimed by it by way of damages (liquidated or unliquidated) for breach of contract pending arbitration proceedings from the contractor and lastly, whether in such case, contractor is entitled to claim injunction against the Union of India from making recovery of such sum.
38) Justice Bhagwati (as His Lordship then was) speaking for the Bench examined the issue in great detail in the light of law laid down by English and Indian Courts. The learned Judge in his distinctive style of writing after examining the entire case law on the subject held that an expression "sum due"
occurring in Clause 18 would mean a sum for which there is an existing obligation to pay in praesenti or in other words which is presently payable and due and, therefore, recovery of only such sums can be made subject matter of Clause 18 which is presently payable and due. It was held that a claim, which is neither due and nor payable, cannot be made subject matter of Clause 18. It was further held that Clause 18 does not create a lien on other sums due to the contractor or give to the purchaser a right to retain such sums until his claim against the contractor is satisfied. It was also held that a claim for damages for breach of contract is not a claim for a sum presently due and payable and the purchaser is not entitled in exercise of the right conferred upon it under Clause 18 to recover the amount of such claim by appropriating other sums due to contractor.
39) Their Lordships approved the view taken by Chagla C.J.
in the case of Iron and Hardware (India) Co. vs. Firm Shamlal and Bros., AIR 1954 Bom.423 by observing in para 11 as under.
"11...........................................................The same view has also been taken consistently by different High Courts in India. We may mention only a few of the decisions, namely, Jabed Sheikh v. Taher Mallik,AIR 1941 Cal 639 S. Milkha Singh v. N.K. Gopala Krishna Mudaliar, AIR 1956 Punj 174 and Iron and Hardware (India) Co. v. Firm Shamlal and Bros., CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 42 of 61 AIR 1954 Bom 423. Chagla, C.J. in the last mentioned case, stated the law in these terms: (at pp. 425-26) In my opinion it would not be true to say that a person who commits a breach of the contract incurs any pecuniary liability, nor would it be true to say that the other party to the contract who complains of the breach has any amount due to him from the other party. As already stated, the only right which he has is the right to go to a Court of law and recover damages. Now, damages are the compensation which a Court of law gives to a party for the injury which he has sustained. But, and this is most important to note, he does not get damages or compensation by reason of any existing obligation on the part of the person who has committed the breach. He gets compensation as a result of the fiat of the Court. Therefore, no pecuniary liability arises till the Court has determined that the party complaining of the breach is entitled to damages. Therefore, when damages are assessed, it would not be true to say that what the Court is doing is ascertaining a pecuniary liability which already existed. The Court in the first place must decide that the defendant is liable and then it proceeds to assess what that liability is. But till that determination there is no liability at all upon the defendant. This statement in our view represents the correct legal position and has our full concurrence. A claim for damages for breach of contract is, therefore, not a claim for a sum presently due and payable and the purchaser is not entitled, in exercise of the right conferred upon it under clause 18, to recover the amount of such claim by appropriating other sums due to the contractor. On this view, it is not necessary for us to consider the other contention raised on behalf of the respondent, namely, that on a proper construction of clause 18, the purchaser is entitled to exercise the right conferred under that clause only where the claim for payment of a sum of money is either admitted by the contractor, or in case of dispute, adjudicated upon by a court or other adjudicatory authority. We must, therefore, hold that the appellant had no right or authority under clause 18 to appropriate the amounts of other pending bills of the respondent in or towards satisfaction of its claim for damages against the respondent and the learned Judge was justified in issuing an interim injunction restraining the appellant from doing so.
12. We accordingly dismiss the appeals. The appellant in each appeal will pay the costs of the respondent all throughout."
40) In our considered opinion, the case at hand being somewhat identical to this case has to be decided keeping in view the law laid down by this Court in the case of Union of CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 43 of 61 India (DGS&D) (supra).
41) Coming now to the facts of the case at hand, we find that wordings of Clause 62 of the contract in question with which we are concerned is identical to that of Clause 18 of Union of India (DGS&D) (supra). Clause 62 of GCC provides for determination of contract owing to default of contractor. The relevant portion of Clause 62 reads as under:
"The amounts thus to be forfeited or recovered may be deducted from any moneys then due or which at any time thereafter may become due to the Contractor by the Railway under this or any other contract or otherwise."
42) On perusal of the record of the case, we find that firstly, arbitration proceedings in relation to the contract dated 22.08.2005 are still pending. Secondly, the sum claimed by the respondents from the appellant does not relate to the contract for which the Bank Guarantee had been furnished but it relates to another contract dated 22.08.2005 for which no bank guarantee had been furnished. Thirdly, the sum claimed by the respondents from the appellant is in the nature of damages, which is not yet adjudicated upon in arbitration proceedings. Fourthly, the sum claimed is neither a sum due in praesenti nor a sum payable. In other words, the sum claimed by the respondents is neither an admitted sum and nor a sum which stood adjudicated by any Court of law in any judicial proceedings but it is a disputed sum and lastly, the Bank Guarantee in question being in the nature of a performance guarantee furnished for execution work of contract dated 14.07.2006 (Anand Vihar works) and the work having been completed to the satisfaction of the respondents, they had no right to encash the Bank Guarantee.
43) We have, therefore, no hesitation in holding that both the courts below erred in dismissing the appellant's application for grant of injunction. We are indeed constrained to observe that both the courts committed jurisdictional error when they failed to take note of the law laid down by this Court in Union of India (DGS&D) CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 44 of 61 (supra) which governed the controversy and instead placed reliance on Himadri Chemicals Industries Ltd. vs. Coal Tar Refining Company, AIR 2007 SC 2798 and U.P. State Sugar Corporation vs. Sumac International Ltd., (1997) 1 SCC 568, which laid down general principle relating to Bank Guarantee. There can be no quarrel to the proposition laid down in those cases. However, every case has to be decided with reference to the facts of the case involved therein. The case at hand was similar on facts with that of the case of Union of India (DGS&D) (supra) and hence the law laid down in that case was applicable to this case. Even in this Court, both the learned counsel did not bring to our notice the law laid down in Union of India (DGS&D) case (supra).
44) We are also of the view that the District Judge having decided the injunction application in the first instance in appellant's favour vide order dated 04.01.2012 erred in rejecting the application made by the appellant second time vide order dated 12.07.2012. It is not in dispute that the respondents despite having suffered the injunction order dated 04.01.2012 did not file any appeal against this order. Such order thus attained finality and was, therefore, binding on the parties.
45) In the light of foregoing discussion, we hold that the appellants have made out a prima facie case in their favour for grant of injunction against the respondents so also they have made out a case of balance of convenience and irreparable loss in their favour as was held by this Court in the case of Union of India (DGS&D) (supra). They are, therefore, entitled to claim injunction against the respondent in relation to encashment of Bank Guarantee no. 12/2006 dated 04.08.2006.
46) We, accordingly, allow the appeal, set aside the impugned order and in consequence allow the injunction application made by the appellant under Section 9 of the Act in Arbitration Suit no. 411/2011 in District Court, Allahabad and grant injunction in appellant's favour by restraining the respondents jointly and severally from encashing Bank Guarantee no. 12/2006 dated 04.08.2006 furnished by the CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 45 of 61 appellant in connection with Anand Vihar Works. No costs."
Arguments on behalf of defendant no. 1 11.1 It is argued by Ld. Counsel for defendant no. 1 that from a bare reading of the terms of WO-1 and WO-2, it is clear that both are with respect to the same project i.e., the Purified Terephthalic Acid (PTA) Plant (ISBL Licensed Unit of BP Amoco Plant)- EPCC-01 for a capacity of 1.2 MMTPA at Paradip Refinery under PX-PTA Project of Indian Oil Corporation Limited. It is submitted that clause 2 which pertains to contractual documents is identical and the same find place in page 6 and 66 of the plaint. It is further submitted that clause 4 which is related to the terms of payments are also identical and the obligations with respect to the provision of a bank guarantee are same. It is stated that even the attachments to the work orders i.e., the manpower deployment schedule and the equipments and machinery are completely identical in both the work orders.
11.2 It is further argued by Ld. Counsel for defendant no. 1 that in the first amendment carried out in WO-2 on 28.09.2022, the subject stated that the amendment is with respect to the fabrication of tanks i.e., WO-2. However, in the first para, it is stated that "....this work order amendment no. 1 for site fabrication of SS Vessels.." i.e. WO-1. It is submitted that both the work orders were interconnected and form part of the same contractual relationship and are a composite transaction.
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 46 of 6111.3 It is further argued by Ld. Counsel for defendant no. 1 that the terms of the bank guarantee makes it abundantly clear that it is an unconditional bank guarantee. Para 3 of the bank guarantee highlights that the obligations of the bank are wholly independent of the contract as it may either be WO-1 or for WO-2. It is submitted that plaintiff has neither alleged nor established fraud in invoking the bank guarantees by defendant no. 1.
11.4 Ld. Counsel for defendant no. 1 has also relied upon following judgments:
(i) Ansal Engineering Projects Ltd. Vs. Tehri Hydro Development Corpn. Ltd., (1996) 5 SCC 450
(ii) Standard Chartered Banks Vs. Heavy Engineering Corporation Limited 2019 SCC OnLine SC 1638
(iii) Himadri Chemicals Industries Ltd. Vs. Coal Tar Refining Co, (2007) 8 SCC 110
(iv) Gujarat Maritime Board Vs. L&T Infrastructure Development Project Ltd and Another (2016) 10 SCC
(v) ANCL & Co. (India) Pvt. Ltd. Vs. Corporation Bank and Others 2013 SCC OnLine Bom 78
(vi) Srinivas Raghavendrarao Desai Vs. Kumar Vamanrao, 2024 SCC OnLine SC 226
(vii) Ram Sarup Gupta (Dead) By Lrs Vs. Bishun Narain Inter College & Ors., (1987) 2 SCC 555
(viii) S.J.S. Business Enterprises (P) Ltd. Vs. State of Bihar, (2004) 7 SCC 166 CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 47 of 61 Issue Wise Findings
12. I have heard the arguments advanced on behalf of plaintiff and defendant no. 1, perused the case file, perused the judgments relied upon by both the parties alongwith evidence lead by both the parties. My findings are as under:
Issue No. 1. Whether the plaintiff has not approached this Court with clean hands and has concealed material facts and documents from this Court? OPD1
13. Ld. Counsel for defendant no. 1 has contended that the plaintiff has not approached this Court with clean hands and has deliberately concealed material facts, particularly the payment of Rs. 95.12 lakhs made under the commercial settlement and the advance payment of Rs. 50.97 lakhs towards WO-2. It is argued that these payments were significant and their non-disclosure in the plaint amounts to suppression of material facts. However, upon examining the nature of these payments and the overall facts of the case, the argument of the defendant does not hold merit.
14. The commercial settlement between the plaintiff and defendant no. 1 was executed on 02.02.2023, specifically to settle and close all claims arising from WO-1. As per this settlement, the CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 48 of 61 defendant no. 1 agreed to pay the plaintiff a sum of Rs. 95.12 lakhs, which was duly paid. This amount was meant to compensate the plaintiff for the cancellation of WO-1 and had no relation to WO-2. The plaintiff has approached this Court seeking an injunction against the invocation of the bank guarantee issued for WO-1, which the defendant no. 1 is now attempting to encash against alleged claims arising from WO-2. Since the settlement amount of Rs. 95.12 lakhs was solely related to Work Order 1 and had already been paid, its mention in the plaint was not necessary, as it does not impact the present dispute regarding the bank guarantee. The omission of this fact, therefore, does not amount to concealment of any material fact.
15. Similarly, Ld. Counsel for defendant no. 1 has also argued that the plaintiff has concealed the fact that an advance payment of Rs. 50.97 lakhs was made towards Work Order 2. However, this payment does not have any bearing on the claim raised by the plaintiff in the present suit. The suit is not for recovery of money but for an injunction restraining the defendant from invoking the bank guarantee given under Work Order 1. The question before the Court is whether the bank guarantee issued for Work Order 1 can be encashed by defendant no. 1 for alleged claims arising from Work Order 2. The advance payment towards Work Order 2 does not affect this question and, therefore, its non-mentioning in the plaint cannot be considered as suppression of any material fact.
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 49 of 6116. It has been held in catena of cases by Hon'ble Apex Court and our own Hon'ble Delhi High Court that suppression of facts is material only if the undisclosed facts would have altered the outcome of the case. In the present matter, even if the settlement amount of Rs. 95.12 lakhs and the advance payment of Rs. 50.97 lakhs were mentioned in the plaint, it would not change the core issue of the dispute, which is the wrongful invocation of the bank guarantee. In the present case, neither of the two payments in question has any direct impact on the claim made by the plaintiff, and hence, the plaintiff cannot be said to have approached this Court with unclean hands.
17. In light of the above reasoning, the defendant no. 1 has failed to establish that the plaintiff has concealed any material facts that would have had an impact on the adjudication of the present dispute. Accordingly, this issue is decided in favor of the plaintiff and against the defendant no. 1.
Issue No. 2. Whether the terms of ABG issued for Work Order 1 can be unilaterally changed? OPD1 Issue No. 3. Whether the terms of the work order no. 1 can be changed without consent of the plaintiff for Work Order 2? OPD1 Issue No. 4. Whether Bank Guarantee issued for Work Order 1 can be invoked for Work Order 2 in view of settlement agreement CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 50 of 61 dated 02.02.2023? OPD1 Issue No. 5. Whether defendant no. 1 is liable to return the Bank Guarantee No. 20061GF003487222 of Rs.1,21,03,912 dated 19.12.2022 to the plaintiff? OPP Issue No. 6. Whether the plaintiff is entitled for permanent injunction against the defendant from encashing Bank Guarantee No. 20061GF003487222 dated 19.12.2022? OP Parties
18. Issue no. 2 to 6 are interconnected and hence, taken together. I have gone through the document annexure P-4 which is an admitted document by both the defendants and is filed by the plaintiff alongwith plaint. This document is at page 116 of the plaint. This is covering letter for bank guarantee dated 19.12.2022. This letter pertains to bank guarantee no. 2006IGF003487222. The content of this letter are reproduced as under:
" Covering Letter for Bank Guarantee
Branch:
Bank of Baroda
Industrial Estate Branch
Highway Road,
Mehsana-384002 Gujarat.
Ref. No. 2006IGF003487222 Date: 19.12.2022
This covering letter is issued to be annexed to Bank Guarantee No 2006IGF003487222, valid upto 10.09.2023 and Claim Period valid upto : 10.12.2023 for amount of RS.1,21,03,912/- (Rs One Crore Twenty One lakh Three Thousand Nine Hundred Twelve only) issued by this office under the signature of:
Name : Mr. R.D. Meena Designation : Chief Manager CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 51 of 61 Confirmation of this guarantee if the same is desired should be obtained from the Regional Office mentioned below:
Bank of Baroda Regional Office Devasya Plaza, Radhanpur Road Mehsana-384002 Mail id: [email protected]. CC to: [email protected] Beneficiary's Name & Address M/s Technip Energies India Ltd New Delhi Signature (Signature of chief manager and stamp of Bank of Baroda) Name : R.D. Meena Designation : Chief Manager"
19. Alongwith this letter, there is a document, the heading of the document is physical issuance of bank guarantee. Admittedly, this bank guarantee is for an amount of Rs. 1,21,03,912/-. It is rightly submitted by Ld. Counsel for plaintiff that this bank guarantee has been furnished for WO-1. The basis of Ld. Counsel for this submission is that this is an admitted position that defendant no. 1 was to give an advance of 10 % towards the total cost of the project which was Rs. 12,10,39,116/- and 10 per cent of same amounted to Rs. 1,21,03,912/-. Even otherwise, there is no dispute on this fact that this bank guarantee no. 2006IGF003487222 has been furnished by the plaintiff for WO-1 to defendant no. 1 with defendant no. 2.
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 52 of 6120.1 Ld. Counsel for plaintiff has relied upon a judgment passed by Hon'ble Apex Court in M/s Gangotri Enterprises Ltd Vs. Union of India & Ors. (Supra) and submitted that the facts in M/s Gangotri Enterprises Ltd. Vs. Union of India & Ors (Supra) and the present case before this Court are similar and accordingly the judgment passed by Hon'ble Apex Court is squarely applicable to the facts of this case.
20.2 In the aforesaid case, North-Central Railway invited tender for doing earth work in embankment and cutting including provision of machine crushed/ blended material blanketing layer and construction of RCC Box type minor bridges at CH-84700M to 114100M, in connection with laying down of Agra-Etawah new BG Rail Line. The appellant- a limited company applied for the said tender and its tender being the lowest one was accepted by the respondent, accordingly, the letter of acceptance was issued in appellant's favour. The total value of the contract was Rs. 14,62,46,742/-, the date of commencement of work was 14.03.2005 and date of completion of work was 13.03.2007. Thereafter, on 14.07.2006, the appellant company was granted another work by the respondent for construction of new station building and other connected work. This work was in connection with the development of new passenger terminal at Anand Vihar and the appellant company submitted a bank/ performance guarantee dated 04.08.2006 from its banker for a sum of Rs. 1,32,78,820/-. Since the work relating to contract dated 22.08.2005 could not be completed within the prescribed time by the appellant, accordingly, the contract dated 22.08.2005 was CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 53 of 61 terminated by the respondents and the respondent invited fresh tenders and rest of the work was allocated by the respondent to another company namely Hanu Infrastructure Private Limited. 20.3 Thereafter on 30.09.2010, the appellant got the completion certificate from the respondent for the Anand Vihar work with the defect liability period of 6 months which also came to end on 30.03.2011, thus the appellant became entitled to seek the release of bank/ performance guarantee submitted by them from the respondents and accordingly, a letter was written to the respondents for the return of bank guarantee. 20.3 On 10.06.2011, the Northern Central railway issued an internal circular to all the concerned department by mentioning that respondent have caused a loss of Rs. 5 Crores approximately and they wrote a letter to the bank which had furnished bank guarantee for and on behalf of the appellant for the encashment of the said bank guarantee.
20.4 Since, the dispute had arisen between the parties in relation and arising out of the contract dated 22.08.2005, the appellant invoked clause 36 r/w clause 64 of General Condition of Contract which provided for the settlement of dispute by arbitration. Appellant after initiation of the arbitration moved an application u/s 9 of Arbitration and Conciliation Act, 1996 seeking injunction on the encashment of the bank guarantee deposited by it for the Anand Vihar work against the respondent by submitting that the respondents i.e. North-Central railway have no right to encash the bank guarantee furnished by the appellant in relation to the dispute arising out of another contract dated 22.08.2005, it has been CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 54 of 61 submitted that the bank guarantee was not furnished by the appellant in relation to contract dated 22.08.2005 but was furnished in performance of another contract dated 14.07.2006 which is a separate contract and has nothing to do with the contract dated 22.08.2005.
20.5 It was also mentioned that so far as contract dated 17.07.2006 is concerned, the work was completed for which completion certificate has also been given to the appellant and the bank guarantee was for execution of contract dated 14.07.2006 which has been duly performed, henceforth the appellant company was entitled to get its bank guarantee released from the defendant. 20.6 On the other hand it was the case of the respondents that since the respondent has the claim/ dues for the payment of sum of money against the appellant, so they are entitled to exercise their right of recovery given to them under clause 62(1) of the contract in question. It has been contended by the respondents that since they have suffered losses at the hands of appellant, therefore, they are entitled to encash the bank guarantee in question. By order dated 04.01.2012, the District Judge allowed the application moved by applicant and restrained the respondent to enash the bank guarantee till appointment of arbitrator. Thereafter the appellant requested the respondent for return of its bank guarantee. 20.7 Thereafter on 13.03.2012, an arbitration tribunal was constituted as per clause 32 of the contract between the parties. The respondents have written a letter to the bank for encashment of said bank guarantee by submitting that the order passed by the District Judge no longer survives as its life was only upto the date CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 55 of 61 of constitution of arbitral tribunal and hence, the respondents became entitled to the encashment of the bank guarantee. Thereafter, the District Judge dismissed the petition of appellant and decided in favour of respondents empowering them to recover any dues/ claim from the appellant and hence, the respondents were within rights to invoke the bank guarantee. 20.8 Aggrieved by this order, appellant preferred an appeal before the High Court and Hon'ble High Court concurred with the view taken by the District Judge and dismissed the appellant's appeal. Thereafter, appellant has filed this appeal by way of special leave before Hon'ble Apex Court. It is submitted by appellant that since the bank guarantee in question was in the nature of performance guarantee furnished by the appellant for due performance of one contract (Anand Vihar work) dated 14.07.2006 and the same having been admittedly performed by the appellant to the satisfaction of the respondent and a completion certificate has already been issued by the respondent, henceforth, the appellant became entitled to claim the release of bank guarantee in their favour. Thereafter, Hon'ble Apex Court decided to go in detail in the controversy involved and observed that the facts of the case are similar to that of Union of India Vs. Raman Iron Foundry (1974) 2 SCC 231.
20.9 In para 42, Hon'ble Apex Court has held that on perusal of record of the case, they find that the arbitration proceedings in relation to contract dated 22.08.2005 are pending, the sum claimed by the respondent from the appellant does not relate to the contract for which the bank guarantee had been furnished but it relates to CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 56 of 61 another contract for which no bank guarantee had been furnished. Secondly, the sum claimed by the appellant from the respondent is in the nature of damages which is yet to be adjudicated upon. In other words, the sum claimed by the respondent is not an admitted sum but is a disputed one and lastly the bank guarantee in question being in the nature of the performance guarantee furnished for execution work of the contract for Anand Vihar cannot be encashed for the loss of other contract.
21. On the other hand, Ld. Counsel for defendant no. 1 has placed reliance on various judgments. The sum and substance of all the judgments relied upon by Ld. Counsel for defendant no. 1 is that the bank guarantee is absolute and unconditional and is in the form of an independent contract between the bank and the beneficiary and unless some fraud or special equity exist, the beneficiary cannot be restrained from encashing the bank guarantee. It has also been held in all these cases that the bank is always obliged to honour its guarantee as long as it is an unconditional and irrevocable one. The relevant paragraphs pressed upon of the judgments cited by Ld. Counsel for defendant no. 1 are as under:
(i) Ansal Engineering Projects Ltd. Vs. Tehri Hyrdo Development Corpn. Ltd. (Supra):
"It is settled law that bank guarantee is an independent and distinct contract between the bank and the beneficiary and is not qualified by the underlying transaction and the validity of the primary contract between the person at whose instance the bank guarantee was given and the beneficiary. Unless fraud or special equity exists, is pleaded and prime facie established by strong CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 57 of 61 evidence as a triable issue, the beneficiary cannot be restrained from encashing the bank guarantee even if dispute between the beneficiary and the person at whose instance the bank guarantee was given by the Bank, had arisen in performance of the contract or execution of the Works undertaken in furtherance thereof."
(ii) Standard Chartered Banks Vs. Heavy Engineering Corporation Limited (2019 SCC OnLine SC 1638:
"20. A bank guarantee constitutes an independent contract. In Hindustan Construction Co. Ltd. Vs. State of Bihar and Others(supra), a two Judge Bench of this Court formulated the condition upon which the invocation of the bank guarantee depends in the following terms:− "9. What is important, therefore, is that the bank guarantee should be in unequivocal terms, unconditional and recite that the amount would be paid without demur or objection and irrespective of any dispute that might have cropped up or might have been pending between the beneficiary under the bank guarantee or the person on whose behalf the guarantee was furnished. The terms of the bank guarantee are, therefore, extremely material. Since the bank guarantee represents an independent contract between the bank and the beneficiary, both the parties would be bound by the terms thereof. The invocation, therefore, will have to be in accordance with the terms of the bank guarantee, or else, the invocation itself would be bad."
(iii) ANCL & Co. (India) Pvt. Ltd. Vs. Corporation Bank and Others 2013 SCC OnLine Bom 78:
"54. On perusal of the terms and conditions of the bank guarantee in this case furnished by the petitioner, it is clear that each of such bank guarantees is absolutely unconditional and the bank was under obligation to honour the same on demand issued by the beneficiary. There was no such condition provided in the bank guarantee which obligates any recording of reasons or quantifying the claim while invoking such bank guarantee. It is not in dispute that in the invocation letter addressed by the 3rd respondent, no reason of any nature kvm ARBPL67.13 whatsoever is given."
22. I am in full agreement with the judgments placed on record by Ld. Counsel for defendant no. 1 that the Bank Guarantees CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 58 of 61 furnished are absolute and unconditional in nature and the bank is bound to encash the same to the beneficiary, the only exceptional circumstances where it can be denied are fraud and special equity.
23. But the case in hand is altogether on the different footings. Admittedly, the contract for which the defendant no. 1 wanted to invoke the bank guarantee has already been terminated by him and no work has been performed under this contract by the plaintiff and admittedly, this bank guarantee pertaining to WO-1 has already been cancelled as per the commercial settlement arrived between the parties on 02.02.2023. This is also an admitted fact that defendant has not asked for any bank guarantee for WO-2. And admittely, no advance amount has been given by the defendant no. 1 to the plaintiff for WO-1 for which the bank guarantee was furnished by the plaintiff to the defendant no. 1.
24. I am also aware of the fact that defendant has advanced 10% of the amount which is approximately Rs. 50.97 Lacs for WO-2 in favour of the plaintiff. This is also an admitted case that defendant no. 1 has never asked for furnishing of any bank guarantee from the plaintiff for this amount, the reason best know to the defendant no. 1. Rather it is the case of defendant no. 1 that after the advancement of this amount of Rs. 50.97 Lacs, defendant no. 1 has further advanced the plaintiff another Rs. 50 Lakhs for further execution of WO-2. Admittedly, after the settlement CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 59 of 61 between the parties, the WO-2 has also been cancelled and after cancellation of WO-2, defendant no. 1 tried to encash the bank guarantee which has been furnished by the plaintiff for WO-1 which is barred in law and cannot be allowed in light of judgment passed by Hon'ble Apex Court in M/s Gangotri Enterprises Ltd Vs. Union of India & Ors. (Supra) and also on the basis of ratio of judgment relied upon by defendant no. 1, this Court cannot interfere in the bank guarantee advanced by the plaintiff qua WO-1 and for that reason, defendant no. 1 in no manner be allowed to encash the same for claiming the damages, if any, for WO-2. Admittedly, no claim petition in any manner/ no counter- claim in any manner/ no set-off in any manner has been filed by the defendant no. 1. Henceforth, the case of the defendant no. 1 is outrightly rejected.
Issue No. 7. Whether the plaintiff entitled for cost of the suit? OPP
25. Parties to bear their own costs.
Relief
26. In view of the findings on the issues framed, the suit is decreed in favor of the plaintiff. Consequently, Defendant No. 1 is permanently restrained from encashing Bank Guarantee No. 2006IGF003487222 for Rs. 1,21,03,912/- dated 19.12.2022. Defendant No. 1 is further directed to return the said Bank CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 60 of 61 Guarantee to the plaintiff immediately. Additionally, Defendant No. 2 is directed to ensure that the bank guarantee is encashed in favor of the plaintiff as per the applicable rules and regulations. Parties to bear their own costs. Needless to say defendant no. 1 may file relevant suit for recovery for any losses suffered for the work not performed by the plaintiff, if any, if law permits. Decree sheet be drawn accordingly. File be consigned to record room after due compliance. Digitally signed by NEELAM NEELAM SINGH Announced & dictated SINGH Date:
2025.03.29 in the open Court on 04:09:58 +0530 this 29th day of March, 2025 (NEELAM SINGH) District Judge (Commercial Court-02) South-East, Saket Courts, ND CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 61 of 61