Delhi High Court
Vfs Global Services Private Limited vs South Delhi Municipal Corporation on 21 March, 2016
Author: V.Kameswar Rao
Bench: V.Kameswar Rao
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on February 17, 2016
Judgment delivered on March 21, 2016
+ IA 1668/2016 in CS(OS) 52/2016
VFS GLOBAL SERVICES PRIVATE LIMITED ..... Plaintiff
Through: Mr.C.A.Sundaram, Sr. Adv.
and Ms. Maninder Acharya,
Sr. Adv. with Mr.Samar
Singh Kachwaha &
Mr.Raghavendra M. Bajaj,
Advs.
versus
SOUTH DELHI MUNICIPAL CORPORATION ..... Defendant
Through: Mr.Sanjay Poddar, Sr.Adv.
with Mr. Mukesh Gupta, Ms.
Pavni Poddar & Mr. Govind
Kumar, Advs.
CORAM:
HON'BLE MR. JUSTICE V.KAMESWAR RAO
V.KAMESWAR RAO, J.
IA 1668/2016 (under Order 39 Rules 1 and 2 CPC)
1. By this order, I would decide the application filed by the plaintiff under Order 39 Rules 1 and 2 read with Section 151 CPC. The prayers made in the application are as under:
"(a) Pass an appropriate ex parte, ad interim order, restraining the defendant from seeking to enforce against the plaintiff, any obligation under the erstwhile licence agreements, including but not limited to, payment of monthly licence fees, encashment of bank guarantee, forfeiture of security deposit, encashment of any post-dated cheque, or taking any punitive action such as issuance of show cause notice, blacklisting etc., CS(OS) 52/2016 Page 1 of 26 pending disposal of the suit.
(b) Pass an appropriate ex parte, ad interim order, directing the defendant to deposit with this Hon'ble Court the post dated cheques furnished by it to the plaintiff".
2. The suit filed by the plaintiff is for declaration, damages, mandatory and permanent injunction. The declaration sought is that, the 52 licence agreements granted to the plaintiff by the defendant are void ab-initio on account of material misrepresentations and suppression of vital facts.
3. Ms. Maninder Acharya, learned Sr. Counsel, who had initially argued for the plaintiff would submit that vide NIT dated April 10, 2015, the defendant invited bids for allotment of 71 authorized parking sites under the jurisdiction of South Delhi Municipal Corporation (SDMC), the details in that regard were in Annexure No. 13 of the NIT. A pre-bid meeting was called by the defendant on April 23, 2015, wherein the plaintiff participated, when it was asked by the bidders, Q.) What will happen if under any circumstances, the SDMC fails to give possession to H-1 bidder who had deposited/completed formalities. A.) SDMC shall ensure handing over the possession of the parking site to the contractor in full earnest.
Q.) Whether the department will hand over the possession of the site on CS(OS) 52/2016 Page 2 of 26 the spot in day time, in presence of nominated person of association as well as local police.
A.) The department will hand over the peaceful possession to the declared H-1 bidder on the spot. According to her, on April 30, 2015, a corrigendum was uploaded/issued by the defendant stating that the maps of 17 sites have been changed so as to comply with an order of the National Green Tribunal. She states, no details of the said order was disclosed to the bidders. It is her case, that the reference to a particular NGT direction, made one think that the corrigendum has been brought pursuant to the same routine and operational issue, that was clarified by the NGT. According to her, this disclosure of the NGT order was crucial for being disclosed to the bidder. After the financial bids were opened, it was found that for 42 sites, the plaintiff was the sole bidder; out of which, against 6 sites, the plaintiff had bid below the reserved MLF. Finally, the plaintiff was allotted 52 sites and a letter was issued on May 26, 2015. The sites were allotted on payment of licence fees of Rs. 3,05,25,715/- per month for a period of 3 years with effect from June 16, 2015. Ms. Acharya would state that the plaintiff was of the belief that the sites offered by the defendant were clear and would be handed over to the plaintiff to enable it to perform its function. She states that the allotment letters were issued on June 15, 2015 and a purported hand over CS(OS) 52/2016 Page 3 of 26 of all 52 sites took place on the same date at the office of the defendant, the permission taken with the belief, they are clear sites. Immediately, problems were noticed. She would refer to a letter dated June 18, 2015 of the plaintiff to the defendant pointing out problems conflicting/rival claims and encumbrances in respect of 7 sites and made a formal request to the defendant to act upon assurances and hand over peaceful possession of the sites. In the letter dated June 18, 2015, a special mention was made to the South Extension, Part II site, stating that the police has sealed the site on account of NGT order. She has stated, the plaintiff was under the impression, it is one site only, which would be effective by an order of NGT. She also refers to subsequent letter of the plaintiff dated June 22, 2015 pointing out similar problems and conflicting claims had arisen with respect to 29 sites, and the plaintiff has elaborated the problems at each site and again requested, the peaceful possession of the parking sites. She draws my attention to the reply of the defendant dated June 24, 2015, to state, instead of handing over the peaceful possession of the sites, has stated that all the problems have been sorted out. According to her, no reference was made to the order of the NGT impacting the licence agreement. Even in its response dated July 3, 2015, the defendant has stated that, the plaintiff, for each site, should approach the local police authorities. This letter of the CS(OS) 52/2016 Page 4 of 26 defendant had come as a shock, rather than addressing the grievance of the plaintiff, the defendant had asked the plaintiff to approach the police authorities. On July 10, 2015, the defendant issued a letter to the plaintiff, if within 3 days, the plaintiff does not issue the indemnity bonds, signed agreements and post dated cheques, for the MLF for the entire 3 years licence period for all 52 sites, the defendant shall initiate action against the plaintiff. The plaintiff furnished to the defendant bank guarantee for a sum of Rs. 5,60,51,430/- and 36 post dated cheques in respect of monthly licence fees being Rs.3.05 Crores per month to the defendant. Upon monthly payment of the licence fees, the defendant would return the post dated cheques corresponding to the said month. On payment of the licence fees in respect of June, July, August, September, 2015, four post dated cheques have been returned. She would state, a total of 32 post dated cheques, drawn by the plaintiff for an aggregate sum of Rs. 97.68 Crores are lying with the defendant. Noting no improvement at the sites, the plaintiff once again made a fresh request to the defendant to hand over clear and unencumbered possession of the 52 sites, pointing in a chart, the problems being faced at each site. She would state, that the defendant in its letter dated August 28, 2015, took a stand that it is the plaintiff which has to sort out the problems with various authorities. She would also highlight claims being CS(OS) 52/2016 Page 5 of 26 raised by DMRC at various sites already taken over by DMRC; claims of RWA/local market associations, claiming either that land does not belong to the defendant or it does not have any right to collect parking charges in respect of cars parked thereon, inter alia, on account of prior vested rights and claims from entities who had paid one time parking charges to the MCD/defendant/previous contractor. She states, in one case, M/s. Aurbindo Place Association filed a writ petition, claiming that the orders passed by this Court in a previous writ petition, the defendant herein had been directed, not to grant any fresh contract for parking in the concerned area, without considering the proposal of the market associations. She states, that, the defendant went ahead with the tender process in respect of that area, that site. She also refers to the Lodhi Road Institutional Area-I & II, the NBCC filed a writ petition in this Court being W.P.(C) 3029/2011, wherein this Court, had passed an order dated September 6, 2011 recording a settlement giving up the site in favour of the NBCC, which would take over the site and run the parking on the site. She states, deliberate suppression and concealment of the order dated November 26, 2014 passed by the NGT in OA 21/2014, wherein the NGT had ordered that the defendant shall ensure that Tarred Roads are not permitted to be used for parking and that, in all markets in Delhi, only one side parking shall be permitted and parking shall not be CS(OS) 52/2016 Page 6 of 26 permitted in a manner that two way free flow of traffic is impossible. The tendered documents includes Tarred Roads within the area allotted and also expressly states that the two sided parking shall be permitted in market areas. In the light of the NGT order, the entire tendered process is vitiated on account of material suppression and misrepresentations of facts. She has drawn my attention to the survey drawings of the parking sites to clearly indicate and specify how violations of NGT order dated November 26, 2014 would have taken place if parking was permitted in the manner provided in the licence agreements. Out of 52 sites, 45 sites are on tarred roads. Furthermore, in 41 parking sites, either two side parking has been allowed in such a manner that there is no free space left for even single lane movement of traffic or single lane parking has been allowed but the road is so narrow that no space is left for free passage of regular traffic. She states, that, the police authorities were approached several times, however, no action was taken, more so, since the defendant did not offer any support whatsoever in spite of its contractual obligations and unequivocal assurances in pre bid meeting of April 23, 2015. She had referred to a letter dated 23.9.2015 from the Deputy Commissioner (RP Cell), SDMC to the various Assistant Commissioners of SDMC, wherein, it was mentioned that, the problems being faced by the plaintiff are also being faced by the contractors in respect of 71 sites, CS(OS) 52/2016 Page 7 of 26 to contend, that the problems faced by the plaintiff were real and genuine. She would refer to letter dated September 7, 2015, wherein the plaintiff had sought the hindrance free sites or in the alternative, to treat the licences as cancelled forthwith being void and non-est.
4. The defendant in response on April 29, 2015, had made bald denials and called upon to sort out the issues through meetings with the officers. Despite meeting, on September 28, 2015, no solution was forthcoming. As the plaintiff had suffered a loss of Rs. 12.2 Crores and recurring loss in excess of Rs. 4 Crores, per month, the plaintiff had to approach this Court by way of W.P.(C) 9407/2015. While hearing the writ petition, the learned Single Judge of this Court vide order dated November 4, 2015 had restrained the defendant from encashing any cheque or bank guarantee till the next date of hearing. She would also highlight the order passed in appeal, filed against the order dated November 4, 2015 being LPA No. 829/2015, wherein the Division Bench of this Court had observed that if the writ petition is dismissed, the cheque as well as the bank guarantee can be encashed by the appellant. Hence, it is clear that bank guarantee could only be encashed if the writ petition being 9407/2015 is dismissed. She has also drawn my attention to the judgment dated 11.12.2015 of the learned Single Judge of this Court in W.P.(C) 9407/2015, wherein, substantial prayers of the CS(OS) 52/2016 Page 8 of 26 plaintiff were granted. She highlights paragraph 27, 28, 29 till 37. According to her, from a reading of para 35, there is a clear conclusion that the licence agreements were voidable at the option of the plaintiff and in terms of para 37, the plaintiff had a right to declare all 52 licence agreements as void, which the plaintiff had exercised with regard to 45 sites vide its letter dated January 12, 2016 and sought a restitution for a sum of Rs.10,96,79,308/- and reserved its right to seek further damages. Insofar as the balance 7 sites are concerned, it is their submission that the plaintiff reserved its right to address the defendant qua those sites after the expiry of three months. She state, that, in the LPA 41/2016, on being asked by the Court, whether it is ready to hand over the remaining 7 sites, and the answer being in the affirmative, the plaintiff was to file an affidavit, which it did and noting the said affidavit, the Division Bench in its order dated January 27, 2016, had recorded that the plaintiff is ready to hand over the remaining sites as well, granted liberty to the parties to initiate proceedings for enforcement of various claims against each other and the Court hearing such claims shall not be prejudiced by the order dated December 11, 2015. The defendant despite such an order, in complete violation of the earlier orders passed by the Court, sought to encash the bank guarantee vide letter of invocation dated January 28, 2016. On coming to know, about the invocation, the plaintiff filed a CM CS(OS) 52/2016 Page 9 of 26 3416/2016 in LPA 416/2016. The Division Bench vide order dated January 29, 2016 directed the defendant to keep the letter of invocation in abeyance for 10 days to enable the plaintiff to seek appropriate remedy. In sum and substance, it is her submission that the interim relief sought for in the application for encashing the bank guarantee/security deposit and the cheques by the defendant, would not be tenable inasmuch as there was a stay in favour of the plaintiff, since the day one, when it filed a writ petition being 9407/2015; (2) the Writ Petition (Civil) 9407/20115 has been allowed by the detailed judgment, wherein, it has been concluded that the plaintiff has a right to declare the licence agreement as null and void at its option. According to her, the defendant calling the plaintiff defaulters is untenable. Further, she would urge that the fraud has been played by the defendant concealing the various impeding factors for running the parking sites. The aforesaid facts would also reveal special equities in favour of the plaintiff. It is a case that the 45 sites are effected by the NGT order. She would rely upon the following judgments:
(i) 200 (2013) Delhi Law Times 283 (DB), State
Trading Corporation of India Ltd. Vs. State Bank
of India and Ors.
(ii) (2008) 1 SCC 544, Vinitec Electronics Pvt. Ltd.
Vs. HCL Infosystems Ltd.
CS(OS) 52/2016 Page 10 of 26
(iii) AIR 2006 Delhi 169, M/s. Hindustan Construction Co.
Ltd. and Anr. Vs. M/s. Satluj Jal Vidyut Nigam Ltd.
5. On the other hand, Mr. Sanjay Poddar, learned senior counsel for the defendant would state that NIT dated April 10, 2015 was issued for allotment of 71 authorised parking sites against the payment of licence fees. It also issued corrigendum dated April 30, 2015 whereby modifying and correcting the layout of the parking in respect of 17 parking sites and the said corrigendum along with corrected parking sites was put up in the public domain. The correction was due to the objections raised by the Delhi Police based on the directions of the National Green Tribunal. According to him, the said bid was open till May 8, 2015. The bidders including the plaintiff, submitted their bids pursuant to the said NIT for 71 sites. In the pre-bid meeting it was made clear that the parking sites are being given on "as is where is basis". According to him, it was made clear, that the answering defendant will not be responsible for any decline in the revenue at the parking sites for any reasons whatsoever. The NIT, stipulated the bidder to conduct survey of the existing site and make independent evaluation of the scope of work. He would state that the bidder was required to visit the parking site to understand the field operation and current revenue administration. He would state that the parking contractors were required to install and maintain computers at all CS(OS) 52/2016 Page 11 of 26 sites to capture all data of parking. The contractor was required to clearly mark out the parking area by putting six inches wide strips of thermoplastic paint within four weeks of taking over the site. The issuance of parking site slips by hand held devices is a mandatory requirement in terms of the NIT and the contractor was required to submit a certificate evidencing use of hand held device to R.P.Cell within a week from the date of taking over the parking sites. The successful bidder was required to produce documentary evidence of having procured these machines before the start of parking operation. According to Mr. Poddar the successful bidder was to manage the site by its own staff and shall not outsource work to any third party. He also highlighted various stipulations of the contract. According to him, the plaintiff was issued separate allotment letters in respect of 52 sites on June 15, 2015. The possession of the 52 sites were handed over to the plaintiff individually and separately on June 16, 2015. Out of 17 parking sites mentioned in the corrigendum dated April 30, 2015, the plaintiff was found successful in respect of 11 parking sites and the possession was taken over by the plaintiff in terms of the corrigendum and not in terms of the original maps issued along with the NIT. The plaintiff never raised any objection for reduction/modification of the area at any point of time including in the pleadings in the writ petition. In other CS(OS) 52/2016 Page 12 of 26 words, according to him, the bidders were fully aware of the NGT order. He states no complaint/grievance has been received by the defendant from the parking contractors to whom remaining six parking sites were allotted out of 17 sites mentioned in the corrigendum dated April 30, 2015. Besides, there is no letter received from the police authorities till date after this corrigendum and allotment of the parking sites citing any issue relating to the NGT order. He would also state, the plaintiff took possession of all the sites with its complete satisfaction and without any objection. In so far as the letter dated June 18, 2015, which pointed out certain difficulties being faced by it from local market association or the residents is concerned, he would state, taking cognizance of such complaint, a joint survey was conducted on June 23, 2015 along with the staff of the plaintiff. The problems were sorted out on the spot to the satisfaction of the said staff of the plaintiff. On July 3, 2015, a point wise reply was furnished. It is only thereafter that the agreement was signed on July 9, 2015. Admittedly, the possession of parking sites were given on June 16, 2015. It is his case, there has been breach of the agreements in respect of 52 sites. He states that notices were issued to the plaintiff from time to time. It is his submission that as a counter blast and to cover up its own lapses the plaintiff started raising frivolous objections pointing difficulties faced by it. He would also state in para CS(OS) 52/2016 Page 13 of 26 21 of the writ petition, a chart was annexed indicating the difficulties and hindrances faced in respect of each of the 52 parking sites, but would state that barring one or two sites all the hindrances and objections alleged by the plaintiff were not attributable to the defendant or to any other government agencies but are because of the plaintiff's own failures. With regard to DMRC work at the Munirka parking site is concerned, the work was completed as on September 18, 2015. At the time of inspection, the site was found to be in a running condition by the plaintiff. Besides this, he would state that the defendant in consultation with the DMRC sought restoration charges so that the claim of the plaintiff if any, would be adjusted. As far as Aurobindo Place parking site is concerned, the claim of the plaintiff was found to be wrong at the time of the inspection on September 20, 2015. The allegation of the plaintiff about the pendency of the writ petition is irrelevant in as much as no court order has prevented the answering defendant or the plaintiff from running the parking sites. In so far as South Extension is concerned, he states that the NGT order is not affecting the parking site inasmuch as the NGT order only stipulates that no regular vehicular traffic is to be affected on tarred road and parking is to be provided only on the one side tarred road meant for vehicular traffic. The South Extension Par-II parking site is not situated on the tarred road meant for CS(OS) 52/2016 Page 14 of 26 regular vehicular traffic. As a matter of fact, it is only on the one side of the ring road and parking is allowed only on the parking area which is inside the market complex. He would state, the plaintiff is confusing the internal metallic road with tarred road meant for regular traffic movement. The defendant has not received any objection/hindrance from Delhi Police other than the 17 parking sites. The objection based on the NGT order for this solitary parking site is also not tenable and have been raised by incorrect reading/interpretation of the NGT order. According to Mr. Poddar, with a view to assist the plaintiff, the matters were taken up with the concerned government agencies. General notices to all the police authorities /Zonal authorities /local RWA's and market associations have been issue by the defendant. He states that the defendant has not committed any breach of the agreements. He states, the plaintiff cannot avoid the agreements merely on the ground that it is unable to make profit as expected by it. He would state the plaintiff was not entitled to surrender 52 parking sites after a period of nine months starting from June 15, 2015 and was required to give 90 days notice for surrender of the parking sites. He states that the plaintiff was required to pay the licence fees for a period of one year w.e.f. June 15, 2015 which works out to be Rs.36,63,08,580/- and after deducting the total amount received i.e. Rs.15,76,28,575/- a sum of Rs.20,86,77,005/- is due and CS(OS) 52/2016 Page 15 of 26 payable by the plaintiff. He denies that contract is void. He would also state, the invocation of bank guarantee cannot be stayed being a separate contract. He would rely on the following judgments in support of his submission:-
(i) 2012 (8) SCC 197 Punjab Urban Planning and Development Authority and ors vs. Raghunath Gupta and ors;
(ii) 2013 (5) SCC 470 Rajasthan State Industrial Development and Investment Corporation and anr. Vs. Diamond and Gem Development Corporation Ltd. and Anr.
(iii) 2011 (6) RAJ 169 (Del) MSTC vs. M/s Jain Traders and ors;
(iv) 1994 (1) SCALE 715 Assistant Excise Commissioner and Ors.
etc. vs. Issac Peter and ors
(v) 2015 (3) AD (Del) 586 JCL Infra Ltd. (Formerly known as J. Sons Co Ltd) vs. Govt. of NCT Delhi through Chief Secretary and Anr;
(vi) 2011 (2) RAJ 216 (Del) Emaar MGF Construction Pvt. Ltd. vs. DDA;
(vii) 2014(1) RAJ 735 (Del) Indu Projects Ltd. vs. Union of India;
(viii) 1997 (1) SCC 568 UP State Sugar Crp. Vs. Sumac International Ltd.;
(ix) 2008 (1) SCC 543 Vinitech Electronics Pvt. Ltd. vs. HCL Infosystems Ltd.
(xi) 2013(6) RAJ 725 (Del) DSC Limited vs. Rail Vikas Nigam Limited and ors.
CS(OS) 52/2016 Page 16 of 26
6. Mr. C.A.Sundaram, learned senior counsel responding to the submissions made by Mr. Poddar, would submit that there is an error in the arguments of Mr. Poddar. He states, the defendant has assured the plaintiff, of free sites, as is clear from page 133 of the documents, the defendant had assured the plaintiff handing over of the possession of the parking site to the contractor in full earnest and in fact, it was represented by the defendant, they would hand over the peaceful possession on the spot. Despite such assurances, noting that, the 45 parking sites, had, one or the other impediment for being handed over, the representation of giving peaceful possession is misrepresentation. He has also drawn my attention to pages 37, 19 (at C), 20 (at 15) to contend certain eventualities have been laid down; which need to be adhered to by the contractor; including order of the Court. According to him, 45 parking sites are in violation of NGT order. He also states that the corrigendum map is dated April 20, 2015. The same was given to the plaintiff on May 1, 2015. In the pre-bid meeting held on April 23, 2015, this aspect of the NGT order and the corrigendum map was not disclosed. He has also drawn my attention to order dated September 23, 2015 of the SDMC, wherein their own field staff has confirmed that there are encroachments in many of the parking sites and the contractors are approaching the department for removal of encroachments. He states CS(OS) 52/2016 Page 17 of 26 this is the version of the defendant themselves as late as September 2015. To contend otherwise now, is a misrepresentation. He would state, it is a case of misrepresentation to entice the plaintiff to enter into a contract. He has referred to a set of maps filed by way of a compilation to submit that these maps having not been disputed demonstrates that, the 45 sites are in violation of NGT order and could not have been allotted as parking sites. In substance, it is his submission that it is a case of fraud underlying the contract. He states, the judgments referred to by Mr. Poddar more specifically related to bank guarantees are where the cases were filed seeking injunction against bank guarantees only unlike this case where the prayer in the suit is for declaration, damages and restitution and a prayer is made in an application for interim relief under order 39 Rules 1 and 2. He seeks the prayers as made in the application. He would also refers to the judgments as noted above.
7. Having heard, the learned counsel for the parties, there is no dispute that the application under consideration is under order 39 Rules 1 and 2 CPC. The prayers primarily are for a restraint order against the defendant, seeking to enforce any obligation under the licence agreements, including monthly licence fees, encashment of bank guarantee, forfeiture of security deposit, encashment of any post dated cheques. Such an application, need to be decided keeping in view the CS(OS) 52/2016 Page 18 of 26 principles governing grant of interim order.
8. Before I deal with the submissions made by the counsels for the parties, I note much reliance was placed by the learned counsel for the plaintiff on the judgment of this Court in WP no.9407/2015 dated December 11, 2015. Suffice to state in para 6 of the order dated January 27, 2016, the Division Bench in LPA no.41/2016, has, by granting liberty to both the parties to work out the other remedies available under law regarding their claims and counter claims including recovery of licence fees/damages, made clear that any such proceedings initiated by either party shall be decided without being influenced by any of the observation/findings recorded in the order dated December 11, 2015. So this Court need to consider the plea raised by the parties independently and not to go by the conclusions in order dated December 11, 2015.
9. The case of the plaintiff as canvassed by the learned senior counsel, that the licence agreements entered by them with the defendant was by way of concealment suppression and fraud on the part of the defendant and hence voidable and have been rightly declared so. According to them, the parking sites clearly indicate violation of NGT order dated November 26, 2014, at least 45 are on tarred roads. Furthermore, in 41 of the parking sites, two sides parking has been allowed in such a manner that there is no free space left for even single CS(OS) 52/2016 Page 19 of 26 lane movement of traffic. That apart, a case of conflicting claims has also been set up by the counsels, like de-notification of site by the MCD; notification of the site by the DMRC; sites in respect of which defendant/MCD/their previous contractors had collected from RWA's/institutions present in the area, lump sum one time parking charges preventing the plaintiff from performing the functions under the agreements; unauthorised encroachments.
10. The stand as canvassed by Mr. Poddar, primarily is of denial of the pleas urged on behalf of the plaintiff. According to him, the defendant is not responsible for any hindrances for the running of the parking site. The submissions noted in para 5 primarily being the stand of the defendant, on the objections raised by the plaintiff on parking sites, prima facie appears to be a plausible reasoning till such time the plaintiff establishes its case in the trial wherein, the scope of NGT order and its effect thereof need to be analysed including the nature and relevance of the third party claims. Till such time, the plaintiff establishes its case, whether the interim order, as sought by the plaintiff need to be granted, is the moot question in the application. The relief sought by the plaintiff is primarily (i) against the encashment of bank guarantees; (ii) forfeiture of security deposit; (iii) restraining from encashment of post dated cheques and (iv) restraining from taking any CS(OS) 52/2016 Page 20 of 26 punitive action such as issuance of show cause notice, black listing of the plaintiff pending disposal of the suit.
11. Insofar as the encashment of bank guarantees is concerned, I am unable to accept the plea of Mr. Sundaram that the judgments relied upon by Mr. Poddar primarily relates to the cases wherein only relief of injunction was sought against the encashment of bank guarantees, unlike the case in hand, wherein, the primary relief of the plaintiff is of declaration of the 52 licences agreements as void, and only as an interim measure the relief of stay of bank guarantees has been sought. It is a settled position of law that the contract of bank guarantees is a separate and independent contract and the relationship between the beneficiary and the bank is regulated by the same, and surely the same shall be applicable while determining plea of stay of bank guarantee as an interim measure, as the position of law would not vary/different in any eventuality.
12. Insofar as the judgments relied upon by Mr. Sundaram in that regard, are concerned in Vinitec Electronics Pvt. Ltd.(supra), in para 25, on which reliance was placed by Mr. Sundaram, the Supreme Court has held that the fraud, if any must be of egregious nature so as to vitiate the underlying transaction. The Supreme Court went on to hold, that pleadings suggest, no such case was made out. In any case, the reliance CS(OS) 52/2016 Page 21 of 26 placed by Mr. Sundaram that "fraud must be of egregious nature so as to vitiate the underlying transaction" need to be established by the plaintiff in this case, before any reliance can be placed on the judgment. The said judgment would have no applicability.
13. That apart, in Hindustan Construction Co. Ltd. and Anr. (supra), wherein, the reliance was placed by Mr. Sundaram on paras 20 & 21 of the judgment is primarily an exposition of law by this Court. The reliance also placed by him on para 25 of the judgment stating that no injustice would be caused to the defendants, if the bank guarantees are not permitted to be encashed at this stage, subject to the condition they are kept alive by the plaintiff, as, by invocation of the same, the plaintiff would suffer irretrievable injustice and injury because they may not be able to bear such financial imbalance is concerned, suffice to state, this case is distinguishable on facts, inasmuch as, in the said case, it was noted by the Court that the claims of the petitioner in that case, were allowed against the respondents by the domestic adjudicating process prescribed under the terms of the Contract. Further, this court was of the view that the concept of irretrievable injustice or damages or special equities would come into play where a party to a Contract having been provided with internal adjudicative mechanism, attempt to frustrate result of such internal adjudication by recourse to encashment of bank CS(OS) 52/2016 Page 22 of 26 guarantee, particularly when the terms and conditions of the Contract including the terms of the guarantee, such determination is final. There is no final determination in this case as yet, for the plaintiff to take advantage of the case cited. The judgment is also not applicable.
14. Insofar as the reliance placed by Mr. Sundaram in the case of State Trading Corporation of India Ltd. (supra), the same would not be applicable on facts, inasmuch as there is a finding of the Court that there was no breach of Contract by the sellers and the quality of grain, which had been supplied by the respondent No.3 to the petitioner was as per contractual obligation. The Court held, it was incumbent upon the petitioner to have first entered into a negotiation with respondent No.3 before it could have invoked the bank guarantee. The Court noted that the petitioner has received the payment of the bank guarantee from respondent No.1 on January 21, 1998. At this time, the order of the Swiss Court injuncting respondent No.2 from making payment to respondent no.1 was in operation. Respondent No.3 had also invoked the arbitration clause against the petitioner on December 22, 1997. There is a finding of the Court that all these facts were well within the knowledge of the petitioner. But it still insisted upon invoking the bank guarantee. It was in this background, this Court had held that the decision of the Swiss Court and the GAFTA having been upheld, the CS(OS) 52/2016 Page 23 of 26 petitioner had abused his power by invoking the bank guarantee. No such facts are available in this case. Suffice to state, this Court has also held that it is difficult to draw any straight jacket formula, which would universally apply to all cases of bank guarantees. I would not like to reiterate the law on bank guarantees, which is well settled. Suffice to state, the invocation of bank guarantee being unconditional and it is not the case of the plaintiff that invocation was not in terms of the same, the defendant is within its right to invoke the same.
15. That apart, insofar as the plea of forfeiture of security deposit is concerned, the Contract stipulates in case of surrender of the site, the amount deposited towards Performance Guarantee/security deposit shall not be adjusted against the license fee of the remaining months and shall be forfeited, refunded or adjusted, as the case may be, after the determination of Contract. The amount against the bank guarantee is for a sum of Rs.5,60,51,430/- and the security deposit is for a sum of Rs.3,55,25,715/-. The issue whether the plaintiff is entitled to the relief as prayed and could have surrendered the sites to the defendant prematurely need to be decided in the trial. Till such time, the plaintiff cannot seek a restraint order of forfeiture of security deposit.
16. Insofar as the encashment of post dated cheques are concerned, there is no dispute that the plaintiff has surrendered all the sites to the CS(OS) 52/2016 Page 24 of 26 defendant. The plea urged by the defendant is, surrendering the sites is contrary to the terms of the Agreement. There is also no denial by the defendant that the sites have been surrendered. If that be so, the plaintiff is not operating the parking sites. In fact, I note, it is also the stand of the defendant that the plaintiff enjoyed the possession of 52 sites till January 27, 2016 and the defendant has taken a stand that the plaintiff is liable to pay a sum of Rs.20,86,77,005/- plus interest thereon and the defendant is entitled to recover the same by encashing the bank guarantee in question. The defendant has also referred to a claim of Rs.48,11,695/-. Suffice to state, the defendant refers to recover the sum through bank guarantee and not through encashment of post dated cheques.
17. In view of my above discussion and taking into consideration that the defendant herein is a local body being South Delhi Municipal Corporation and keeping in view the position of law, its right to invoke the bank guarantee in the facts, cannot be questioned. At the same time, noting the pleas urged, to balance the equities, this Court is of the view that the defendant, on encashment of bank guarantee (as already invoked by it), shall keep the amount of the bank guarantee as well as the security deposit in an interest bearing fixed deposit till the culmination of the proceedings, so that the benefits thereon enure to the successful party in CS(OS) 52/2016 Page 25 of 26 these proceedings.
18. Insofar as the prayer of encashment of the post dated cheques is concerned, in view of the stand taken by the plaintiff surrendering the parking sites and the fact, the plaintiff is not operating the parking sites, which aspect has not been denied by the defendant and the post dated cheques, primarily to be used for payment of minimum license fee, suffice to state, the defendant cannot encash them. As no submission has been made with regard to the prayer seeking restraint order against black listing of the plaintiff, the same is rejected.
19. In view of my conclusion above, it may not be necessary for me to refer to the judgments, as relied upon by Mr. Poddar. The application IA 1668/2016 is disposed of in above terms.
20. The defendant shall file written statement within four weeks from today. The replication, thereto be filed within two weeks thereafter. List before Joint Registrar on May 9th, 2016 for further proceedings.
(V.KAMESWAR RAO) JUDGE MARCH 21, 2016 Akb/ak CS(OS) 52/2016 Page 26 of 26