Delhi High Court - Orders
Jmc Projects India Limited vs South Delhi Municipal Corporation on 26 July, 2021
Author: Vibhu Bakhru
Bench: Vibhu Bakhru
$~28
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ O.M.P.(I) (COMM.) 234/2021
JMC PROJECTS INDIA LIMITED ..... Petitioner
Through Mr Arvind Nigam and Mr Sachin
Datta, Senior Advocates with Mr
Ayush Agrawal, Mr Vikrant Singh
Bloria, Mr Pushpendu Gautam, Dr
Sunil Mittal and Mr Digit Saikia,
Advocates.
versus
SOUTH DELHI MUNICIPAL CORPORATION ..... Respondent
Through Mr Sandeep Bajaj, Standing Counsel
with Ms Aakanksha Nehra & Mr
Asav Rajan, Advocates.
CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
ORDER
% 26.07.2021 [Hearing Held Through Videoconferencing]
1. The petitioner has filed the present petition under Section 9 of the Arbitration and Conciliation Act, 1996 (A&C Act), inter alia, praying that respondent be restrained from invoking the Performance Bank Guarantee (Bank Guarantee No. 50/2012 as extended from time to time).
2. The said Performance Bank Guarantee was submitted by the petitioner to the respondent in terms of the Contract Agreement dated 24.09.2012. Disputes arose between the parties in connection with the said Contract, which were initially referred to Dispute Resolution Committee (DRC). However, the same remained unresolved. Consequently, the Signature Not Verified Digitally signed by:DUSHYANT RAWAL petitioner invoked the Agreement to refer the disputes to arbitration by its notice dated 03.06.2017. Thereafter, petitioner had filed a petition under Section 11(6) of the A&C Act for constitution of an Arbitral Tribunal. The said petition was allowed by this Court by an order dated 13.08.2020 and Justice (Retired) A.K. Sikri, a former Judge of the Supreme Court of India, was appointed as the Sole Arbitrator.
3. The parties had raised rival claims before the Arbitral Tribunal. The arbitral proceedings culminated in an award dated 30.06.2021 (hereafter 'the Award'). In terms of the Award, certain claims made by the petitioner were awarded in its favour. Notably, the counter claims made by the respondent including claims based on the allegation that there was delay on the part of the petitioner in performing the contract, were rejected. The respondent had also raised a counter claim for refund of mobilisation advance, however, that counter claim was also rejected as barred by the limitation.
4. It is not disputed that if the arbitral award is not set aside, the respondent would have no ground to invoke the Performance Bank Guarantee in question and as a sequitur of the arbitral award, the same is required to be discharged.
5. In these circumstances, there can be no justifiable grounds for the respondent to invoke the Bank Guarantee. The same would necessarily require to be discharged as a consequence of the petitioner prevailing in the arbitral proceedings.
6. Mr Bajaj, learned counsel for the respondent states that although respondent has not challenged the Award dated 30.06.2021 as yet but it is seeking internal approvals to do so and the same is likely to take some time.
Signature Not Verified Digitally signed by:DUSHYANT RAWALHe submits that in the meanwhile to preserve the security in favour of the respondent, it would be necessary that the Bank Guarantee in question be kept alive for a further period of at least thirty days in order to enable the respondent to approach this Court and seek an appropriate order for staying the Award dated 30.06.2021.
7. Mr Nigam, learned senior counsel appearing for the petitioner has opposed the said request. He submits that in order to keep the Bank Guarantee alive, the petitioner would not only have to pay the charges to the bank and also deposit 100% margin of the money. And, the petitioner cannot be compelled to bear additional costs and expenses after succeeding in the arbitral proceedings.
8. Since the Bank Guarantee in question is expiring on 31.07.2021, the petitioner cannot be put to any further costs for extending the same after having prevailed before the Arbitral Tribunal. There is no order passed by any court setting aside the Award or staying the same. The respondent has yet not instituted any proceedings for assailing the Award.
9. Having stated the above, this Court also considers it apposite to consider the respondent's request that the Bank Guarantee be kept alive for at least thirty days to enable the respondent to seek an appropriate order from the Court in the event it decides to challenge the Award. However, as noticed above, that cannot be at the cost of the petitioner.
10. In view of the above, this Court considers it apposite to accede to the respondent's request that the Bank Guarantee be directed to be kept alive for a further period of thirty days from 31.07.2021 albeit on certain terms.
11. Considering the above, the present petition is allowed and the Signature Not Verified Digitally signed by:DUSHYANT RAWAL respondent is restrained from invoking the Bank Guarantee in question (Performance Bank Guarantee No. 50/2012 as extended from time to time).
12. The petitioner is further directed to keep the Bank Guarantee alive for a further period of thirty days from 31.07.2021. This is subject to the respondent furnishing an affidavit to this Court that it would reimburse the commission/bank charges incurred by the petitioner in extending the term of the Bank Guarantee from 31.07.2021 to 30.08.2021 as well as bear the interest at the prevalent rate as charged by the concerned bank to the petitioner, on the margin money furnished by the petitioner to the concerned bank for keeping the Bank Guarantee alive, if it does not succeed in setting aside the Award. The said affidavit be filed on or before 30.07.2021 with the advance copy to the learned counsel for the petitioner.
13. It is clarified that in the event such an affidavit is not filed, there would be no obligation on the part of the petitioner to extend the current term of the said Bank Guarantee in question; that is, extend its validity beyond 31.07.2021.
14. It is further clarified that the liability to pay such charges would also be subject to any order that the petitioner may secure in any proceedings that it may institute to challenge the arbitral award dated 30.06.2021.
15. Dasti.
VIBHU BAKHRU, J JULY 26, 2021 RK Signature Not Verified Digitally signed by:DUSHYANT RAWAL