Madras High Court
M/S.Adani Ennore Container vs Kamarajar Port Limited on 10 September, 2020
Author: N. Sathish Kumar
Bench: N.Sathish Kumar
O.A.No.286 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 10.09.2020
CORAM :
THE HONOURABLE MR. JUSTICE N.SATHISH KUMAR
O.A.No.286 of 2020
M/s.Adani Ennore Container
Terminal Private Limited,
No.1/2, Ramcons Fotuna Towers,
4th floor, Kodambakkam High Road,
Nungambakkam, Chennai 600 034
Rep.by its Authorised Signatory ... Applicant
Vs.
Kamarajar Port Limited
(Government of India Undertaking)
2nd floor, (North Wing) and 3rd Floor,
Jawahar Building, 17, Rajaji Salai,
Chennai 600 001.
Rep by its Director ... Respondent
PRAYER: Original Application filed under Order XIV Rule 8 of Original Side
Rules read with Section 9 of the Arbitration and Conciliation Act, 1996 to grant an
order of interim injunction restraining the respondent (pursuant to its letter dated
23.07.2020) from invoking and /or encashing the Bank Guarantee
No.0024BG00057615 for an amount of Rs.29,59,73,500/- (Rupees Twenty Nine
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O.A.No.286 of 2020
Crores Fifty Nine Lakhs Seventy Three Thousand Five Hundred Only) or any other
sum, out of Bank Guarantee of Rs.63,50,00,000/- (Rupees Sixty Three Crores Fifty
Lakhs Only) furnished by the applicant pursuant to the terms of the Concession
Agreement dated 15.03.2014 pending disposal of arbitral proceedings.
For Applicant : Mr.P.S.Raman
Senior Counsel for
Mr.P.Giridharan
For Respondent : Mr.R.Sathish Parasaran
Senior Counsel for
Mr.Arun C.Mohan
ORDER
This original application has been filed to grant an order of interim injunction restraining the respondent (pursuant to its letter dated 23.07.2020) from invoking and/or encashing the Bank Guarantee No.0024BG00057615 for an amount of Rs.29,59,73,500/- (Rupees Twenty Nine Crores Fifty Nine Lakhs Seventy Three Thousand Five Hundred Only) or any other sum out of Bank Guarantee of Rs.63,50,00,000/- (Rupees Sixty Three Crores Fifty Lakhs Only) furnished by the applicant pursuant to the terms of the Concession Agreement dated 15.03.2014 pending disposal of arbitral proceedings.
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2. The applicant was declared as the selected bidder and respondent issued a letter of Award (LOA) dated 14.02.2014 vide which the applicant was awarded the project. The applicant being one of the successful bidders of the tender floated by the respondent entered into a Concession Agreement dated 15.03.2014 (“ the agreement” of “ the Concession Agreement”) with the respondent for the Development of Container Terminal at Kamarajar Port on Design Built Finance Operate Transfer (DBFOT) basis in terms of the above mentioned agreement. It was agreed between the applicant and the respondent that the stipulated period for completion of the project shall be 27 months for Phase-I from the date of award of Concession and for Phase II shall be 72 months from the Date of Award of Concession and the total concession period for the project was fixed as 30 years. The estimated project cost was fixed by the respondent as Rs.1270 crores. The applicant also furnished the performance Bank Guarantee to the respondent for a sum of Rs.63,50,00,000/- valid up to 05.08.2021 in Bank Guarantee No.0024BG00057615. During the terms of the Concession Agreement the applicant was prevented from completing the construction works for project which means all works, equipment and things necessary to complete the project and provide the project facilities and services in accordance with the requirements of the Concession Agreement, either by acts and omissions of respondent or for reasons beyond the control of the applicant. On account of delays Page 3/10 http://www.judis.nic.in O.A.No.286 of 2020 and hindrances which were attributable to the respondent and were beyond the control, not attributable to the applicant Phase I completion was delayed which had a cascading effect on the commencement of construction for Phase II. It is the contention of the learned counsel for the applicant that the entire delay was due to the various act on the part of the respondent. The delay also includes delay in handing over the land by the respondent and appointment of independent engineer and also delay in the project due to cyclone vardha and non approval of estimate project cost. When the matter stood thus the respondent issued a notice dated 23.07.2020 to invoke the Bank Guarantee LC.
3. The learned counsel for the respondent denied the entire allegations made by the learned counsel for the applicant. Is the contention of the learned counsel for the respondent that the delay is not on the part of the respondent. There is no connection for completion of Phase I & II and the land was always available for the applicant to take possession with effect from 20.01.2019. However the applicant has not taken any steps to take possession and has not shown any inclination to commence the work of Phase II of the project and continued to misread the agreement by linking the Phase I and commencement of Phase II of the project in an untenable manner. Similarly with regard to the delay in appointment of independent engineer and non Page 4/10 http://www.judis.nic.in O.A.No.286 of 2020 approval of project estimate cost is also denied. Hence it is the contention that the Bank Guarantee is an independent contract and the applicant cannot seek any order of injunction.
4. Heard both sides and perused the materials available on record.
5. When the matter came up before this Court on 07.08.2020 this Court granted status quo and after hearing both sides taking into fact that the main dispute appears with regard to the delay and both sides making allegations against each other on the delay aspect this Court at paragraph no.2 of the order has recorded as follows:-
“2. Whether or not the delay is attributed to the applicant or respondent is matter of evidence. It cannot be decided at this stage. Though, the BG binds a bank, the performance of underlying contract is relevant for ascertaining the facts. This Court is of the view that as the issue is very simple and narrowed down and the same can be referred to the arbitration for resolution as per the contract. The contract provides for two tier resolution dispute. First is the mediation. Accordingly, both sides are directed to have a meeting through ZOOM virtual hearing before 14.08.2020 and to see that if there is any possible mediation effected between the parties and report before this Court on 17.08.2020. The direction to deposit the Page 5/10 http://www.judis.nic.in O.A.No.286 of 2020 amount will not have any effect in the merit of the case. The status quo already granted is ordered to continue till then”.
6. Taking note of the fact that the Bank Guarantee is an independent contract unless the egregious fraud or either irreparable injury is shown by the applicant the respondent cannot be injuncted and directed the applicant to deposit a sum of Rs.10,00,00,000/- (Ten Crores only), taking note of the fact that out of Rs.63,50,00,000/- what was sought to be enforced is only Rs.29,59,73,500/- therefore this Court directed the applicant to deposit Rs.10 crores to the respondent and in pursuant to the order of this Court the applicant has deposited Rs.10,00,00,000/- (Ten Crores only). This Court also taking note of the contract governing the parties directed the parties to go for mediation and directed to have mediation through ZOOM before hearing 14.08.2020.
7. Now it appears that mediation also conveyed pursuant to the direction of this Court. However no resolution have been reached between the parties, in the meanwhile the Applicant has nominated Hon'ble Justice Mr.B.S.Chauhan, Former Judge, Hon'ble Supreme Court of India as an arbitrator on their side. Mr.Arun Mohan, learned counsel submitted that the respondent also nominated their arbitrator accordingly they have nominated Hon'ble Tmt.Justice R.Banumathi, Former Page 6/10 http://www.judis.nic.in O.A.No.286 of 2020 Judge, Hon'ble Supreme Court of India. This Court is of the view that since both sides have already nominated their arbitrators instead of going into merits of the case particularly whether or not the delay is attributed to the respondent, leave the matter to the decision of the arbitrators.
8. In such view of the matter, this Court is of the view that taking note of the nature of the work and there is no allegation with regard to the quality of the work, a sum of Rs.10,00,00,000/- (Rupees Ten Crores only) have already been secured by way of deposit before the Respondent. This Court is of the view that since both sides have nominated their arbitrators, this matter can be referred to arbitral tribunal itself on the following observations, so that the interest on both sides will be protected.
i) The two nominated arbitrators are requested to nominate the Presiding Officer expeditiously within a period of one month from the date of receipt of a copy of this order.
ii) Till the claim is filed by applicant before Arbitral Tribunal respondent is directed to maintain status quo for the remaining amount covered under the Bank Guarantee as their interest is Page 7/10 http://www.judis.nic.in O.A.No.286 of 2020 also protected partially namely Rs.10 crores has been deposited.
iii) Thereafter it is also open to the applicant to approach the arbitral tribunal for any interim measures under Section 17 of the Act.
iv) The applicant shall file claim statement within one month of the constitution of Arbitral Tribunal.
v) Fees of the arbitrators shall be fixed as per the schedule of the Act.
vi) Learned Arbitral Tribunal shall make every endeavour to dispose the matter expeditiously as per law.
9. With the above observations, the Original application is disposed of.
10.09.2020 Index: Yes/No Speaking order/Non speaking order dpq Page 8/10 http://www.judis.nic.in O.A.No.286 of 2020 Copy to:
1. The Hon'ble Mr. Justice B.S. Chauhan B-Wing, Lok Nayak Bhawan, Khan Market, New Delhi - 110003.
2. The Hon'ble Tmt. Justice R. Banumathi C-20, Ground Floor, Defence Colony, New Delhi 110024.
Note: Registry is directed to send order copy to the Hon'ble Judges, at once.
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