Andhra Pradesh High Court - Amravati
Devi Engineering And Construction ... vs Container Corporation Of India Concor ... on 3 February, 2021
Author: R. Raghunandan Rao
Bench: R. Raghunandan Rao
HON'BLE SRI JUSTICE R. RAGHUNANDAN RAO
WRIT PETITION No.23282 of 2020
ORDER:
The petitioner which is engaged in the field of construction and executes EPC Work Contracts and Oil Field Service Contracts, was the successful tenderer in a tender floated by the 1st respondent, for construction of a warehouse in Kakinada Port at a cost of Rs.3959.22 lakhs. The contract was to be executed within a period of 18 months from the date of letter of acceptance. The said letter of acceptance was issued on 01.05.2018 and an agreement dated 18.6.2018, was also executed. Under the terms of the letter of acceptance and the agreement, the contract was to commence from 15.05.2018 and the schedule date of completion was 14.11.2019. The petitioner also submitted a performance bank guarantee for an amount of Rs.1,63,36,113/- and submitted a security deposit for Rs.1,63,36,113/-.
2. The execution of the contract was not completed by 14.11.2019 as initially contracted. The 1st respondent had granted various extensions of time for the completion of the contract. The last such extension was given by a letter dated 28.08.2020, where time for completion was extended to 28.02.2021.
3. While, the petitioner was seeking to complete the contract, the 1st respondent issued a notice of termination dated 20.11.2020, calling upon the petitioner to complete the execution of contract within 7 days from the date of such notice, failing which, the contract would be terminated. Subsequently, the 1st respondent issued another termination notice dated 04.12.2020 2 RRR,J W.P.No.23282 of 2020 calling upon the petitioner to complete the balance of work within 48 hours, failing which, the 1st respondent would terminate the contract, forfeit the security deposit and encash the bank guarantee. At that stage, the petitioner has approached this Court by impugning the notice dated 04.12.2020 and for a direction to the respondents not to encash the bank guarantee dated 01.06.2018 issued by the petitioner through the 3rd respondent bank.
4. This Court by an order dated 07.12.2020 restrained respondent Nos.1 and 2 from invoking the bank guarantee dated 01.06.2018 initially for a period of three weeks. The said interim direction was extended from time to time.
5. The petitioner has set out various facts to contend that the delay in execution of the contract was on account of the actions of respondent Nos.1 and 2 and the petitioner cannot be held liable for such delays. The petitioner also contended that the 1st respondent having given time till 28.02.2021 to execute the project, suddenly turned around and called upon the petitioner to complete the work within 7 days by notice dated 20.11.2020 and within 48 hours by notice dated 04.12.2020. It is the case of the petitioner that such demands by the 1st respondent are clearly arbitrary, high handed and violative of Article 14 of the Constitution of India.
6. The respondent Nos.1 and 2 after notice had filed their counter along with certain material papers.
3 RRR,J W.P.No.23282 of 2020
7. The respondents raised preliminary objections to the maintainability of the writ petition. The Respondents contend that the writ petition is nothing but a civil suit for specific performance of agreement and injunction restraining the respondents from invoking the bank guarantee. It is submitted that the issues raised in the writ petition relate to a non statutory contract between the petitioner and the respondents, and same would not be maintainable especially in view of the fact that there is a provision for arbitration in the contract itself. The Writ Petition raises various issues of facts which cannot be decided in a Writ proceeding. The respondents have also set out various facts to contend that the delay in the execution of the project was not on their account. The respondents submit that despite the grant of additional time, the petitioner did not take any steps for execution of the contract. The respondents would point to the notice dated 20.11.2020 which set out all the details of the various letters sent by the respondents to the petitioner informing the petitioner that no work activity was going on at the site and calling upon the petitioner to undertake work to the satisfaction of the respondents. It is the case of the respondents that extension of time to the petitioner did not result in any change in attitude of the petitioner and that the petitioner had not taken up any constructive activity in October and November, 2020, because of which the respondents had to issue the notice dated 20.11.2020 and 04.12.2020. These notices were essentially issued for the purposes of galvanising the petitioner into taking effective steps for execution of contract. As the petitioner did not respond to these notices, it would be clear 4 RRR,J W.P.No.23282 of 2020 that the petitioner is not any manner interested in completing the project.
8. The contract has been extended beyond the initial date of completion 14.11.2019. The reason for the delay is a matter of controversy and both parties have their own versions as to why there is such delay. These are questions of fact into which, this Court cannot go into, as such issues require a proper hearing and after parties have adduced necessary evidence to that effect. It should also be noticed that there is an adequate remedy to the petitioner by way of Clause 17-B of GCC on the agreement dated 18.06.2018 which provides for reference of all disputes to arbitration.
9. Coming to the invocation of bank guarantee, it is settled law that an injunction restraining the invocation of a bank guarantee can be issued only on grounds of fraud or on grounds of impossibility of recovery of the bank guarantee amounts. In this case, neither ground is pleaded or argued. In the circumstances, there cannot be any injunction restraining the invocation of bank guarantees, on account of the effect of such invocation on the financial health of the Petitioner. However, since the petitioner is being relegated to an alternative remedy, it would only be appropriate to grant an opportunity to the petitioner to raise such issues, as may be permissible, to protect the interest of the petitioner relating to the invocation of the bank guarantee.
10. In these circumstances, the present writ petition is dismissed, leaving it open to the petitioner to avail of such remedies, as are available to the petitioner. As far as bank 5 RRR,J W.P.No.23282 of 2020 guarantee dated 01.06.2018 drawn on the 3rd respondent is concerned, there shall be an injunction restraining the respondent Nos.1 and 2 from invoking the said bank guarantee for a period of three (3) weeks. There shall be no order as to costs.
As a sequel, pending miscellaneous petitions, if any, shall stand closed.
____________________________ R. RAGHUNANDAN RAO, J.
03.02.2021 Sdp 6 RRR,J W.P.No.23282 of 2020 HON'BLE SRI JUSTICE R. RAGHUNANDAN RAO WRIT PETITION No.23282 of 2020 03.02.20121 Sdp.