Calcutta High Court
Simplex Infrastructures Ltd vs Siemens Llc Emts And Ors on 27 January, 2020
Author: Debangsu Basak
Bench: Debangsu Basak
GA 1008 OF 2019
WITH
CS 84 OF 2019
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
SIMPLEX INFRASTRUCTURES LTD.
Versus
SIEMENS LLC EMTS AND ORS.
For Petitioner : Mr. Prithwiraj Sinha
Mr. Soumen Ghosh, Adv.
Mr. Abhishek Banerjee, Adv.
For Respondent No.2 to 4 : Mr. Soorjya Ganguli, Adv.
Ms. Pooja Chakrabarti, Adv.
Ms. Somdutta Bhattacharyya, Adv.
Mr. Radhika Misra, Adv.
Mr. Debjyoti Saha, Adv.
Hearing concluded on : January 27, 2020 Judgement on : January 27, 2020 DEBANGSU BASAK, J. :-
In a suit for declaration and injunction, the plaintiff seeks an order of injunction restraining the defendants from receiving any amount under the counter guarantees issued by the defendant Nos.2 and 3 to the defendant No.4.
2
Learned Advocate appearing for the plaintiff submits that, the defendant No.1 is the beneficiary of two types of bank guarantees. The two types are performance bank guarantees and mobilization advance bank guarantees. He submits that, the defendant No.1 placed an order for construction upon the plaintiff. In terms of such contract, the plaintiff was required to issue bank guarantees in favour of the defendant No.1. The plaintiff caused the defendant No.4 to issue the bank guarantees to the defendant No.1. In turn, the defendant Nos.2 and 3 issued bank guarantees to the defendant No.4 on behalf of the plaintiff securing the defendant No.4 against any claim that may be lodged by the defendant No.1 on the defendant No.4 for the bank guarantees which the defendant No.4 issued to the defendant No.1.
Referring to the facts of the case, he submits that, the plaintiff executed the work to the complete satisfaction of the defendant No.1. He submits that, since, the work was completed to the satisfaction of the defendant No.1, the question of invocation of the performance bank guarantees did not arise. So far as, mobilization advance bank guarantee is concerned, he submits that, the defendant No.1 retained a large portion of the bills raised by the plaintiff leaving only a paltry 3 sum of Rs.46,432.77 as payable by the defendant No.1 to the plaintiff. The final bill is yet to be settled. The defendant No.1 is not remediless on the mobilization advance aspect. The defendant No.1, therefore, could not have invoked any of the performance or the mobilization advance bank guarantees issued by the defendant No.4. The defendant No.4 would not have involved the bank guarantees issued by the defendant Nos. 2 and 3 to it.
In the facts and circumstances of the present case, he submits that, there are special equities intervening in favour of the plaintiff requiring restraint on the invocation of the bank guarantees. He submits that, the invocation has to be in accordance with the conditions of the bank guarantees. In the present case, he submits that there is no invocation of the bank guarantee issued by the defendant No. 4 to the defendant No.1. He relies upon 2017 SCC Online Cal 17244 [Rahee GPT (JV) & Ors.] and submits that, when there is a consideration of special equities, an order of injunction on the invocation of a bank guarantee is permissible. He submits that, since, the plaintiff is enjoying an ad interim order, there is no reason why the same should not be directed to be continued till the disposal of the suit.
4
Learned Advocate appearing for the defendant Nos. 2, 3 and 4 submits that, the bank guarantees are unconditional. The defendant No.1 invoked the bank guarantees issued by the defendant No.4. In turn, the defendant No.4 wrote to the defendant Nos. 2 and 3 for payment. There being proper invocation, the bank guarantees are required to be honoured. He submits that, there are no special equities involved. He relies upon (2007) 8 Supreme Court Cases 110 (Himadri Chemicals Industries Ltd. Versus Coal Tar Refining Co.), (2016) 14 Supreme Court Cases 517 (Adani Agri Fresh Limited Versus Mahaboob Sharif And Others) and the judgement and order dated October 17, 2019 passed by the Division Bench in APOT No.123 of 2019 (Bank of Baroda Vs. Simplex Projects Limited & Ors.) in support of his contentions.
The suit is for declaration and injunction. The plaintiff seeks reliefs with regard to the bank guarantees issued on behalf of the plaintiff in favour of the defendant No.1, in the suit. The plaintiffs participated in a tender floated by the defendant No.1 for design, supply, installation and commissioning of one number of 400KV series reactor substation at Dubai and became successful in such tender. A contract was entered into between the plaintiff and the 5 defendant No.1 with regard thereto. Under the contract the plaintiff was required to provide bank guarantees to the defendant No.1 for performance and mobilisation advance. The defendant No.4 issued bank guarantees in favour of the defendant No.1 and the defendant Nos. 2 and 3 in turn, issued bank guarantees to the defendant No.4 to cover the losses that the defendant No.4 may suffer on the invocation of the bank guarantees issued in favour of the defendant No.1. In the present application, the plaintiff seeks reliefs with regard to the bank guarantees issued by the defendant Nos. 2 and 3 to the defendant No. 4. All such defendants are banks.
A sample of the relevant clause of the bank guarantee issued by the defendant Nos. 2 and 3 to the defendant No. 4 is as follows:-
" In consideration of your issuing above guarantee, we hereby give you our counter-guarantee and irrevocably undertake to pay you any sum or sums not exceeding in the aggregate a maximum amount of AED 2,240,645.85 (Dirhams Two million two hundred forty thousand six hundred forty five and Fils eighty five only) plus any present or future taxes levies, imports, duties, charges or withholdings of whatsoever and by whomsoever imposed upon receipt by us of your first written demand by authenticated SWIFT at this 6 office no later than 27.02.2018 stating that you have received a complying demand for payment under your guarantee."
The defendant No.1 invoked the bank guarantees issued by the defendant No. 4 by a letter dated March 26, 2019. This letter is disclosed in the affidavit in opposition of the defendant No. 4. In turn, the defendant No.4 invoked the bank guarantees of the defendant Nos. 2 and 3 by an electronic mail dated April 5, 2019. The invocations are in terms of the bank guarantees. At least, nothing is placed on record to suggest otherwise.
On the principles for grant or refusal to grant an order of injunction restraining enforcement of a bank guarantee or a letter of credit Himadri Chemicals Industries Limited (Supra) is of the following view :-
Adani Agri Fresh Limited (Supra) is of the view that an injunction of an unconditional bank guarantee can be granted only if the Court is satisfied about the fraud at the hand or alternatively, if the Court is satisfied that an irreparable injury or some irretrievable injustice would be caused to the party concerned by the non-grant of an order of injunction. Rahee GPT (JV) & Ors. (Supra) granted an order of injunction, after returning a finding in the facts of that case 7 that special equities existed in favour of grant of an order of injunction. Bank of Baroda (supra) applied the ratio laid down in Himadri Chemicals Industries Limited (supra) and allowed the appeal directed against the order granting injunction in similar facts.
In the facts of the present case, I am unable to arrive at the finding that their exists any special equities in favour of the plaintiff in continuing with the existing order of injunction. The plaintiff is yet to establish any fraud. The guarantees are, on one part from bankers to a bank and on the other part are from a banker to the beneficiary. All these are at the instance of the plaintiff.
There is no material at this stage to suggest that, there was any fraud committed in the issuance of the bank guarantees by the two bankers to a bank. There is also no fraud established in the issuance of the bank guarantees by the defendant No.4 to the defendant No.1.
The Court is not concerned with the contract existing between the plaintiff and the defendant No.1. in a suit relating to bank guarantee or letter of credit issued pursuant to such contract. The contract of bank guarantee or the letter of credit, as the case may be, is an independent and separate contract. Such contract is guided and governed by its own terms. Disputes between the plaintiff and the 8 defendant No. 1 with regard to the contract between them cannot be a ground for issuance of an order of injunction. In the facts of the present case, the plaintiff is trying to set up its disputes with the defendant No. 1 in relation to the contract between them to claim special equities in relation to the independent and separate contract of bank guarantees. The plaintiff may or may not have a case against the defendant No.1 with regard to its claim that the plaintiff executed the work to the complete satisfaction of the defendant No.1. The Court is concerned with the contracts of guarantees are separate and independent. There is no special equity or any other special circumstance existing in favour of the plaintiff to continue with the existing interim order.
In such circumstances, the interim order granted on April 9, 2019 as extended on May 7, 2019 stands vacated.
Old GA No.1008 of 2019, new GA No.1 of 2019 in CS No. 84 of 2019 is disposed of accordingly without any order as to costs.
Stay of operation of this order is prayed for. The same is considered and refused.
(DEBANGSU BASAK, J.) S.De