Calcutta High Court
Simplex Infrastructures Limited vs Principal Secretary on 18 July, 2024
OCD-8
IN THE HIGH COURT AT CALCUTTA
COMMERCIAL DIVISION
ORIGINAL SIDE
G.A. (Com) No. 1 of 2024
In
C.S. (COM) No. 727 of 2024
SIMPLEX INFRASTRUCTURES LIMITED
-VS-
PRINCIPAL SECRETARY, HOUSING DEPARTMENT, GOVERNMENT OF
WEST BENGAL & ORS.
BEFORE:
The Hon'ble JUSTICE KRISHNA RAO
Dated: 18.07.2024
Appearance:
Mr. Mainak Bose, Adv.
Rupak Ghosh, Adv.
Biswarup Acharya, Adv.
... For the petitioner/plaintiff.
Mr. Kishore Dutta, Ld. Advocate General
Anirban Ray, Adv.
... For the respondents/defendants.
ORDER
1. The petitioner has filed the present application praying for ad interim order. The respondent no. 2 floated a tender for the purpose of 2 construction of a project having 3024 nos. of flats along with other amenities at Bijay Nagar and Daskeary under RCFA Project at Ranigunj for rehabilitation. The petitioner has participated in the said tender and being successful bidder, the respondent no. 2 issued a formal work order for a sum of Rs.189,98,57,129/- in favour of the petitioner company on 5th March, 2018.
2. The time for execution of work under the said contract was 450 days which was to be commenced from 19th March, 2018. As per the contract, the petitioner is to furnish two Bank Guarantees, one being the advance bank guarantee and another being the performance bank guarantee each to the tune of 10% of the contract value. The petitioner duly furnished the mobilization advanced bank guarantee and performance bank guarantee on 13th March, 2018, being Bank Guarantee No. 092BGPR1807200003 for a sum of Rs.18,99,85,713/-. The performance bank guarantee was last extended on 3rd May, 2024 and is valid till 5th August, 2024.
3. Initially, the execution of the contract was smoothly progressing but subsequently the petitioner faced difficulties with the execution of the project due to reasons attributable to the respondent nos. 2 to 4 for lack of funds at the end of respondent nos. 2 to 4 and accordingly the petitioner has requested the extension of time for completion of work till 30th June, 2022. Due to cash crunch at the end of respondent nos. 2 to 4, no work could be carried out by the petitioner at the work site since June, 2021. Ultimately, the respondent nos. 2 to 4 had extended the 3 time for completion of project till 30th June, 2023. Due to delay at the end of the respondent nos. 2 to 4 and due to increase in the price of materials, the petitioner proposed to foreclose the project in terms of the contract and the petitioner requested the respondents to depute the representative at the work site for joint measurement of the work in progress and also requested to clear the 25th RA bill amounting to Rs. 3 crores. The respondent no. 3 by a letter dated 12th June, 2023, requested the petitioner to depute their representative for joint measurement of the work. On 18th September, 2023, the respondent no. 3 fixed a meeting on 21st September, 2023 at 2.00 p.m. for foreclose of the project. The petitioner company attended the meeting but on perusal of the Minutes of the Meeting, it is found that for the purpose of joint measurement at work site, a life threat being faced by the representatives of the petitioner company, accordingly, the petitioner has requested for police protection as a measure of safety. On 27th June, 2024, the respondent no. 3 had issued a letter to the petitioner company requesting for clearance of site and removal of plants and equipment from the project site. It was also informed by the respondent no. 3 that since project stood foreclosed on 12th June, 2023 and it was obligatory on the part of the petitioner to clear the site and to remove all the machineries from the work site.
4. Mr. Mainak Bose, Learned Advocate representing the petitioner submits that all of a sudden on 12th July, 2024, the respondent no. 4 issued a notice to the respondent no. 5 requesting immediate encashment of the 4 performance bank guarantee furnished by the petitioner. He submits that the notice dated 12th July, 2024, for invocation of performance bank guarantee was never made to the petitioner company and the petitioner company manages to get hold of the notice of invocation of performance bank guarantee.
5. Mr. Bose submits that the performance bank guarantee is being sought to be invoked on the ground that there is requirement of invocation of the performance bank guarantee by the competent higher authority and solely on the said reason, the respondent directorate had requested the respondent no. 4 bank to invoke the performance bank guarantee.
6. Mr. Bose submits that the petitioner has furnished the performance bank guarantee to secure its performance under the contract and is intrinsically linked to the aspect of the performance under the contract and as such the grounds for invocation of performance bank guarantee on the ground of the requirement of the Higher Authority is dehors the terms of the performance bank guarantee.
7. Mr. Bose submits that the terms of the clauses of the performance bank guarantee for invocation which clearly states that the respondents directorate has to raise a demand stating that the amount claimed is required to meet the recovery of dues currently or likely to be due from the petitioner company. He submits that the letter of invocation does not speak any sum being due and payable by the petitioner company to the respondents.
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8. Mr. Bose submits that the requirement for the purpose of invoking the Bank Guarantee, i.e. demand has to be raised by the respondent directorate against the petitioner is conspicuously absent and is dehors the terms of the performance bank guarantee.
9. Mr. Bose in support of his submission relied upon the following judgments:
i. 2016 SCC OnLine Cal 3417 (M/s. Felguera Gruas India Pvt. Ltd. -vs- M/s. Phoenix Conveyor Belt Inida Pvt. Ltd. & Anr.).
ii. (1999) 8 SCC 436 (Hindustan Construction Co.
Ltd. -vs- State of Bihar & Ors.
iii. Unreported judgment in the case of M/s. KSE Electricals Pvt. Ltd. -vs- The Project Director, Bangladesh Rural Electrification Board & Anr.) passed in A.P. 230 of 2021.
10. Mr. Kishore Dutta, Learned Advocate General representing the respondent nos. 1 to 4 submits that the petitioner only on the basis of the communication dated 12th July, 2024 has filed the present suit and prayed for interim order but the petitioner has not enclosed the document annexed with the said letter which was forwarded to the bank wherein specific reasons have been assigned.
11. Learned Advocate General submits that along with the letter dated 12th July, 2024, the respondent no. 4 has forwarded all original Bank Guarantee with legal compliance certificate, copy of front page of bank 6 passbook, copy of cheque leaf for ready reference and copy of correspondence of Higher Authority.
12. Learned Advocate General has handed over the note sheets containing six pages after serving copy to the Learned Counsel for the petitioner and submits that the correspondence of the higher authority which is mentioned in the letter dated 12th July, 2024, is of the same which was forwarded to the respondent no. 5. Mr. Dutta submits that in the said note sheets, the requirement for invocation of the Bank Guarantee is categorically mentioned and the competent authority has approved the same for revocation of the Bank Guarantee of the petitioner.
13. Learned Advocate General submits that in the said note sheets, it is categorically mentioned that the suspension of work by 674 days by the contractor has caused in execution of the work and hence, the delay shall be treated as unauthorized delay by the contractor.
14. Learned Advocate General submits that as per clause 8.7 of the contract, the amount of delay damages cannot be exceed 10% of the contract value and as such the amount of delay damages of the petitioner comes to Rs. 18,99,85,713/-.
15. Learned Advocate General further submits that as per Section 80 (2) of the Code of Civil Procedure, 1908, the Court shall not grant relief in the suit whether interim or otherwise, except after giving to the Government or public Officer, as the case may be, a reasonable opportunity of showing cause in respect of the relief prayed in the suit. 7 He submits that in the present suit, though this Court has granted leave to the petitioner under Section 80(2) of the Code of Civil Procedure, 1908 and as such before passing any interim order, a show cause notice is to be issued to the Government to explain as to why the interim order shall not be granted.
16. Learned Advocate General has relied upon the following judgments:
i. (2006) 13 SCC 599 (Reliance Salt Ltd. -vs-
Cosmos Enterprises & Anr.).
ii. (2008) 1 SCC 544 (Vinitec Electronics Private Limited -vs- HCL Infosystems Ltd.).
iii. 2013 SCC OnLine Cal 15454 (M/s. Sarda Energy & Mineral Ltd. & Anr. -vs- W.B. Power Development Corporation Ltd. & Ors.).
17. Heard the Learned Counsel for the respective parties, perused the materials on record. The petitioner has filed the suit and prayed for leave under Section 80(2) of the Code of Civil Procedure,1908. This Court granted leave to the petitioner to file the suit without issuance of notice under Section 80(1) of the CPC to the respondents. Now, the plaintiff moves an application for grant of ad interim order. The petitioner had also sent the copy of the interlocutory application to the respondents and on receipt of notice, the Learned Advocate General appeared on behalf of the respondents.
Section 80(2) of the Code of Civil Procedure, 1908, reads as follows:
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"80. Notice.- (2) A suit to obtain an urgent or immediate relief against the Government (including the Government of the State of Jammu and Kashmir) or any public officer in respect of any act purporting to be done by such public officer in his official capacity, may be instituted, with the leave of the Court, without serving any notice as required by sub-section (1); but the Court shall not grant relief in the suit, whether interim or otherwise, except after giving to the Government or public officer, as the case may be, a reasonable opportunity of showing cause in respect of the relief prayed for in the suit:
Provided that the Court shall, if it is satisfied, after hearing the parties, that no urgent or immediate relief need be granted in the suit, return the plaint for presentation to it after complying with the requirements of sub-section (1)."
18. Learned Advocate General emphasis upon issuance of show cause notice for giving a reasonable opportunity of hearing to the respondents in terms of Section 80(2) of the Code of Civil Procedure, 1908.
19. Mr. Bose, Learned Senior Advocate, representing the petitioner submits that Section 80(2) of the Code of Civil Procedure, 1908, has been introduced in the amended Code of Civil Procedure, 1908, with a view to mitigate the rigorous of Sub-Section 1 of Section 80 and to enable a person to seek urgent and immediate relief.
20. In the present case, admittedly, the petitioner has not issued notice under Section 80 (1) of the Code of Civil Procedure, 1908, to the respondents before initiation of the present suit. On the prayer made by the Counsel for the petitioner and considering the urgency, this Court granted leave under Section 80(2) of the Code of Civil Procedure, 1908, 9 to file suit without issuance of notice. Now, the question whether without issuance of show cause, an interim order can be passed. Admittedly, the petitioner has filed the suit against the Government. As per sub-section 2 of Section 80 of the CPC, 1908, a suit can be filed for immediate relief against the government or any public servant with the leave of the Court but the Court shall not grant relief in the suit whether interim or otherwise except after giving to the Government or the Public Officer as the case may be, a reasonable opportunity of showing cause in respect of the relief prayed for in the suit.
21. In the present case, the petitioner has issued notice to the respondents and the respondents have appeared as per the notice, though the parties have argued the matter but Learned Advocate General raised the point that as per Sub-section 2 of Section 80, a show cause notice is to be issued by this Court for giving reasonable opportunity to the respondents.
22. Considering the above, this Court is of the view that though the petitioner of its own and without any order of the Court has issued notice to the respondents and the respondents have appeared through the Learned Advocate General but sub-section 2 of Section 80 provides for issuance of show cause and reasonable opportunity of hearing.
23. In view of the above, this Court is of the view before passing any interim order, a show cause notice is to be issued upon the respondents to 10 show cause as to why interim order as prayed for by the petitioner shall not be granted.
24. In view of the above, ad interim prayer of the petitioner is refused. Issue show cause notice upon the respondents to explain within 7 days from the date of receipt of the show cause notice as to why the interim order as prayed for by the petitioner shall not be granted.
25. Let the matter appear after seven (7) days of issuance of show cause notice upon the respondents.
(KRISHNA RAO, J) p.d/-