Full Text
FAO(OS) 374/2013
M/S.DSC LTD. Petitioner
Through : Dr. A.M.Singhvi, Sr. Adv. Mr. Abhijat and Mr. Hari Haran, Advs.
Through ; Mr. Anil Seth, Adv.
HON'BLE MR. JUSTICE NAJMIWAZIRI
19.08.2013 The present appeal questions an order of the learned Single
Judge of 14^^ August, 2013 dismissing an application under Section 9 ofthe Arbitration & Conciliation Act, 1996.
The appellant was awarded a contract pursuant to a notice inviting tender by the respondent on 6^^^ October, 2007 for construction of roadbed, major and minor bridges, track linking and allied works. The appellant is a joint venture of two companies; its bid was accepted by a letter dated 15^^ April, 2008 which conveyed that the tenure of the contract was 24 months and the works were scheduled to commence within 42 days of the receipt of the letter of:
2013:DHC:7052-DB acceptance,i.e. the contractwasto commence on25"February, 2008 and come to an end on 24- August, 2010. The appellant had urged that the respondent had made available only 63.7 kilometers of the land, i.e. a part of the total site and that this amounted to a breach ofthe contract which inhibited the respondents fi-om invoking the performance guarantee. The learned Single Judge after considering the submissions ofthe parties and the materials on , I record concluded that no ground had been made out for mterdictmg the invocation of the bank guarantee - i.e. the relief sought mthe proceedings before him.
Dr. Singhvi, learned senior counsel for the appellant submits that the findings regarding absence of special equities in the present case were not warranted. He relied upon a chart or table, which is part ofthe pleadings, to submitthat out ofthe 11 stretches which w^re the subject matter ofthe award, some lands were made available only in certain stretches, though they were required in full for the necessary construction activities . It was urged that there are only two sections ofland where the entire stretch ofland was made available.
Learned senior counsel also relied upon the previous order of this
Court in W.P.(C) 1453/2013 titled M/s. DSC Ltd. v. Union of India
And Anr. passed on 19^ July, 2013 to say that the Court had granted
It liberty to seek suitable orders under Section 9 of the Arbitration &
Conciliation Act, 1996. It was submitted that even though the question offraud had been given up inthose proceedings, the plea of special equities would survive and the learned Single Judge fell into an error in holding that the appellant did not satisfy that condition.
Counsel also relied upon Section 67 of the Indian Contract Act, 1872 •. in support of the submission that special equities can said t'6 have arisen in the present case because the necessary facilities for the performance ofthe contract had not been extended by the respbhident.
The learned Single Judge inthe impugned order has notified the extremely limited scope ofthe Court's jurisdiction when applications
' i for interdicting with invocation ofbank guarantees are mad|i! He noticed the relevant rulings of the Supreme Court. This Court does not propose to deal with these propositions oflaw, as there cai^6t be any question as to their validity. However, what is of particular interest and relevance in these proceedings are the follpWing observations and firidings ofthe learned Single Judge:- '
I • : nill:.'
; isJUr"' "24.9Itwas submitted by Mr. Seth that 7block sectid)^ comprised of land equivalent to 71.28 hns, which handed over to the JV in June, 2008. This stretch , 71.28 KMs, according to Mr. Seth, had from day-me permission available from the forest department, for felling trees. It was contended that apartfrom the abqve. there was no hindrance in the JV executing the work with respectto: building stations, staffquarters andplatform^: as each station or block section, was independent ofeach other. It was submitted that, while the JV could haye executed work worth Rs 160 crores, it actually executed' work valued at Rs 90 crores, as indicated above, in 58 months, till March, 2013.
ORDER
25. Mr Seth sought to rely upon letter dated 19.03.2012 oftheRVNL, which is again subject matter of the writ proceeding, to demonstrate that there were^ -jMconstraints in 7 block section, and that, for the last-hfiie,'; year, no work had been carried out by the JV in block sections out of the 7, which remain unimpedii from day one. • 'i | 25.[1] In so far as permission for felling trees concerned, Mr. Seth submitted that the requ^e permission was obtained, as indicated above, for Kms of land evenprior to the award of the work JV. It was emphasized that the PMC had explaine^j^j^ the officials ofthe JV, the procedure to be adoptekifm felling trees, and that, ultimately, it was theobligation,^: the JVto obtain the requiredpermission wherever jjybii. required to be obtainedasper terms ofthe contract. '( 25.[2] In so far as drawings were concerned, whicVf}tne JV had to submit, he referred me to clause 8.[3] contract. It was also contended that RVNL hasprovMid^ complete drawings of civil works for 71.28 Kms ofme^ land and the work required to be executed as per tfiose drawings was not executed even till March, 2(\]^ Reliance in this regard was placed on letter datM'.' 30.03.2013 filed in WP(C) 1453/2013. Mr. submitted that there was also case of inadequ^i^ ifiii ';'l. ' I;.': tj deployment of manpower by the JV. Reference regard was placed on letter dated 27.03.2009 in 1453/2013. Amongst, various other letters, relianc^^i^.i: placed on letter dated 15.03.2013 issued by the the JV that it had completely stopped its work 14.03.2013. Mr. Seth submitted that none judgments relied upon were applicable to thefacts case. DSCL, according to Mr. Seth, hadfailed to i^ing^ out a case ofspecial equities ofirretrievable nature. •;;f •' ' l' T The impugned order thereafter proceeded to analyse the contentions and interestingly recorded that the appellant appeared'to be in default even on the performance ofthe work entrusteitfeit:i' "21. Aperusal of the submissions and the ||ij| would show that what the contract required DSCIJ'.t^}'^l^.^ do was to lay a parallel railway line alongwith existing line. The length of the parallel line, envisaged in the contract, is 87.[4] KMs and it evidently spread over 11 block sections. While, DS(M\ contends, the contract required RVNL to give^"^. hindrance free access to the entire stretch of 57.#'',, Kms, RVNL contends to the contrary andhas statia ] ^ before me that, 7blocksections stretching over 7/.2jS 'f ^ Kms were available to DSCL for execution (j);!' right at the stage ofaward ofthe contract itself. ':' Seth, quite candidly, during the course ofarguments 'I'll' stated that RVNL wouldperhaps have had difficulty - DSCL was able to show that it had executed;.;,; entire work over the said 7 block sections, which, I,[1] were completely hindrancefree. ''li;; ^
28. Thefact that DSCL has not been able to execi^'• •;; the work, though time for execution ofthe contr^'i '! expired long ago, was not in dispute. What really-'mi l,• dispute is, the attributability ofthe delay in executic^i, J of the work. Both sides have argued their case witl\ ill • i|- )fV •' m-filil'; vehemence. Submissions made would demonstrate that show cause notices have been issuedfrom time to time by RVNL which have been withdrawn based on assurances given, and as a matter offact, during the execution of the work, RVNL has encashed bank guarantees worth Rs. 7crores. " This Court has considered the submissions of the parties. While there can be no dispute as to the applicability or relevance.of, / Section 67 of the Contract Act, 1872 vis-a-vis performance of contracts, this Court fails to see how the provision would assist the appellant in the present case. The principles governing the Court's approach to actions and claims injimcting the enforcement ofa bank guarantee hardly need repetition. Sans fraud at the stage of the formation of the contract or the existence of special equities, the Court would never entertain applications for injunctions much less grant them. By those standards, ajudge's scrutiny ofthe performance of the underlying contract would indeed be a rare exercise, if ever undertaken. Besides these, the other aspect which this Court notices isthat the appellant had approached on at least two earlier occasions for almost identical reliefs, i.e. restraining the respondents from encashing the bank guarantee. The first instance was atiother I:, J previous Section 9 application, OMP 893/2012, after which the li'i appellant preferred a writ petition being W.P.(C) No.1543/2013. It was successful in obtaining some interim relief on 4*^ March, 2013. In the present case, the respondents were restrained from any, j precipitative action. That order, however, does not appear to record the reasons for the relief granted. This writ petition was finally disposed off on 19*''July, 2013, when the respondents were directed to convert the bank guarantee into a Fixed Deposit inthe name ofthe third attempt, as it were, after the writ petition was disposed offand liberty was expresslygranted. Having regard tothe materials on record as well as the previous litigation, this Court is unpersuaded that any equity as sought to be urged exists warranting interference with the impugned order of August, 2013. The appeal has nomerit and is, therefore, dismissed. Order dasti under signatures of Court Master. Ljlmj '
S. RAVINDRA BHAT, J ^AZIRI,J