Angelique International Ltd. v. Salma Dam Joint Venture (SDJV)

1. For disposal of the captioned application, the relevant facts are that WAPCOS/defendant No.3 (hereafter, ‘WAPCOS’), a Govt. of India Undertaking, invited pre-qualification applications from interested bidders for “Reconstruction, Rehabilitation and completion of Salma Dam Project (3x14 MW), Afghanistan, Package-III: Main Civil and Hydro Mechanical Works” (hereafter, ‘the Project’).

2. Plaintiff and defendant No.2 executed a joint venture agreement dated 09.09.2005 (hereafter, ‘the Agreement’), leading to the formation of the SDJV/defendant No.1 (hereafter, ‘JV’), which submitted its bid to WAPCOS, and were ultimately declared as the successful bidder. The project was awarded to the JV vide Letter of Award dated 17.01.2006. Later, an addendum dated 29.03.2006 was also entered into w.r.t the said Agreement.

3. Plaintiff has claimed that in terms of clause 4.[3] of the Agreement, pursuant to an understanding/agreement dated 24/25.01.2006, the scope of work of both parties of the JV was defined. Per the same, plaintiff furnished a bank guarantee of Rs.8,07,90,465/-, while defendant No.2 furnished a bank guarantee of Rs.17,30,53,000/-, both of which were in favour of WAPCOS. Subsequently, a formal contract dated 09.03.2006 (hereafter, ‘the Contract’) was entered into between WAPCOS and the JV. The Agreement and the bank guarantees were made part of the said Contract. The project was completed, however, retention amount of Rs.1,61,08,04,915/- remains payable by WAPCOS to JV. In the aforesaid backdrop, the plaintiff has preferred the present suit for rendition of accounts, along with ancillary reliefs including that of injunction.

4. The point in dispute is whether the shares of the parties are governed by the Contract or by the addendum. Plaintiff claims that by virtue of the addendum, which according to it was acted upon by the parties and also approved by WAPCOS, the scope of work as defined earlier by the Contract, came to be altered. While plaintiff’s scope of work and share increased from 5% to 35%, defendant No.2’s scope of work and share reduced from 95% to 65%.

5. To contend that the parties also acted on the addendum, reference was made to Clause 5.1, in terms of which the plaintiff and defendant No.2 furnished separate bank guarantees in the ratio of 35% to 65% respectively. Plaintiff also claims that the addendum was approved. It is stated that plaintiff forwarded the addendum to WAPCOS for approval vide request letter dated 06.03.2009 as well as reminders dated 03.11.2009, 20.04.2011 and 25.03.2013, which were also signed by defendant No.2. WAPCOS did not reject the same, which meant an implied approval. In doing so, WAPCOS acknowledged the increase in plaintiff’s stake to 35% and the decrease in defendant No.2’s stake to 65%.

6. Application is also pressed on the ground that defendant No.2’s net worth has fallen to Rs.14.31 crores, while its long-term borrowing is up by Rs.318.44 crores (as on 31.03.2021), an averment which is not denied by the JV and defendant No.2 in their reply. Reference was also made to the order dated 09.12.2015 passed by DRT, Bangalore in O.A. No. 636/2013, whereby defendant No.2 was directed to deposit the surplus sale proceeds received by it, on behalf of JV, to the loan account in Allahabad Bank. Thus, vide the said order, DRT has attached the amount payable by WAPCOS to defendant No.1. Lastly, it is submitted that, in case the retention money lying with WAPCOS, is released to defendant No.1, the same will be misappropriated by defendant No.2.

7. The JV & defendant No.2, though admitting the factum of execution of addendum, have contended that it was neither acted upon nor expressly approved by WAPCOS, in terms of Clause 3.[7] of the Contract.

8. To contend that the addendum never came into force, reference was made to Clause H of the Addendum which provided that the plaintiff and defendant No.2 would open separate bank accounts, to receive payments corresponding to their share. Further, as per Clause 1.14 of the FIDIC Conditions of Contract for Construction, which as per the Letter of Award were to be read in conjunction with the conditions of the Contract, the Contractor was prohibited from altering its composition and legal status, without prior approval of the employer, which in the present case is WAPCOS. In fact, plaintiff never intended to act on the addendum, as it sought WAPCOS’s approval for the first time on 06.03.2009 i.e., after a delay of almost 3 years.

WAPCOS never granted approval to the addendum as reflected in WAPCOS’ letter dated 14.08.2016, which has mentioned plaintiff’s share as 5%. The Contract was amended on 09.06.2015, but addendum was not incorporated into it. Reference was also made to the income tax return filed on behalf of JV, where respective shares of plaintiff and defendant No.2 were mentioned as 5% and 95% respectively.

9. In the captioned application, plaintiff has sought following prayers: “(a) Order dated 05.09.2016 passed by this Hon'ble Court and order dated 21.05.2018 and 12.04.2022 passed by Hon'ble Supreme Court be continued and WAPCOS may kindly be directed to deposit the amount payable to Defendant No[1], in this Hon'ble Court; (b) Ex-parte order in terms of prayer (a).”

10. Pertinently, the captioned application was listed on 06.05.2022, when learned counsel appearing for JV and defendant No.2, gave a statement that they would not take any precipitate steps towards the release of the amount from WAPCOS, till the next date of hearing. The statement came to be made in light of the order dated 05.09.2016 passed in OMP (I) (COMM) 70/2016. Even the Supreme Court vide order dated 21.05.2018 passed in SLP (C) No.13044/2018 directed that the interim arrangement between the parties as agreed on 05.09.2016 would continue to operate. The order also recorded ‘no objection’ on behalf of defendant No.2.

11. Learned Senior Counsels appearing for the parties addressed extensive submissions. Though in the present proceedings, WAPCOS has stated that the addendum was never approved, however, as per plaintiff, WAPCOS has taken a contradictory stand in SLP 26555/2017 filed by it, in allied proceedings, in the following terms:

12. It is worthwhile to note that the parties have setup their respective claims, which would depend on the issue, whether the addendum was approved by WAPCOS and was acted upon by the parties. In the considered opinion of this Court, the aforesaid issue would require to be proved at trial stage, by way of leading evidence.

13. Pertinently, WAPCOS has not denied that the retention money held by it, is payable to JV, however, it has taken a stand that the same is subject to JV providing a Final Statement as per clause 14.11 of the GCC. Moreover, Plaintiff has claimed to have withdrawn its authority given to defendant No.2 with immediate effect vide its Board Resolution dated 21.09.2016.