National Commodities Management Services Limited v. Food Corporation of India

1. This hearing has been done through hybrid mode.

2. The National Commodities Management Services Limited/Petitioner (hereinafter “Petitioner”) has filed the present writ petition against the Food Corporation of India/Respondent No.1 (hereinafter “FCI”) seeking relief in respect of original bank guarantees furnished by it to the FCI.

3. The brief facts of the matter are that a Requests for Proposal (hereinafter “RFP”) were floated by the FCI in May, 2019 in respect of which Concession Agreements dated 28th May, 2019 were entered into with Respondent Nos. 2 and 3, which were two Special Purpose Vehicles (SPVs) set up by the Petitioner. As part of the said RFPs, two performance securities to the tune of Rs.1.38 crores each were furnished to the FCI by Respondent no.2 and 3. On the ground that Respondent Nos. 2 and 3 had failed to satisfy certain conditions imposed as per the Concession Agreements, the FCI had invoked the said two bank guarantees in July, 2022.

4. The Petitioner, in order to save the bank guarantees, transferred a sum of Rs.1.38 crores twice to the FCI to satisfy both the bank guarantees and then sought release of the original bank guarantees from FCI without prejudice to its right and contentions. The said bank guarantees were not released, leading to the filing of the present writ petition. The reliefs prayed in the writ petition are as under: “a. That this Hon'ble Court by a Writ in the nature of Mandamus or any other appropriate Writ, direction or order to direct the Respondent no. 1 to release the original bank guarantees vide BG no: OGT0018190038873 and OGT0018190038872 each amounting to Rs. 1,38,00,000/- respectively deposited by the Petitioner; b. direct the Respondent no. 1 to withdraw its letter dated 22.07.2022 and 29.08.2022 and 30.08.2022, whereby the Respondent no. 1 has requested the Respondent no. 4 to invoke the bank guarantees of the Petitioner and release the amount in their account; c. Pending the hearing and final disposal of the present Petition, Respondent no. 1 it servants, its employees, authorized persons or any person acting on behalf of the Respondents shall not take any coercive and/or precipitative action against the Petitioner with reference to the Bank Guarantees no. OGT0018190038873 and OGT0018190038872 respectively or by invoking and encashing the Bank Guarantees to forfeit the Security Deposit of Rs. 1,38,00,000/- each in both the bank guarantees; d. direct the Respondent No. 4 to not to release the aforementioned Bank Guarantee as the same stands already paid which are 9u1y acknowledged by the Respondent No. 1;”

5. Mr. Jayant Mehta, ld. Sr. Counsel, submits that FCI, having received the entire value of both the bank guarantees, is obligated to release the original bank guarantees.

6. On the other hand, ld. Counsel for FCI submits that the FCI is entitled to encash the said bank guarantees. He submits that the bank guarantees have been furnished by Respondent Nos. 2 and 3 but the cash has been deposited by the Petitioner. Hence as per the agreements, the bank guarantees ought not to be returned but the FCI is willing to return the cash deposited by the Petitioner.

7. The Court has considered the matter. Though, strictly under the Concessions Agreement, FCI may have been entitled to invoke the two bank guarantees, having now received the money i.e., the value of the bank guarantees from the Petitioner on behalf of Respondent Nos.2&3, the FCI cannot claim double benefit. Since the SPVs themselves were floated by the Petitioner and the amounts have been received by the FCI, the bank guarantees are directed to be released to the Petitioner within one week.

8. For the said purpose, the representative of the Petitioner would visit the office of the FCI on 8th December, 2022 to obtain the release of the original bank guarantees from the General Manager, Regional Office, Patna.

9. It is made clear that the above payment being made by the Petitioner, is without prejudice to the case of the Petitioner on merits as also the FCI, which is free to avail of its remedies as per the contract, in accordance with law.

10. The above order is passed in the unique facts of this case and is not to be treated as a precedent.

11. With these observations, the present petition is disposed of.

12. All pending applications, if any, are disposed of.

13. Order dasti.

PRATHIBA M. SINGH, J. DECEMBER 2, 2022