Full Text
HIGH COURT OF DELHI
M/S GARG BUILDERS THROUGH SHRI MOHINDER PAL GARG ..... Petitioner
Through: Mr. Rajshekhar Rao, Sr. Adv. assisted by Mr. Rahul Malhotra, Adv.
Through: Mr. Ankit Jain, Mr. Varun Nischal, Mr. Vaibhav Mishra, Advs. for R-1 with Mr. Mukesh Kumar (Law Officer-
HPL)
Mr. Amol Sharma, Adv. for R-2
M/S GARG BUILDERS THROUGH SHRI MOHINDER PAL GARG ..... Petitioner
Through: Mr. Rajshekhar Rao, Sr. Adv. assisted by Mr. Rahul Malhotra, Adv.
Through: Mr. Ankit Jain, Mr. Varun Nischal, Mr. Vaibhav Mishra, Advs. for R-1 with Mr. Mukesh Kumar (Law Officer-
HPL)
Mr. Amol Sharma, Adv. for R-2
2022:DHC:1670 O.M.Ps.(I) (COMM.) 200/2021, 201/2021 & 202/2021
GARG BUILDERS ..... Petitioner
Through: Mr. Rajshekhar Rao, Sr. Adv. assisted by Mr. Rahul Malhotra, Adv.
Through: Mr. Ankit Jain, Mr. Varun Nischal, Mr. Vaibhav Mishra, Advs. for R-1 with Mr. Mukesh Kumar (Law Officer-
HPL)
Mr. Amol Sharma, Adv. for R-2
JUDGMENT
1. Hindustan Prefab Limited (HPL) invited tenders from interested bidders for construction activities to be carried out at various locations in the country. With respect to three of the tenders thus floated, the petitioner Garg Builders was the successful bidder.
2. Tenders were awarded to the petitioner, by HPL, for carrying out of construction activities at Ghaziabad, Uttar Pradesh, Raipur, Chhattisgarh and Asansol, West Bengal vide Letters of Award dated 3rd March, 2016, 9th January, 2017 and 4th August, 2018, followed by agreements dated 21st March, 2016, 25th January, 2017 and 25th September, 2018 respectively.
3. Each of these Agreements required the petitioner to provide Bank Guarantees towards security deposit as well as Performance 2022:DHC:1670 O.M.Ps.(I) (COMM.) 200/2021, 201/2021 & 202/2021 Bank Guarantee (PBGs). Bank Guarantees, as so required, were undisputedly furnished by the petitioner to HPL. All the Bank Guarantees were issued by HDFC Bank Ltd. (“the Bank”) which is, accordingly, Respondent 2 in these three petitions.
4. Disputes arose between the petitioner and HPL in respect of all these three contracts. The contracts provided for reference of the disputes to arbitration. Accordingly, after following the pre-arbitral regimen stipulated in that regard in the individual agreements, the petitioner moved this Court by way of Arb. P 518 of 2021, Arb. P 473 of 2021 and Arb. P P47 of 2020, respectively.
5. Prior to filing Arb. P 518 of 2021, Arb. P 473 of 2021 and Arb. P 47 of 2020, however, the petitioner moved the captioned three OMPs, under Section 9 of the Arbitration and Conciliation Act, 1996 (“the 1996 Act”), seeking pre-arbitral interim reliefs.
6. The relief sought in these three cases is identical. In each of these cases, the petitioner has averred that HPL had written to the Bank on 1st July, 2021, invoking the Bank Guarantees furnished by the petitioner, and calling upon the Bank to credit the amount secured by the Bank Guarantees into HPL’s account. The petitioner has sought a restraint against such invocation, pending resolution of the disputes between the petitioner and HPL by arbitration.
7. The petitioner was represented, initially, by Mr. Jayant Mehta, learned Senior Counsel, and later, by Mr. Raj Shekhar Rao, learned Senior Counsel, in these matters, whereas Mr. Ankit Jain appeared on behalf of the contesting respondent HPL. They were heard at length. The Bank was represented by Mr. Amol Sharma, who did not choose to advance any argument, as the Bank has no stake in the matter.
8. I proceed to dispose of the captioned OMPs by the present judgment. The relevant facts, and prevailing considerations, being the same in all the three OMPs, they are dealt with together. Facts
9. The details of the contracts in these three OMPs may be tabulated as under: OMP No. Date of Contract Location of work 200 of 2021 25th January, 2017 Raipur 201 of 2021 25th September, 2018 Asansol 202 of 2021 21st March, 2016 Ghaziabad Other specifics of the contracts are of no particular relevance to the determination of the issue in controversy; ergo, reference thereto is eschewed.
10. Nine Bank Guarantees, provided by the petitioner as required by the aforenoted three contracts, form subject matter of these three petitions. The petitioner also provided four Bank Guarantees towards security deposit, the details of which may be tabulated thus: BG No. Dated Amount (₹) Purpose OMP (I) (Comm) 200/2021 003GT0216 17.12.16 3243000/- Security Deposit 003GT0219 11.09.19 2974000/- Security Deposit 003GT0218 06.10.18 7500000/- Security Deposit 003GT0217 30.10.17 3243000/- Security Deposit OMP (I) (Comm) 201/2021 003GT0218 07.08.18 28773504/- Performance OMP (I) (Comm) 202/2021 003GT0216 16.03.16 15172278/- - 003GT0217 16.06.17 2000000/- - 003GT0219 16.09.19 3500000/- - 003GT0218 08.10.18 2500000/- -
11. The operative terms of the aforesaid Bank Guarantees read thus: Bank Guarantee No. 003GT0216352001[2] dated 17th December, 2016 “In consideration of Hindustan Prefab Limited having its Head Office at Jangpura, New Delhi: 110 014 (hereinafter called the “Employer” which expression shall unless repugnant to the subject or context include its successors and assigns) having issued Notice inviting Tender No.HPL/DGM(C)/TC/ESIC/Raipur/2016-17/92 dated 06.12.2016 M/s Garg Builders having its Registered/Head Office at 110, NDM-1, Netaji Subhash Place, Pitampura, New Delhi-110034 (hereinafter called the “Tenderer” who wishes to participate in the said tender for Construction of 100 bedded ESIC Hospital at Raipur, Chhattisgarh and you, have agreed to accept an irrevocable and unconditional Bank Bid Guarantee for and amount of Rs.32,43,000.00 [Rupees Thirty Two Lakh Forty Three Thousand Only] valid up to 20-JUN- 2017 on behalf of the tenderer in lieu of cash Deposit required to be made by the tenderer, as a condition precedent for participation in said tender. We, the HDFC Bank LTD, a body corporate constituted under the Companies Act 1956 having its Registered Office at HDFC Bank House,C.S.No.6/242, Senapati Bapat Marg, Lower Parel (West), Mumbai 4000013 and other places, a Branch at E-13/29, 2nd Floor, Harsha Bhavan, Middle Circle, Connaught Place, New Delhi 110001 (hereinafter referred to as the Bank) do hereby unconditionally and irrevocable guarantee and undertake to pay to the “Employer” on demand without any demur reservation, protest, contest, and recourse to be extent of the said sum of Rs. 32,43,000.00 (Rupees Thirty Two Lakh Forty Three Thousand Only). Any such claim/demand made by the said “Employer” on us shall be conclusive and binding on us irrespective of any dispute or difference raised by the tenderer. This guarantee shall be irrevocable and shall remain valid up to 20-JUN-
2017. If any further extension of this guarantee is required, the same may be granted to such required period on receiving instructions from M/s Garg Builders on whose behalf this guarantee is issued.” Bank Guarantee No. 003GT02192540009 dated 11th September, 2019 “In consideration of the Hindustan Prefab Ltd. having its Head Office at Jangpura, New Delhi (hereinafter called “The Employer”) having offered to accept the terms and conditions of the proposed agreement between Hindustan Prefab Ltd and M/s Garg Builders (hereinafter called “the said Contractor(s)”) for the work Construction of 100 bedded ESIC Hospital at Raipur, Chattisgarh (hereinafter called “the said agreement”) having agreed to production of an irrevocable Bank Guarantee for ₹2,974,000.00 as a security/guarantee from the contractor(s) for compliance of his obligations in accordance with the terms and conditions in the said agreement.
1. We, HDFC Bank Limited, E-13/29, 2nd Floor, Harsha Bhavan, Middle Circle, Connaught Place, New Delhi 110001 (hereinafter referred to as “the Bank”) hereby undertake to pay to the Employer an amount not exceeding ₹2,974,000.00 on demand by the Employer.
2. We HDFC Bank Limited do hereby undertake to pay the amounts due and payable under this Guarantee without any demure, merely on a demand from the Employer stating that the amount claimed as required to meet the recoveries due or likely to be due from the said contractor(s). Any such demand made on the bank shall be conclusive as regards the amount due and payable by the bank under this Guarantee. However, our liability under this guarantee shall be restricted to an amount not exceeding ₹2,974,000.00.
3. We, the said bank further undertake to pay the Employer any money so demanded notwithstanding any dispute or disputes raised by the contractor(s) in any suit or proceeding pending before any court or Tribunal relating thereto, our liability under this present being absolute and unequivocal. The payment so made by us under this guarantee shall be a valid discharge of our liability for payment there under and the Contractor(s) shall have no claim against us for making such payment.” Bank Guarantee No. 003GT02182790007 dated 6th October, Employer”) having offered to accept the terms and conditions of the proposed agreement between Hindustan Prefab Ltd and M/s Garg Builders (hereinafter called “the said contractor(s)”) for the work Construction of 100 bedded ESIC Hospital at Raipur, Chattisgarh (hereinafter called “the said agreement”) having agreed to production of an irrevocable Bank Guarantee for ₹7,500,000.00 (Rupees.SEVENTY FIVE LAKHS ONLY) as security/guarantee from the contractor(s) for compliance of his obligations in accordance with the terms and conditions in the said agreement. (hereinafter referred to as “the Bank”) hereby undertake to pay to the Employer an amount not exceeding ₹7,500,000.00 (Rupees SEVENTY FIVE LAKHS ONLY) on a written demand by Employer.
2. We HDFC Bank Limited (indicate the name of the Bank) do hereby undertake to pay the amounts due and payable under this Guarantee without any demure, merely on a demand from the Employer stating that the amount claimed as required to meet the recoveries due or likely to be due from the said contractor(s). Any such demand made on the bank shall be conclusive as regards the amount due and payable by the bank under this Guarantee. However, our liability under this guarantee shall be restricted to an amount not exceeding ₹7,500,000.00 (Rupees.SEVENTY FIVE LAKHS ONLY). Employer any money so demanded notwithstanding any dispute or disputes raised by the contractor(s) in any suit or proceeding pending before any court or Tribunal relating thereto, our liability under this present being absolute and unequivocal. The payment so made by us under this bond shall be valid discharge of our liability for payment there under and the Contractor(s) shall have no claim against us for making such payment.” Bank Guarantee No. 003GT02173030030 dated 30th October, Head Office at Jangpura, New Delhi (hereinafter called the employer) having offered to accept the terms and conditions of the proposed agreement between Hindustan Prefab Ltd and M/s Garg Builders (hereinafter called “the said contractor(s)”) for the work Construction of 100 bedded ESIC Hospital at Raipur, Chattisgarh (hereinafter called “The said agreement”) having agreed to production of an irrevocable Bank Guarantee for ₹3,243.,000.00 (Rupees Thirty Two Lack Forty Three Thousand only) as security/guarantee from the contractor(s) for compliance of his obligations in accordance with the terms and conditions in the said agreement.
1. We HDFC Bank Limited, incorporated under the Companies Act, 1956 and carrying on the business of banking under the Banking Regulation Act having its registered office at HDFC Bank House, C.S. No. 6/242, Senapati Bapat Marg, Lower Parel (West), Mumbai 400013 and one of its branch office at HDFC Bank Limited, E-13/29, 2nd (hereinafter referred to as “the Bank) hereby undertake to pay to the Government an amount not exceeding ₹3,243,000.00 (Rupees Thirty Two Lakh Forty Three Thousand only) on a written demand by employer.
2. We HDFC Bank Limited do hereby undertake to pay the amount due and payable under this Guarantee without any demure, merely on a written demand from employer stating that the amount claimed is required to meet the recoveries due or likely to be due from the said contractor(s). Any such demand made on the Bank shall be conclusive as regards the amount due and payable by the bank under this Guarantee. However, our liability under this guarantee shall be restricted to an amount not exceeding ₹3,243,000.00 (Rupees Thirty Two Lakh Forty Three Thousand only).
3. We, the said bank further undertake to pay to employer the guaranteed money so demanded notwithstanding any dispute or disputes raised by the contractor(s) in any suit or proceeding pending before any court or Tribunal relating thereto, our liability under this present being absolute and unequivocal. The payment so made by us under this bank guarantee shall be valid discharge of our liability for payment there under and the contractor(s) shall have no claim against us for making such payment.” Bank Guarantee No. 003GT02182190021 dated 7th August, “In consideration of the Hindustan Prefab Ltd.having its Head Office at Jangpura, New Delhi (hereinafter called the employer) having offered to accept the terms and conditions of the proposed agreement between Hindustan Prefab Ltd. and M/s Garg Builders (hereinafter called “the said contractor(s)”) for the work Upgradation from 100 to 150 bedded ESIC Hospital at Asansol, West Bengal (hereinafter called “The said agreement”) having agreed to production of a irrevocable Bank Guarantee for Rs. 28773504/- (rupees TWO CRORE EIGHTY SEVEN LAKHS SEVENTY THREE THOUSAND FIVE HUNDRED AND FOUR RUPEES ONLY.) as security/guarantee from the contractor(s) for compliance of his obligations in accordance with the terms and conditions in the said agreement.
1. We HDFC Bank Limited We HDFC Bank Limited, incorporated under the Companies Act 1956 and carrying on the business of banking under the Banking Regulation Act having its registered office at HDFC Bank House, C.S. No.6/242, Senapati Bapat Marg, Lower Parel (West), Mumbai 400013 and one of its branch office at Hdfc Bank Limited, 1st Floor, Kailash Building, 26, K.g.Marg, New Delhi-110001 (hereinafter referred to as “the Bank) hereby undertake to pay to the government an amount not exceeding Rs.28773504/- (Rupees TWO CRORE EIGHTLY SEVEN LAKHS SEVENTY THREE THOUSAND FIVE HUNDRED AND FOUR RUPEES ONLY) on a written demand by employer.
2. We HDFC Bank Limited do hereby undertake to pay the amount due and payable under the Guarantee without any demure, merely on a written demand from employer stating that the amount claimed is required to meet the recoveries due or likely to be due from the said contractor(s). Any such demand made on the Bank shall be conclusive as regards the amount due and payable by the bank under this Guarantee. However, our liability under this guarantee shall be restricted to an amount not exceeding Rs. 28773504/- (Rupees TWO CRORE EIGHTY SEVEN LAKHS SEVENTY THREE THOUSAND FIVE HUNDRED AND FOUR RUPEES ONLY)
3. We, the said bank further undertake to pay to employer the guaranteed money so demanded not exceeding Rs. 28773504/- (Rupees TWO CRORE EIGHTY SEVEN LAKHS SEVENTY THREE THOUSAND FIVE HUNDRED AND FOUR RUPEES ONLY) notwithstanding any dispute or disputes raised by the contractor(s) in any suit or proceeding pending before any court tor Tribunal relating thereto, our liability under this present being absolute and unequivocal.” Bank Guarantee No. 003GT02171670016 dated 16th June, Employer”) having offered to accept the terms and conditions of the proposed agreement between Hindustan Prefab Ltd. And M/s Garg Builders (hereinafter called “the said contractor(s)”) for the work C/o. of Proposed Infrastructure for 08 Battalion of National Disaster Response Force (NDRF), Ghaziabad (U.P.) (hereinafter called “the said agreement”) having agreed to production of an irrevocable Bank Guarantee for Rs. 20,00,000.00 (Rupees Twenty lakh Only) as a security/guarantee from the contractor(s) for compliance of his obligations in accordance with the terms and conditions in the said agreement.
1. We HDFC Bank LTD, a body corporate constituted under the Companies Act 1956 having its Registered Office at HDFC Bank House, C.S.No.6/242, Sengapati Bapat Marg, Lower Parel (West), Mumbai 4000013 and other places, Branch at E-13/29, 2nd Floor, Harsha Bhavan, Middle circle, Connaught Place, New Delhi 110001 (hereinafter referred to as the Bank) hereby undertake to pay to the Hindustan Prefab Ltd. acting for and on behalf of the Employer as an Agent/Power of Attorney Holder, an amount not exceeding Rs.20,00,000.00/- (Rupees Twenty Lakh Only) on demand by Hindustan Prefab Ltd. for and on behalf of Employer as an Agent/Power of Attorney Holder.
2. We HDFC Bank Limited do hereby undertake to pay the amount due and Payable und this Guarantee without any demur, merely on a demand form by Hindustan Prefab Ltd. for and on behalf of the Employer as an Agent/Power of Attorney Holder stating that the amount claimed is required to meet the recoveries due or likely to be due from the said contractor. Any such demand made on the Bank shall be conclusive as regards the amount due and payable by the Bank under this Guarantee. However, our liability under this Guarantee shall be restricted to an amount not exceeding Rs.20,00,000.00/- (Rupees Twenty Lakh Only).
3. We the Said Bank further under take to pay to the Employer represented by Hindustan Prefab Ltd. for and on behalf of the employer as an Agent/Power of Attorney Holder any Money up to the guaranteed amount so demanded not withstanding any dispute or disputes raised by the Contractor in any suit or proceeding pending before any court or Tribunal relating there to, our liabilities under this present being absolute and unequivocal. The payment so made by us under this Guarantee shall be a valid discharge of our liability for payment there under and the Contractor shall have no claim against us for making such payment.” Bank Guarantee No. 003GT02192590021 dated 16th September, 2019 Employer” ) having offered to accept the terms and conditions of the proposed agreement between Hindustan Prefab Ltd. and M/s Garg Builders (hereinafter called “the said Contractor(s)”) for the work C/o of Proposed Infrastructure for 08 Battalion of National Disaster Response Force (NDRF), Ghaziabad (U.P) (hereinafter called “the said agreement”) having agreed to production of an irrevocable Bank Guarantee for Rs.3,50,000.00 as a security/guarantee from the contractor(s) for compliance of his obligations in accordance with the terms and conditions in the said agreement. (hereinafter referred to as “the Bank”) hereby undertake to pay to the Employer an amount not exceeding Rs. 3,500,000.00.
2. We, HDFC Bank Limited (indicate the name of the Bank) do hereby undertake to pay the amounts due and payable under this guarantee without any demure, merely on a demand from the Employer stating that the amount claimed as required to meet the recoveries due or likely to be due from the said contractor(s). Any such demand made on the bank shall be conclusive as regards the amount due and payable by the bank under this Guarantee. However, our liability under this guarantee shall be restricted to an amount not exceeding ₹3,500,000.00 Employer any money so demanded notwithstanding any dispute or disputes raised by the contractor(s) in any suit or proceeding pending before any court or Tribunal relating thereto, our liability under this present being absolute and unequivocal. The payment so made by us under this guarantee shall be a valid discharge of our liability for payment there under and Contractor(s) shall have no claim against us for making such payment.” Bank Guarantee No. 003GT02182810026 dated 8th October, Employer”) having offered to accept the terms and conditions of the proposed agreement between Hindustan Prefab Ltd and M/s Garg Builders (hereinafter called “the said Contractor(s)”) for the work C/o. of Proposed Infrastructure for 08 Battalion of National Disaster Response Force (NDRF), Ghaziabad (U.P) (hereinafter called “the said agreement”) having agreed to production of an irrevocable Bank Guarantee for ₹2,500,000.00 (Rupees.TWENTY FIVE LAKHS ONLY) as security/guarantee from the contractor(s) for compliance of his obligations in accordance with the terms and conditions in the said agreement. (hereinafter referred to as “the Bank”) hereby undertake to pay to the Employer an amount not exceeding ₹2,500,000.00 (Rupees.
2. We HDFC Bank Limited (indicate the name of the Bank) do hereby undertake to pay the amounts due and payable under this Guarantee without any demure, merely on a demand from the Employer stating that the amount claimed as required to meet the recoveries due or likely to be due from the said contractor(s). Any such demand made on the bank shall be conclusive as regards the amount due and payable by the bank under this Guarantee. However, our liability under this guarantee shall be restricted to an amount not exceeding ₹2,500,000.00 (Rupees.TWENTY FIVE LAKHS ONLY). Employer any money so demanded not exceeding ₹2,500,000.00 (Rupees.TWENTY FIVE LAKHS ONLY) notwithstanding any dispute or disputes raised by the contractor(s) in any suit or proceeding pending before any court or Tribunal relating thereto, our liability under this present being absolute and unequivocal. The payment so made by us under this Guarantee shall be a valid discharge of our liability for payment there under and the Contractor(s) shall have no claim against us for making such payment.”
12. On 14th June, 2021, HPL wrote the following letter to the Bank, seeking to invoke the aforesaid nine bank guarantees: “HPL/BG/ENCASHMENT/26 June 14, 2021 The Chief Manager HDFC Bank E-13/29, 2nd Floor Harsha Bhawan Cont. Circus New Delhi-110001 Sub: Invocation of Bank Guarantee Dear Sir, Please refer to your following mentioned Bank Guarantees
┌──────────────────────────────────────────────────────────────────────────────────────────┐ │ Sl. BG. No. Dated Project Amount Claim │ │ No. date │ ├──────────────────────────────────────────────────────────────────────────────────────────┤ │ 1. 003GT02160 16.03.2016 NDRF 1,51,72,278.00 15-06- │ │ 760022 Gzd 2021 │ │ 2. 003GT02171 16.06.2017 NDRF 20,00,000.00 15-06- │ │ 670016 Gzd 2021 │ │ 3. 003GT02163 17.12.2016 ESIC 32,43,000.00 20-07- │ │ 529912 Raipur 2021 │ │ 4. 003GT02192 11.09.2019 ESIC 29,74,000.00 10-09- │ │ 540009 Raipur 2021 │ │ 5. 003GT02192 16.09.2019 NDRF 35,00,000.00 15-09- │ │ 590021 Gzd 2021 │ │ 6. 003GT02182 08.10.2018 NDRF 25,00,000.00 07-10- │ │ 810026 Gzd 2021 │ │ 7. 003GT02182 06.10.2018 ESIC 75,00,000.00 05-04- │ │ 790007 Raipur 2022 │ │ 8. 003GT02182 07.08.2018 ESIC 2,87,73,594.00 06-04- │ │ 190021 Asans 2022 │ │ ol │ │ 9 003GT02173 30.10.2017 ESIC 32,43,000.00 29-04- │ │ 030030 Raipur 2022 │ │ The validity period of the captioned bank guarantees is │ │ expired and are under claim period on the date mentioned │ │ O.M.Ps.(I) (COMM.) 200/2021, 201/2021 & 202/2021 Page 15 of 56 │ │ 2022:DHC:1670 │ │ above. We have requested to extend the validity of BGs. As │ │ bank guarantees have not been extended further and not │ │ received by us as per request. │ │ Now competent authority has decided to invoke the │ │ above mentioned bank guarantees, accordingly you are │ │ requested to remit the guarantee amount in terms of the │ │ guarantee in its letter and spirit by means of Demand Draft in │ │ favour of M/s Hindustan Prefab Limited, payable at New │ │ Delhi OR remit the amount to the undersigned mentioned a/c │ │ (a copy of cancelled cheque is also enclosed). │ │ Name of the Party HINDUSTAN PREFAB LIMITED │ │ Banker Punjab National Bank │ │ Branch Jangpura, Bhogal, New Delhi-110014 │ │ Account No. 0147002100025853 │ │ RTGS CODE PUNB0014700 │ │ Thanking you │ │ Yours faithfully, │ │ For Hindustan Prefab Limited │ │ Sd/- │ │ V.K.Gupta, │ │ FA& CAO” │ └──────────────────────────────────────────────────────────────────────────────────────────┘
26. Further, in the notes to the financial statements of HPL for the year ending 31st March, 2019, Mr. Mehta has invited attention to para 23.[5] which reads as under: “23.[5] There is erosion of substantial net worth of the Company due to accumulated losses. However, the financial statements have been prepared on a going concern basis as the Company is a profit making concern since last many years with no borrowings and on the basis of improved business operations.”
27. He points out from para 23.[5] of the same notes to the financial statement, that the contingent liabilities of HPL were as provided for in the said note to the financial statement. He also drew my attention to Clause 23.[6] of the notes on financial statements, which dealt with handing over of various land and properties of HPL to the land and development office (L&DO) on 20th March, 2018, and read thus: “23.[6] Hand-over of various Land and Properties to Land & Office Development (L&DO) on 20.03.2018 a) As per the order dated 22.02.2018 of Ministry of Housing & Urban Affairs (MoHUA), Government of India, being the administrative ministry, HPL was directed to hand-over various Land and properties, as mentioned in PIM to L&DO, without any express compensation, on 20.03.2018. The said decision has been approved and ratified in the Board meeting held on 23.03.2018. Accordingly, the net block of Land of ₹
9.07 lakhs and Roads of ₹ 0.37 lakh as at 20.03.2018 were written off during the year 2017-18. The Company on 07.01.2019, requested MoHUA to provide suitable compensation for the acquired land and properties, which were valued at ₹ 1427.89 crores as per the valuation done by MoHUA appointed valuer as part of the disinvestment process. b) As per the said order of MoHUA and the directions received from L&DO, the built up portion of existing properties and other immovable assets i.e. registered office of HPL, residential quarters, presently being used by staffs and families of HPL will remain with HPL, till further decision is taken on the matter. Accordingly, Office Buildings and Residential Buildings, the net block of which is ₹ 225.66 lakhs (Previous Year: ₹ 251.72 lakhs) and ` 6.85 lakhs (Previous Year: ₹ 7.41 lakhs) respectively as at 31.03.2019, have continued to be shown under Property, Plant & Equipments in note no. 9. In case, the decision is taken by L&DO to take over these buildings from HPL in future, corresponding effect will be given in the accounts in that year. c) Property (Housing) at Jangpura, let out to Hudco was also handed over to L&DO on 20.03.2018. Since L&DO is yet to initiate the steps for transfer of legal title of said property hence it has been shown under the Residential Buildings as at 31.03.2019 in (b) above. Pending transfer of legal title of above property, rent has not been provided for in the accounts. d) Municipal taxes of ₹ 8.57 lakhs due to SDMC for the year 2018-19 i.e. subsequent to the date of handing over of Land and Properties is payable by L&DO. Accordingly, no provision towards the said amount has been provided for in the accounts. e) Office Buildings includes office at Scope Minar, Laxmi Nagar with Original Cost of ₹ 1,16,45,125/- (Previous Year: ₹ 1,16,45,125/-) of which the title deed in favour of Company is yet to be executed by SCOPE. However, land allotted to SCOPE by DDA is leasehold land. Further, the said office has since been handed over to the Land and Development Office (L&DO) on 20.03.2018. The said office, let out to EPFO was vacated w.e.f 27.06.2018. Since L&DO is still to initiate the steps for transfer of legal title of said property with SCOPE hence it has been shown under Office Buildings as at 31.03.2019 in (b) above. The rent received from EPFO for the period 21.03.2018 to 27.06.2018 i.e. subsequent to the date of its handing over to L&DO has been shown as payable in note no. 7. Accordingly, demand of ₹ 22.72 lakhs raised during the year by SCOPE towards property tax, maintenance charges and electricity for the year 2018- 19 is payable by L&DO. Management intends to take up this matter with SCOPE to raise these demands directly to L&DO and considering the same, no provision towards such charges has been made as the same will be paid either directly by L&DO or recovered from them if paid by the Company.”
28. Mr. Mehta thereafter drew my attention to the balance sheet of HPL as on 31st March, 2019, to point out that, as against the cash in hand available with HPL, of ₹ 153.9624 crores, ₹ 103.4204 grade payables were figuring in the current liabilities of HPL for the said financial year.
29. The audited financial statements of HPL, therefore, submits Mr. Mehta, indicate that the financial condition of HPL is not such as could inspire confidence that HPL would continue to possess the financial wherewithal to restore, to the petitioner, the status quo ante, were HPL to be permitted to invoke the bank guarantees and the petitioner, thereafter, to succeed in arbitration.
30. Mr. Jain has seriously contested the submission, of Mr. Mehta, regarding the allegedly precarious financial condition of HPL. He submits that 100% shareholding of HPL was with the Hon’ble President of India. Apropos the financial position of HPL as reflected from its balance sheet, Mr. Jain points out that, against the total liabilities of HPL of ₹ 176.37 crores, its current assets were to the tune of ₹ 249.90 crores. Referring to the paragraph titled “Emphasis of Matters” cited by Mr. Mehta, Mr. Jain points out that, while noting the fact that substantial net worth of HPL had been eroded by accumulated losses, it was, nonetheless, a going concern as was reflected in the very same passage, and its financial statements had also been prepared on a going concern basis. In this context, Mr. Jain has also invited my attention to Clause 23.[5] of the notes on financial statements of HPL, which record the fact that HPL was “a profit making concern since last many years with no borrowings and on the basis of improved business operations”. Mr. Jain points out that HPL had earned profits both in 2017-18 and 2018-19. Adverting to the handing over of land and properties of HPL to L&DO, Mr. Jain points out that Clause 23.6(a) of the notes on financial statements (which had earlier been reproduced) records the request, of HPL, to the Ministry of Housing and Urban Affairs (MoHUA), on 7th January, 2019, for suitable compensation against the acquired land and properties, which were valued at ₹ 1427.89 crores as per the valuation done by the valuer approved and appointed by the MoHUA. It was not, therefore, submits Mr. Jain as though the land of the company was thrown away for a song.
31. Mr. Jain has pressed into service the judgments of the Supreme Court in UP State Sugar Corporation v. Sumac International Ltd.[1] and Svenska Handelsbanken v. Indian Charge Chrome[2], to contend that the requirement of the existence of the element of egregious fraud actually permeates all three considerations, i.e. of irretrievable injustice, special equities and egregious fraud itself, on which alone invocation of an unconditional and irrevocable bank guarantee could be interdicted by a Court. Irretrievable injury, he submits, must partake of the character of impossibility of execution. Mere financial hardship being faced by the beneficiary of the bank guarantee, submits Mr. Jain, even if it were shown to exist, could not justify interdiction of invocation. Analysis
32. This is yet another a case in which valuable time of this Court has been expended in dealing with a prayer for a restraint against invocation of “unconditional” and irrevocable bank guarantees. In its decision in CRSC Research and Design Institute Group Co Ltd v. Dedicated Freight Corridor Corporation of India Ltd[3], a Division Bench of this Court, while upholding the judgment of this Bench in CRSC Research and Design Institute Group Co Ltd v. Dedicated Freight Corridor Corporation of India Ltd[4], lamented the fact that, despite the law in that regard being practically fossilized, Courts were being inundated with repeated requests for stay of unconditional bank guarantees. Apparently, with a view to discourage such litigation in future, the appellant before the Division Bench was burdened with costs of ₹ 5 lacs.
33. The following passages from the report of the judgment of the Division Bench in CRSC Research and Design Institute[3] speak for themselves: “7. The settled law with respect to grant of an injunction which has the effect of restraining encashment of a bank guarantee, is (a) when in the course of commercial dealings an unconditional bank guarantee is given or accepted, the beneficiary is entitled to realize such a bank guarantee in terms thereof irrespective of any pending disputes; (b) the Bank giving such a guarantee is bound to honour it as per its terms, irrespective of any dispute raised by its customer; (c) the very purpose of giving such a bank guarantee would otherwise be defeated; (d) the Courts should therefore be slow in granting an injunction to restrain the realization of such a bank guarantee; (e) the Courts have carved out only two exceptions i.e. (i) a fraud in connection with such a bank guarantee would vitiate the very foundation of such a bank guarantee - if there is such a fraud of which the beneficiary seeks to take the advantage, he can be restrained from doing so; fraud has to be an established fraud which the bank knows of and the evidence must be clear, both as to the fact of fraud and as to the bank's knowledge; and, (ii) the second exception relates to cases where allowing the encashment of an unconditional bank guarantee would result in irretrievable harm or injustice to one of the parties concerned; since in most cases payment of money under such a bank guarantee would adversely effect the bank and its customers at whose instance the guarantee is given, the harm or injustice contemplated under this head must be of such an exceptional and irretrievable nature as would override the terms of the guarantee and the adverse effect of such an injunction on commercial dealings in the country; it must be proved to the satisfaction of the Court that there would be no possibility whatsoever of the recovery of the amount from the beneficiary, by way of restitution. *****
15. We are unable to agree with the contention of the senior counsel for the appellant that this Court, when approached for the interim measure of interference with unequivocal, absolute and unconditional BGs, is required to interpret the contract and/or form a prima facie opinion whether the beneficiary of the BGs has wrongfully invoked the BGs. Such exercise, in our view, is to be done in a substantive proceeding to be initiated by the appellant for recovery of the monies of the BGs, if averred to have been wrongly taken by the respondent No. 1 by encashment of BGs. If any interim relief is also claimed in the said substantive proceedings, the need for taking a prima facie view, will arise therein; however not while dealing with an application for the interim measure of restraining invocation/encashment of BGs. In the said proceedings, no question of taking a prima facie view arises and the enquiry is confined to, whether on the basis of the documents, a case of fraud of egregious nature in the matter of obtaining/furnishing BGs, is made out. As far as the argument of the senior counsel for the appellant, of special equities is concerned, the same is but a facet of the second exception aforesaid of irretrievable harm or injustice. Needless to state that from the entire arguments of the senior counsel for the appellant, no case of fraud of egregious nature in the matter of making/obtaining of the BGs is made out. All that emerges is that there are disputes between the appellant and the respondent No. 1 and it is not even whispered that the respondent No. 1 built the entire charade of entering into the contract, only to obtain BGs and to profiteer from the appellant. With respect to the ground urged by the senior counsel for the appellant, of special equities, the Solicitor General has stated that the appellant is a Chinese entity and if ultimately in arbitration, which has already commenced between the parties, the monies are found due to the respondent No. 1 from the appellant, the respondent No. 1 would have no means or ways available to it for recovering the same from the appellant and/or to enforce the arbitral award in China. On the contrary, it is contended that the respondent No. 1 is a Public Sector Undertaking and the monies, if ultimately found due to the appellant from the respondent No. 1, can always be recovered by the appellant from the respondent No. 1.
16. Fraud, as an exception to the rule of non-interference with encashment of BGs, is not any fraud but a fraud of an egregious nature, going to the root i.e. to the foundation of the bank guarantee and an established fraud. The entire case of the appellant, we are afraid, fails to qualify so. The Single Judge has written at length on the subject and save for as aforesaid, we need not say more.
17. Irretrievable injustice, as an exception to the rule of non-interference with encashment of BGs, is again not a mere loss, which any person at whose instance bank guarantee is furnished, suffers on encashment thereof. It is always open to such person to sue for recovery of the amount wrongfully recovered. What has to be proved and made out to obtain an injunction against encashment, is that it will be impossible to recover the monies so wrongfully received by encashment. There is not even a whisper to this effect, neither in the pleadings nor in the arguments.” (Emphasis supplied)
34. Despite the clear enunciation of the law as above, and at least till I sat in that roster, petition after petition continued to be filed, seeking stay of invocation of unconditional irrevocable bank guarantees. In nearly every such case – including the present petitions – reliance was placed, by the petitioners, on the disputes between the parties relating to the performance/non-performance of the original contract. The fact that the petitioner, seeking stay of invocation of the bank guarantees, had a subsisting claim against the respondent beneficiary of the bank guarantees is also inevitably taken as a ground for seeking stay of invocation.
35. In view of the well crystallized law on the subject, any reference to the original dispute between the parties, relating to the performance of the contract, is completely irrelevant, insofar as the issue of stay of invocation of the bank guarantees is concerned. That dispute has necessarily to form substratum of an entirely different proceeding, to be resolved either by arbitration or by adjudication by a Court. While I have recorded the submissions of learned Senior Counsel for the petitioner regarding the petitioner’s substantive grievances against HPL, I do not, in view of the law that stands settled in that regard, propose to deal with the said contentions here.
36. With these prefatory observations, I deem it appropriate, before applying the law to the facts of the present case, to itemize the basic principles relating to bank guarantees, their invocation and the interdiction of such invocation, thus:
(i) Commercial contracts often contain clauses requiring the contractor to furnish bank guarantees.
(ii) These bank guarantees are, principally, either bank guarantees provided towards security, for having been awarded the contract, or performance bank guarantees, to guarantee performance of the contract, though, on occasion, other bank guarantees such as bank guarantees towards mobilization advance etc. may also be required to be provided.
(iii) The contract, in such cases, also provides for the circumstances in which the bank guarantees could be invoked, as well as the purpose for requiring the bank guarantees to be provided in the first place.
(iv) No bank guarantees payment to anyone gratis. Every bank guarantee is of necessity issued by a bank on instructions. In case of a commercial contract, such as the contract in the present petition, the instruction to the bank, to provide a bank guarantee, is given by the person to whom the contract is awarded; in the present case, the petitioner. The party to whom the contract is awarded, in other words, instructs the bank, in lieu of having been awarded the contract, to issue a bank guarantee in favour of the person awarding the contract. In the present case, as required by the agreements between the petitioner and the HPL, and that the petitioner’s instance, bank guarantees were issued by the bank in favour of HPL which, therefore, is the beneficiary of the bank guarantee.
(v) These bank guarantees are, however, bilateral contracts between the bank and the beneficiary, i.e. HPL, even if they were issued at the instance of the petitioner. The petitioner is not a party to the bank guarantees. It is, therefore, legally a stranger to the contract, insofar as the bank guarantees are concerned.
(vi) Like all independent commercial contracts, every bank guarantee has to abide strictly by its terms. Honour and compliance of a bank guarantee, as per its terms, is, therefore, mandatory. In the case of bank guarantees, especially, the Supreme Court has stressed this aspect, as there is an overwhelming element of public interest involved in requiring banks to honor their commitments towards customers and clients. If a bank is to be interdicted, at the instance of a third party, who is a stranger to the bank guarantee between the bank and the beneficiary, from honouring the bank guarantee, the Supreme Court has held in United Commercial Bank v. Bank of India[5] and Hindustan Steelworks Construction Ltd. v. Tarapore & Co[6], that it would erode the public faith in the banking institution of the country.
(vii) The bank is, therefore, concerned only with the terms of the bank guarantee. The elements of any dispute between the contractor and the beneficiary of the bank guarantee, or the conditions existing in the contract between the contract awardee and the beneficiary of the bank guarantee, i.e. in the present case between the petitioner and HPL, are, therefore, generally irrelevant to the aspect of invocation of the bank guarantee. Even the circumstances stipulated in the contract between the beneficiary and the contract awardee, in which the bank guarantee could be invoked, are also of no relevance insofar as the liability of the bank to honour the bank guarantee is concerned.
(viii) In order for the aspect of performance, or failure of performance, of the parent contract, by either party, to become relevant as a consideration for invocation of the bank guarantee, they have necessarily to be incorporated by express reference in the bank guarantee itself. In other words, if the bank guarantee were to stipulate that the bank would be required to make payment to the beneficiary only in the event of failure, on the part of the contract awardee, to abide by its obligations under the Contract, then the aspect of performance of the contract by the contract awardee would become a relevant consideration, while assessing the obligation of the bank to make payment to the beneficiary.
(ix) Similarly, oftentimes, a contract may stipulate the particular stage at which, or exigency in which, the bank guarantee could be invoked by the beneficiary. Such a stipulation in the contract would, however, become relevant for the bank, when called upon by the beneficiary to honour the bank guarantee, only if that stipulation figures expressly in the body of the bank guarantee itself.
(x) Else, the bank is not expected, much less required, to advert to the covenants of the original contract between the contract awardee and the beneficiary, to which the bank is a stranger – just as the contract awardee is a stranger to the bank guarantee. Nor is it required to enter into the disputes between the contract awardee and the beneficiary of the bank guarantee, or into the aspect of performance, or non-performance, of the contract. Nor, for that matter, is the bank entitled to examine whether the stage at which the contract between the parties envisages invocation, or enforcement, of the bank guarantee, has, or has not, been reached. The bank, being a stranger to the contract between the contract awardee and the beneficiary of the bank guarantee, has no authority to probe into the said contract, unless the terms of the bank guarantee expressly require it to do so. The bank has necessarily to be concerned only with the terms of the bank guarantee, to which alone it is a party.
(xi) If the invocation of the bank guarantee by the beneficiary thereof is, therefore, in terms of the bank guarantee, the Court cannot interdict the bank from honouring the bank guarantee, by referring to the covenants in the contract between the contract awardee and the beneficiary of the bank guarantee. Any such attempt by the Court would amount to directing the bank to violate the contract, with the beneficiary of the bank guarantee, to which it is a party and, therefore, to direct the bank to commit an illegality. This, quite obviously, is completely impermissible.
(xii) Equally, it is not permissible, either, for the Court to interdict the invocation of a bank guarantee on the ground that the stage for such invocation, as per the contract, has not been reached, or that the exigency in which the bank guarantee could be invoked as per the contract, does not exist, unless that stage, or that the exigency, is incorporated as a condition for invocation in the bank guarantee itself.
(xiii) Interdiction of invocation of unconditional bank guarantees would be justified, where the invocation is otherwise in terms of the covenants in the bank guarantees, only where there is found to exist egregious fraud, or special equities, or where irretrievable injustice would ensue were invocation not to be injuncted. In this regard, I deem it appropriate to reproduce, with humility, the following passages from my decision in Kuber Enterprises v. Doosan Power Systems India Pvt Ltd[7], in which I have followed the Division Bench pronouncement in CRSC Research and Design Institute[3]:
39. Though, therefore, the opening preambular recital, identifies the purpose for providing of the bank guarantee as ensuring compliance, by the contractor, i.e. by the petitioner, of its obligations under the agreement with HPL, the only condition requiring fulfilment, by HPL, to be entitled to the benefit of the bank guarantee is “a demand … stating that the amount claimed (was) required to meet the recoveries due or likely to be due from” the petitioner.
40. To that extent, one may say that the use of the expression, “unconditional”, in respect of bank guarantees, is actually a misnomer. Bank guarantees are, etymologically, never “unconditional”. (Courts have, however, classically referred to bank guarantees such as those issued in the present petitions as “unconditional”.) What has to be identified is the condition in the bank guarantee which governs the obligation(s) of the bank thereunder. Even in the present case, the bank guarantees furnished by the petitioner were, stricto sensu, not unconditional; the only condition was, however, that a demand letter was required to be issued by HPL.
41. It is a important to note the specific stipulation, in the bank guarantee, that the only requirement to be met by HPL was raising of a demand on the bank, stating that the amount claimed was required to meet recoveries due or likely to be due from the petitioner. Whether these amounts were actually due or likely to be due is, for the purposes of the bank guarantees forming subject matter of the present petition, completely irrelevant. What was required was a statement from HPL to the bank, stating that these amounts were due or likely to be due from the petitioner.
42. Once such a statement was made, neither could the Bank refuse to honour the bank guarantee by going behind the statement or seeking to verify whether the statement was right or wrong, nor could any Court interdict such invocation on that ground. To repeat, what was required by the bank guarantees was a statement by HPL that the amounts in question were required to meet the recoveries due or likely to be due from the petitioner, and no more. Once such a statement was made, any interdiction against invocation of the bank guarantee by examining whether, in fact, any such amount was, or was not, due from the petitioner to HPL, would be an unjustified exercise and would also be in the teeth of the express covenants of the bank guarantee.
43. A plea for stay of invocation of a bank guarantee would be predicated either on the premise that the invocation was contrary to the terms of the agreement between the parties or contrary to the terms of the bank guarantee itself.
44. Once, however, the beneficiary of the bank guarantee proceeds towards invocation of the bank guarantee by writing to the bank, the first argument, of the invocation being contrary to the terms of the parent contract between the parties, ceases to be available to the contractor. The reason is simple. Referring to the facts of the present case, the petitioner has instructed the bank to issue bank guarantees favouring HPL, for availing the benefit of which HPL merely had to communicate to the bank stating that the amount claimed was required to meet the recoveries due from the petitioner. Once, therefore, such a communication was made by HPL to the bank, the petitioner could not seek, thereafter, to interdict invocation of the bank guarantee by referring to the terms of the original contract. No equities could sway in favour of the petitioner in such a situation, predicated on the terms of the contract, breach of the contract, default or absence of default, etc. The petitioner cannot, in such circumstances, seek to come between the two independent contractual parties, namely the bank and HPL, in the matter of performance of the contract between those parties, to which the petitioner is a stranger.
45. If, therefore, the grievance of the petitioner is that the invocation of the bank guarantee by HPL, though otherwise in accordance with the covenants in the bank guarantee, is contrary to the covenants in the parent agreement, the remedy with the petitioner would be to proceed against HPL to recover the monies released by HPL by invocation of the bank guarantees, not to interdict such invocation, which is a matter between the bank and HPL, and to which the petitioner is a complete stranger. The grievance of the petitioner, in such an event, is vis-à-vis HPL, and not the Bank. The grievance between the petitioner and HPL, being relatable not to the covenants of the bank guarantee, but to the covenants of the agreement between the petitioner and HPL, would have to be decided on the basis of the appropriate protocol in that regard; if arbitrable, by arbitration, else by judicial adjudication.
46. In the present case, the covenants in the contract, as well as the aspect of compliance/non-compliance with the contractual obligations have not been made conditions governing honouring of the bank guarantees by the bank. The bank guarantee dated 17th December, 2016, merely requires HPL to demand, of the bank, the amount governed by the bank guarantee and the bank would become immediately liable to transmit the amount to HPL. The remaining three bank guarantees are a trifle more specific, in requiring the demand from HPL to state that the amount claimed was required to meet the recoveries due or likely to be due from the petitioner. Once such a demand, with such a statement, is made by HPL, the demand is conclusive regarding the amount covered thereby and operates proprio vigore, rendering the bank liable to honour the bank guarantee and to pay, to HPL, the amount covered by the bank guarantee, as demanded by it. All the four bank guarantees are equally categorical in stipulating that the demand by HPL would be conclusive regarding the liability of the bank, notwithstanding any dispute raised by the contractor, i.e. the petitioner.
47. There is no dispute that the letter dated 1st July, 2021, from HPL to the bank specifically stated that the amount claimed was required to meet the recoveries due or likely to be due from the petitioner. The contractual pre-condition in the bank guarantees, thereby, stood completely satisfied. The bank became, thereby, bound, by law, to credit the amount covered by the bank guarantees into the account of HPL.
48. Applying the above principles to the fact of the present case, it is clear that no case for interdicting invocation of the subject bank guarantees, consequent on the letter of invocation dated 1st July, 2021, issued by HPL to the bank, can be said to exist. As already noted, the stipulation, in the letter, to the effect that the amount claimed was required to meet the recoveries due or likely to be due from HPL satisfied the pre-invocation requirement as contained in the bank guarantee. Whether, in fact, these amounts were due or likely to be due, from the petitioner are beyond the scope of inquiry by the Courtand, indeed, was also beyond the scope of inquiry by the bank when approached by HPL. Once HPL made the requisite statement in terms of the concerned clauses in the bank guarantees, the matter had to address there. Subsequently, if it was found that the statement was incorrect-as the petitioner would seek to contend-the remedy with the petitioner would be to seek restitution in the substantive arbitral proceedings. There are several ways in which this can be done, and it is not for this Court to offer any suggestion in that regard. Suffice it to state that no case for restraining invocation of the bank guarantees, as having been invoked contrary to the terms of the bank guarantees, can be said to exist.
49. There are, however, as already noted earlier, select circumstances in which invocation of an “unconditional” bank guarantee, even if superficially in terms of the covenants in the bank guarantee governing its invocation, may be interdicted by a Court. These are (ii) where the bank guarantee is vitiated by egregious fraud,
(iii) where irretrievable injustice would result if the bank guarantee were permitted to be invoked, and, (iv) where special equities exist, as would justify interdiction or invocation of the bank guarantees. Applying the above principles:
50. Fraud has not even been pleaded by the petitioner and, indeed, Mr. Mehta was candid in submitting that he was not seeking to contend that the invocation of the bank guarantees was justified on the ground of egregious fraud. Egregious fraud, in any case, as already noted, would have had to vitiate the bank guarantees themselves, in order for it to be pleaded as a ground to restrain invocation. The bank guarantees having been issued by the bank at the instance of the petitioner and as required by the covenants of the agreement, it cannot be said that the bank guarantees were fundamentally vitiated on the ground of egregious fraud.
51. The petitioner’s contention that HPL owes, to the petitioner, amounts in excess of the amount covered by the bank guarantees is obviously completely tangential to the issue at hand. Any amounts owed by HPL to the petitioner would have to form subject matter of resolution by arbitral proceedings. This Court does not require to return any finding, in the present case, regarding the petitioner’s entitlements against HPL, or vice versa.
52. Nor can the present case be said to be one of special equities or irretrievable injustice. Indeed, the contention of learned Senior Counsel for the petitioner was essentially predicated on the irretrievable injustice principle, as learned Senior Counsel sought to contend that the financial condition of HPL was so precarious that, were the bank guarantees to be permitted to be encashed and the amounts credited into the account of HPL, there was every likelihood of HPL not being financially in a position to restitute the petitioner, even though the petitioner to succeed in arbitration.
53. I have already alluded to the rival contentions of learned Counsel regarding the financial condition of HPL. Learned Counsel for both sides have invited my attention to certain recitals in the audited statement of accounts and balance-sheet of HPL. They cannot all be said to be pointing one way, or to be making out a case of HPL being in such straitened financial circumstances as to be unable to pay the amount covered by the subject bank guarantees to the petitioner, if so directed at a later stage in the arbitral proceedings. No case of irretrievable injustice can, therefore, be said to exist.
54. Special equities, as held by the Supreme Court in UP State Sugar Corporation[1] and in Svenska Handelsbanken[2], have to partake the character of irretrievable injustice. Even otherwise, it cannot be said that any such case of special equities has been made out by the petitioner, as would justify interdicting invocation of the subject bank guarantees. Indeed, the contentions of learned Senior Counsel for the petitioner essentially revolved around compliance with the conditions stipulated in the bank guarantee for transfer of the guaranteed amount to the credit of HPL, and on the aspect of irretrievable injustice.
55. In view thereof, it cannot be said that, within the boundaries of the law relating to interdiction of invocation of the irrevocable bank guarantees, a case for such interdiction has been made out by the petitioner in the present case, insofar as the subject bank guarantees are concerned.
56. The prayers in the petition would, therefore, necessarily have to be rejected. OMP (I) (COMM) 201/2021
57. The factual matrix of this petition is largely similar to that of OMP (I) (COMM) 200/2021. The contract in question was relating to upgradation of a hospital situated at Asansol, West Bengal. The other relevant contractual stipulations were identical to those contained in the agreement forming subject matter of OMP (I) (COMM) 200/2021.
58. This petition concerns, as already noted, a single Bank Guarantee No.003GT02182190021 dated 7th August, 2018 for ₹ 2,87,73,594.00. The covenants in the bank guarantee, governing its invocation, are identical to those in the bank guarantees forming subject matter of OMP (I) (Comm) 200/2021.
59. Clearly, the factual and legal position which obtains in the present case is identical to that obtains in OMP (I) (COMM) 200/2021. The observations and finding of this Court in the OMP (I) (COMM) 200/2021 would, therefore, apply mutatis mutandis to the present case.
60. The prayer for restraining invocation of the Bank Guarantee, forming subject matter of OMP (I) (COMM) 201/2021 would also, clearly, have to be rejected. OMP(I) (COMM.) 202/2021
61. The factual matrix of this petition is largely similar to that of OMP (I) (COMM) 200/2021. The contract in question was in relation to completion of a project of the National Disaster Response Force, Ghaziabad, Uttar Pradesh. The other relevant contractual stipulations were identical to those contained in the agreement forming subject matter of OMP (I) (COMM) 200/2021.
62. This petition concerns four Bank Guarantees, tabulated in para 10 supra. The governing covenants of the Bank Guarantees are identical to those forming subject matter of OMP (I) (Comm) 200/2021.
63. Clearly, the factual and legal position which obtains in the present case is identical to that obtains in OMP (I) (COMM) 200/2021. The observations and finding of this Court in the OMP (I) (COMM) 200/2021 would, therefore, apply mutatis mutandis to the present case.
64. The prayer for restraining invocation of the Bank Guarantee, forming subject matter of OMP (I) (COMM) 202/2021 would also, clearly, have to be rejected. Conclusion
65. All three OMPs are, therefore, dismissed. Pending applications, if any, also stand disposed of.
66. It is made clear that the above decision is limited to the aspect of the prayer for stay of invocation of the Bank Guarantees. It shall not operate as a restraint on the petitioner seeking any other remedy under Section 9 of the 1996 Act before the learned Arbitral Tribunal. Any such application if made shall be considered by the learned Arbitral Tribunal on its own merits.
67. There shall be no orders as to costs.
C. HARI SHANKAR, J.