The Delhi High Court allowed encashment of a bank guarantee invoked due to delayed supply under a procurement contract, directing the amount to be held in a separate account pending final adjudication.
Full Text
Translation output
W.P.(C) 8001/2020 HIGH COURT OF DELHI Date of Decision: 15th October, 2020
W.P.(C) 8001/2020 & CM APPLs. 26054-55/2020 MS ZILINGO PTE. LTD. ..... Petitioner Through: Mr. Dayan Krishnan, Senior Advocate with Ms. Namitha Mathews and Ms. Poorva Pant, Advocates.(M:9599786590)
VERSUS
UNION OF INDIA AND ORS. ..... Respondents Through: Mr. Kirtiman Singh, CGSC for R-1 along with Mr. Rajiv Wadhawan, Director (Regulations), MoHFW. Mr. Ratan Kumar Singh, Advocate for R-2
CORAM:
JUSTICE PRATHIBA M. SINGH Prathiba M. Singh, J.(Oral)
JUDGMENT
1. This hearing has been held through video conferencing.
2 The brief background of this matter is that a contract was entered into between the High Commission of India, Singapore and the Petitioner, through the channelising company HLL Lifecare Ltd., Thiruvananthapuram, for the procurement and supply of masks. As per the contract, the Petitioner was to supply 10 million KN-95 Respiratory Masks, for a value of USD 22.[5] million. 30 percent of the total value of the invoice was to be secured through a bank guarantee by the Petitioner, which is the subject matter of this present writ petition.
3. The present writ petition was listed in the typed supplementary list on special marking on 14th October, 2020, and was taken at 4:00 P.M in view of the urgency expressed that a bank guarantee, for a sum of USD 6.75 million, 2020:DHC:3028 is sought to be encashed by the Respondent No. 1/Union of India, through the Ministry of External Affairs. The encashment demand has been raised by the High Commission of India in Singapore, for invoking the said bank guarantee dated 9th April 2020, vide its letter dated 8th October, 2020. The issuing bank, of the bank guarantee, Respondent No. 3/ DBS Bank Singapore, has sent an e-mail to the Petitioner, stating that the amount is likely to be credited to the beneficiary’s account by 10:00 A.M on 15th October, 2020.
4. After considering the matter, this Court had directed on 14th October 2020, as under:
“7. The matter relates to procurement of KN-95
masks which are essential items especially during the
pandemic. The stand of the Petitioner is that they are
ready and willing to effect supplies immediately and
it is only due to the testing protocol that the supply
has been stopped. The reasons for encashment not
being clear at this stage and further keeping in mind
the fact that 68% of the supply has also already been
made, the following directions are issued:
i. Advance copy of this petition is stated to have been served on the marking agency in the office of Union of India, Delhi High Court. However, none appears for the Respondents. Accordingly, let a copy of this petition be served to Mr. Kirtiman Singh, ld. CGSC, who shall obtain instructions by tomorrow i.e., 15th October, 2020. ii. Respondent No. 3 Bank is directed not to make any payment pursuant to the invocation of the bank guarantee, until further orders of this Court. iii. The bank guarantee shall be renewed by the Petitioner for a further period of 30 days, and the confirmation of renewal shall be placed on record in the form of a letter from Respondent No. 3 Bank by tomorrow i.e., 15th October, 2020, through an e-mail to the Court Master.’
Pursuant to the above order, Mr. Kirtiman Singh ld. CGSC and Mr. Ratan Kumar Singh, ld. counsel for Respondent No.2 have entered appearance. Mr. Kirtiman Singh, ld. counsel under instructions from Mr. Rajiv Wadhawan, Director, MoHFW submits that the Government does not wish to take the supply of the remaining 3.[2] million masks as the Petitioner has been in breach of several deadlines. The contract was originally entered into in April 2020 and the initial supplies were to be made in May 2020. The final extension was granted only till 15th September 2020. Post the deadline, supply of 6.[8] million masks have been made but the remaining is yet to be made.
5,780 characters total
5. Yesterday, when this Court had granted an interim order against the encashment of bank guarantee, the Petitioner was directed to get the Bank guarantee extended and place a copy of the same on record. An email from the DBS Bank Ltd. has been placed on record from which it appears that the extension of the bank guarantee would not be processed by the Bank until and unless the High Commission of India rejects/withdraws its claims on the bank guarantee.
6. There are various issues being raised as to the maintainability of the petition, breaches etc., The hearing cannot be concluded in a short time period and an affidavit would be required. Ld. Counsels also wish to rely upon various judgements in support of their case.
7. It is almost 2:00 p.m in India and in Singapore it is 4:30 p.m. Considering the time difference between India and Singapore, the bank guarantee is valid only till today i.e., 15th October, 2020. The DBS Bank Limited, being a bank located in Singapore has not extended the Bank Guarantee. The interests of both parties accordingly require to be secured, while the hearing is half-way.
8. It is accordingly directed as under: i. The Bank Guarantee No 550-02-1574989 for USD 6,750,000 (US Dollars Six million seven hundred fifty thousand), issued by DBS Bank Ltd., Singapore shall accordingly be encashed and the entire amount i.e., the guaranteed sum, shall be credited by the DBS Bank Ltd., Singapore to the account of the High Commission of India, 31, Grange Road, Singapore 239702, immediately; ii. The said amount shall be kept by the High Commission of India in an identified account, the details of which shall be filed with this Court before the next date; iii. The amount so credited to the High Commission of India shall not be utilised for any other purpose and shall abide by the further orders of this Court.
9. In the meantime, while the order is being issued, the Petitioner shall inform the DBS Bank Limited by way of an email within half an hour that the encashment of the Bank Guarantee has been permitted by this Court.
10. Let a short counter affidavit be filed by the Respondents 1 and 2 within a week. Rejoinder within one week thereafter. List on 10th November 2020.
11. Today’s order be emailed urgently to counsels for the parties.
PRATHIBA M. SINGH
JUDGE
OCTOBER 15, 2020
dj/Ak
Upgrade to Pro
This feature is available on the Pro plan. Upgrade to unlock full AI summaries, PDF downloads, and more.