M/S Simplex Projects Ltd. v. National Buildings Construction Corporation Limited & Ors.

1. Mr Ranganthan, learned counsel who appears for respondent no.4 points out that respondent no.4 has merged with the State Bank of India and, therefore, the Memo of Parties needs to be corrected. In view of the above, the Memo of Parties is amended and State Bank of Travancore Ltd. is replaced by State Bank of India Ltd. as respondent no. 4.

2. The petitioner has filed the present petition, inter alia, 2019:DHC:3706 impugning a letter dated 19.09.2016 issued by respondent no. 1 (hereafter ‘NBCC’) to State Bank of Travancore Ltd., inter alia, stating that the petitioner had “not completed all their contractual obligations under the terms and conditions of Contract” and the Bank Guarantees in question (eight in number) were required to be extended. The petitioner further prays that NBCC be directed to return the Bank Guarantees in question.

3. The petitioner is a company engaged in the business of construction. The petitioner was awarded three separate construction contracts by NBCC: (i) construction of 100 bedded Hospital at Thoubal, Manipur (hereafter referred to as the ‘Thoubal Project’); (ii) Accommodation for Urban Employed Youth Women Vendors at New Market, Imphal (hereafter ‘the New Market Project’); and (iii) Accommodation for Urban Employed Youth Women Vendors at Laxmi Market, Imphal (hereafter ‘the Laxmi Market Project’)

4. The petitioner had submitted three Bank Guarantees aggregating ₹96,50,000.00/- for securing the due performance of the Thoubal Project. The details of the Bank Guarantees furnished by the petitioner pertaining to the said contract are set out below:-

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┌──────────────────────────────────────────────────────────────────────────────┐
│       Sl.No. Bank Guarantee No. Date                       Amount            │
├──────────────────────────────────────────────────────────────────────────────┤
│       1.            7024810BG0000119        23.12.2010     Rs.78,00,000.00   │
│       2.            7024807BG0000059        27.12.2007     Rs.1500000.00     │
│ 7.      Concededly, all the three projects are now over. It is also not      │
└──────────────────────────────────────────────────────────────────────────────┘

20. Since, NBCC has not canvassed any other ground for withholding the Bank Guarantees in question, the present petition is liable to be allowed.

21. In view of the above, it is not necessary to consider the issue whether NBCC is justified in withholding the Bank Guarantees furnished by the petitioner in respect of the Thoubal Project. However, for the sake of completeness, this court considers it apposite to decide the said question as well.

22. Admittedly, there is no issue pertaining to recovery of service tax in respect to the Thoubal Project. In this view, there is no justifiable reason for the NBCC to withhold the three performance bank guarantees furnished by the petitioner in respect of the said project. It is difficult for this Court to accept that NBCC is entitled to withhold the securities provided by the petitioner in respect of one contract, as against any possible dues that may be in respect of any other contract. A plain reading of the Bank Guarantees furnished by the petitioner indicates that they are performance bank guarantees to secure the performance of the contract in question. Concededly, the Thoubal Project has been duly performed and, therefore, the Bank Guarantees furnished in respect of the said project is liable to be released.

23. In view of the above, the petition is allowed and NBCC is directed to forthwith return the Bank Guarantees in question to the petitioner.

24. The pending application is disposed of.

VIBHU BAKHRU, J JULY 30, 2019 MK/RK