Judgment:
HONBLE SRI JUSTICE R. SUBHASH REDDY AND HONBLE SRI JUSTICE A. SHANKAR C.M.A.No.870 OF201323-09-2014 M/s. Tata Project Limited, Supply Chain Management, represented by its Managing Director..Appellant M/s. Offshore Infrastructure Limited,represented by its Managing Director.. Respondents Counsel for the appellant :Sri Vedula Srinivas Counsel for respondent No.1:Sri M.L. Ganu & Sri M. Papa Reddy, HEAD NOTE: ?. CASES REFERRED:
1. (2007) 8 SCC1102. (2008) 1 SCC5443. AIR1997SC24771) 4. (2006) 13 SCC5995. AIR2010CALCUTTA1126. 1998 III AD (DELHI) 641 7. AIR2006DELHI1698. (1997) 1 SCC5689. (1988) 1 SCC17410. (1984) 1 WLR392: (1984) 1 ALL ER351(CA) HONBLE SRI JUSTICE R. SUBHASH REDDY AND HONBLE SRI JUSTICE A. SHANKAR NARAYANA CIVIL MISCELLANEOUS APPEAL No.870 OF2013
JUDGMENT: (Per Honble Sri Justice A. Shankar Narayana) Challenge, under this Civil Miscellaneous Appeal, is to the order, dated 23-09-2013, in O.P. No.2236 of 2012 on the file of learned III Additional Chief Judge, City Civil Court, Hyderabad, whereby and where under the requests of respondent No.1 herein made under Section 9 of the Arbitration and Conciliation Act, 1996 (for short the Act) for perpetual injunction restraining the appellant herein from invoking/receiving any amount under the Bank Guarantees dated 28-03-2012 issued by the respondent No.2 herein Axix Bank Limited, for Rs.1,96,97,066/- and another bank guarantee of the same date for Rs.1,96,97,066/-, or to restrain respondent No.2 herein from making any payment in respect of the said bank guarantees and further perpetual injunction restraining the appellant herein from preventing respondent No.1 herein and its officials from removing their machinery, which details were mentioned in the Schedule annexed to the petition, from the work site at Raigarh, Chhattisgarh State were acceded to by the Court below.
2. For the sake of convenience, we refer to the parties as arrayed in O.P. filed before the lower Court.
3. The facts that are relevant for the purpose of disposal of the instant civil miscellaneous appeal are as under: i) Respondent No.1 is principal contractor and has taken up work of design engineering, laying pipeline, power transmission, construction of jack well for M/s Visa Power Limited at Raigarh, Chhattisgarh. It has, in turn, sub-contracted various facets of work to different entities including the petitioner, who is a sub-contractor. The 1st respondent entrusted the work to the petitioner as to leasing land for storage of pipes, unloading from Trucks/Trailers, handling, stacking, loading, local transportation to project site, grit blasting, fabrication of structures, miter bends, internal coating of pipes at joints, external wrapping and coating, erection, testing and commissioning civil work, laying of Hume Pipes at village, river and national high-way crossing etc. of an estimated thirty kilometers of underground and over-ground 1200mm NB pipeline with a mechanical equipment at intake jack-well, pump house etc., at M/s Visa Super TPS Project, Raigarh, Chhattisgarh vide work order dated 02-02-2012. ii) The general terms and conditions of the contract were annexed to the work order containing the contractual terms. The total project value stipulated in the work order is Rs.19,69,70,656/-. Clause -7.0 of the work order requires the petitioner to submit Contract Performance Guarantee for 10% of the total contract price within fifteen (15) days from the date of order, valid for eighteen (18) months from the date of completion of entire scope of the work and hand over facilities to TPL/Client i.e., claim period of three (03) months thereafter. iii) The terms of payment have been that the respondent No.1 was to pay 10% of the total contract price as advance, as provided by clause 9.0 on mobilization of requisite man power, machinery etc. against submission of advance bank guarantee for equivalent amount valid till commissioning within the claim period of six (06) months. As per the terms, the petitioner mobilized the resources and furnished two bank guarantees for Rs.1,96,97,066/- dated 28.03.2012 issued by the 2nd respondent. Seven months period was provided for completion of work in the work order commencing from 02-02-2012. The petitioner avers that since respondent No.1 was not in a position to proceed with the work for want of availability of sites, though, the petitioner mobilized the resources by 28-03-2012 itself, and even, mobilization advance of 10% was not released till the month of September, 2012, despite, by 28-03-2012 itself, the petitioner mobilized men and machinery as per the terms, resulted in gross delay in the entire project, projecting lapses on the part of the respondent No.1. iv) It is, according to the petitioner, that the pipeline, except for small stretch within the factory premises, has to pass through private properties, agricultural fields, National Highways and State Highways etc., and as such, obtaining Right of Use (ROU) and Right of Way (ROW), was of material importance, and as per the contract, it is the sole responsibility of the respondent No.1 to obtain ROU/ROW documents from the concerned property losers and the Government, as per clause 1 of the work order by making payment to the land losers through Visa Power Limited. It is stated by the petitioner, it could effect certain extent of work within the factory area of approximately 1.5 KMs. and that the respondent No.1 was consciously aware of the said fact as evidenced by the minutes of meeting dated 22-06-2012, wherein the petitioner had specifically put respondent No.1 to notice that in view of non-availability of work fronts, it would be appropriate to foreclose the contract of the petitioner and recover the actual losses suffered by it, and by that date, running bills and bill for idling of man power and machinery were pending with respondent No.1 to the tune of Rs.4,38,71,176/-. v) It is further stated that E-mail of respondent No.1 dated 02-07-2012 shows that the delays were attributable to the 1st respondent alone, and even as late as 02-07-2012, respondent No.1 was not in a position to make the initial payments which were to be released to the petitioner in the month of March, 2012 itself. When the petitioner sought respondent No.1 to foreclose the work order, as respondent No.1 had defaulted in performing its part of contract, respondent No.1 sought to extend time schedule for completion of the work till May, 2013, besides requesting to assist in obtaining ROU/ROW permissions/approvals by promising to pay Rs.40,00,000/- in addition to the contract value for obtaining such approvals to that extent. It is, according to the petitioner, that the 1st respondent had acknowledged its liability to pay amount to the tune of Rs.66,00,000/- to it as against part payment towards idling of man power, plant and machinery as agreed on 16/17-08-2012 payable to the petitioner, and despite acknowledging the liability vide MOM, failed to pay the same. The petitioner claims that, though, it was skeptical as to the assurances made by respondent No.1, but having already accepted the work order, persuaded to agree at the behest of respondentNo.1, but despite the same, respondent No.1 has not paid the sum of Rs.12.37 lakhs for 16 KMs. stretch against agreed Rs.40.00 lakhs for full 30 KMs. stretch for obtaining ROU/ROW approvals, or the amount of Rs.66.95 lakhs as agreed, but, on the contrary, sought to blame the petitioner for non-obtaining the said approvals, which is wholly unjust and unbecoming of respondent No.1. vi) The petitioner also states that it has agreed to submit ROU/ROW forms in the meeting dated 13-07-2012, subject to payment being released by the respondent No.1. According to the petitioner, that they had carried out survey by engaging third party for a length of 16.2 KMs. at Rs.75,000/- per KM. and called upon respondent No.1 to release the payment thereon as on 27-07-2012, but the respondent No.1 failed to release the same. Petitioner, therefore, claims that the respondent No.1 cannot expect the petitioner to proceed with the work even without releasing mobilization advance as agreed in time and withholding even the running account bills raised by it from time to time and additional payment due as agreed. Thus, there has been clear violation on the part of respondent No.1 in performing their reciprocal obligation. vii) The petitioner states that clause 5 of the work order contemplates that the respondent No.1 had also agreed to return the original bank guarantee which was to be treated only for Rs.50.00 lakhs. The petitioner claims that the 1st respondent was required to make available the entire stretch of 30 KMs. at the beginning of the work itself, but the same could not be made available even up to 20-09-2012, and even as on the date of making the instant application. According to the petitioner, the extension offered by the respondent No.1 was only up to 20-05-2013 and since it was unrealistic, keeping in view the situation on the site the petitioner had insisted for such extension up to 30-06-2013. It is also according to the petitioner, that as on 12-06-2012 itself, the amount due to it was Rs.3,98,27,509/- in addition to the amount due towards advance and running account bills. Thus, the petitioner was constrained to write to respondent No.1 on 21-11-2012, calling upon it for arranging full scale availability of 30 KMs, or at least in terms of chainages already promised by the letter dated 21-09-2012, or otherwise to foreclose the contract and settle the bills. The petitioner states that despite the lapses attributable to respondent No.1, instead of acting upon the same by taking a realistic view of situation, respondent No.1 had chosen to terminate the contract vide communication dated 23-11-2012. The said termination is wholly erroneous, as respondent No.1 itself violated the terms of the contract and there was no lapse attributable to it (petitioner), so as to deserve termination. Petitioner claims that the respondent No.1 was also threatening to adopt other options available under clauses 31.4.i and 31.4.ii including threat as to recovery of damages. In fact, machinery belonging to the petitioner was lying within the work site was worth more than Rs.84,03,560/- and the officials of respondent No.1 were refusing permission to take out the said machinery claiming alleged lien in respect of the same. The petitioner states that if the minutes of meetings, dated 22-06-2012 and 17-07-2012 are perused, it would be apparent that respondent No.1 is guilty of fraud while obtaining consent from it for extension of time for execution of the work from 20-09-2012 to 20-05-2013 on false assurance of release of amount and making available work fronts. It is, according to the petitioner, that the action of respondent No.1 in obtaining extension of bank guarantees pursuant to the extension of contract period under the terms of the work order and intending to en-cash the bank guarantees in a fraudulent manner, which is impermissible in law or in the nature of criminal breach of trust and clear established act of fraud attributable to respondent No.1. viii) The petitioner states that respondent No.1 in its E-mail dated 21-09-2012, given revised schedule confirming that total 30 KMs. stretch should be available by 30-11-2012 and also confirmed that it was Visa Power Limited alone which shall be completely responsible for providing ROU/ROW and also sent E-mails, dated 28-09-2012 and 05-10-2012 from which it can be culled out that the total outside front available was only 750 meters out of 28,500 meters, though, it (petitioner) has brought to the notice of respondent No.1 that, in fact, no such front was being made available and called upon the respondent No.1 to release fronts immediately and also explained by furnishing drawings that the fronts are not being released in sequence and other holds, thereby making it impossible to proceed with the work. ix) The petitioner states that the terms of contract provide that in case of dispute, the same has to be resolved by arbitration as per article 32.2 of the general terms and conditions which provides a mechanism for dispute resolution and, therefore, to protect and preserve the rights of the respective parties, more particularly, of the petitioner pending adjudication of their claims, approached Civil Court under Section 9 of the Act seeking the aforesaid reliefs.
4. Respondent No.1 contested the requests made by the petitioner in O.P. by filing counter affidavit on 26-02-2013. While denying various averments made in the petition, required the petitioner to substantiate the stand with strict proof. Respondent No.1 admits the entrustment of work, issue of work order dated 02-02-2012, in favour of the petitioner and the bank guarantees furnished by it. But, however, contends that the said bank guarantees works out to be an independent contract between the Banker respondent No.2 and respondent No.1. According to respondent No.1, under the terms and conditions of the said bank guarantees, the banker had irrevocably and unconditionally undertook to pay to respondent No.1 on demand, the amount not exceeding the respective guaranteed amounts on receipt of intimation that the petitioner has for any reason failed to comply with any of the terms and conditions of the said work order and any such demand made by respondent No.1 on the banker shall be paid without any demur, reservation, contest, recourse or protest and without any reference to the petitioner and such demand made by respondent No.1 shall be conclusive and binding notwithstanding any difference between respondent No.1 and the petitioner or any dispute pending before the Court, Tribunal or Arbitrator. According to the 1st respondent, the said stipulation evidences that the bank guarantees are unconditional and the banker is bound to honour any demand that may be made by respondent No.1, which principles are upheld by the Honble Supreme Court in the cases reported in (1996) 5 SCC450 AIR1997SC2477 (2008) 1 SCC544 besides various other judgments. i) Respondent No.1 states that the petitioner delayed the submission of the bank guarantees till 30-04-2012, as against fifteen days time from the date of work order being 02-02-2012 and did not rectify the said mistakes in the said bank guarantees owing to their own defaults and there were three amendments dated 30-04-2012, 31-08-2012 and 01-09-2012 to the advance bank guarantee and one amendment dated 30-04-2012 to the performance of bank guarantee due to the defects in the bank guarantees submitted by the petitioner. ii) Respondent No.1 states that the petitioner having specifically agreed under the contract that the ROU/ROW under their scope had sought to dispute the same and thereby caused for the unwarranted delays. Despite the same, respondent No.1 has agreed for extension of seven months contract ending by September, 2012 till May, 2013 in addition to agreeing to extend the necessary support to obtain ROU/ROW, but the petitioner sought for further extension up to 30-06-2013. It is also stated that the petitioner without mobilizing the required tools and plants, Hydro Testing Pump, man power and unable to complete the scope of contract, had sought to wriggle out the liabilities and responsibilities by raising a false and vexatious dispute contending that obtaining the ROU/ROW was not in their scope. It is stated that despite repeated requests and notice of termination dated 06-11-2012, the petitioner failed to adhere to the agreed terms of the contract and perform the same. iii) It is stated that the petitioner had executed a total certified gross value of Rs.40,28,493/- vide RA bills 1 to 3 and got the payment of the same, and the balance amount covered by RA bill Nos. 4 and 5 respectively, for Rs.1,36,517/- and Rs.1,51,320/- were not admissible, as the same were towards alleged repair works and incomplete ROU/ ROW scope, and the rest of the RA bills 6 and 7 respectively, for Rs.8,20,815/- and Rs.8,08,908/- were under certification. It is stated that the 1st respondent could recover only Rs.4,02,848/- as against the advance amount of Rs.1,92,94,218/- from out of the RA bills till the date of termination of contract and the balance advance amount of Rs.1,92,94,218/- is to be recovered by it. It is stated that since the petitioner failed to perform the contract, respondent No.1 was forced to execute the said job through third party at the cost and risk of the petitioner and, therefore, it is entitled to deal with the said performance and advance bank guarantees and the same cannot be interdicted. It is, according to respondent No.1, that the petitioner approached the Court suppressing the true and correct facts attributing false and frivolous allegations and obtained order of status- quo. Respondent No.1 has denied the petitioner mobilizing men and machinery simultaneously along with furnishing of bank guarantees by 28-03-2012. Respondent No.1 has denied the allegation that it was not in a position to release even the mobilization advance as per clause - 9 of the work order and other incidental allegations. According to respondent No.1, it is nothing but speculative to claim that the petitioner has suffered loss to the tune of Rs.4,38,71,176/-. Respondent No.1 also denied the allegation that the material worth Rs.84,03,560/- is in its control and withholding the said machinery as alleged by the petitioner. iv) Concerning fraud, respondent No.1 contends, the allegation of the petitioner that respondent No.1 is guilty of fraud on the ground of obtaining consent from the petitioner for extension of time for execution of the contract on false assurance of release of the amount and making availability of work fronts is absolutely false and without any basis and contrary to the own case of the petitioner. According to the respondent No.1, the petitioner had sought for extension till 30-06-2013 instead of 20-05-2013 and failed to execute any job having claimed the substantial amount of advance of Rs.1,96,97,066/- and sought to disown the contractual liabilities and resorted to claim for all sorts of illegal and unethical demands with utter disregard to the agreed terms of the contract by refusing to accept the scope of ROU/ROW which is part of unit rate prices agreed to by the petitioner. According to respondent No.1, no amount or any bill is due and payable to the petitioner and, on the other hand, the petitioner is liable to return the unadjusted advance mobilization amount. According to respondent No.1, the petitioner has neither raised nor substantiated any of the essential grounds whatsoever to claim the relief sought for in the petition. v) Respondent No.1 also submits that it has nothing to do with the machinery, tools and plants alleged to have mobilized and, in fact, it has no information whatsoever about their existence, ownership and possession of the petitioner. vi) Respondent No.1 further claims that the petitioner, violating the status-quo order of the Court below, removed whatever the tools and plants existed at the site, and no other machinery, tools and plants exists at any of the locations of the works and that it had no control whatsoever at any point of time. While concluding, respondent No.1 submits that the petitioner has raised false and speculative claims by projecting incorrect facts in the original petition and the same cannot be agitated before the Court below, since they are subject matters of the arbitration. It is, according to respondent No.1, that the petitioner having obtained an exparte status quo order, has deliberately and maliciously neglected and failed to invoke the arbitration and not even got the order communicated to respondent No.2 Banker in the original petition and, thus, it reflects the conduct of the petitioner, and such an action is nothing but abusing the process of law and deserves no indulgence of the Court and, hence, sought to set aside the order challenged in the instant appeal.
5. During inquiry in the original petition, the petitioner got exhibited Exs.P-1 to P-42, to substantiate its request, whereas, respondent No.1 got marked Exs.R-1 to R-13, in an attempt to condemn the case of the petitioner and to substantiate its own case.
6. Since certain events that transpired in passing the order under challenge have got a direct bearing on the controversy herein, we intend to project them.
7. The Original Petition was filed on 03-12-2012, and it was registered on 04-12-2012. The Court below on 12-12-2012, passed exparte status quo order, ordering the parties to maintain status-quo in respect of the schedule property as well as bank guarantees to protect the interests of the petitioner and directed to post the matter on 21-12-2012. On service, respondent No.1 filed counter on 26-02-2013, resisting the claim and also seeking the Court to set aside the above ex parte status quo order. The impugned order was passed on 23-09-2012.
8. The Court below having referred to the contentions and the decisions of the Honble Supreme Court and various High Courts in i) (2007) 7 SCC125 ii) 2012 (1) ALT316DB); iii) (1996) 5 SCC450 2006(2) CTLJ203(Del) and (2005) 7 SCC605relied on by the petitioner, and the decisions in 2008 (2) ALD693(DB); (2007) 6 SCC798 (1996) 5 SCC450 AIR1997SC2477and (2008) 1 SCC544 relied on by the 1st respondent, despite referring to the contention of respondent No.1 that fraud is a specific ground which must be specifically pleaded and proved by the petitioner, and that the Court exercising its power cannot interfere with the enforcement of bank guarantees or letters of credit except only in cases where fraud or special equity is prima facie made out in the case as triable issue by strong evidence so as to prevent irretrievable injustice to the parties, however, referring to the contentions of respondent No.1 that as per terms of the contract that the petitioner should approach the client and should get ROU/ROW from the client, M/s. Visa Power Project, whereas, the petitioners contention has been that respondent No.1 could not provide ROU/ROW in time, as such, he could not commence the works and attributed the same to respondent No.1 and, thus, observing that the legal position settled by the Honble Supreme Court as well as the High Courts that when the triable issue exists, the Court should interfere to protect the interests of both parties until the issue is settled by the respective Courts, injuncted respondent No.1 from encashing any amount under the bank guarantees and also injuncted respondent No.1 from preventing the petitioners officials in removing its machinery from the work site at Raigarh until settlement of the dispute between the parties either before the Arbitrator or before the respective Civil Courts.
9. Heard Sri Vedula Srinivas, learned counsel for the appellant, and Sri M.L. Ganu and Sri M. Papa Reddy, learned counsel appearing for the 1st respondent.
10. It is contended by the learned counsel, Sri Vedula Srinivas that when the contract was entered into, the 1st respondent- petitioner, has specifically agreed under the contract that ROU/ROW were under their scope, as per Clause 1.2 of the agreement but despite the same sought to dispute the same contending that since the appellant failed to provide work fronts, it occasioned for the unwarranted delays. It is also contended that the 1st respondent has agreed for execution of work within seven months i.e. by September, 2012 and extended by six months i.e. till May, 2013, besides agreeing to extend the necessary support to obtain ROU/ROW, still, the 1st respondent sought for further extension upto 30-06-2013 and only to wriggle itself out of the liabilities and responsibilities, raised an incorrect dispute contending that obtaining ROU/ROW was not in their scope. It is also contended that the advance bank guarantee furnished by the 1st respondent on 28-03-2012, was defective and it had to be amended thrice and even the work performance bank guarantee furnished by the 1st respondent, dated 28-03-2012 was defective and it had to be amended once and, thus, there was abnormal delay in furnishing the valid advance bank guarantee and performance bank guarantee for a sum of Rs.1,92,94,218/- each and in fact simultaneously, with the furnishing of both bank guarantees, the 1st respondent was required to mobilize men and machinery. It is also contended that the allegation of the 1st respondent that the appellant was not in a position to release even the mobilization advance as per Clause 9 of the work order, was totally incorrect. It is further contended that the appellant never withheld the machinery at the site as alleged by the 1st respondent. It is further contended that after entering into the agreement, as the 1st respondent failed to perform his part of obligation under the agreement within the time frame, despite deliberations that took place thrice and despite the appellant coming forward to assist the 1st respondent and extend necessary support, still, the 1st respondent failed to perform its obligation under the contract by raising disputes, which ultimately lead to issue of notice of termination, dated 23-11-2013. It is further more, contended that the Courts are empowered to grant injunctions, when there is clear established fraud played by the beneficiary and such fraud must be of egregious nature as to vitiate the entire contract itself and when there are special equities in favour of persons seeking injunction such as irretrievable injury or irretrievable injustice would occur if such injunction is not granted. It is, still, further contended that the Court below committed error in granting the relief despite the fact that neither the 1st respondent established neither clear fraud nor special equities, and, therefore, sought to set aside the impugned order. It is still further contended that both bank guarantees are unconditional and constitute independent contracts since the stipulation contained in the bank guarantees specifies that banker is bound to honour any demand that may be made by the appellant. In support of his contentions, learned counsel has placed reliance on the decisions of Honble Supreme Court in Himadri Chemicals Industries Limited v. Coal Tar Refining Company , Vinitec Electronics Private Limited v. HCL Infosystems Limited , Dwarikesh Sugar Industries Limited v. Prem Heavy Engineering Works (P) Limited and another , Reliance Salt Limited v. Cosmos Enterprises and another and M/s. Pollen Dealcom Private Limited and another v. Chambal Fertilisers and chemicals Limited and others .
11. On the other hand, it is contended by Sri Sunil Ganu, learned counsel appearing for the 1st respondent-petitioner that obtaining right of ROU/ROW since was of material importance and as per the agreement, it is the sole responsibility of the appellant - 1st respondent to obtain ROU/ROW documents from the concerned property losers and Government, as per Clause 1 of the work order by making payment to the land-losers by Visa Power Limited on their own. It is contended that the 1st respondent could effect the work within the factory area of approximately 1.5 K.M. out of 30 K.M., but it is the appellant that did not make available work fronts despite the fact that the 1st respondent in fact, specifically, brought to the notice of the appellant in the meeting dated 22-06-2012, that it would be appropriate to foreclose the contract. It is also contended that the delays in execution of work specified in work order, were attributable to the appellant alone as can be gathered from the constant exchange of communication and correspondence through e-mails and the negotiations evidenced by the Minutes of Meetings. It is further contended that, though, in the meeting dated 16/17-08-2012, the appellant assured to pay amount to the tune of Rs.66,00,000/- acknowledging its liability, against part payment towards idling of manpower, plant machinery, still, did not keep up its assurance and, thus, the 1st respondent became skeptical as to the assurances made by the appellant, but contrary to the same, the appellant sought to throw blame on the 1st respondent for non-obtaining the approvals, which was wholly unjustified. It is further more contended that the Minutes of Meetings, dated 22-06-2012, 16-06-2012 and 16th/17th August,2012, would reflect that the appellant is guilty of fraud while obtaining consent from the 1st respondent for extension of time for execution of the work from 20-09-2012 to 20-05-2013, on false assurance of release of amount and making available work fronts. It is, therefore, his contention that the action of the appellant in obtaining extension of bank guarantees, pursuant to the extension of contract period, under the terms of the work order and its intention to encash bank guarantees in a fraudulent manner, accounts for clear established act of fraud attributable to the 1st respondent.
12. Thus, it is his contention that not only the work fronts were not made available, but mobilization advance was not released besides the act of appellant in resorting to obtaining extension of bank guarantees with an intention to encash them, are sufficient enough to satisfy the requirement of clear established fraud on the part of the appellant accounting for irretrievable injustice which accounts for special equities in favour of the 1st respondent and, therefore, the injunction granted by the Court below cannot be found fault. Learned counsel in support of his arguments has placed reliance on the judgments of the Delhi High Court in P.D. Alkaram Pvt. Ltd. V. Canara Bank & another and M/s. Hindustan Construction Company Limited and another v. Satluj Jal Vidyut Nigam Limited .
13. Having heard the learned counsel on either side, we have also perused the material on record and the impugned order.
14. To decide the main controversy in the instant appeal, initially, we intend to advert to the admitted facts. M/s. Visa Power Limited, Raigarh, Chhattisgarh, is the client of the appellant - 1st respondent in O.P., the Tata Projects Private Limited. The 1st respondent has taken up the work of design engineering, laying pipeline, power transmission and construction of jack well for its client. M/s. Offshore Infrastructure Limited, who is the petitioner, is a sub-contractor and the 1st respondent sub-contracted various facets of work to different entities including the petitioner in the O.P. The scope of work is detailed in the work order, dated 02-02-2012. They entered into the said work order, binding them to perform their respective obligations thereunder. For laying pipeline from the factory, certain land was required to be acquired, belonging to either private parties or the Government, as the case may be. Since certain clauses of the work order marked as Ex.P-4, which is also marked as Ex.B-8, is of vital significance, in view of the disputes that have arisen at a later stage, we intend to extract them. Clause 1 in its entirety, reads as under:
1. 0 Scope of Work:
1. Unloading from trucks/trailors, handling, stacking, loading, local transportation to Project site, grit blasting, fabrication of structures, mitre bends, internal coating of pipes at joints, external wrapping and coating, erection, testing and commissioning including civil work, laying of Hume pipes at village, river and national highway crossings etc. of an estimated 30 KM of underground & overground 1200 mm NB Pipeline with mechanical equipment at Intake Jackwell, Pump house etc. as per the TPLs BOG enclosed as Annexure-2. The final quantity of work executed shall be as per the drawings & documents as approved by TPL/VPL.
2. Right of Use (ROU)/Right of way (ROW): ROU/ROW for the pipeline laying work shall be in the scope of the contractor, as per the agreement between TPL & VPL.
3. All the enabling work for the operation of the package such as construction of site office, site stores, fabrication yard, grit blasting shed, painting yard including obtaining land on lease, watch & ward facilities etc. shall be in the your scope. The total value of the contract is to the tune of Rs.19,69,70,656/-. Clause - 5 provides for time schedule for completion of the work. It reads thus:
5. 0 Completion Schedule: The entire scope of work as mentioned at Sl. No.1.0 above shall be completed within 07 months from the date WO. This completion period includes time required for mobilization of tools, machinery and manpower within 10 days from the date of work order. Clause 7 deals with contract performance bank guarantee to be furnished by the petitioner. It reads as under:
7. 0 Contract Performance Bank Guarantee: You will submit Contract Performance Bank Guarantee (CPBG) for 10% of the total contract period within 15 days from the date of order valid for a period of 18 months from the date of completion of entire scope of work and handing over the facilities to TPL/client, with claim period of 3 months thereafter. The CPBG will be extended by the contractor if required by TPL without any additional charge. Clause 9 deals with terms in regard to payment by the 1st respondent, which also simultaneously incorporates for submission of advance bank guarantee for equivalent amount by the petitioner with time frame. It reads thus:
9. 0 Payment Terms:
20. Advance-10% of the total contract price shall be payable as advance on mobilization of requisite manpower and machinery and Tools & Plant, establishment of site office, stores, cement godown, fabrication yard and Quality Control laboratory for the pipe laying work against submission of Advance Bank Guarantee for equivalent amount valid till the date of LO/Work Order, whichever is earlier. As per the details mentioned in Annexure-3 (Details of payment terms). 80% Progress-As per the details mentioned in Annexure-3 (Details of Payment terms) 10% Retention-As per the details mentioned in Annexure-3 (Details of payment terms) 10% from each Running Account Bill shall be retained which shall be payable after liquidation of Punch points, reconciliation of free issue materials and release of labour retrenchment payments by the contractor. The monthly Running Account bills at the contractual item unit rates shall be submitted by 25th of every month as per certified measurement sheet for release of payment by 7th of next month. The other clauses are not that relevant for the purpose of adjudication of the controversy.
15. Thus, a bare reading of clause 1.2 makes it abundantly clear that the ROU/ROW for the purpose of pipeline laying work shall be in the scope of the petitioner as per the agreement between the 1st respondent and its client (VPL). The petitioner having entered into the agreement under Ex.P-4, in our view, cannot now, give a goby and raise dispute that obtaining ROU/ROW is in the scope of the 1st respondent. The said dispute was, in fact, raised not just immediately after entering into Ex.P-4, but only after lapse of a considerable period.
16. In this context, Exs.P-7, P-10 and P-11 are of vital significance in arriving at on which of the parties the responsibility of obtaining ROU/ROW lies. Ex.P-7 is minutes of meeting held on 22-06-2012, at the 1st respondents office at Hyderabad. The petitioner was represented by Mr. Vishal Sachdev. Point No.2 therein, refers to the dispute with regard to ROU/ROW. It is stated therein that the petitioner was given the order based on pre-order negotiations where total ROU/ROW responsibilities belongs to the petitioner and all compensation to land losers would be made by Visa Power Limited. The dispute raised by the petitioner was referred to, mentioning that the petitioners view point was that it has agreed to provide assistance services to the extent of Rs.40,00,000/- which was their estimation of the ROU/ROW and subsequently the contract value was enhanced to the tune of Rs.40,00,000/- and the petitioner was agreeable to extend on ROU/ROW up to a value of Rs.40,00,000/- and that too without accepting total responsibility. The 1st respondent expressed that the same was not acceptable. Thus, more than 4 months later, for the first time, the petitioner raised such a dispute.
17. Ex.P-11 concerns with the minutes of meeting held between the petitioner and the 1st respondent on 13-07-2012. In Clause 1, they arrived at that the petitioner shall submit to the 1st respondent entire ROU/ROW papers (B1 / P2 forms) with land loser village maps plotted on the main pipe line route with authentication of concerned revenue officials within thirty days and the 1st respondent shall provide all assistance for obtaining permission from the authorities for laying pipelines through the highway / road / canal as the job progresses. Further clauses would reflect that the 1st respondent will coordinate and try that the compensation to land losers was paid within one month of submission of ROU/ROW, documents, specified in Clause 1. Even the 1st respondent agreed that it will give letter that the advance bank guarantee given for Rs.1.96 Crore will be treated only as Rs.50.00 lakhs subject to the terms contained in Clause 4. In Clause 5, the 1st respondent agreed to return the original advance bank guarantee, treated as Rs.50.00 lakhs only, by the said minutes, on submission of documents for 30 K.Ms. of ROU/ROW, for which, the 1st respondent would pay Rs.40.00 lakhs to the petitioner as cost of ROU/ROW charges, which amount can also be adjusted against advance.
18. Thus, what emerges from Ex.P-11 is that obtaining ROU/ROW was the responsibility of the petitioner, though, there appears to be some sort of concession made by the 1st respondent that it would coordinate with the petitioner to the extent of payment of compensation, besides, providing all assistance for obtaining permission from the authorities for laying pipeline through highway / road / canal as the job progresses. In fact, the 1st respondent promised to release all payments towards RA bills to the petitioner in seven (7) days time.
19. In the minutes of meeting held on 16/17-08-2012 at Hyderabad, in Clause 3, the petitioner was obligated to obtain permissions for 16 KM pipeline documents submitted to the Government officials which includes meeting of all expenditure and the team formed earlier consisting of VPL TPL OIL (client, 1st respondent and the petitioner) members still, work closely and bring the land losers/farmers/ as per B1 / P1 (ROU) and present to Visa Power for making necessary compensation by it.
20. Ex.P-13 is a communication from the petitioner to the 1st respondent, dated 21-11-2012, leveling certain allegations against the 1st respondent concerning first stretch under Front Details. The petitioner complains that further job could not be carried out due to non-availability of ROU from the 1st respondent. Under the 5th stretch, petitioner complained that the 1st respondent making false claim by saying that the fronts are available, in spite of their repeated requests and reminder, but failed to provide the documents i.e. payment receipts to the land owners, NOC from land owners etc., to the petitioner. Concerning submission of B-1 and P-2 documents, the petitioner claimed that the documents are not in their scope of work and only after discussions and assurance of payment, with SBU Head, Mr. Deepankar Chatterjee, of the 1st respondent, they took up the said work and, though, they have completed 16.2 KM work and raised a bill for the same, they have not received the payment for the same, and, therefore, they have stopped any further activity of the said job. The petitioner has also given two options to the 1st respondent either for arranging the full scale of availability of the ROU measuring 30 KMs and in the event of still finding difficulties, in doing so, to arrange the availability of ROU in terms of the chainages already promised by the 1st respondent through the e-mail, dated 21-09-2012. The petitioner also states that if the second option too was not possible, considering the rainy spell of 4 5 months in 2013, it requested the 1st respondent to foreclose their contract and settle all the pending dues plus idling upto November, 2012 and mobilization and de-mobilization of plant machinery and all establishments etc. While concluding, petitioner expressed that in spite of assurances made by the 1st respondent from time to time their (petitioners) pending payments have not been released and to bring an end to their site ordeals and also the mounting financial losses, the solution lies in the closing of contract on as is where is basis. Though, these all facts constitute the subject of dispute before the arbitration, still, not only the communication and correspondence, but also minutes of the meetings suggest that the petitioner unjustly shifting responsibility of obtaining ROU/ROW on the 1st respondent contrary to the condition agreed under Clause 1.2 of Ex.P-4. So, delays associated with the alleged false promises attributed to the 1st respondent by the petitioner, in our view, appear to be unconvincing. So, in our view, no special equities are to be found in favour of the petitioner at this stage.
21. For granting injunction, as already mentioned in the above, the primary aspects that require to be gone into are whether there is any fraud of egregious nature so as to vitiate the entire contract itself and whether there are any special equities in favour of the person seeking injunction such as irretrievable injury or irretrievable injustice would occur if such injunction is refused.
22. In the present context, we are of the view to refer to the decisions relied on by the learned counsel for both sides. In Himadri Chemicals Industries Limiteds Case (Supra 1), relied on by the learned counsel for the appellant-1st respondent, the Honble Supreme Court referring to the earlier decision in U.P. State Sugar Corporation v. Sumac International Limited , stated that two exceptions for grant of an order of injunction to restrain enforcement of bank guarantee or letter of credit, laid down in the said decision were, (1) fraud committed is in the notice of the bank, which would vitiate the very foundation of guarantee and (2) injustice of the kind which would make it impossible for the guarantor to reimburse himself. Also referring to the decision in U.P. Coop. Federation Limited v. Singh Consultants and Engineers (P) Limited , wherein while dealing with the case of fraud, it was held that the fraud must be egregious nature, such as to vitiate the entire underlying transaction, further observed that while coming to a conclusion as to what constitutes fraud, quoted with approval the observations of Sir John Donaldson, M.R. in Bolivinter Oil SA v. Chase Manhattan Bank , at page 352 g h, by extracting the observations, thus: The wholly exceptional case where an injunction may be granted is where it is proved that the bank knows that any demand for payment already made or which may thereafter be made will clearly be fraudulent. But the evidence must be clear, both as to the fact of fraud and as to the banks knowledge. It would certainly not normally be sufficient that this rests on the uncorroborated statement of the customer, for irreparable damage can be done to a banks credit in the relatively brief time which must elapse between the granting of such an injunction and an application by the bank to have it discharged.
23. Concerning the second exception, the Honble Supreme Court extracted paragraph No.14 in U.P. State Sugar Corporations Case (Supra 8) to the effect that: to avail of this exception, therefore, exceptional circumstances which make it impossible for the guarantor to reimburse himself if he ultimately succeeds, will have to be decisively established. Clearly, a mere apprehension that the other party will not be able to pay, is not enough. In Itek case (Itek Corpn. V. First National bank of Boston, 566 Fed Supp 1210) there was a certainty on this issue. Secondly, there was good reason, in that case for the Court to be prima facie satisfied that the guarantors i.e. the bank and its customer would be found entitled to receive the amount paid under the guarantee.
24. Having referred to the decision in U.P. State Sugar Corporations Case (Supra 8) and U.P. Coop. Federation Limiteds Case (Supra 9), the Honble Supreme Court laid down the following principles that should be noted in the matter of injunction to restrain the encashment of bank guarantee or letter of credit, thus: (i) While dealing with an application for injunction in the course of commercial dealings, and when an unconditional bank guarantee or letter of credit is given or accepted, the beneficiary is entitled to realize such a bank guarantee or a letter of credit in terms thereof irrespective of any pending disputes relating to the terms of the contract. (ii) The bank giving such guarantee is bound to honour it as per its terms irrespective of any dispute raised by its customer. (iii) The courts should be slow in granting an order of injunction to restrain the realization of a bank guarantee or a letter of credit. (iv) Since a bank guarantee or a letter of credit is an independent and a separate contract and is absolute in nature, the existence of any dispute between the parties to the contract is not a ground for issuing an order of injunction to restrain enforcement of bank guarantees or letters of credit. (v) Fraud of an egregious nature which would vitiate the very foundation of such a bank guarantee or letter of credit and the beneficiary seeks to take advantage of the situation. (vi) Allowing encashment of an unconditional bank guarantee or a letter of credit would result in irretrievable harm or injustice to one of the parties concerned.
25. For the proposition that the bank guarantee is an independent contract between bank and the beneficiary and that the bank is always obliged to honour its guarantee as long as it is an unconditional and irrevocable one and the two exceptions for the said rule, the learned counsel placed reliance on Vinitec Electronics Private Limiteds Case (Supra 2). The Honble Supreme Court while reiterating the principles summarized in the decision in Himadri Chemicals Industries Ltd. (Supra 1), further held that the encashment of bank guarantee would cause any irretrievable injury or irretrievable injustice and special equities, if any, must be pleaded specifically to injunct the beneficiary from invoking the bank guarantee.
26. In Dwarikesh Sugar Industries Limiteds case (Supra 3), the Honble Supreme Court while commenting that notwithstanding with the authoritative pronouncements of the Honble Supreme Court, the High Courts and the Courts subordinate thereto, still, seem intent on affording to the Honble Supreme Court innumerable opportunities for dealing with the area of law relating to granting injunctions from invoking bank guarantees, held in paragraph No.32 thus:
32. When a position, in law, is well settled as a result of judicial pronouncement of this court, it would amount to judicial impropriety to say the least, for the subordinate Courts including the High Courts to ignore the settled decisions and then to pass a judicial order which is clearly contrary to the settled legal position. Such judicial adventurism cannot be permitted and we strongly deprecate the tendency of the subordinate Courts in not applying the settled principles and in passing whimsical orders which necessarily has the effect of granting wrongful and unwarranted relief to one of the parties. It is time that this tendency stops.
27. For the proposition that fraud which vitiates the contract must have a nexus with the acts of the parties prior to entering into the contract, in the context of invocation of bank guarantee and entitlement as to injunction against invocation, the learned counsel placed reliance on Reliance Salt Limiteds Case (Supra 4). The Honble Supreme Court referred to the definition of fraud in Section 17 of the Indian Contract Act, 1872, in paragraph 15 thus:
15. ".Fraud". is defined in Section 17 of the Indian Contract Act, 1872 in the following terms:
17. Fraud defined.- Fraud means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract: (1) the suggestion, as a fact, of that which is not true, by one who does not believe it to be true; (2) the active concealment of a fact by one having knowledge or belief of the fact; (3) a promise made without any intention of performing it; (4) any other act fitted to deceive; (5) any such act or omission as the law specifically declares to be fraudulent. Explanation. - Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak, or unless his silence is, in itself, equivalent to speech. The Honble Supreme Court while referring to the definition contract of guarantee defined under Section 126 of the Contract Act in the same case held that when a contract of guarantee was sought to be invoked, it was primarily for the bank to plead a case of fraud and not for a promisor to set up a case of breach of contract, which observations are contained in paragraphs 18 and 19 thus:
18. ".Contract of guarantee". is defined under Section 126 of the Indian Contract Act in the following terms:
126. 'Contract of guarantee', 'surety', 'principal debtor' and 'creditor' - A 'contract of guarantee' is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called the 'surety'; the person in respect of whose default the guarantee is given is called the 'principal debtor' and the person to whom the guarantee is given is called the 'creditor'. A guarantee may be either oral or written.
19. Bank Guarantee constitutes an agreement between the Banker and the Principal, albeit, at the instance of the promisor. When a contract of guarantee is sought to be invoked, it was primarily for the bank to plead a case of fraud and not for a promisor to set up a case of breach of contract.
28. The learned counsel also placed reliance on the decision in M/s. Pollen Dealcom Private Limiteds Case (Supra 5) for the proposition that a mere allegation of fraud or where irretrievable injury was likely to be caused to the Guarantor, would not suffice and only in case of established fraud the equitable relief of injunction can be granted.
29. We have already adverted to the relevant facts touching the dispute between the parties herein before. The dispute as regards the responsibility to obtain ROU/ROW, not releasing the mobilization advance as per the work order and making non-available work-fronts as alleged by the petitioner and the counter allegations that the advance bank guarantee was with all defects and it was thrice amended and the valid advance bank guarantee was submitted only on 30-04-2012 and even work performance guarantee was also with defects and it was only rectified by amending it, which was submitted on 01-09-2012 would all may amount to breach of terms and conditions of the work order, and further, reciprocal obligations referred to in the minutes of meetings held thrice in succession and the out-come thereof, besides the correspondence contained in E-mails exchanged between the parties, are all to be resolved in the arbitration proceedings, as per article 32.2 of the general terms and conditions which provides for dispute resolution and, therefore, in our view, they do not constitute sufficient grounds to stall the invocation of bank guarantees by way of granting injunction at this stage.
30. Adverting to the judgments relied on by the learned counsel for respondent No.1/petitioner in P.D. Alkarams Case (Supra 6), a Division Bench of High Court of Delhi held that the delay in encashment on execution of work, was not caused on account of the conduct of party entrusted with contract, would account for special equity in favour of that party and warrants granting injunction from invoking the bank guarantee by the beneficiary. The learned counsel relied on the observations contained in paragraph 24 which are thus:
24. The plaintiff has also placed on record sufficient material, in the form of various invoices issued by M/s. Hindalco Industries Ltd.; bill-wise details of aluminium procured, corresponding to drawings filed per Annexure P-1 (Colly.), which, prima facie, shows that it had procured fabrication material worth more than Rs.20 lacs, advanced by the defendant. In the light of this material, over- emphasis of learned counsel for the defendant on the above extracted last part of the plaintiff's letter dated 29 May 1996, to the effect that it would start mobilising itself for the job only when the site is ready, renders it of no substance. It may not be out of place to mention that during the course of hearing it was suggested to learned counsel for the defendant that the purchased material stated to be lying at the premises of the plaintiff may be got inspected by the defendant and if deemed fit it could be released to the defendant for being used in the building under construction. It seems that the inspection was carried out because it was stated at the bar by learned counsel for the defendant that the material was not complete and it was on that plea that the defendant did not show any interest in the material. In this view of the matter, plaintiff's pleas of defendant's failures and fraudulent misrepresentation apart, to be dealt with on merits later in due course, when the plaintiff prima facie, seems to have utilised the entire mobilization advance for procuring the material for use on the defendant's building, as per the approved specifications, I feel that the plaintiff has successfully brought out special circumstances which are sufficient to make the present case an exceptional one justifying interference by restraining defendant no.2 from enforcing the bank guarantee in question. As a matter of fact having gained knowledge that the plaintiff has procured substantial material, even invocation of the bank guarantee after oral termination of the contract appears to be fraudulent. Bearing in mind all these factors, I find that special equities are in favor of the plaintiff and if the defendant is allowed to encash the bank guarantee in question, it would amount to irretrievable injustice to the plaintiff. I am, Therefore, satisfied that it is a fit case where defendant no.1 needs being interdicted from encashing the bank guarantee in question.
31. The next decision relied on by the learned counsel for the 1st respondent - petitioner in M/s. Hindustan Construction Company Limiteds Case (Supra 7), the Honble Supreme Court has held that injunction restraining encashment of bank guarantee can be granted only in case of fraud or in the case of irretrievable injustice if encashment is allowed.
32. Reverting to the fact situation occurring in the instant case, Clauses 7 and 9 are concerned with contract performance bank guarantee and advance bank guarantee respectively, which are extracted in the above.
33. We have perused both the bank guarantees. On a scanning of the terms thereof, we have no hesitation to hold that they are unconditional. In such an event, the petitioner cannot be permitted to raise any dispute and prevent the 1st respondent from encashing the bank guarantee subject to the rider that his case falls in either of the exceptions or both.
34. So, the first question that falls for our consideration is as to the present case falls under any of the exceptions viz., whether there is a clear fraud, of which, the 2nd respondent has noticed and the fraud of the beneficiary from which it seeks to benefit, and, another exception, whether there are any special equities in favour of granting injunction.
35. The plea touching the ground of fraud is set out in paragraph No.14 of the petition. For better appreciation, we would like to extract paragraph No.14, which is as under:
14. . It is respectfully submitted that if the minutes of meetings of 22.6.2012 and 17.7.2012 are perused, it would be apparent that respondent No.1 are guilty of fraud while obtaining consent from the petitioner for extension of time for execution of the contract from 20.9.2012 to 20.5.2013 on false assurance of release of amount and making available work fronts. Having obtained such extension of bank guarantees, in pursuance of extension of contract period under the terms of the work order, respondent no.1 are now wanting to encash the said bank guarantees in such fraudulent manner, which is not permissible in law. In fact the actions on the part of concerned officials of respondent no.1 are in the nature of criminal breach of trust and clear established act of fraud attributable to them. The petitioner respectfully submits that the alleged failure on the part of the petitioner as claimed in the notice of termination by respondent No.1 vide communication dated 23.11.2012 are imaginary and far-fetched.
36. Thus, the element of fraud is introduced not at the inceptive stage, but, at the stage at which consent was obtained from the petitioner for extension of time for execution of the contract from 20-09-2012 to 20-05-2013, that too, on the alleged false assurance of release of amount and making available work fronts. In the foregoing discussion, while dealing with the relevant clauses and minutes of meetings including e-mail communications, we have made it clear that the responsibility to obtain ROU/ROW was in the scope of the petitioner as per Clause 1.2 of the work order and in the minutes of meeting even a concession was made by the 1st respondent to the effect that it would coordinate in obtaining permissions from the concerned authorities on submission of B-1 and P-2 forms and the 1st respondent raised dispute for the first time in the minutes of meeting held on 22-06-2012. Thus, a thorough scanning of the pleadings, more particularly, the averments in paragraph No.14, afore- extracted, would reveal that no factual foundation is laid as to the allegation of fraud. In our view, the allegations contained in the said paragraph are vague and centers on alleged breach of contract by the 1st respondent. Such a bald allegation, certainly, would not satisfy the requirement in law, constituting any fraud, much less, fraud of an egregious nature as to vitiate the entire contract. In that view of the matter, the allegation of fraud does not fall within the ambit of first exception.
37. The second question that falls for consideration is whether encashment of the bank guarantee would cause any irretrievable injury or irretrievable injustice. In paragraph No.13 of the petition, petitioner raised the plea of irretrievable injustice. Paragraph No.13 reads thus:
13. . As would be apparent from the above factual matrix, since the beginning itself respondent no.1 were not in a position to make available the work fronts along with ROU & ROW approvals as required, so as to enable the petitioner to proceed with the work. Respondent no.1 were also in gross violation and breach of the contract having not released even the mobilization advance amount as late as September 2012 till the expiry of the contract. In the circumstances the assertions by respondent no.1, attributing delays to the petitioner and proceeding to invoke the terms of the contract for termination thereof and threat for invocation of the bank guarantees furnished by the petitioner is absolutely incorrect and false. Respondent no.1 are now threatening to invoke the bank guarantees furnished by the petitioner. Respondent no.1 are also withholding the machinery belonging to the petitioner within their factory premises and outside the factory premises at Chattisgarh on ground of exercising alleged lien on the same. It is respectfully submitted that the above actions of respondent no.1 are in clear breach and violation of the terms of the contract and if respondent no.1 are permitted to act upon the same, it would not only cause material loss and injury to the rights of the petitioner but also amount to irretrievable injustice being caused. When respondent no.1 themselves have violated the terms of contract and when the delays are attributable to respondent no.1 alone, it would be totally unjust to mulct the petitioner with the liability of the bank guarantee amount, especially keeping in view the above admitted factual matrix.
38. It is contended that the 1st respondent unilaterally issued notice of termination, dated 23-11-2012, we would like to mention that the communication, dated 21-11-2012, from the petitioner to the 1st respondent would make it very clear that it even required the 1st respondent to foreclose the contract in case the 1st respondent does not make available the work fronts. At the cost of repetition, we would like to mention again that obtaining ROU/ROW is absolutely indispensable for obtaining permission from the concerned authority and payment of compensation to the land losers and the Government, through the client of the 1st respondent Visa Power Limited.
39. We have referred to Clause 1.2 of the work order and also observed in the above that obtaining ROU/ROW is in the scope of the petitioner alone, but a concession was also given by the 1st respondent to the extent of coordinating with the petitioner in obtaining permissions from the concerned authority. The mere allegation that the actions of the 1st respondent were in clear breach and violation of the terms of the contract and the 1st respondent if, permitted to act on the same, it would not only cause material loss and injury to the rights of the petitioner, but also amounts to irretrievable injustice being caused, is not sufficient enough to substantiate the ground of irretrievable injustice being caused. It is only, if the petitioner is able to prima facie establish, that in case, bank guarantee is invoked, the amounts due cannot at all be realized from the 1st respondent; it can be said that it would cause irretrievable injustice and accounts for special equities in its favour to entitle the grant of injunction.
40. There is yet another circumstance that dis-favours the petitioner in entitling it for the relief sought. The 1st respondent specifically averred that the petitioner having obtained status quo order failed to invoke the arbitration and not even got communicated to the 2nd respondent. There is no denial by the petitioner by way of filing a rejoinder or further affidavit controverting the said allegation. Such conduct of the petitioner, certainly, dis-entitles it to seek equitable relief of injunction, when applied the principle laid down by the Honble Supreme Court in Reliance Salt Limiteds Case (Supra 4) as to invocation of bank guarantee, that it was primarily for the bank to plead case of fraud and not for a promisor to set up a case of breach of contract. Therefore, we are of the considered view, that the present case does not fall even in the second exception, as no plea at all is raised concerning special equities.
41. To sum up, when the principles laid down by the Honble Supreme Court are applied to the facts of this case, the inevitable conclusion is that the petitioner failed to establish not only the ground of clear fraud but also the ground of special equities in its favour. Therefore, the order under challenge is liable to be set aside.
42. Accordingly, the appeal is allowed and the order under challenge is set aside. We make no order as to costs.
43. As a sequel thereto, Miscellaneous Applications, if any, pending stand disposed of. __________________________ R. SUBHASH REDDY, J __________________________ A. SHANKAR NARAYANA, J23d September, 2014. Mgr/Pv HONBLE SRI JUSTICE R. SUBHASH REDDY AND HONBLE SRI JUSTICE A. SHANKAR NARAYANA CIVIL MISCELLANEOUS APPEAL No.870 OF2013
ORDER: (Per Justice A. Shankar Narayana) Immediately after pronouncement of judgment, oral submission is made by learned counsel for the appellant for grant of leave as contemplated under Article 134-A of the Constitution of India. As there is no substantial question of law of general importance involved for consideration in the matter, we are of the view that it is not a fit case for grant of leave, to prefer an appeal before the Honble Supreme Court. However, we direct that the appellant shall not invoke the bank guarantees, which are subject matter of this appeal, for a period of two weeks from today. __________________________ R. SUBHASH REDDY, J ____________________ A. SHANKAR NARAYANA, J23d September, 2014.