ASHOK KUMAR MATHUR - (1.) This is an appeal arising out of an order dated 14th March, 2000 passed by the Learned single Judge in W.P. No. 2924 of 1999 whereby the Learned single Judge held that there was no fraud or any reference to any special equity made therefore it has no jurisdiction to interfere in enforcement of the bank guarantee. Consequently the writ petition was dismissed. Aggrieved against the aforesaid order passed by the Learned single Judge the present appeal has been filed by the petitioner/appellant.
(2.) The brief facts which are necessary for disposal of the above appeal are that the appellant Burn Standard and Co. Ltd. challenged the notice of invocation of bank guarantee dated 19th November, 1999 issued by the respondent No. 1 in a letter dated 25/30th December, 1999 issued by the United Bank of India, the respondent No. 2. It is alleged that the petitioner is a sick industrial unit within the meaning of West Bengal Relief Undertaking (Special Provisions) Act, 1972 (hereinafter referred to as the Act of 1972 and also under Section 3(1)(o) of the Sick Industrial Company (Special Provisions) Act, 1985 (hereinafter referred to as SICA. A scheme was framed by the BIFR under SICA for rehabilitation. Thereafter the invocation of the bank guarantee dated 11th June, 1999 issued by the United Bank of India on behalf of the petitioner is arbitrary and illegal. The petitioner also invoked Section 6 of the Act of 1972 that all recoveries stand suspended.
(3.) A contract was entered into between the petitioner and the respondent No. 1, Oil and Natural Gas Corporation Limited on 7th September, 1996 for complete rehabilitation work of "EE Platform" for a lump sum price of Rs. 69,60,000/- inclusive of taxes and duties as applicable at Bombay in pursuance of tender floated by respondent No. 1. As per the contract the petitioner was obliged to furnish performance guarantee and security deposit. On 11th July, 1996 the petitioner furnished on demand irrevocable bank guarantee for a sum of Rs. 69.60 lakhs to be paid without any demur, protest or reservation to respondent. The said bank guaranteeat extended till 31st May, 2000. Since the petitioner could not complete the work in terms of the said contract a dispute arose between the parties and a meeting was held on 10th June, 1999 whereby the petitioner requested to short close the contract and the respondent No. 1 agreed to consider the same subject to award of left over work to alternative agency and also upon due analysis of payment as per the provisions of the contract. The respondent No. 1 by letter dated 11th November, 1999 wrote to the United Bank of India making a demand in writing requesting to remit a sum of Rs. 69.60 lakhs by invoking the bank guarantee furnished by the petitioner/appellant. By letter dated 25/30th November, 1999 the United Bank of India addressed a letter to the petitioner requesting them to make immediate arrangement of the said fund. Hence a writ petition was filed by the petitioner for quashing the aforesaid communication. The grievance of the appellant was that by invocation of the said bank guarantee the petitioner/appellant company will suffer irreparable loss and injury. It was also contended that the delay in completion of the work could not call for invocation of the bank guarantee and the petitioner company did not commit any wrong therefore there is no case for failing to honour any of the commitments. It was contended that the option of the respondent in invocation of the bank guarantee was not warranted. It was also contended that the said dispute is between two public sector undertaking therefore the matter should be referred to the arbitration of the Government. As against this, Mr. Sen, Learned counsel appearing for the respondent submitted that no injunction can be granted against invocation of the bank guarantee as there is no plea of fraud or special equity. He raised a preliminary objection as to the jurisdiction of this High Court to entertain this writ petition. It was alleged that the bank guarantee stipulates that the place wherefrom tender was floated would alone have exclusive jurisdiction. He also contended that the plea of the petitioner that it is a sick company and there is a scheme prepared by BIFR under SICA cannot be invoked for seeking injunction against the invocation of the bank guarantee. He also submitted that the bank guarantee is a separate and independent contract. The contract of the bank guarantee is between the bank and the beneficiary and declaration of sickness under the Act of 1972 or framing of scheme by BIFR under SICA is irrelevant. Similarly, it is also contended that the provisions of the Act of 1972 cannot come in the way of invocation of the bank guarantee. Mr. sen invited our attention to decision of Apex Court and unreported division bench judgment of this Court in Turnkey International Limited v. Allahabad Bank (Appeal No. 960 of 1992) and also relied on another division bench judgment in Madalasa International v. Central Bank of India reported in 1999 Company Cas 153 : (AIR 1998 Bombay 247). The Learned single Judge after examining the whole matter and with reference to other decisions of the Apex Court declined to interfere in the writ petition and consequently dismissed the writ petition. Hence the present appeal.;