- (1.) FACTS WHERE THE PARTIES WOULD JOIN ISSUE : The above appeals would relate to ten contracts involving 21 Bank Guarantees. Indian Oil Corporation (hereinafter referred to as the 'IOC') entrusted construction of Panipath Refinery to Bridge & Roof Company (I) Ltd. (hereinafter referred to as 'B & R'). IOC and B & R were both having deep and pervasive control of the Central Government. The Ministry of Petroleum controlled the former one whereas the later one was having control of the Ministry of Heavy Industries. 21 Bank Guarantees were furnished by B & R to secure the payment of the advance that was given by IOC in respect of some of the contract whereas the rest Bank Guarantees were submitted as performance guarantee.
(2.) B & R completed the project and submitted their final bill that IOC was supposed to pay under the contract. The Bank Guarantees would stand discharged on expiry of the defect liability period. According to B & R, the defect liability period already lapsed by efflux of time. No complain came from IOC on the construction, they, however, delayed in setting the final bill. IOC attempted to encash the Bank Guarantees in first matter being A.P.O. No. 219 of 2011 that involved three guarantees. B & R objected to the same and referred the issue to the high power committee of the Central Government from time to time. At the request of B & R, IOC postponed the encashment. They requested Bank of Baroda to stay their hands. Such request would appear from pages-51, 52 & 53 of the petition. Despite discussions, the issue could not be resolved. Ultimately IOC invoked the guarantees. Before the Bank of Baroda could make payment B & R approached the learned Single Judge under Section 9 of the Arbitration and Cancellation Act, 1996, inter alia praying for an order of restraint against invocation. His Lordship declined, hence, this appeal.
(3.) B & R altogether filed 11 petitions that would give rise to 11 appeals before us. We would however, refer to the documents annexed to the application for stay in APO No. 219 of 2011 for the purpose of discussion of facts in the forgoing judgment. Since all the 11 appeals would involve identical issue we wish to dispose of all the 11 appeals by this common judgment and order. Mr. Arijit Chowdhury, learned senior counsel appearing for IOC, however, contended that facts would slightly defer in A.P.O. No. 337. We have examined the pleadings in A.P.O. No. 232 of 2011 arising out of A.P. No. 337 of 2008. We do not find any material distinction, the subject matter of the said appeal had with other connected appeals. The Division Bench at the time of admission of the appeals asked the Bank not to pay the amount covered by the respective Bank Guarantees. Such interim order is still continuing. Mr. Arijit Chowdhury, learned senior counsel appearing for the IOC informed this court that they did not invoke the other 18 Bank Guarantees in view of the order of the Division Bench. On a perusal of the rival pleadings, we find no dispute with regard to the construction. B & R requested IOC to revise the price in view of stiff rise in price of steel during the period of construction that IOC declined on the ground, the contract would involve the fixed price. B & R would request adjustment of the steel price against the advance that IOC did not agree. B & R failed to renew the guarantees that accelerated the process of invocation. RIVAL CONTENTIONS : Mr. Mukherjee advanced his argument on behalf of B& R. He raised four issues: (i) Bank Guarantee was invoked for extraneous reason that was not permissible. (ii) The Guarantee was not unconditional, hence, it could only be invoked in terms of the agreement. (iii) Union of India issued guideline wherein Bank Guarantee could be invoked only as a last resort. Such guideline was not followed. (iv) Fraud. Elaborating the argument on the first issue, Mr. Mukherjee contended, the Bank Guarantee being advance guarantee and performance guarantee, were furnished in terms of the agreement.;