Samapti Chatterjee, J. - (1.) The following issues are to be determined :- (i) Whether without giving any opportunity of hearing issuance of letter by the respondent authorities for invocation of bank guarantee ought to be declared as illegal, whimsical or arbitrary act on the part of the respondent authorities ? (ii) Whether prior to issuance of letter of invocation of bank guarantee the respondent authorities ought to have considered petitioner's representations dated January 16, 2018, February 5, 2018, February 14, 2018, February 23, 2018, March 7, 2018 & March 9, 2018 ?
(2.) The petitioner's case in nutshell is as follows :- The petitioner No.1, India Power Corporation Limited formerly known as DPSC Limited ( hereinafter referred to as IPCL), is an existing company within the meaning of the Companies Act, 2013. The petitioner IPCL, established in 1919, is one of the leading power generation and utility companies in India. An ISO 9001:2015 entity, it has actively forwarded into a diversified portfolio, with renewable and conventional modes of power generation, distribution and power trading and has a diversified portfolio of conventional and renewable modes of power generation, multi-location distribution, operation and maintenance and logistic outfits. On June 26, 2015, IPCL entered into an agreement with the President of India acting through the Chief Electrical Engineer, Eastern Railway (hereinafter referred to as the "said agreement"). By virtue of the said agreement IPCL was under obligation to supply the traction power to respondent Eastern Railway and that it would take at the point of supply the electrical energy for electrical traction purpose together with the power to be reserved for maintaining supply at Eastern Railway premises for 132dv/25kv Traction sub-station at Pandabeswar in Burdwan District. It was, inter alia, also agreed between parties that the railway authority would pay IPCL for the electrical energy supplied and other services to the respondent railway. The relevant terms of the said agreement are quoted below :- "(4) IPCL shall sort out Right of Way (ROW) issue from Bankola GSS/J.K.Nagar to Railway's traction feeding point at Pandabeswar/TSS. However, Railway would extend necessary cooperation whenever practicable". (6) That E.R. will arrange for payment of Rs.13.93 crores (Rupees thirteen crores ninety three lakhs) towards the cost of 132 kv transmission line, Bay extension work, equipments etc. (hereinafter collectively referred to as Service Line) and Apparatus necessary for the purpose of giving supply at the point of Pandabeswar/TSS. (8) The payment shall be made only after signing of this Agreement and receipt of B.G. of Rs.13.93 crores from Nationalised Bank. IPCL shall bear the remaining cost, if any, towards the Transmission line and Bay extension work for supply of power at Pandabeswar/TSS. It is made clear that the time line for starting of the works will commence only after receipt of payment from E.R. (30) .Penalty for delayed Compensation- In case IPCL is not able to complete the construction and commissioning of 132 kv Transmission line from J.K. Nagar/Bankola/GSS to Railway traction sub-station at Pandabeswar within the stipulated period of 18 months from the date of receipt of payment of Rs.13.93 crore, further 6 (six) months maximum extension for completion of works may be considered by railways after receiving request from IPCL with valid reason. .If IPCL is not able to complete the works within 18 months plus 6 months extended period, IPCL will be liable for payment of interest on full amount for the period (which may include the first 24 months period also) and interest rate (Maximum not exceeding 14% per annum) as decided by Railway.." Under the said agreement the petitioner IPCL was allowed a period of 18 months and an additional six months to complete the entire work, subject to the timely performance of reciprocal obligations and extension of corporation by the respondent railway and other government authorities as would be evident from various Clauses of the said agreement including the Clause 4 thereof. Such timely completion of the work was also subject to the occurrence of any event mentioned in Clause 28 of the said agreement i.e. the Force Majeure Clause. In pursuance of the said agreement the petitioner IPCL duly submitted bank guarantee for a total sum of Rs. 13.93 crores on July 29, 2015 valid from August 3, 2015 to August 2, 2018; Rs. 9.50 crores through RBl Bank Limited and Rs. 4.43 crores through Axis Bank. The stipulated time period for completion of project would start upon submission of the bank guarantee. The said bank guarantees were not unconditional but payable only against 'any loss or damage caused to or suffered or would be caused to or suffered by the Government by reason of any breach by the Contractor of any of the terms or conditions contained in the said agreement in which the contractor has submitted his offer." It was further provided in the said guarantees that the banks giving the guarantees "further agree with the Government acting through FA & CAO/Eastern Railway, Kolkata, that the Government shall have the fullest liberty without our consent and without affecting in any manner our obligations hereunder to vary any of the terms and conditions of the said Agreement or to extend time of performance by the said Contractor from time to time or to postpone for any time or from time to time any of the powers exercisable by the Government against the said Contractor. During the course of execution of the agreement period the petitioner faced various obstructions and problems which were beyond the control of the petitioner about which the petitioner time to time informed the authority but no response was received by the petitioner from their counterpart. It is the case of the petitioner that despite series of information forwarded to the railway authority regarding various obstructions faced by the petitioner to perform the contractual obligation which such situations squarly fall under Force Majeure clause of the agreement as a result the petitioner could not complete project within the stipulated time as agreed. It is also the case of the petitioner that vide letter dated January 26, 2018 the IPCL requested the respondent railway to grant extension for a period of six months for completion of the said project and also explained the reasons which caused the delay. It is contended that without considering the petitioners representation and the fact situation as explained the railway authority vide its letter dated February 2, 2018 agreed to extend the time for completion only upon payment of penalty for a sum of Rs. 5,44,06,680/- in terms of Clause 30 of the agreement. The said letter further provided that failure to deposit the said penalty within March 17, 2018 will result in the encashment of the bank guarantee submitted by the petitioner, IPCL. In response to such letter the petitioner again on February 5, 2018 explained the unavoidable hindrances faced by the petitioner to complete the work within the stipulated time. Thereafter the petitioner IPCL explained the causes of unavoidable delay in several letters which were duly replied by the railway authority denying the causes highlighted by the petitioner in their letters. It was also the case of the petitioner IPCL that delay occurred due to problems regarding Right Of Way (as referred ROW), as a result the petitioner had to divert its route from A.P.9/7 to A.P. 25/0 for which petitioner had to negotiate two railway track crossing separately for their drivers. Unfortunately, by the impugned order dated February 2, 2018 the respondent railway authority reiterated its stand to extend the time for completion only upon payment of penalty amounting to Rs. 5,44,06,680/- as per Clause 30 of the said agreement and that failure on the part of the petitioner to deposit the said penalty within March 17, 2018 would result in the encashment of the bank guarantee of the petitioner no.1. Immediately thereafter vide a letter dated 5th February, 2018 once again petitioner brought to the notice of the respondent all the obstructions faced by the petitioner which squarely come under Force Majeure clause and this protested that respondent railway has no authority to impose penalty invoking Clause 30 of the said agreement. Submission of Learned Advocates
(3.) Mr. Kalyan Bandyopadhyay, learned senior Counsel appearing for the petitioner vehemently urged that due to unavoidable circumstances as well as the obstructions faced by the petitioner IPCL some delay was caused to complete the work within the stipulated time for which the railway authority should not have imposed penalty resorting to Clause 30 of the agreement while granting extension of time for completion of the work.;