Delhi District Court
Ishan Equipments Pvt. Ltd vs Technip Energies Pvt. Ltd on 29 March, 2025
IN THE COURT OF MS. NEELAM SINGH
DISTRICT JUDGE (COMMERCIAL)-02, SOUTH EAST
SAKET COURTS, NEW DELHI
CS (COMM)-1072/2023
Ishan Equipments Pvt Ltd.
Survey No. 144-145-153-154/1-154/2-154/3,
NH No. 8, Sankarda, Near Manikchand,
District Vadodara, Gujarat-391350 ..... Plaintiff
Versus
1. Technip Energies Pvt Ltd.
Registered office at:
B-22, Okhla Industrial Area,
New Delhi-110020
2. Bank of Baroda
Industrial Estate Branch
Highway Road, Mehsana
Gujarat-384002 .....Defendants
Date of Institution: 24.11.2023
Arguments concluded on : 29.03.2025
Date of Judgment: 29.03.2025
JUDGMENT
The crux of facts stated in brief is noted below:
Case of the plaintiff;
1.1 The plaintiff is a Company incorporated under the
provisions of Companies Act, 1956 having its registered office at
Survey No. 144-145, Ν.Η No. 8, Sankarda, NR. Police Chowki
Vadodara, Gujarat. The Plaintiff is inter alia engaged in the
business of undertaking turnkey assignment covering Design,
Supply, Installation and Commissioning of Deaertor, Pressure
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Vessels, Heat Exchangers, Steam Surface Condenser, FW Heater,
Storage Tanks etc. etc.1.2 Defendant No. 1 is a Company incorporated under the
provisions of Companies Act, 1956 and is engaged in a full range
of design and project development services, from early
engagement to delivery. Defendant is involved in Software
publishing, consultancy and supply of software, operating systems
software, business and other applications software alongwith
computer games software for all platforms.
1.3 Defendant No.2 is a Bank registered with the Reserve Bank
of India and engaged in the business of Banking and Finance in
terms of the Banking Regulation Act, 1949.
1.4 It is the case of the plaintiff that two work orders were
issued by Defendant No.1 to the Plaintiff relating to Work Order
No. ITIN-SC-0001868 regarding Site Fabrication of SS Vessels
for 100136C001 dated 02.02.2022 (hereinafter referred as WO 1)
and Work Order No. SC-0001869 regarding In-situ Fabrication of
Tanks for 100136C001 dated 31.01.2022 (hereinafter referred as
WO 2). It is submitted that plaintiff provided a Bank Guarantee
No. 2006IGF003487222 dated 19.12.2022 for an amount of Rs.
1,21,03,912/- for WO 1. It is submitted that for WO 2, defendant
has never asked for any bank guarantee. It is submitted that
pursuant to Work Order No.1, the plaintiff submitted Advance
Bank Guarantee in terms of clause 4 of WO 1. The said Bank
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Guarantee was issued by the Defendant No.2 (Bank of Baroda).
However, no Advance Bank Guarantee was submitted for the
Work Order No.2 and the work was executed on a mutual
understanding between the parties. The plaintiff started execution
of the Work Orders as per the terms of the contract. It is submitted
that in the interregnum, WO 1 was canceled after the mutual
discussion between the parties and the parties vide minutes of
meeting dated 02.02.2023 categorically recorded the settlement
arrived between the parties for WO 1.
1.5 It is further submitted that the plaintiff, thereafter, continued
with the WO 2 and executed the same as per the terms and
conditions mentioned under the same. However, the Defendant
No.1 despite work being duly executed by the plaintiff started
raising issues with the quality of work and stopped the payment
and canceled the WO 2 vide its email dated 21.03.2023. It is
submitted that for WO 2, there was no Bank Guarantee
issued/submitted by plaintiff. It is further submitted that the
Defendant No. 1 has also not provided any justification or
clarification or explanation for claiming Rs 314 lakhs from the
plaintiff with regard to WO 2.
1.6 It is further submitted that the Defendant No.1 vide email
dated 03.11.2023 arbitrarily informed the plaintiff that since no
amount has been paid for non-performance of WO 2, the
Defendant No.1 will proceed to encash the Bank Guarantee. It is
further submitted that Defendant No.1 threatened the Plaintiff to
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invoke the Bank Guarantee submitted under WO 1 for the alleged
non performance of WO 2 which is not only illegal but will
amount to unjust enrichment of defendant no. 1. It is further
reiterated that Bank Guarantee had been submitted specifically for
the purpose of WO 1 and it is an integral part of the said contract,
hence the same cannot be arbitrarily utilized for any other
purpose.
1.7 It is further submitted that Defendant No. 1 has also not
provided any justification or clarification or explanation for the
expenses sheet submitted by the defendant no. 1 for claiming Rs
314 lakhs from the plaintiff. The plaintiff through numerous
emails, has asked the Defendant No. 1 again and again to provide
the detailed justification/back up for expenses occurred but
defendant no. 1 intentionally ignored to justify its claim of Rs. 314
lakhs.
1.8 It is further submitted that the invocation of bank guarantee
should be in accordance with the terms of the bank guarantee as it
is specifically recorded in the Bank Guarantee that the same is
issued under WO 1 and will be invoked for the non-performance
of WO 1 only. It is further submitted that the invocation of bank
guarantee is not justified merely because the party invoking the
bank guarantee has some claim of damages against the party who
furnished the bank guarantee. The bank guarantee given for
searching the performance of one contract cannot be invoked for
claims or disputes in another contract between the same parties.
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1.9 It is further submitted that Defendant No.1 has time and
again informed the plaintiff that they will invoke the Bank
Guarantee given under WO 1 to mitigate the disputed claim under
WO 2 and for that reason, the present suit has been filed seeking
injunction against defendant no. 1 to not invoke the bank
guarantee given by plaintiff under WO 1.
Case of the defendant;
2.1 Defendant no. 1 has contested the suit by filing written
statement and submitted that the claim of the plaintiff is
manifestly vexatious and without any merit. It is submitted that the
present suit filed by plaintiff deserves dismissal on the ground of
misdescription of defendant no. 1, affidavits not notarized in
accordance with the law and also for concealment of material facts
at the hands of the plaintiff.
2.2 It is submitted that the Defendant is a world-leading
engineering and technology player for the energy transition
specializing a full range of design and project development
services, from early engagement to delivery. The defendant no. 1
in consortium with Technip France (now Technip Energies France)
was awarded a large Engineering, Procurement, Construction and
Commissioning (EPCC) contract by Indian Oil Corporation
Limited (IOCL) for its Para Xylene (PX) and Purified Terephthalic
Acid (PTA) complex project at Paradip, Orissa, on the East Coast
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 5 of 61
of India vide Letter of Acceptance dated April 23, 2021
(“hereinafter referred to as the “Project”).
2.3 It is further submitted that the defendant no. 1 being the
contractor of the project, appointed the plaintiff as a sub-
contractor and issued two work orders as under:-
(a) Work Order for Site Fabrication of SS Vessels for 100136C001
Purified Terephthaic Acid (PTA) Plant (ISBL Licensed Unit of BP
Amoco Plant)-EPCC-01 for a capacity of 1.2MMTPA at Paradip
Refinery under PX-PTA Project of Indian Oil Corporation Limited
(herein referred to as (“WO-I”).; and
(b) Work Order for In-Site Fabrication of Tanks for 100136C001-
Purified Terephthaic Acid (PTA) Plant (ISBL Licensed Unit of BP
Amoco Plant)-EPCC-01 for a capacity of 1.2MMTPA at Paradip
Refinery under PX-PTA Project of Indian Oil Corporation Limited
(hereinafter referred to as “WO-2”)
2.4 It is further submitted that the WO-2 was to be completed
within 10 months from the date of the issue of the work order and
the WO-1 was to be completed within 12 months from the date of
the issue of the work order. It is submitted that both the work
orders pertained to work relating to the PTA Plant at the Paradip
Refinery.
2.5 It is submitted that the defendant no. 1 issued WO-1 on
February 2, 2022 for a total value of Rs. 22,57,00,000/- and
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defendant no. 1 had to pay an advance of 10% to the plaintiff on
submission of an Advance Bank Guarantee (ABG). It is further
submitted that an amended work order was issued by the
defendant no. 1 on September 28, 2022 for WO-1 whereby the
supply of SS plates was excluded from the scope of work of the
Plaintiff and the same was to be issued as a free issue material
(“FIM”) by the defendant no. 1 and accordingly, the value of the
WO-1 was reduced to Rs. 12,10,39,116/- and the billing breakup
stated that 10% of the same i.e. an ABG of Rs.1.21 Crores was to
be submitted by the plaintiff as against the advance paid by the
defendant no. 1 to the plaintiff.
2.6 It is further submitted that pursuant to an amendment to the
WO-1, the plaintiff, on December 19, 2022 submitted an ABG of
Rs. 1,21,03,912/-and the defendant No. 2 being the Bank issued
the ABG. It is submitted that the validity of the ABG was upto
September 9, 2023 and the Claim Period was valid upto December
10, 2023.
2.7 It is further submitted that defendant no. 1 issued WO-2 on
January 31, 2022 for a total value of Rs. 88,320,982/- and the
defendant had to pay an advance of 10% to the Plaintiff on
submission of an Advance Bank Guarantee (ABG). It is submitted
that an amended work order was issued for WO-2 on September
28, 2022 and whereby the work order for procurement of CS and
SS plate was excluded from the scope of work of the Plaintiff and
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the same was provided by the defendant no. 1 as a Free Issue
Material (FIM) and accordingly, the amended value of WO-2 was
reduced to Rs. 5,09,74,634/- and the billing breakup stated that the
10% of the same i.e. an ABG of Rs. 50,97,463/-was to be
submitted by the plaintiff against the advance paid by the
defendant no. 1 to the Plaintiff.
2.8 It is further the case of defendant no. 1 that despite several
follow-ups, there was no Advance Bank Guarantee provided by
the plaintiff for the WO-2 to defendant no. 1. It is further
submitted that defendant no. 1 was under a contractual obligation
to conclude the project on a timely basis and it was constrained to
release the 10% advance of the total amount of the work order i.e.
Rs. 50,97,463/- on the assurance that the ABG for WO-2 would be
issued soon and also on the basis of the ABG provided by the
plaintiff for WO-1.
2.9 It is further submitted that adhering to its obligation and in
the interest of timely completion of the work, the defendant no. 1
released another 10% of the total value of the work order i.e. Rs.
50,97,463/- on February 3, 2023 but no Bank Guarantee was
issued even for this advance payment by the plaintiff.
2.10 It is further the case of defendant no. 1 that a commercial
settlement was arrived at between the plaintiff and the defendant
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no. 1 on February 2, 2023 whereby it was mutually agreed that the
WO-1 shall stand canceled and a settlement cost of Rs. 95.12 Lacs
was agreed upon as consideration to be paid by the defendant no.
1 to the plaintiff based on the actual work performed. It is further
submitted that it was agreed between the parties that the defendant
no. 1 will return the ABG of WO-1 (for Rs. 1.21 Crores) after the
receipt of the ABG of WO-2 as the advance against the WO-2 was
released based on the ABG given for WO-1. It is further submitted
that defendant no. 1 adhered to the payment of the settlement cost
of Rs. 95.12 Lacs to the plaintiff whereas the plaintiff failed to
uphold their end of the bargain i.e. submission of the ABG for
WO-2.
2.11 It is further the case of defendant no. 1 that due to the poor
performance and continuous slippage in the commitment by the
plaintiff of WO-2, two default notices dated January 1, 2023 and
February 16, 2023 were sent to plaintiff by the defendant no. 1
warning the plaintiff that if there is no visible improvement in site
progress in 10 days, the defendant no. 1 would be forced to take
contractual actions in accordance with the provisions of the WO-2.
It is further submitted that defendant no. 1 also reminded the
plaintiff that they have not submitted the ABG for the WO-2
despite of regular follow-ups since 10 months of the placement of
the Purchase Order.
2.12 It is further submitted that despite the issuance of the
default notices, there was no visible improvement in the progress
at the site and the plan was not being executed inline with the
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Work order schedule. Therefore, the Defendant no. 1 had no
choice but to cancel the WO-2 vide cancellation notice dated
March 17, 2023 and affirmed its decision to cancel the WO-2 vide
email dated March 21, 2023 and requested the plaintiff to start
demobilising the site.
2.13 It is further the case of defendant no. 1 that as per the scope
of the work orders, issued to the plaintiff, if the performance of the
work by the subcontractor will not be satisfactory then defendant
no. 1 shall have the right to delete all or any part of the work and
defendant no. 1 shall have the right to got the work done through
some other agency at the plaintiff’s risk and cost. It is submitted
that since the plaintiff failed in performing its obligations arising
out of WO-2, the defendant no. 1 had to place the work order for
Fabrication of Tankages with another sub-contractor, namely
Kamlesh Kumar Singh Engineers Pvt. Ltd. and provide them with
extra FIM that was included in the scope of work of the plaintiff.
It is further submitted that defendant no. 1 worked out all the
expenses and shared a total excess cost incurred by the defendant
no. 1 with the terms of work order amounting to Rs. 3.14 Crores
which was shared with the plaintiff vide email dated October 3,
2023.
2.14 It is further submitted that owing to the aforementioned
cancellation of WO-2, defendant no. 1 issued a formal letter to the
plaintiff requesting the plaintiff to immediately settle all the claims
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in order to avoid any contractual remedies. It is submitted that the
plaintiff sought some time to process the settlement of the claim of
the defendant no. 1 due to some medical emergency. It is further
submitted that taking note of such medical exigency, the defendant
no. 1, vide email dated November 6, 2023 informed the plaintiff
that the ABG submitted for WO-1 (the WO 1 was cancelled on
February 2, 2023) was to expire on December 10, 2023 and
therefore, requested the plaintiff to extend the validity of the ABG
for another 3 months.
2.15 It is further submitted that defendant no. 1 categorically
wrote to the plaintiff that if the ABG (for WO-1) is not extended,
the defendant no. 1 shall proceed with encashing the ABG. It is
submitted that the plaintiff vide email dated November 8, 2023
completely denied its liability of Rs. 3.14 crores and disputed the
cancellation of WO-2 by stating that it was a unilateral decision
taken by the defendant no. 1. It is further the case of defendant no.
1 that the plaintiff finally applied for the extension of ABG and
informed the Defendant No. 1 vide email dated November 20,
2023 and the Bank Guarantee (originally given for WO-1) was
finally extended on November 20, 2023 and the plaintiff informed
the defendant no. 1 about the “Amended Bank Guarantee” vide
email dated November 21, 2023.
2.16 It is further submitted that the defendant no. 1 vide email
dated November 21, 2023 invited the plaintiff for settling the extra
claims (amounting to Rs. 3.14 crores) and categorically stated that
the said email is the final and last effort for settling the claims
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failing which the defendant no. 1 would proceed with the
encashing the Bank Guarantee.
2.17 It is further submitted that plaintiff did not provide a
favorable response regarding the settlement of outstanding
payments, and considering that the validity of the Advanced Bank
Guarantee (ABG) initially issued for WO-1 was extended for the
subsequent WO-2 despite the cancellation of WO-1. It is
submitted that the defendant no. 1 was compelled to seek
Defendant No. 2’s assistance in encashing the ABG as there was
no alternative options available. It is submitted that in view of the
aforementioned facts and circumstances, it is evident that the
plaintiff has approached this Court with unclean hands and has
mislead this Court since the validity of the ABG which was
originally issued for WO-1 was extended after the cancellation of
WO-1 which means that the extension of the validity of the ABG
bearing no. 2006IGF003487222 for Rs. 1,21,03,912/- dated
19.12.2022 was done for the purpose of WO-2 since there was no
Bank Guarantee given for WO-2 by the Plaintiff despite various
reminders/follow-ups sent by defendant no. 1.
2.20 It is further submitted that the present suit seeking
injunction of the Bank Guarantee on the ground that the
encashment is against the terms of the Bank Guarantee is legally
unsustainable. It is further submitted that the non-compliance of
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settlement agreement by the plaintiff, entitles the defendant no. 1
for encashment of ABG. It is further submitted that there is
commonality between the work orders issued to the plaintiff. It is
further submitted that invocation of bank guarantee has been
initiated by defendant no. 1 in accordance with its terms and the
Courts are restrained from granting injunction against encashment
of bank guarantee in terms of various judgments passed by
Hon’ble High Courts and Hon’ble Apex Court.
Defendant no. 2
3. Written Statement has been filed on behalf of defendant no.
2. Defendant no. 2, Bank of Baroda, is a body corporate,
constituted under the Banking Companies (Acquisition and
Transfer of Undertaking) Act, 1970. It is submitted that at the
request of Mehsana Co-operative Bank Limited and on behalf of
plaintiff company, defendant no. 2 issued bank guarantee no.
2006IGF003487222 valid upto 10.09.2023, claim period valid
upto 10.12.2023, for an amount of Rs. 1,21,03,912/- for the
consideration of defendant no. 1 company for awarding Work
Order to the plaintiff as per terms and conditions mentioned in the
work order no. ITIN-SC-0001868 dated 02.02.2022. It is
submitted that the bank guarantee was issued with covering letter
dated 19.12.2022. Furthermore, Mehsana Co-operative Bank Ltd.
vide its Letter dated 20.11.2023 alongwith communication
between plaintiff and defendant no. 1 requested defendant no. 2 to
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extend the bank guarantee and accordingly, defendant no. 2
extended the bank guarantee vide amendment till 10.12.2023
claim period valid upto 10.03.2024. It is submitted that defendant
no. 2 has no role to play in the present case except the fact that
defendant no. 2 bank has issued bank guarantee at the instance of
plaintiff company. It is submitted that defendant no. 2 would abide
by any direction/ order passed by this Court.
4. Replication has been filed on behalf of the plaintiff, where it
has reiterated the submissions made in the plaint and has denied
the submissions made in the Written Statement by the defendants.
5. Upon completion of the pleadings, the following issues
were framed on 04.07.2024:
1. Whether the plaintiff has not approached this Court with clean
hands and has concealed material facts and documents from this
Court? OPD1
2. Whether the terms of ABG issued for Work Order 1 can be
unilaterally changed? OPD1
3. Whether the terms of the work order no. 1 can be changed
without consent of the plaintiff for Work Order 2? OPD1
4. Whether Bank Guarantee issued for Work Order 1 can be
invoked for Work Order 2 in view of settlement agreement dated
02.02.2023? OPD1
5. Whether defendant no. 1 is liable to return the Bank Guarantee
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No. 20061GF003487222 of Rs.1,21,03,912 dated 19.12.2022 to
the plaintiff? OPP
6. Whether the plaintiff is entitled for permanent injunction against
the defendant from encashing Bank Guarantee No.
20061GF003487222 dated 19.12.2022? OP Parties
7. Whether the plaintiff entitled for cost of the suit? OPP
8. Relief.
6. (a) The matter then was kept for evidence. In order to prove
the case plaintiff has examined Sh. Ramesh Chandra Samriya as
PW-1 who tendered his evidence by way of affidavit Ex.PW1/A.
He also relied upon the following documents:
1. Board of Resolution dated 18.11 2023 PW 1/1 (OSR).
2. Copy of Work Order 1 is EX. as PW 1/2.
3. Copy of Work Order 2 is EX. PW1/3.
4. Copy of Bank Guarantee dated 19.12.2022 Along with
Extension Letter dated 20.11.2023 is EX.PW 1/4.
5. Copy of letter dated 03.01.2023 is Ex.PW 1/5.
6. Copy of Minutes of Mecting dated 02.02.2023 is Ex. P1/6.
7. A copy of final default notice dated 16.02.2023 is as Ex. P1/7.
8. A copy of email dated 21.03.2023 is Ex. P1/8.
9. A copy of letter dated 18.10.2023 is Ex. P1/9.
10. A copy of email dated 03.11.2023 is Ex. P1/10.
11. A copy of email dated 21.11.2023 is Ex. P1/11.
12.A copy of ticket dated 22.11.2023 is Ex. P1/12.
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(b) PW-1 was cross examined by Ld. Counsel for defendant.
Relevant portion of his cross examination is reproduced as under:
“Q. Since when you have been working with the plaintiff company?
Ans: – I am working Since 2011 and continue to work in a company.
Q. What are your responsibilities as the finance manager of the
plaintiff?
Ans: – My responsibilities are to take care of day-to-day affairs of
banking, finance and accounts work of the plaintiff company including
the projects of the company.
Q. What kind of services does your company provide?
Ans: – My company provides the Manufacturing of Process
Equipment’s (Storage Vessel, Tanks, Heat Exchanger, Columns,
Structure work) of stainless Steel, Carbon Steel for chemical
industries, Refineries, Water Treatment plants in industries, Power and
Gas, Meta allergic Industries, Fertilizers, etc.
At this Stage, Affidavit supporting the plaint of PW 1 has been shown
to PW-1 From Judicial File.
Q. Can you confirm the affidavit shown to you is belongs to you?
Ans: – Yes
Q- Do you Know Mr. Harshad Joshi (Adv)?
Ans: – Yes.
Q. Can you confirm whether Adv. Harshad Joshi (G/2101/2019) had
identified your signature in the above said affidavit?
Ans: – Yes
Q. Is Mr. Harshad Joshi is your Authorized Counsel to Represent the
plaintiff in this case?
Ans: -Yes
Q. Can You show from the Vakaltnama on record which can confirm
that Mr. Harshad Joshi is an authorized person to represent you in this
case?
Ans: – There is no Signature or Name of Mr. Harshad Joshi (Adv) in
the vakaltnama.
Q. Where was Mr. Harshad Joshi when you signed the above said
Affidavit?
Ans: – Mr. Harshad Joshi had accompanied me at New Delhi, when I
signed the Affidavit.
Q. Do you have any Document on record which suggest or shows that
Mr. Harshad Joshi was in New Delhi, when he identified your
signature on the affidavit?
Ans: – No Documents is on record; Vol. the Airplane ticket of Adv
Harshad Joshi is with me.
It is wrong to suggest Mr. Harshad Joshi is a lawyer practicing in
Gujrat and both he and you were in Gujarat at the time of signing of
the affidavit and neither of you were in New Delhi; therefore, it is
wrong to suggest that your affidavit is not with accordance with law
and you are not competent to be witness for the plaintiff in this case.)
At this stage, Document at page 30 of plaint paper book from judicial
showed to PW-1.
Q. Can you show your signature in the above said document?
Ans: – No.
It is wrong to suggest that the affidavit under Order XI Rule 6 A of the
CPC (as amended by the Commercial Courts Act) which is a
mandatory requirement in a commercial suit has not even been signed
by you and therefore, you are not competent to depose on behalf of
plaintiff.
Q. Can you tell me for which work/services the defendant no 1 wanted
to engage the plaintiff company?
Ans: – Our company was engaged for manufacturing of Storage Vessel,
Storage Tankages.
Q. Were you the part of any negotiation with defendant no.1 prior to
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the issuance/ Execution of the Work Orders bearing No. ITIN-
SC-0001868 dated 2nd/ Feb/2022 (WO.1) and Work Orders bearing
No. ITIN-SC-0001869 dated 31st/ Jan/2022 ( WO.2)
Ans: – No. Vol. I was managing the finance department of the
company.
Q. Were the Work Orders addressed or signed by you?
Ans: – No.
Q. Is it correct that you are not privy to or aware of the contents of
Work Orders?
Ans: – Yes, I was aware of the contents of Work Orders.
It is wrong to suggest that you are aware of the contents of work order.
Q. You state in para 7 of evidence affidavit that there were, “Certain
issues faced in the work executed” in relation to Work Order 2. What
were the issues?
At this stage, Affidavit from judicial filed has been showed to PW-1.
Ans: – We were facing the issue of Site Mobilization
Q. Did you ever visit the project site at Paradip Refinery, Odisha
during the term of Work order 2?
Ans: – No, I did not visit at Paradip Refinery during the work order 2″.
Q. Is it correct that Defendant No. 1 claimed an amount of Rs 3.14
Crores for the breach of work order?
Ans: – Yes, the amount of Rs 3.14 Crores was claimed over e-mail.
Q. It is correct that as per para 6 of your affidavit, no advance bank
guarantee was issued for work order-2 and the work was executed on
the mutual understanding of the parties. Can you show from record as
to where such mutual understanding was recorded or stated?
(At this stage affidavit has been shown to witness from judicial file)
Ans: – There is no written document and it was a telephonic
conversation.
Q. Were you a part of the above said telephonic conversation?
Ans:-I was not a part of the telephonic conversation.
Q. As per para 8 of your affidavit you stated minutes of meeting dated
2.2.2023 (EX PW 1/6) “Categorically recorded the settlement arrived
between the parties for work order 1”. Is it correct that as per clause 3
of the documents an amount of Rs. 95.12 Lakhs was to be paid to
plaintiff?
(At this stage affidavit has been shown to witness from judicial file)
Ans: – Yes, we have received the amount of Rs. 95.12 Lakhs.
Q. Can you show any document from your plaint that you received the
above said amount of Rs. 95.12 Lacs?
Ans: – No. (Vol. the above said amount is not necessary/relevant to
disclose in the plait).
Q. Pursuant to settlement dated 2.2.2023 (EX PW 1/6) were there any
monetary claims against either of the parties in relation to the work
order 1?
Ans: – Yes, there were claims in relation to the as per the table( Referred
to clause 3) annexed to the settlement/MOM.
Q. Pursuant to the settlement recorded on 02.02.2023 did you ever
make a written request seeking the return the ABG (Advance Bank
Guarantee) which as per you was given for work order 1?
Ans: – No, but I had asked the same over a phone call.
Q. With whom and on what date did you make the aforesaid phone
call?
(At this stage MOM dated 02.02.2023 @page 127 (Ex-PW-1/6) from
the court records has been showed to witness)
Ans: – I had spoken to Mr. Vivek Gupta and Mr. Vipin Aggarwal over a
call around 3-4 times.
Q. Can you show from the Plaint the averments which show that you
made the aforesaid phone calls?
Ans: – No, I have not made any such averments in my Plaint.
It is wrong to suggest that since the settlement dated 2.2.2023, you
never sought the return of the ABG which you say was given for work
order 1.
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Q. Is it correct that on 27.01.2023 you received an advance of Rs 50.97
Lakhs from Defendant No. 1 in relation to work order 2?
Ans: – No.
At this stage the witness has been confronted with page 45 of List of
Documents filed with the Written Statement (Document No. 2) from the
Judicial File.
Vol. Yes, I received an amount of Rs. 50.97 Lakhs from Defendant No.
1 in relation to work order 2.
Q. Did you mention or make any averments regarding the receipt of the
aforementioned amount in your Plaint?
(At this stage counsel for plaintiff raised an objection- “That the Plaint
is in connection with the recovery of ABG given for work order-1 and it
has no nexus with the payment given for work order 2”.)
[At this stage counsel for Defendant No.1 draws attention to Para 4 of
the Plaint and Annexure P-2 (@Page 5 of LOD with plaint) ]
Q. Is it correct that on 20.04.2023 you received an amount of Rs. 1.13
Crores from Defendant No.1 towards the amount for work order 1?
Ans: – Yes. Vol. In April I received the amount of Rs 1.13 Crore and
still after receiving the said amount I didn’t receive certain pending
amount in connection with work order 1.
Q. Have you mentioned or made any averments regarding receiving of
the aforementioned amount for work order 1 in your Plaint?
Ans: – No. Vol. I did not make any averment as it is regarding ABG
with Defendant No. 1.
Q. Is it correct that on 20.11.2023 you applied for an extension of the
ABG which as per you was given for work order 1?
Ans: – Yes. Vol. Work order 1 was already cancelled and Defendant No.
1 had kept the ABG and was threatening to invoke the same.
Q. Have you mentioned or made any averments in your Plaint regarding
the extension of ABG?
(At this stage witness has shown the court records)
Ans: – No.
(At this stage, the counsel of Plaintiff says that the Plaint contains the
admitted document wherein the facts have been disclosed.)
(At this stage the counsel for Defendant No. 1 in his rebuttal says that
the counsel for the Plaintiff cannot attempt to supplant or answer the
question on behalf of witness and accordingly, this objection may not
be considered and be expunged.)
(At this stage an observation is made by the local commissioner that the
counsel for Plaintiff is not answering on behalf PW-1 and that he just
raised a concern regarding the question relevancy.)
[At this stage, witness was confronted with page no 56 of LOD filed
with the Written Statement (The application of bank guarantee
renewal)].
Q. Is the above confronted document signed and stamped on behalf of
the Plaintiff Company?
Ans: – Yes.
Q. Have you filed this document with your Plaint?
Ans: – No.
Q. How many people were employed/contracted/engaged by Plaintiff
for fabrication work that has been done?
Ans: 30-35 people (roughly) in a first role, moreover 5-6 people from
engineering staff Vol. This is not an exact figure.
Q. How much payment according to you has to be paid by Defendant
No. 1 in connection with work order 1?
Ans: – I cannot recall the exact figure.
Q. Can you show from record where you have prayed for payment of
outstanding amount?
Ans: – I do not remember.
Q. Was work order 2 ever amended after it was originally issued on 31
Jan 2022?
Ans: – Yes it was amended for only one time.
Q. Was it amended in writing?
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 18 of 61
ADN-Yes
At this stage witness was confronted with the document marked as
ANNEXURE P-2 (@page 51 and 57) of LOD filed by the Plaintiff.
Q. Is it correct that the documents at the aforementioned pages dated
28.09.2022 and 01.01.2023 are the only two amendments for work
order 27
Ans: Yes, it is correct.
Q. Are there any other amendments to work order 2 apart from those
mentioned at pages 51 and 57?
Ans: – No.
Q. Is it correct that after the MOM dated 02.02.2023, the Plaintiff
received an amount Rs. 50.97 Lakhs on 03.03.2023 for work order 2?
Ans: – I have to check.
At this stage the file was shown to the witness (@page no 46) List of
Documents filed by Defendant No 1.
Ans: – Yes, we received the payment for work order 2.
At this stage, page No 129 (LOD filed by the Plaintiff) was shown to
the witness from the court file.
Q. Is the meeting referred to in the aforementioned letter the same
meeting which resulted in the MOM dated 02.02.2023?
Ans: -No.
Q. How many meetings did you have with Defendant No. 1 on
02.02.2023?
Ans: – Only one meeting.
Q. Can you tell us where and to whom did Defendant No. 2 intimate
that appropriate action should be taken in terms of Work Order 2?
Ans.;- Bank had intimidated the Plaintiff.
At this stage the counsel for Plaintiff had intervened and suggested that
there is typographical error and it has to be Defendant No. 1)
Q. As per the final default notice of 16.02.2023. Defendant No. I had
raised specific issues and allegations against the Plaintiff regarding the
non-compliance of work order 2. Did you ever give a Specific
Reply/Response?
Ans: Yes, I had sent.
Q. Can you show from the record when you had sent the specific reply?
Ans: – No it’s not on record. Vol. There are correspondences but the
same is not in the Plaint.
It is wrong to suggest that you never had a specific response to the
allegations raised by Defendant No. 1 for your non compliance of work
order 2 as you were guilty of failing to not perform the obligation for
work order 2.
Q. Can you show us where you have mentioned in your Plaint the
contents of the table that you have mentioned in para 15 of your
affidavit?
Ans:-I have not seen in the Plaint (at this stage the court file has been
shown to witness)
Ans: – No, it is not mentioned in the Plaint.
It is wrong to suggest that your Affidavit goes beyond your pleadings in
the suit which disentitled you to for any relief.
Q. Is the table mentioned in para 15 reflecting the disputed amount
which as per you is payable by Defendant No. 1 sfor the two work
Orders?
Ans: – Yes
It is wrong to suggest that you are not entitled to the relief sought and it
is also to suggest that you have played fraud of the court by concealing
the material information. It is also wrong to suggest that you have taken
contradictory stand not only from what is stated in the plaint but also
from what has been deposed by PW-1, thereby further corroborating
your malafide intention in instituting and perusing the present
proceeding, It is wrong to suggest that you are not liable for the return
of the bank guarantee has it is your own case that the advance against
work order 2 was given against the ABG originally issued for work
order 1. Even otherwise the work orders were between the same parties
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 19 of 61
for the same project and were identically verdant. It is also wrong to
suggest that a bank guarantee is a independent contract between the
bank and beneficiary and you have no locus to seek a return of the
same”.
7 (a). Plaintiff has also examined Director of the plaintiff
company Mr. Jayanti Panchal as PW-2 who has tendered his
evidence by way of affidavit Ex.PW2/A and relied upon following
documents:
1. Copy of work order 1 Ex. PW2/1.
2. Copy of Work order 2 Ex. PW 2/2.
3. Copy of bank Guarantee dated 19.12.2022 along with extension
letter 20.11.2023 is Ex. PW/3.
4. Copy of letter dated 03.01.2023 is Ex. PW 2/4.
5. Copy of Minutes of Meeting Dated 02.02.2023 Ex. PW 2/5.
6. Copy of Final Default Notice dated 16.02.2023 is Ex. PW 2/6.
7. Copy of Email Dated 21.03.2023 is Ex. PW-2/7.
8. Copy of Letter Dated 18.10.2023 is Ex. PW 2/8.
9. Copy of Email Dated 03.11.2023 is Ex. PW 2/9.
10. Copy of Email Dated 21.11.2023 is Ex. PW 2/10.
(b) PW-2 was cross examined by Ld. Counsel for defendant.
Relevant portion of his cross examination is reproduced as under:
“Q. What is your name as per Government Records?
Ans:- My name is Jayantilal Manilal Panchal.
Pw-2 has seen his Aadhar Card at this stage.
Q. What is your name as per the MCA (Ministry of Corporate affairs)
Records?
Ans: – Jayantilal Manilal Panchal.
Q. Is it correct to say that, “Jayanti Panchal” the name is reflected in your
affidavit Ex PW2/A is not your registered name as a director?
Ans: – Yes, it is not my registered name as per ROC/MCA Records.
Q. your affidavit which reflects your name as “Jayanti Panchal” – Director
of the plaintiff company is not your correct name?
Ans: – It is my incorrect name.
Q. Is it correct that nobody by the name “Jayanti Panchal” is a director in
the Plaintiff company?
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A. It is correct that there is no such director in the Plaintiff company as
“Jayanti Panchal”.
Sugg: I put it to you Mr. Jayantilal Manilal Panchal that you are not
competent to depose as a director of the Plaintiff company and whatever
you say here is not liable to be read in and as evidence.
It is incorrect.
Counsel for Defendant No. 1 states that all further questions are without
prejudice to the aforementioned suggestions.
Counsel for the Plaintiff states that he has no objection for the same.
Q. What are your educational qualifications?
A. I am a graduate in B.Sc (Industrial Chemistry).
Q. Do you understand the legal meaning of the term “cause of action”?
As for the TOC, Project, Paradip Odia
O. During the operations undertaken in relation to the work ordiers did you
ever personally visit the Paradip refinery in Odialiva?
A. Yes, I have visited the refinery
Q. When and on how many occasions have you visited the said site at
Paradip
A. I have visited the said site twice, once when the work orders were being
issued and thereafter for the site setup.
Q. What work was undertaken while doing the site setup?
A. Fabrication work was being done.
Q. What was the purpose for which the Fabrication work was undertaken?
A. It is being done for the refinery work.
Q. Is it correct that as per both the work orders, (Clause 4) you were
contractually liable to furnish Advance Bank guarantees (ABGs) to
Defendant No. 1?
A. Yes, it is correct.
Q. Was your relationship with Defendant No. 1 a business/ for profit
relationship or was it a not for profit/ charitable relationship?
A. It was a business relationship only.
Q. Since it was a business relationship what is the basis to say that the
contractual obligation of providing an ABG in lieu of the advance given by
the Defendant No. 1 for Work Order 2 was waived?
A. It was waived by Defendant No. 1 and I am not aware on what basis it
was waived. However, work order 1 was mutually terminated and our
ABG which was with Defendant No. 1 was asked to be returned with all
the remaining payments pertaining to work order -1 which was released by
Defendant No.1. However, some payments were pending which was
subjected to the presentation of documentary evidence but till date the said
remaining payment is outstanding.
It is therefore correct that there is no such document on record on the basis
of you are claiming that Defendant No. 1 has waived an contractual don
which required you to furnish the ABG?
A. It is correct that there is no such documentary evidence qua the same.
At this stage the witness has been shown the Para No. 8 of Judicial File.
Q. What do you mean by the term “oblique motive” and his affidavit from
the attributed the same to the Defendant No. 1?
A. Oblique motive means that the ABG for Work order-1 was with
Defendant how have you No. 1 and we were demanding the same along
with other outstanding payments against Defendant No. 1 for Work Order
2. The same payment was made subsequently but I do not know as to for
which work order the said payment was made to us.
At this stage the witness has shown the Copy of minutes of meeting dated
02.02.2023 (Ex. Pw-2/5) from the Judicial file.
Q. Can you identify the signatures (On top right) on this Document as
yours?
A. Yes, the said signatures are mine.
Q. Is it correct that the settlement and cancellation of work Order-1 was
recorded and were in accordance with the Minutes of Meeting dated
02.02.2023?
A. No. (Vol. Our Minutes of Meeting was made on 02.02.2023 in which
we demanded our outstanding Payment and ABG as both ABG and
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 21 of 61
outstanding payments were with Defendant No. 1 due to which they had
created pressure and dominance and had made me sign the above Minutes
of Meeting and they called me for a meeting and by creating undue
pressure, Defendant No. 1 has terminated Work Order-1.
Q. Therefore, does that mean that your evidence affidavit which states that
“WO-1, was cancelled after the mutual discussion between the Parties vide
Minutes of Meeting dated 02.02.2023 categorically recorded the
understanding arrived between the parties for WO-1” is false and
incorrect?
A. This statement is true and correct. Vol. We made this Affidavit from the
material available with the company and both the aforementioned
statements and the response to the abovementioned question are true.
Q. Therefore, are you saying that that on one hand the work order 1 was
“Cancelled after mutual discussion vide Minutes of Meeting dated
02.02.2023 and that the settlement/cancellation of work order-1 was not in
accordance with the MOM dated 02.02.2023 (In terms of your
aforementioned answer) are both true, and correct? S(Comm) 10 he
Equipment
A. Both the versions are correct.
Q. Can you please tell us as to where you have mentioned or averred in the
plaint that Defendant No. I had any oblique motive, used any pressure or
dominance in while you executed the MOM dated 02.02.2023?
A.I have not mentioned it in the Plaint.
Q. Did you ever raise any objection with Defendant No.1 saying that you
were made to execute the Minutes of Meeting dated 02.02.2023 under
pressure or that D-1 had an oblique motive?
A. No, Vol. I have discussed the issue orally many times.
Q. Can you show us where you have mentioned in your Plaint that you
discussed the issue regarding signing the MOM under pressure/dominance
orally with the Defendant No. 1.
A. No.
It is incorrect to suggest that the contents of the para 8 of your affidavit in
relation to Defendant No. 1 having an oblique motive and that you signed
the MOM under pressure is an desperate afterthought as they have not only
not been pleaded in the Plaint but also find no mention in the evidence
affidavit of PW-1.
(Vol. when the MOM took place at that time Mr. Ramesh PW-1 was not a
part of that MOM.)”
Thereafter, PE was closed.
8. (a) Matter was then kept for defence evidence. In order
to prove its case defendant no. 1 has examined Sh. Prashant
Sharma as DW-1 who tendered his evidence by way of affidavit
Ex.DW1/A. He has relied upon the following documents:
1. Copy of GPA Dated 12.06.2021is EX DW 1/1 (OSR).
2. Copy of Work order 1 is marked as EX DW 1/2 (OSR).
3. Copy of Work order 2 is marked as EX DW 1/3 (OSR).
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4. Copy of Settlement/ MOM agreement dated 2.2.2023 as
DW 1/4 (OSR).
5. Copy of Default Notice dated 1.1.2023 As DW1/5. (OSR).
6. Copy of Default notice dated 16.02.2023 as Dw 1/6. (OSR).
7. Copy of cancellation notice dated 17.03.2023 ex as DW 1/7.
(OSR).
8. Copy of Email Dated 3.10.2023 is Ex As DW 1 /8. (OSR).
9. Copy of Email Dated 06.11.2023 is Ex as DW 1/9. (OSR).
10.Copy of Email Dated 8.11.2023 is Ex as DW1/10. (OSR).
11.Copy of Application for extension of advance bank
guarantee originally issued for work order 1 dated
20.11.2023 is EX DW 1/11.
12.Copy of email dated 21.11.2023 is EX DW 1/12.
(b) DW-1 was cross examined by Ld. Counsel for plaintiff.
Relevant portion of his cross examination is reproduced as under:
“Q. What is your name?
Ans: – My Name is Mr. Prashant Sharma and it is my official name.
Q. When did you join the company of Defendant no 1?
Ans: – I joined the company in 2006.
Q. Can you show your letter of appointment?
Ans: – No I cannot show the same, I am not aware that it is a part of case file.
Q. What is your role in the Defendant no 1 company?
Ans: – I am the company Secretary.
Q. Have you read the pleadings in the instant matter?
Ans: – Yes, I have read the pleadings.
Q. Did you understand the averments and submission made in the plaint
before signing the written statement and evidence by the way of affidavit?
Ans: – Yes.
Q. Can you show the reliefs sought by the plaintiff in the suit?
(At this stage court file has shown to Witness).
Ans: – The Witness has pointed out that reliefs are mentioned in page 19 of
the Plaint.
Q. Is it correct that the plaintiff has filed the instant suit recovery of Rs
1,21,03,912/- along with interest from Defendant no 1 and permanent
injunction against Defendant no 1 from encashing the advance bank guarantee
(ABG) No 20061GF003487222 dated 19th Dec 2022 for WO 1?
Ans: – Relief no 1 is for the return of ABG from Defendant no 1 and not for
recovery of amount of Rs. 1,21,03,912/- and the interest mentioned in ABG
and relief no. 2 is for permanent injunction against defendants for encashment
of ABG.
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Q. Is there any other relief claimed in plaint except the above-mentioned
relief?
Ans: – No other Specific reliefs are sought in plaint.
Q. Is it correct that you have not filed any counter claim against the plaintiff
in the instant matter?
Ans: – Yes, Rs 3.14 Crore is mentioned in the Written statement.
Q. Can you show from the documents that the court fees claiming Rs 3.14
Crore as counter claims have been deposited or filed?
Ans: – I don’t recall.
(At this stage witness was confronted with his written statement from the
judicial file)
At this stage the counsel for defendant raised an objection over the relevancy
of above said question.
Ans: – No, there is no documents.
Q. Do you know the meaning of counter claim?
Ans: – Yes, it means if somebody is asking something and you are putting
your claim against the same.
Q. Are you aware about the process and procedure of filing the counter claim?
Ans: – No I am not aware of procedure.
Q. Is it correct that the amount of Rs 3.14 Crores as mentioned in written
statement of Defendant no 1 is related to work order 2?
(At this stage the witness has shown the judicial file)
Ans: – Yes
Q.Is it correct that Defendant no 1 has not initiated any proceedings for the
recovery of Rs 3.14 Crores which is related to work order 2?
Ans: – Yes, it is correct.
Q. Is it correct that the instant suit is pertaining to ABG no
20061GF003487222 dated 19th Dec 2022 issued for work order 1?
Ans: – Yes, it is correct.
I put it to you that you have not filed any counter claim for the recovery of Rs
3.13 Crores against the plaintiff in the instant proceedings as the said amount
is allegedly due and payable under work order 2 and the instant proceedings is
qua work order 1.
Ans: -It is not fully correct. Vol. we have has initiated the part recovery out of
3.14 Crores by initiating the encashment of the ABG given for work order 1
by the plaintiff. Both the work orders are inter-connected and related to the
same project for the same client. This connectivity is established in the
settlement agreement/ MOM dated 2nd Feb 2023.
Q. Do you understand the legal meaning of a contract?
Ans: – Yes, it is the terms agreed between the two parties.
Q. It is correct that each and every contract has to be governed by its terms
and condition?
Ans: – Yes, it is correct.
Q. Can you show the clause from work order 1 clause seeking the deposit or
submission of requirement of submitting the ABG of 10 % of Contract
amount?
(At this stage the document at page no 67 of plaintiff list of documents from
court file has been showed to witness)
Ans: – yes, it is clause 4 of work order 1.
Q. Can you show from the judicial file the ABG issued for work Order 1?
(at this stage file has been again showed to witness)
Ans: – Yes, it is in court file at page no 116 in plaintiff’s list of documents.
Q. Can you point out from the above said document any reference to work
order 1?
Ans: – yes, it is in the 14th Line of Page no 117 of the plaintiff’s list of
documents.
Q. Can you show any clause from work order 1 and work order 2 which
suggest that both the work order is interlinked?
Ans: – Yes, it has been shown in subject clause at page no 5 and 64 of
plaintiff’s list of documents which is for the same project of IOCL PX-PTA
project. VOL. This fact has been subsequently established in the MOM dated
2nd Feb 2023 executed between the parties.
Q. Can you tell the work order no of work order 1 and work order 2?
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(at this stage file has been again showed to witness)
Ans: – Yes, the work order 1 no is W.O.NO. ITIN-SC-0001868 dated 2 nd Feb
2022 and the no for the work order 2 is W.O.NO. ITIN-SC-0001869 dated 31 st
Jan 2022 again said the no of Work order 2 is SC-0001869 dated 31 st Jan
2022.
Q. Is it correct that IOCL has awarded the contract to the Defendant no 1 at
Paradip Refinery to Defendant no 1?
Ans: – Yes, it is correct.
Q. Can you tell us the scope of contract awarded to Defendant no 1 by IOCL
at Paradip Refinery?
Ans: – Currently it is going on. Vol. It is for engineering, procurement,
construction, Commissioning of PX-PTA project for IOCL at Paradip
Refineries.
Q.Is it correct that there is only one consolidated contract executed between
IOCL and Defendant no 1 as mentioned above?
Ans: – yes, there is one consolidated contract. VOL. the contract was executed
between IOCL and concercium of Technip energies India ltd and Technip
France.
Q. Is it correct that the scope of above-mentioned consolidated contract
includes Insite fabrication of tanks and Insite fabrication of S.S vessels?
Ans: – Yes
Q. Is it correct that defendant no 1 executed two work orders, one for
fabrication S.S Vessels and 2nd is fabrication of tanks with plaintiff on
different dates?
Ans: – Yes, it is correct.
Q. It is correct that the scope, terms and condition of both the work orders
were different?
Ans: -No. Vol. The scope of both the work orders were different but for the
same project and client and the terms and condition of both work orders were
identical except for work order value and related terms.
Q. Can you identify the person from work order 1 the signature of authorized
person of Defendant no 1?
(At this stage the judicial file has been showed to witness)
Ans: – Yes, Mr. Devender Singh and Ebenezer chairmandorai has signed the
work order 1 on behalf of defendant no 1.
Q. Can you identify the person from work order 2 the signature of authorized
person of Defendant no 1?
Ans: – Yes, Mr. Arjinder Singh and Mr. Ebenezer chairmandorai has signed
the work order 1 on behalf of defendant no 1.
Q. Can you tell why defendant no 1 issued two different work orders to
plaintiff?
Ans: – I don’t know.
Q. Is it correct that you were not a part during the negotiations and execution
of the aforesaid work Orders?
Ans: – Yes, it is correct.
I put it to you that two different and independent work orders were issued by
concerned authorized persons of defendant no 1 wherein both the work order
contains different scope, terms and condition qua its execution as it operates
in two different fields.
Ans: – It is wrong. Vol. Though the work orders were separate but it was for
the same project, same client with separate scope.
Q. is it correct that IOCL is the client of defendant no 1?
Ans: – Yes, it is correct.
Q. Is it correct that Defendant no 1 subcontracted the part of work allotted by
IOCL by way of one consolidated contract to Defendant no 1, to the plaintiff
by way of two different work orders?
Ans: – Yes, It is correct.
Q. Is it correct that for the execution of the project, Defendant no 1 was
reporting to the IOCL authority/representatives qua the status of the project?
Ans: – Yes.
Q. Is it correct that authorized representative of plaintiff company was not
reporting to the IOCL authority/representatives?
Ans: -Yes, it is correct. VOL. They were not directly reporting to IOCL
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Authority, however, IOCL was their principal Employer.
Q. It is correct that work order 1 categorically stipulates that ABG equivalent
to 10 percent of the contract price required to be submitted by the plaintiff
before the release of advance for execution of work?
(at this stage court file has shown to witness)
Ans: – Yes, it is correct.
Q. Can you point out the value of Work Order 1?
Ans: – Yes, it has been mentioned on page no 64 of list of Documents and the
original value was Rs 22.57 Crores and which was amended vide amendment
1 dated 28th Sep 2022 and the amended value was Rs 12,10,39,116.
Q. Can you point out the value of ABG given for work order 1?
Ans: – Yes, it is Rs. 1,21,03,912.
Q. is it correct that the aforementioned ABG was submitted in terms of the
Work Order 1?
Ans: – Yes
Q. Is It correct that despite submission of ABG for work order 1 the
Defendant no 1 has not released any advance in term of the work order 1?
Ans: – I am not sure.
Q. Can you point out from your written statement regarding the same?
(At this stage judicial file has been showed to witness)
Ans: – No. Vol. It cannot be ascertained from the written statement.
Q. Is it correct that plaintiff has executed some work in terms of Work order
1?
Ans: – Yes, it is correct.
I put it to you that despite the receipt of the ABG for work order 1 and despite
some work executed or perform by the plaintiff in terms of work order 1 the
defendant no 1 never released the advance of 10 percent as stipulated under
the work order 1.
Ans: – I am not sure.
Q. What was the total value of Work Order – 2?
Ans. Around 8.8 Cr.
Q. Is it prior to amendment or after the amendment?
At this stage judicial file has been shown to the witness.
Ans:- 8.8 Cr was the original contract price or amount and 5.09 Cr after the
amendment 1.
Q. Is it correct that work order 2 categorically stipulates that ABG equivalent
to 10% of the contract price was required to be submitted?
At this stage judicial file has been shown to the witness.
Ans:- Yes.
Q. What would have been the total value of ABG for Work Order-2?
Ans:- It would be 10% of 5.09 Cr. Which will be approx. 50.97 Lacs.
Q. When did Defendant No. 1 release the 10% advance under work order-2.
At this stage judicial file has been shown to the witness.
Ans: – 27.01.2023.
Q. Is it Correct that the Defendant No.1 released the 10% advance despite
there being no ABG for work Order-2 on 27.01.2023?
Ans:- Yes. Vol. However, Defendant No. 1 already had ABG of Rs. 1.21 Cr.
Q. What do you mean by “Your Previous Volunteer statement that Defendant
No. 1 already had ABG of Rs. 1.21 Cr.”
At this Stage the counsel for the Defendant has raised an objection that the
clarification in connection with the volunteer statement is not required as the
same is self explanatory.
At this Stage the Local Commissioner had allowed the Counsel for the
Plaintiff to ask the same question but not to repeat the same.
Ans. The Plaintiff requested to release the advance on the basis of ABG
submitted for Work Order-1 and assured that he will replace the ABG of Work
Order-1 with ABG for Work Order-2 and provide the work order-2 ABG.
Q. Can you show any document on or before 27 th January 2023 wherein the
Plaintiff had requested Defendant No. 1 to release the 10 % Advance under
Work Order-2 on the basis of ABG submitted for work order-1.
At this stage judicial file has been shown to the witness.
Ans. It is not in the plaint and it is also not in the written statement.
Q. I Put it to you that there is no document prior to 27 th Jan 2023 wherein the
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 26 of 61
Plaintiff had requested Defendant No. 1 to release the 10 % Advance under
Work Order-2 on the basis of ABG submitted for work order-1.
Ans.- It is Correct. Vol. Plaintiff has requested for release of advance in lieu of
ABG issued for Work Order-1 which has been recorded in the
MOM/Settlement dated 02.02.2023.
Q. Is it correct that on or before 27.01.2023 the Defendant No.1 never
informed in writing to the plaintiff that 10% advance under work order-2 has
been released in lieu of ABG submitted for work order-1.
ANS:- I don’t Know.
Q. Can you show from the records any documents filed along with your
written statement reflecting the abovesaid information?
At this stage judicial file has been shown to the witness.
Ans. There is no document filed along with the written statement.
Q. Is it correct that there is a document prior to 27.01.2023 wherein
Defendant No.1 informed the Plaintiff qua the release of 10% advance for
work order-2 in lieu of ABG given for work order-1. However, you have not
filed the same with the written statement.
At this Stage Ld. Counsel for Defendant has raised an objection that the
Question which have been asked is a leading question and to support his
objection he clarified that the Mode and Manner of the question is not correct
but the objective of the question is fine.
At this stage the Local Commissioner allowed the counsel for Plaintiff to ask
the same Question.
Ans. I don’t recall.
Q. Who on behalf of the Plaintiff assured the Defendant No.1 on or before
27.01.2023 that ABG for the Work Order-1 will be replaced by the ABG for
Work Order-2 and accordingly requested for the release of advance of 10%
under work order-2?
ANS:- I don’t recall the exact name but it was from the Plaintiff Company.
Q. Can you specify the date of such assurance?
ANS:- No, I cannot specify/recall the date of Assurance.
Q. Were you a part of this communication when this assurance was given by
the Plaintiff?
ANS:- No.
Q. Who was the recipient of such assurance on behalf of the Defendant No. 1?
ANS:- I do not know the name but it was someone from the procurement
team.
Q. I put it to you that neither the plaintiff requested or nor the Defendant No.1
had informed the Plaintiff to release the 10% advance under work order-2 in
lieu on the ABG submitted for work order-1 and there is no documentary
proof in that regard on or before 27.01.2023 which demonstrate that the
amount of 10% for work order-2 was released on the basis for ABG for work
order-1 you have given a false affidavit on oath to mislead the Hon’ble Court
for which necessary legal actions should be taken against you.
ANS:- No.Q. It is correct that the plaintiff has started the execution of work
order-2 even without receiving the 10% for the Work Order-2?
ANS:- I don’t know.
At this stage the Witness has been confronted document P-5, page No. 126
filed along with Plaintiff’s list of Document from judicial file.
Q. Is it correct that on 03.01.2023, Defendant No.1 issued a default notice for
work order-2 instructing the plaintiff to speed up the work?
ANS:- Yes.
Q. Is it Correct that in letter dated 03.01.2023, Defendant No.1 has asked the
Plaintiff to submit ABG for work order-2?
ANS:- It is not correct. Vol. We have not asked the Plaintiff to submit the
ABG but we have mentioned that Ishan has not submitted ABG in spite of
regular follow up.
Q. Is it correct that vide letter dated 03.01.2023 the Defendant no.1 informed
the Plaintiff that the Plaintiff has not submitted the ABG for tankages even
after 10 months of purchase order placement dated 02.02.2022 which is a
serious default.
ANS:- Yes.
Q. Is it correct that from 03.01.2023 till 27.01.2023 the Plaintiff never
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 27 of 61
submitted ABG for work order-2?
ANS:- Yes.
I put it to you that Defendant No. 1 has released the 10% advance for work
order-2 without receiving the ABG for Work Order-2 and accordingly waived
the contractual condition on the date of release of Advance i.e., 27.01.2023.
It is wrong to suggest.
Q. Is it correct that on 02.02.2023, Defendant No. 1 and the Plaintiff
terminated the Work Order-1 you were not a part of that Meeting?
At this Stage, Ld. Counsel for the Defendant has raised an objection that the
contents of the said documents are self explanatory and do not require any
further oral evidence by a witness of fact.
At this stage the Ld. Local Commissioner has overruled the Objection,
It is correct that I was not a part of that Meeting.
Q. Is it Correct that the meeting Dated 02.02.2023 was regarding the
Discussions on work order -1.
At this stage Ld. Counsel for Defendant has raised an objection that the
question asked by the Counsel for the Plaintiff is seeking to procure oral
evidence on an admitted written/electronic document which is not permissible
U/s 59 of the Indian Evidence Act and the Corresponding Act of B.S.A
Section 54. At this stage the rebuttal for the objection and in rebuttal he
clarified that the Witness is Deposing on a basis of Document wherein the
understanding of the parties are recorded on the basis of discussion and prior
communication wherein the witness is not a part/signatory to the said
document then in such scenario it is mandatory to ascertained the basis on
which witness is deposing.
At this stage after Listening both the counsel Ld. Local Commissioner has
made the observation that asking question from the witness is necessary to
establish the position of Law in the case and the same has allowed in the
interest of Justice.
At this stage the Witness wants to see the Court File permission granted in the
interest of justice.
In the Continuation of his above said answer, “In this Regard reference has
been give to serial no. 3 & 5 of the MOM dated 02.02.2023 at Page No. 127
of Plaintiff’s Documents from Judicial File.
Q. It is correct that on 02.02.2023 there is another meeting between Defendant
No.1 and Plaintiff for Work Order-2 wherein the necessary directions for the
execution of Work Order-2 were issued to the Plaintiff?
ANS:- I cannot recall.
At this Stage the Witness was confronted with the Documents at Page No. 129
of the Plaint from the Judicial File.
Q. After Showing the File “Is it correct that on 02.02.2023 there is another
meeting between Defendant No.1 and Plaintiff for Work Order-2 wherein the
necessary directions for the execution of Work Order-2 were issued to the
Plaintiff”
ANS:- It is incorrect. Vol. there was only one common meeting was held on
02.02.2023 the minutes of meeting was duly signed by the Defendant No.1
and the Plaintiff.
Q. Is it Correct that at page No. 129 of the Plaintiff’s Document Para 1, 3 rd
Line Defendant No. 1 mentioned that on 02.02.2023 the Defendant No.1
granted last opportunity to the Plaintiff to perform on the Tanks Order failing
which Defendant No.1 will be forced to terminate the Tankages Order?
ANS:- Yes.
Q. Can you show from MOM dated 02.02.2023 page 127 of Plaintiff’s
Document that the Plaintiff was given the Last Opportunity to Complete the
Work Order-2?
At this stage the witness has shown the Judicial File.
Ans. It is not there in the MOM.
Q. Can you identify the Person who has signed the MOM on behalf of the
Plaintiff?
ANS:- I can identify Mr. Jayanti Panchal, but I can not identify Mr. Anil
Singh.
Q. It is Correct that Mr. Jayanti Panchal is the Managing Director of the
Plaintiff?
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 28 of 61
ANS:- I do not know.
At this stage the witness is known page No. 129 of the Plaintiff’s Document.
The Question has been repeated by the counsel for the Plaintiff after
confronting the documents to the witness.
Q. Is it correct that Mr. Jayanti Panchal is the Managing Director of the
Plaintiff.
ANS:- Yes.
Q. Is it correct that alleged claim amount to Rs. 3.14 Cr. is unrelated to the
instant suit. Which is for the work order-2 and the ongoing dispute which is
the subject matter of the suit revolved around the invocation of ABG dated
19.12.2022 given for work order-1?
ANS:- Its not fully correct. Vol. The advance against the Work Order-2
amounting to Rs. 50.95 Lacs + 50.95 Lacs was given in lieu of ABG held
against Work Order-1.
Q. When was the Work Order-1 was cancelled?
ANS:- It was cancelled on Meeting dated 02.022023.
Q. Was there is any intimation given to the Plaintiff in advance qua the agenda
of the said meeting?
ANS:- I cannot recall.
Q. Is it correct that Work Order-2 was cancelled within approx. 45 days from
the Meeting dated 02.02.2023.
At this stage the witness has shown the Page No. 48 of List of Documents
filed along with the Written Statement from the Judicial File.
Ans. Yes.
Q. Is it Correct that ABG for work Order-1 was extended without amending
its original terms except the date i.e., Date of Amendment and Date of Expiry.
ANS:- Yes.
Q. Is it Correct that Defendant No.1 never asked in writing or orally to the
Plaintiff to amend the Work Order-1 which is ITIN-SC-0001868 from the
ABG during its subsequent extension.
ANS:- I Don’t recall. Vol. However, the Defendant No. 1 has requested
plaintiff to provide ABG for work order-2 against which ABG for work
order-1 will be replaced. This fact was also recorded in the MOM Dated
02.02.2023.
At this stage the witness has shown page no. 122 of the Plaint from the
Judicial File.
Q. Is it correct that this is the extension of the ABG originally issued for Work
Order-1. Wherein all the terms and Conditions remains unchanged.
At this stage objection has been raised by the Ld. Counsel for Defendant as
the Witness is legally incompetent to given oral evidence of this Document as
it has been authored by Defendant No. 2 at the request of Plaintiff.
Ans. The ABG was extended for Work Order-1.
At this stage the Witness has been again confronted with the page no. 129 of
the Plaintiff’s Document from the Judicial File. At this stage the counsel for
the Defendant again raised an objection which is same as above.
ANS:- As per the Extension issued by the Bank all terms and Conditions of
the ABG remained unchanged.
I Put it to you that at no point of time the Defendant No. 1 has requested the
Plaintiff to extend the Terms and Condition as well as the scope of ABG
provided for Work Order-1 to be utilized under the Work Order 2. The
Plaintiff has never requested the Defendant No.1 to invoke the ABG given for
Work Order-1 for satisfying its alleged claim arising out of Work Order-2
hence your entire deposition is false and frivolous which should not be relied
upon by the Hon’ble Court and appropriate legal actions should be taken
against you for giving false testimony under oath in the Court of Law.
ANS:- It is wrong to suggest”.
Final Arguments
9. The matter was listed for final arguments. Ld. Counsel for
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 29 of 61
the plaintiff as well as Ld. Counsel for defendants made their
respective submissions.
Arguments on Behalf of the Plaintiff:
10.1 It is argued by Ld. Counsel for the plaintiff that tyhere are
certain admitted facts in this case. The admitted facts of the parties
are as under:
(a) Work Order for Site Fabrication of SS Vessels for 100136C001
Purified Terephthaic Acid (PTA) Plant (ISBL Licensed Unit of BP
Amoco Plant)-EPCC-01 for a capacity of 1.2 MMTPA at Paradip
Refinery under PX-PTA Project of Indian Oil Corporation
Limited. (WO-1)
(b) Work Order for In-site Fabrication of Tanks for 100136C001-
Purified Terephthaic Acid (PTA) Plant (ISBL Licensed Unit of BP
Amoco Plant)-EPCC-01 for a capacity of 1.2 MMTPA at Paradip
Refinery under PX-PTA Project of Indian Oil Corporation
Limited. (WO-2)
(c) Defendant no. 1 issued WO-1 on 02.02.2022. The total value
of WO-1 was Rs. 22,57,00,000/- and the defendant no. 1 had to
pay an advance of 10% to the plaintiff on submission of an
Advance Bank Guarantee (ABG).
(d) An amended work order was issued by defendant no. 1 on
28.09.2022 for WO-1 whereby the supply of SS plates was
excluded from the scope of work of the plaintiff and the same was
to be issued as a free issue material (FIM) by defendant no. 1.
Therefore, the value of WO-1 was reduced to Rs. 12,10,39,116/-
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 30 of 61
and the billing break up stated that 10% of the same i.e. an ABG
of Rs. 1.21 Crores was to be submitted by the plaintiff as against
advance paid by the defendant no. 1 to the plaintiff.
(e) Pursuant to the amendment of WO-1, the plaintiff on
19.12.2022 submitted an ABG of Rs. 1,21,03,912/- and defendant
no. 2 being the Bank issued the ABG which was valid upto
09.09.2023 and claim period was valid till 10.12.2023.
(f) Defendant no. 1 also issued WO-2 on 31.01.2022 for a total
value of Rs. 88,320,982/- and defendant no. 1 had to pay an
advance of 10% to the plaintiff on submission of an ABG.
(g) An amended work order was issued for WO-2 on 29.09.2022
and whereby the procurement of CS and SS plate was excluded
from the scope of work of the plaintiff as the same was provided
by defendant no. 1 as FIM.
(h) Amended work order was issued by the defendant no. 1 to the
plaintiff on 01.01.2023 whereby the approved billing schedule
was incorporated by defendant no. 1. The amended WO-2 was
reduced to Rs. 5,09,74,634/- and the billing break up stated that
the 10% of the same i.e. an ABG of Rs. 50,97,463/- was to be
submitted by plaintiff against the advance paid by defendant no. 1
to the plaintiff.
(i) There was no ABG provided by the plaintiff to defendant no. 1
for WO-2.
(j) A commercial settlement was arrived between the plaintiff and
defendant no. 1 on 02.02.2023 whereby it was mutually agreed
that WO-1 shall stand canceled and a settlement cost of Rs. 95.12
Lakhs was agreed upon as consideration to be paid by the
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 31 of 61
defendant no. 1 to the plaintiff.
10.2 It is argued by Ld. Counsel for the plaintiff that the only
point of consideration before this Court on the basis of admitted
fact is that plaintiff has issued ABG in favour of defendant for
work order no. ITIN-SC-0001868. The said work order was not
allotted to the plaintiff, admittedly defendant no. 1 has issued
work order no. 2 in favour of plaintiff and for the advances given
by defendant no. 1 i.e. 10 per cent of the contract amount, plaintiff
has not issued ABG in favour of defendant no. 1, so the foremost
point of consideration before this Court is that whether defendant
no. 1 is allowed to invoke ABG issued by plaintiff for WO-1 in
favour of defendant no. 1 which was admittedly not allotted to the
plaintiff and whether defendant no. 1 is allowed to invoke the
ABG for a different contract i.e. WO-2, the ABG which was given
for WO-1. It is argued by Ld. Counsel for the plaintiff that this
position has already been settled by Hon’ble Apex Court in the
case of M/s Gangotri Enterprises Ltd. Vs. Union of India & Ors.
AIR 2016 Supreme Court 2199 decided on 05.05.2016. Ld.
Counsel for the plaintiff has taken me to paragraph 13 of this
judgment.
10.3 I have gone through the aforesaid judgment and Hon’ble
Apex Court had granted an injunction against the invocation of
bank guarantee on the ground that the guarantee in question which
was said to be invoked pertain to a different contract altogether. It
is submitted that as per this case, Gangotri Enterprises Ltd.
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 32 of 61
(Supra), the appellant was awarded two contracts by the
respondent, wherein a bank guarantee was submitted by the
appellant to the respondent in the second contract. Certain
disputes arose between the parties in the first contract and
arbitration proceedings thereunder were commenced. The
respondent sought to encash the bank guarantee provided under
the second contract. The appellant filed applications u/s 9 the
Arbitration Act, seeking injunction against the invocation of bank
guarantee, which was ultimately rejected by the Hon’ble High
Court. In the appeal before Hon’ble Apex Court, injunction was
granted restraining the encashment of the bank guarantee, inter-
alia, stating that the sum claimed by the respondent from the
appellant in the arbitration proceedings did not pertain to the
contract under which the bank guarantee was actually furnished,
but for another contract (first contract) for which no bank
guarantee had been furnished and the bank guarantee in question
was in the nature of a performance bank guarantee and the works
under the second contract had been satisfactorily completed.
10.4 It is submitted by Ld. Counsel for the defendant that the
facts before the Hon’ble Apex Court and before this Court are
similar in nature and the defendant no. 1 here in this case on the
basis of the judgment (Supra) be restrained from encashing the
ABG for WO-2 which was never executed and materialized for
WO-2 by the plaintiff.
10.5 The relevant paragraphs of M/s Gangotri Enterprises Ltd.
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 33 of 61
Vs. Union of India & Ors. (Supra) is reproduced hereunder:
“2) This appeal is filed against the final judgment and order dated
23.07.2012 of the High Court of Uttar Pradesh Judicature at
Allahabad in F.A.F.O. No. 2930 of 2012 whereby the High Court
dismissed the appeal filed by the appellant herein and upheld the
order of District Judge which had refused to grant an interim
injunction restraining encashing of the Bank Guarantee by the
respondents herein.
3) In order to appreciate the issue involved in this appeal, which
lies in a narrow compass, it is necessary to set out the relevant
facts in brief infra.
4) The respondents, i.e., North Central Railway invited tender
for doing “earth work in embankment and cutting including
provision of machine crushed/blended material blanketing
layer and construction of RCC Box type minor bridges at
CH-84700M to 114100M”, in connection with laying down of
Agra-Etawah new BG Rail Line. The appellant-a Limited
Company applied for the said tender and its tender being the
lowest one was accepted by the respondents on 14.03.2005
and accordingly the letter of acceptance was issued in
appellant’s favour. The contract agreement No. CE(C) ‘North’
ALD/A-E/Contract/EW-III dated 22.08.2005 was then signed
between the parties. The total value of the contract was
Rs.14,62,46,742/-, the date of commencement of work was
14.03.2005 and the date of completion of work was
13.03.2007. As the work could not be completed within the
prescribed time, on the request of the appellant-Company, the
period of completion of work was extended twice by the
respondents, firstly, from 14.03.2007 to 31.12.2007 and again
upto 30.09.2008 without levy of penalty and with price
variation clause benefit.
5) On 14.07.2006, the appellant-Company was granted another
work by the respondents-North Central Railway vide letter No.
74- W/4/1/347/WA/ANVR/SERd./TCR for construction of New
Station Building (G+2) circulating area, various service buildings,
construction of platform shelters with RCC Column and beam,
Underground and Overhead water storage tanks, water supply
pipeline network and other misc. works in connection with the
Development of New Passenger Terminal at Anand Vihar (East
Delhi) [hereinafter referred to as “Anand Vihar works”]. In
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 34 of 61
connection with the grant of the Anand Vihar works, the
appellant-Company submitted a Bank/Performance Guarantee
bearing No. 12/2006 dated 04.08.2006 from its banker Indian
Mercantile Co-operative Bank Ltd., Cantt. Road, Lucknow
(hereinafter referred to as ‘Bank’) for a sum of Rs.1,32,78,820/-.
6) Since the work relating to contract dated 22.08.2005 could
not be completed within the prescribed time/extended time by
the appellant due to non-availability of site because of the
agitation of the farmers and non- supply of the specification or
drawing of most of the small bridges by the respondents, as
complained by the appellant, the Agra-Etawah contract dated
22.08.2005 was terminated by the respondents vide its letter
dated 30.04.2009. After inviting fresh tenders, the rest of the
work was allocated by the respondents to another Company,
namely, M/s Hanu Infrastructure Pvt. Ltd. Kasganj, Kashiram
Nagar for approximately Rs. 11 Crores on 10.06.2011 without
giving any information to the appellant- Company.
7) On 30.09.2010, the appellant got the completion certification
from the respondents for the Anand Vihar works with a defect
liability period of six months, which also came to an end on
30.03.2011. Thus the appellant became entitled to seek the release
of the Bank/Performance Guarantee No. 12/2006 submitted by it
for the said work from the respondents.
8) On 27.06.2011, the appellant, therefore, wrote a letter to the
respondents-North Central Railway for return of the
Bank/Performance Guarantee No. 12/2006.
9) On 10.06.2011, the North Central Railway issued an internal
circular to all concerned departments of the Railways for
withholding of dues of the appellant-Company stating therein that
the contract of the appellant- Company dated 22.08.2005 or the
New Agra-Etawah BG Line was cancelled and the same had
caused the respondents a loss of Rs.5,58,16,036.33. The said
circular came to the knowledge of the appellant on 18.07.2011.
10) On 30.11.2011, the respondents through their accounts
department wrote a letter to the Bank which had furnished
Bank Guarantee No.12/2006 for and on behalf of the appellant
for the encashment of the said Bank Guarantee.
11) On 02.12.2011, the final bill for the Anand Vihar works
were cleared by the respondents and the payment for the same
was released by the respondents.
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 35 of 61
12) Since the disputes had arisen between the parties in relation to
and arising out of the contract dated 22.08.2005, the appellant
invoked Clause 36 read with Clause 64 of the General Conditions
of Contract (in short “GCC”) which provided for the settlement of
dispute by arbitration.
13) After initiation of the arbitration, the appellant, on 04.01.2012,
moved an application under Section 9 of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as “the Act”)
before the District Judge, Allahabad bearing Arbitration Suit No.
411 of 2011 seeking injunction on encashment of the Bank
Guarantee deposited by it in the Anand Vihar works, against the
respondents. It was inter alia alleged in the application that the
respondents-North Central Railway have no right to encash the
Bank Guarantee No.12/2006 furnished by the appellant in relation
to dispute arising out of another contract dated 22.08.2005. It was
alleged that firstly, Bank Guarantee was not furnished by the
appellant in relation to contract dated 22.08.2005 but was
furnished in performance of another contract dated 14.07.2006
(Anand Vihar works) which is a separate contract and has nothing
to do with the contract dated 22.08.2005. Secondly, it was alleged
that so far as the contract dated 14.07.2006 (Anand Vihar works)
is concerned, the work was completed well within time and also
to the satisfaction of the respondents and for which Completion
Certificate was also given to the appellant by the respondents on
30.09.2010. Thirdly, it was alleged that since the Bank Guarantee
in question was in the nature of performance Guarantee for due
execution of contract dated 14.07.2006 (Anand Vihar works) and
the same having been performed by the appellant to the
satisfaction of the respondents, the appellant-Company was
entitled to get its Bank Guarantee No.12/2006 released from the
respondents. It was further alleged that in these circumstances, the
respondents have no right to encash the Bank Guarantee in
relation to any dues arising out of other contract with the
appellant. It was also alleged that in any event, so long as the
disputes arising out of the contract dated 22.08.2005 are not
finally decided by the arbitrator and liabilities of the parties are
not ascertained as to, who has to pay how much sum by way of
damages and whether any one is at all liable to pay, there is no
sum “due” or “payable” either by the appellant to the respondentsCS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 36 of 61
or/and vice versa and hence the respondents cannot invoke Clause
62(1) of GCC for realization of any money/sum by encashing the
Bank Guarantee from the appellant.
14) The respondents resisted the petition and inter alia
contended that Clause 62(1) of GCC empowers the
respondents to make recovery of any dues from the appellant.
It was contended that since the respondents have a claim/dues
for payment of a sum of money against the appellant
(contractor), they (respondents) would be entitled to exercise
their right of recovery given to them under Clause 62(1) even
if such claim is not for a “sum due” and “sum payable” and is
a claim for “damages” though disputed by the appellant and
remains to be adjudicated upon in a court of law or by the
arbitrator. It was contended that the respondents were,
therefore, entitled to encash the Bank Guarantee in question in
relation to dues/claim made by the respondents against the
appellant.
15) By order dated 04.01.2012, the District Judge allowed the
application made by the appellant and restrained the respondents
from encashing Bank Guarantee till appointment of arbitrator or
constitution of Arbitral Tribunal. It may be mentioned here that
the respondents did not file any appeal against this order, which
attained finality.
16) By letters dated 20.01.2012 and 29.01.2012, the appellant
then requested the respondents for return of its Bank
Guarantee.
17) On 13.03.2012, an arbitration Tribunal was constituted as
per Clause 32 read with Clause 64 of the contract between the
parties which comprised of Shri Arun Kumar,
CCE/NCR/ALD, Shri A.K. Bijalwan
FA&CAO/F&B/NCR/ALD and Shri R. Rajamani Former
CCRS & Member/Arbitrator to look into the claims and the
counter claims of the parties. The arbitration proceedings are
pending.
18) On 21.03.2012, the Deputy Chief General Manager/Const./SE
Rd/NDLS wrote to the Branch Manager of the Indian Mercantile
Cooperative Bank for extension of Bank Guarantee, which was
valid upto 13.01.2012. On the request of the respondents, the
Bank extended the period of Bank Guarantee for another six
months, i.e., upto 13.07.2012.
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 37 of 61
19) On 04.04.2012, the respondents through their accounts office
wrote a letter to the Branch Manager of the Bank to encash the
said Bank Guarantee in their favour.
20) Since the respondents went on insisting for encashment of
the Bank Guarantee again and again saying that order dated
04.01.2012 passed by District Judge no longer survives as its
life was only upto the date of constitution of arbitral Tribunal
and hence the respondents became entitled to encash the Bank
Guarantee, the appellant again filed a petition under Section 9
of the Act bearing Arbitration Suit No. 216 of 2012 before the
District Judge, Allahabad seeking injunction against the
respondents from encashing the Bank Guarantee.
21) By order dated 12.07.2012, the District Judge dismissed
the petition and declined to grant injunction to the appellant.
This time, the District Judge accepted the stand taken by the
respondents and held that Clause 62(1) empowers the
respondents to recover any dues/claim from the appellant and
hence the respondents were within their rights to invoke the
bank Guarantee and recover the dues relating to other
contract.
22) Aggrieved by the said order, the appellant preferred an appeal
bearing F.A.F.O. No. 2930 of 2012 before the High Court.
23) By impugned judgment dated 23.07.2012, the High Court
concurred with the view taken by the District Judge and dismissed
the appellant’s appeal.
24) Challenging the said judgment, the appellant has filed this
appeal by way of special leave.
25) Heard Mr. B. Adinarayan Rao, learned senior counsel for the
appellant and Mr. Atul Chitaley, learned senior counsel for the
respondents.
26) Mr. B. Adinarayan Rao, learned senior counsel appearing for
the appellant (Contractor) while assailing the legality and
correctness of the impugned order reiterated the same
submissions, which were urged by the appellant before the two
Courts below in support of the application filed by the appellant
under Section 9 of the Act. His submission was that since the
Bank Guarantee in question was in the nature of performance
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 38 of 61
guarantee furnished by the appellant for due performance of one
contract (Anand Vihar works) dated 14.07.2006 and the same
having been admittedly performed by the appellant to the
satisfaction of the respondents (North Central Railway), as is clear
from the completion certificate dated 30.09.2010 issued by the
respondents in appellant’s favour, the purpose for which the Bank
Guarantee had been furnished was over as soon as the Satisfaction
Certification was issued by the respondents in appellant’s favour.
Learned counsel, therefore, contended that the appellant became
entitled to claim release of the Bank Guarantee in their favour on
and after 30.09.2010 without any fetters on their rights.
27) In the second place, learned counsel urged that the
respondents (North Central Railway) had no right to take
recourse to Clause 62 of GCC for encashing the Bank
Guarantee in question because firstly, the arbitration
proceedings which arose out of another contract dated
22.08.2005 were still pending for final adjudication of the
liability, if any, and secondly, so long as the liability as to how
much sum was payable and if so by whom it was payable was
not finally determined in accordance with law in the
arbitration proceedings by the arbitrators, there was no “sum
due” and nor any “sum payable” in praesanti by the appellant
to the respondents and vice versa in connection with another
contract.
28) In the third place, learned counsel contended that the District
Judge, in the first instance, having rightly granted the injunction
to the appellant vide order dated 4.01.2012 and no appeal having
been filed against this order by the respondents, the said order had
become final and was binding on the parties. It was, therefore,
urged that when the appellant moved the second application for
grant of injunction after the matter was referred to arbitration
because of insistence on the part of the respondents to encash the
bank guarantee, the District Judge should have extended the life
of first order dated 04.01.2012 instead of again going into the
merits of the case.
29) Lastly, learned counsel urged that in the light of this legal
position arising in the case, the appellant had made out a
prima facie case for grant of injunction against the
respondents (North Central Railway) from encashing the bank
guarantee in question.
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 39 of 61
30) In reply, learned counsel for the respondents (North
Central railway) supported the impugned order and contended
that no case is made out to interfere in the impugned order and
hence it be upheld.
31) Having heard the learned counsel for the parties and on
perusal of the record of the case, we find force in the
submissions of the learned senior counsel for the appellant.
32) In our considered opinion, it may not be necessary for us
to go into more details of the issue because, in our view, the
controversy involved in this case remains no more res integra
and stands decided by this Court in the case of Union of India
vs. Raman Iron Foundry, (1974) 2 SCC 231. Since the issue
stands already decided by this Court and hence it is necessary
to examine the facts of the case and law laid down therein in
detail and then apply the same to the facts of the case at hand.
33) The facts of the case of Union of India (DGS&D) (supra)
were that the respondent (Raman Iron Foundry) entered into a
contract with the Union of India (DGS&D)-the appellant for
supply of certain quantity of “Foam compound”. The contract,
apart from several other conditions, contained two clauses,
namely, Clauses 18 and 24. Clause 24 provided that in the
event of any dispute arising between the parties in connection
with the contract, the same shall be decided by means of
Arbitration. Clause 18 with which we are concerned provided
for “recovery of sums due” which reads as under :
“18. Recovery of sums due — whenever any claim for the
payment of a sum of money arises out of or under the
contract against the contractor, the purchaser shall be
entitled to recover such sum by appropriating in whole or
in part, the security, if any, deposited by the contractor,
and for the purpose aforesaid, shall be entitled to sell
and/or realise securities forming the whole or part of any
such security deposit. In the event of the security being
insufficient, the balance and if no security has been taken
from the contractor, the entire sum recoverable shall be
recovered by appropriating any sum then due or which at
any time thereafter may become due to the contractor
under the contract or any other contract with the purchaser
or the Government or any person contracting through the
Secretary, if such sum even be not sufficient to cover the
full amount recoverable, the contractor shall on demand
pay to the purchaser the balance remaining due.”
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 40 of 61
34) The performance of the contract ran into difficulties and
dispute arose between the parties giving rise to claims by
either parties against the other. The respondent contended that
the appellant committed a breach of the contract and was,
therefore, liable to pay to the respondent a sum of Rs.
2,35,800/- by way of damages suffered by the respondent by
reason of the breach of the contract whereas the appellant, on
the other hand, said that it was the respondent who committed
the breach of the contract and was, therefore, liable to pay to
the appellant by way of damages a sum of Rs. 2,28,900/-. In
the meantime, the appellant through Assistant Director of
Supplies sent a letter to the respondent calling upon the
respondent to make payment to them a sum of Rs. 2,28,900/-
and threatened that if the said amount is not paid, it will be
recovered from several respondents’ pending bills in respect
of other contracts.
35) The respondent, therefore, filed an application under
Section 20 of the Indian Arbitration Act 1940 in Delhi High
Court against the appellant for filing the arbitration
agreement. The respondent also made an application for an
interim injunction restraining the appellant from recovering
the amount of damages claimed by it from several pending
bills of the respondent. The learned Single Judge dismissed
the injunction application on the ground that it could not be
proved that there were any pending bills but at the same time
allowed the application made under Section 20 of the Indian
Arbitration Act and referred the matter to arbitration as per
Clause 24 of GCC. This is how the claim/counter claim of the
parties became the subject matter of the arbitration
proceedings.
36) Pending arbitration proceedings, the appellant made
attempt to recover the said amount from the respondent and
hence the respondent again made another interlocutory
application under Section 41 read with second schedule to the
Indian Arbitration Act, 1940 and prayed for status quo in the
case. The appellant resisted the application. It was contended
that Clause 18 empowers the appellant to make recovery of
any amount from the respondent. The learned Single Judge
allowed the respondent’s application.
He took the view that Clause 18 did not authorize the
appellant to appropriate the amounts of any pending bills of
the respondent towards satisfaction of its claim for damages
against the respondent unless such claim for damages was
either admitted by the respondent or adjudicated upon by the
arbitrator or suit in civil court. Accordingly, the injunction, as
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 41 of 61
prayed for, was granted to the respondent against the
appellant. It is this issue, which was carried by the Union of
India to this Court.
37) The questions, which fell for consideration before this
Court, were – first, what is the true interpretation of Clause 18;
second what is the meaning of the words “sum due” and “may
become due” under the contract or any other contract with the
purchaser occurring in Clause 18; third, whether Clause 18
empowered the Union of India to make recovery of amount
claimed by it by way of damages (liquidated or unliquidated)
for breach of contract pending arbitration proceedings from
the contractor and lastly, whether in such case, contractor is
entitled to claim injunction against the Union of India from
making recovery of such sum.
38) Justice Bhagwati (as His Lordship then was) speaking for
the Bench examined the issue in great detail in the light of law
laid down by English and Indian Courts. The learned Judge in
his distinctive style of writing after examining the entire case
law on the subject held that an expression “sum due”
occurring in Clause 18 would mean a sum for which there is
an existing obligation to pay in praesenti or in other words
which is presently payable and due and, therefore, recovery of
only such sums can be made subject matter of Clause 18
which is presently payable and due. It was held that a claim,
which is neither due and nor payable, cannot be made subject
matter of Clause 18. It was further held that Clause 18 does
not create a lien on other sums due to the contractor or give to
the purchaser a right to retain such sums until his claim
against the contractor is satisfied. It was also held that a claim
for damages for breach of contract is not a claim for a sum
presently due and payable and the purchaser is not entitled in
exercise of the right conferred upon it under Clause 18 to
recover the amount of such claim by appropriating other sums
due to contractor.
39) Their Lordships approved the view taken by Chagla C.J.
in the case of Iron and Hardware (India) Co. vs. Firm Shamlal
and Bros., AIR 1954 Bom.423 by observing in para 11 as
under.
“11…………………………………………………..The same
view has also been taken consistently by different High Courts
in India. We may mention only a few of the decisions, namely,
Jabed Sheikh v. Taher Mallik,AIR 1941 Cal 639 S. Milkha
Singh v. N.K. Gopala Krishna Mudaliar, AIR 1956 Punj 174
and Iron and Hardware (India) Co. v. Firm Shamlal and Bros.,CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 42 of 61
AIR 1954 Bom 423. Chagla, C.J. in the last mentioned case,
stated the law in these terms: (at pp. 425-26) In my opinion it
would not be true to say that a person who commits a breach
of the contract incurs any pecuniary liability, nor would it be
true to say that the other party to the contract who complains
of the breach has any amount due to him from the other party.
As already stated, the only right which he has is the right to go
to a Court of law and recover damages. Now, damages are the
compensation which a Court of law gives to a party for the
injury which he has sustained. But, and this is most important
to note, he does not get damages or compensation by reason
of any existing obligation on the part of the person who has
committed the breach. He gets compensation as a result of the
fiat of the Court. Therefore, no pecuniary liability arises till
the Court has determined that the party complaining of the
breach is entitled to damages. Therefore, when damages are
assessed, it would not be true to say that what the Court is
doing is ascertaining a pecuniary liability which already
existed. The Court in the first place must decide that the
defendant is liable and then it proceeds to assess what that
liability is. But till that determination there is no liability at all
upon the defendant. This statement in our view represents the
correct legal position and has our full concurrence. A claim for
damages for breach of contract is, therefore, not a claim for a
sum presently due and payable and the purchaser is not
entitled, in exercise of the right conferred upon it under clause
18, to recover the amount of such claim by appropriating other
sums due to the contractor. On this view, it is not necessary for
us to consider the other contention raised on behalf of the
respondent, namely, that on a proper construction of clause 18,
the purchaser is entitled to exercise the right conferred under
that clause only where the claim for payment of a sum of
money is either admitted by the contractor, or in case of
dispute, adjudicated upon by a court or other adjudicatory
authority. We must, therefore, hold that the appellant had no
right or authority under clause 18 to appropriate the amounts
of other pending bills of the respondent in or towards
satisfaction of its claim for damages against the respondent
and the learned Judge was justified in issuing an interim
injunction restraining the appellant from doing so.
12. We accordingly dismiss the appeals. The appellant in each
appeal will pay the costs of the
respondent all throughout.”
40) In our considered opinion, the case at hand being
somewhat identical to this case has to be decided keeping in
view the law laid down by this Court in the case of Union of
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 43 of 61
India (DGS&D) (supra).
41) Coming now to the facts of the case at hand, we find that
wordings of Clause 62 of the contract in question with which
we are concerned is identical to that of Clause 18 of Union of
India (DGS&D) (supra). Clause 62 of GCC provides for
determination of contract owing to default of contractor. The
relevant portion of Clause 62 reads as under:
“The amounts thus to be forfeited or recovered may be
deducted from any moneys then due or which at any time
thereafter may become due to the Contractor by the
Railway under this or any other contract or otherwise.”
42) On perusal of the record of the case, we find
that firstly, arbitration proceedings in relation to
the contract dated 22.08.2005 are still pending.
Secondly, the sum claimed by the respondents
from the appellant does not relate to the contract
for which the Bank Guarantee had been furnished
but it relates to another contract dated 22.08.2005
for which no bank guarantee had been furnished.
Thirdly, the sum claimed by the respondents from
the appellant is in the nature of damages, which is
not yet adjudicated upon in arbitration
proceedings. Fourthly, the sum claimed is neither
a sum due in praesenti nor a sum payable. In other
words, the sum claimed by the respondents is
neither an admitted sum and nor a sum which
stood adjudicated by any Court of law in any
judicial proceedings but it is a disputed sum and
lastly, the Bank Guarantee in question being in the
nature of a performance guarantee furnished for
execution work of contract dated 14.07.2006
(Anand Vihar works) and the work having been
completed to the satisfaction of the respondents,
they had no right to encash the Bank Guarantee.
43) We have, therefore, no hesitation in holding that both
the courts below erred in dismissing the appellant’s
application for grant of injunction. We are indeed
constrained to observe that both the courts committed
jurisdictional error when they failed to take note of the law
laid down by this Court in Union of India (DGS&D)
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 44 of 61
(supra) which governed the controversy and instead placed
reliance on Himadri Chemicals Industries Ltd. vs. Coal
Tar Refining Company, AIR 2007 SC 2798 and U.P. State
Sugar Corporation vs. Sumac International Ltd., (1997) 1
SCC 568, which laid down general principle relating to
Bank Guarantee. There can be no quarrel to the
proposition laid down in those cases. However, every case
has to be decided with reference to the facts of the case
involved therein. The case at hand was similar on facts
with that of the case of Union of India (DGS&D) (supra)
and hence the law laid down in that case was applicable to
this case. Even in this Court, both the learned counsel did
not bring to our notice the law laid down in Union of India
(DGS&D) case (supra).
44) We are also of the view that the District Judge having
decided the injunction application in the first instance in
appellant’s favour vide order dated 04.01.2012 erred in
rejecting the application made by the appellant second
time vide order dated 12.07.2012. It is not in dispute that
the respondents despite having suffered the injunction
order dated 04.01.2012 did not file any appeal against this
order. Such order thus attained finality and was, therefore,
binding on the parties.
45) In the light of foregoing discussion, we hold that
the appellants have made out a prima facie case in
their favour for grant of injunction against the
respondents so also they have made out a case of
balance of convenience and irreparable loss in their
favour as was held by this Court in the case of Union
of India (DGS&D) (supra). They are, therefore,
entitled to claim injunction against the respondent in
relation to encashment of Bank Guarantee no.
12/2006 dated 04.08.2006.
46) We, accordingly, allow the appeal, set aside the
impugned order and in consequence allow the
injunction application made by the appellant under
Section 9 of the Act in Arbitration Suit no. 411/2011
in District Court, Allahabad and grant injunction in
appellant’s favour by restraining the respondents
jointly and severally from encashing Bank Guarantee
no. 12/2006 dated 04.08.2006 furnished by the
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 45 of 61
appellant in connection with Anand Vihar Works. No
costs.”
Arguments on behalf of defendant no. 1
11.1 It is argued by Ld. Counsel for defendant no. 1 that from a
bare reading of the terms of WO-1 and WO-2, it is clear that both
are with respect to the same project i.e., the Purified Terephthalic
Acid (PTA) Plant (ISBL Licensed Unit of BP Amoco Plant)-
EPCC-01 for a capacity of 1.2 MMTPA at Paradip Refinery under
PX-PTA Project of Indian Oil Corporation Limited. It is submitted
that clause 2 which pertains to contractual documents is identical
and the same find place in page 6 and 66 of the plaint. It is further
submitted that clause 4 which is related to the terms of payments
are also identical and the obligations with respect to the provision
of a bank guarantee are same. It is stated that even the attachments
to the work orders i.e., the manpower deployment schedule and
the equipments and machinery are completely identical in both the
work orders.
11.2 It is further argued by Ld. Counsel for defendant no. 1 that
in the first amendment carried out in WO-2 on 28.09.2022, the
subject stated that the amendment is with respect to the fabrication
of tanks i.e., WO-2. However, in the first para, it is stated that
“….this work order amendment no. 1 for site fabrication of SS
Vessels..” i.e. WO-1. It is submitted that both the work orders
were interconnected and form part of the same contractual
relationship and are a composite transaction.
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 46 of 61
11.3 It is further argued by Ld. Counsel for defendant no. 1 that
the terms of the bank guarantee makes it abundantly clear that it is
an unconditional bank guarantee. Para 3 of the bank guarantee
highlights that the obligations of the bank are wholly independent
of the contract as it may either be WO-1 or for WO-2. It is
submitted that plaintiff has neither alleged nor established fraud in
invoking the bank guarantees by defendant no. 1.
11.4 Ld. Counsel for defendant no. 1 has also relied upon
following judgments:
(i) Ansal Engineering Projects Ltd. Vs. Tehri Hydro Development
Corpn. Ltd., (1996) 5 SCC 450
(ii) Standard Chartered Banks Vs. Heavy Engineering Corporation
Limited 2019 SCC OnLine SC 1638
(iii) Himadri Chemicals Industries Ltd. Vs. Coal Tar Refining Co,
(2007) 8 SCC 110
(iv) Gujarat Maritime Board Vs. L&T Infrastructure Development
Project Ltd and Another (2016) 10 SCC
(v) ANCL & Co. (India) Pvt. Ltd. Vs. Corporation Bank and
Others 2013 SCC OnLine Bom 78
(vi) Srinivas Raghavendrarao Desai Vs. Kumar Vamanrao, 2024
SCC OnLine SC 226
(vii) Ram Sarup Gupta (Dead) By Lrs Vs. Bishun Narain Inter
College & Ors., (1987) 2 SCC 555
(viii) S.J.S. Business Enterprises (P) Ltd. Vs. State of Bihar,
(2004) 7 SCC 166CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 47 of 61
Issue Wise Findings
12. I have heard the arguments advanced on behalf of plaintiff
and defendant no. 1, perused the case file, perused the judgments
relied upon by both the parties alongwith evidence lead by both
the parties. My findings are as under:
Issue No. 1. Whether the plaintiff has not approached this Court
with clean hands and has concealed material facts and documents
from this Court? OPD1
13. Ld. Counsel for defendant no. 1 has contended that the
plaintiff has not approached this Court with clean hands and has
deliberately concealed material facts, particularly the payment of
Rs. 95.12 lakhs made under the commercial settlement and the
advance payment of Rs. 50.97 lakhs towards WO-2. It is argued
that these payments were significant and their non-disclosure in
the plaint amounts to suppression of material facts. However, upon
examining the nature of these payments and the overall facts of the
case, the argument of the defendant does not hold merit.
14. The commercial settlement between the plaintiff and
defendant no. 1 was executed on 02.02.2023, specifically to settle
and close all claims arising from WO-1. As per this settlement, the
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 48 of 61
defendant no. 1 agreed to pay the plaintiff a sum of Rs. 95.12
lakhs, which was duly paid. This amount was meant to compensate
the plaintiff for the cancellation of WO-1 and had no relation to
WO-2. The plaintiff has approached this Court seeking an
injunction against the invocation of the bank guarantee issued for
WO-1, which the defendant no. 1 is now attempting to encash
against alleged claims arising from WO-2. Since the settlement
amount of Rs. 95.12 lakhs was solely related to Work Order 1 and
had already been paid, its mention in the plaint was not necessary,
as it does not impact the present dispute regarding the bank
guarantee. The omission of this fact, therefore, does not amount to
concealment of any material fact.
15. Similarly, Ld. Counsel for defendant no. 1 has also argued
that the plaintiff has concealed the fact that an advance payment of
Rs. 50.97 lakhs was made towards Work Order 2. However, this
payment does not have any bearing on the claim raised by the
plaintiff in the present suit. The suit is not for recovery of money
but for an injunction restraining the defendant from invoking the
bank guarantee given under Work Order 1. The question before
the Court is whether the bank guarantee issued for Work Order 1
can be encashed by defendant no. 1 for alleged claims arising
from Work Order 2. The advance payment towards Work Order 2
does not affect this question and, therefore, its non-mentioning in
the plaint cannot be considered as suppression of any material
fact.
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 49 of 61
16. It has been held in catena of cases by Hon’ble Apex Court
and our own Hon’ble Delhi High Court that suppression of facts is
material only if the undisclosed facts would have altered the
outcome of the case. In the present matter, even if the settlement
amount of Rs. 95.12 lakhs and the advance payment of Rs. 50.97
lakhs were mentioned in the plaint, it would not change the core
issue of the dispute, which is the wrongful invocation of the bank
guarantee. In the present case, neither of the two payments in
question has any direct impact on the claim made by the plaintiff,
and hence, the plaintiff cannot be said to have approached this
Court with unclean hands.
17. In light of the above reasoning, the defendant no. 1 has
failed to establish that the plaintiff has concealed any material
facts that would have had an impact on the adjudication of the
present dispute. Accordingly, this issue is decided in favor of the
plaintiff and against the defendant no. 1.
Issue No. 2. Whether the terms of ABG issued for Work Order 1
can be unilaterally changed? OPD1
Issue No. 3. Whether the terms of the work order no. 1 can be
changed without consent of the plaintiff for Work Order 2? OPD1
Issue No. 4. Whether Bank Guarantee issued for Work Order 1 can
be invoked for Work Order 2 in view of settlement agreement
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 50 of 61
dated 02.02.2023? OPD1
Issue No. 5. Whether defendant no. 1 is liable to return the Bank
Guarantee No. 20061GF003487222 of Rs.1,21,03,912 dated
19.12.2022 to the plaintiff? OPP
Issue No. 6. Whether the plaintiff is entitled for permanent
injunction against the defendant from encashing Bank Guarantee
No. 20061GF003487222 dated 19.12.2022? OP Parties
18. Issue no. 2 to 6 are interconnected and hence, taken
together. I have gone through the document annexure P-4 which is
an admitted document by both the defendants and is filed by the
plaintiff alongwith plaint. This document is at page 116 of the
plaint. This is covering letter for bank guarantee dated 19.12.2022.
This letter pertains to bank guarantee no. 2006IGF003487222. The
content of this letter are reproduced as under:
" Covering Letter for Bank Guarantee
Branch:
Bank of Baroda
Industrial Estate Branch
Highway Road,
Mehsana-384002 Gujarat.
Ref. No. 2006IGF003487222 Date: 19.12.2022
This covering letter is issued to be annexed to Bank Guarantee
No 2006IGF003487222, valid upto 10.09.2023 and Claim
Period valid upto : 10.12.2023 for amount of RS.1,21,03,912/-
(Rs One Crore Twenty One lakh Three Thousand Nine
Hundred Twelve only) issued by this office under the
signature of:
Name : Mr. R.D. Meena
Designation : Chief Manager
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 51 of 61
Confirmation of this guarantee if the same is desired should
be obtained from the Regional Office mentioned below:
Bank of Baroda
Regional Office
Devasya Plaza, Radhanpur Road
Mehsana-384002
Mail id: [email protected].
CC to: [email protected]Beneficiary’s Name & Address
M/s Technip Energies India Ltd
New Delhi
Signature(Signature of chief manager and stamp of Bank of Baroda)
Name : R.D. Meena
Designation : Chief Manager”
19. Alongwith this letter, there is a document, the heading of
the document is physical issuance of bank guarantee. Admittedly,
this bank guarantee is for an amount of Rs. 1,21,03,912/-. It is
rightly submitted by Ld. Counsel for plaintiff that this bank
guarantee has been furnished for WO-1. The basis of Ld. Counsel
for this submission is that this is an admitted position that
defendant no. 1 was to give an advance of 10 % towards the total
cost of the project which was Rs. 12,10,39,116/- and 10 per cent of
same amounted to Rs. 1,21,03,912/-. Even otherwise, there is no
dispute on this fact that this bank guarantee no.
2006IGF003487222 has been furnished by the plaintiff for WO-1
to defendant no. 1 with defendant no. 2.
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 52 of 61
20.1 Ld. Counsel for plaintiff has relied upon a judgment passed
by Hon’ble Apex Court in M/s Gangotri Enterprises Ltd Vs. Union
of India & Ors. (Supra) and submitted that the facts in M/s
Gangotri Enterprises Ltd. Vs. Union of India & Ors (Supra) and
the present case before this Court are similar and accordingly the
judgment passed by Hon’ble Apex Court is squarely applicable to
the facts of this case.
20.2 In the aforesaid case, North-Central Railway invited tender
for doing earth work in embankment and cutting including
provision of machine crushed/ blended material blanketing layer
and construction of RCC Box type minor bridges at CH-84700M
to 114100M, in connection with laying down of Agra-Etawah new
BG Rail Line. The appellant- a limited company applied for the
said tender and its tender being the lowest one was accepted by the
respondent, accordingly, the letter of acceptance was issued in
appellant’s favour. The total value of the contract was Rs.
14,62,46,742/-, the date of commencement of work was
14.03.2005 and date of completion of work was 13.03.2007.
Thereafter, on 14.07.2006, the appellant company was granted
another work by the respondent for construction of new station
building and other connected work. This work was in connection
with the development of new passenger terminal at Anand Vihar
and the appellant company submitted a bank/ performance
guarantee dated 04.08.2006 from its banker for a sum of Rs.
1,32,78,820/-. Since the work relating to contract dated 22.08.2005
could not be completed within the prescribed time by the
appellant, accordingly, the contract dated 22.08.2005 was
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 53 of 61
terminated by the respondents and the respondent invited fresh
tenders and rest of the work was allocated by the respondent to
another company namely Hanu Infrastructure Private Limited.
20.3 Thereafter on 30.09.2010, the appellant got the completion
certificate from the respondent for the Anand Vihar work with the
defect liability period of 6 months which also came to end on
30.03.2011, thus the appellant became entitled to seek the release
of bank/ performance guarantee submitted by them from the
respondents and accordingly, a letter was written to the
respondents for the return of bank guarantee.
20.3 On 10.06.2011, the Northern Central railway issued an
internal circular to all the concerned department by mentioning
that respondent have caused a loss of Rs. 5 Crores approximately
and they wrote a letter to the bank which had furnished bank
guarantee for and on behalf of the appellant for the encashment of
the said bank guarantee.
20.4 Since, the dispute had arisen between the parties in relation
and arising out of the contract dated 22.08.2005, the appellant
invoked clause 36 r/w clause 64 of General Condition of Contract
which provided for the settlement of dispute by arbitration.
Appellant after initiation of the arbitration moved an application
u/s 9 of Arbitration and Conciliation Act, 1996 seeking injunction
on the encashment of the bank guarantee deposited by it for the
Anand Vihar work against the respondent by submitting that the
respondents i.e. North-Central railway have no right to encash the
bank guarantee furnished by the appellant in relation to the dispute
arising out of another contract dated 22.08.2005, it has been
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 54 of 61
submitted that the bank guarantee was not furnished by the
appellant in relation to contract dated 22.08.2005 but was
furnished in performance of another contract dated 14.07.2006
which is a separate contract and has nothing to do with the contract
dated 22.08.2005.
20.5 It was also mentioned that so far as contract dated
17.07.2006 is concerned, the work was completed for which
completion certificate has also been given to the appellant and the
bank guarantee was for execution of contract dated 14.07.2006
which has been duly performed, henceforth the appellant company
was entitled to get its bank guarantee released from the defendant.
20.6 On the other hand it was the case of the respondents that
since the respondent has the claim/ dues for the payment of sum of
money against the appellant, so they are entitled to exercise their
right of recovery given to them under clause 62(1) of the contract
in question. It has been contended by the respondents that since
they have suffered losses at the hands of appellant, therefore, they
are entitled to encash the bank guarantee in question. By order
dated 04.01.2012, the District Judge allowed the application
moved by applicant and restrained the respondent to enash the
bank guarantee till appointment of arbitrator. Thereafter the
appellant requested the respondent for return of its bank guarantee.
20.7 Thereafter on 13.03.2012, an arbitration tribunal was
constituted as per clause 32 of the contract between the parties.
The respondents have written a letter to the bank for encashment
of said bank guarantee by submitting that the order passed by the
District Judge no longer survives as its life was only upto the date
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 55 of 61
of constitution of arbitral tribunal and hence, the respondents
became entitled to the encashment of the bank guarantee.
Thereafter, the District Judge dismissed the petition of appellant
and decided in favour of respondents empowering them to recover
any dues/ claim from the appellant and hence, the respondents
were within rights to invoke the bank guarantee.
20.8 Aggrieved by this order, appellant preferred an appeal
before the High Court and Hon’ble High Court concurred with the
view taken by the District Judge and dismissed the appellant’s
appeal. Thereafter, appellant has filed this appeal by way of special
leave before Hon’ble Apex Court. It is submitted by appellant that
since the bank guarantee in question was in the nature of
performance guarantee furnished by the appellant for due
performance of one contract (Anand Vihar work) dated 14.07.2006
and the same having been admittedly performed by the appellant to
the satisfaction of the respondent and a completion certificate has
already been issued by the respondent, henceforth, the appellant
became entitled to claim the release of bank guarantee in their
favour. Thereafter, Hon’ble Apex Court decided to go in detail in
the controversy involved and observed that the facts of the case are
similar to that of Union of India Vs. Raman Iron Foundry (1974) 2
SCC 231.
20.9 In para 42, Hon’ble Apex Court has held that on perusal of
record of the case, they find that the arbitration proceedings in
relation to contract dated 22.08.2005 are pending, the sum claimed
by the respondent from the appellant does not relate to the contract
for which the bank guarantee had been furnished but it relates to
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 56 of 61
another contract for which no bank guarantee had been furnished.
Secondly, the sum claimed by the appellant from the respondent is
in the nature of damages which is yet to be adjudicated upon. In
other words, the sum claimed by the respondent is not an admitted
sum but is a disputed one and lastly the bank guarantee in question
being in the nature of the performance guarantee furnished for
execution work of the contract for Anand Vihar cannot be
encashed for the loss of other contract.
21. On the other hand, Ld. Counsel for defendant no. 1 has
placed reliance on various judgments. The sum and substance of
all the judgments relied upon by Ld. Counsel for defendant no. 1
is that the bank guarantee is absolute and unconditional and is in
the form of an independent contract between the bank and the
beneficiary and unless some fraud or special equity exist, the
beneficiary cannot be restrained from encashing the bank
guarantee. It has also been held in all these cases that the bank is
always obliged to honour its guarantee as long as it is an
unconditional and irrevocable one. The relevant paragraphs
pressed upon of the judgments cited by Ld. Counsel for defendant
no. 1 are as under:
(i) Ansal Engineering Projects Ltd. Vs. Tehri Hyrdo Development
Corpn. Ltd. (Supra):
“It is settled law that bank guarantee is an independent and
distinct contract between the bank and the beneficiary and is not
qualified by the underlying transaction and the validity of the
primary contract between the person at whose instance the bank
guarantee was given and the beneficiary. Unless fraud or special
equity exists, is pleaded and prime facie established by strongCS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 57 of 61
evidence as a triable issue, the beneficiary cannot be restrained
from encashing the bank guarantee even if dispute between the
beneficiary and the person at whose instance the bank guarantee
was given by the Bank, had arisen in performance of the contract
or execution of the Works undertaken in furtherance thereof.”
(ii) Standard Chartered Banks Vs. Heavy Engineering Corporation
Limited (2019 SCC OnLine SC 1638:
“20. A bank guarantee constitutes an independent contract. In
Hindustan Construction Co. Ltd. Vs. State of Bihar and
Others(supra), a two Judge Bench of this Court formulated the
condition upon which the invocation of the bank guarantee
depends in the following terms:− “9. What is important,
therefore, is that the bank guarantee should be in unequivocal
terms, unconditional and recite that the amount would be paid
without demur or objection and irrespective of any dispute that
might have cropped up or might have been pending between the
beneficiary under the bank guarantee or the person on whose
behalf the guarantee was furnished. The terms of the bank
guarantee are, therefore, extremely material. Since the bank
guarantee represents an independent contract between the bank
and the beneficiary, both the parties would be bound by the terms
thereof. The invocation, therefore, will have to be in accordance
with the terms of the bank guarantee, or else, the invocation itself
would be bad.”
(iii) ANCL & Co. (India) Pvt. Ltd. Vs. Corporation Bank and
Others 2013 SCC OnLine Bom 78:
“54. On perusal of the terms and conditions of the
bank guarantee in this case furnished by the petitioner, it is
clear that each of such bank guarantees is absolutely
unconditional and the bank was under obligation to honour the
same on demand issued by the beneficiary. There was no such
condition provided in the bank guarantee which obligates any
recording of reasons or quantifying the claim while invoking
such bank guarantee. It is not in dispute that in the invocation
letter addressed by the 3rd respondent, no reason of any nature
kvm ARBPL67.13 whatsoever is given.”
22. I am in full agreement with the judgments placed on record
by Ld. Counsel for defendant no. 1 that the Bank Guarantees
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 58 of 61
furnished are absolute and unconditional in nature and the bank is
bound to encash the same to the beneficiary, the only exceptional
circumstances where it can be denied are fraud and special equity.
23. But the case in hand is altogether on the different footings.
Admittedly, the contract for which the defendant no. 1 wanted to
invoke the bank guarantee has already been terminated by him and
no work has been performed under this contract by the plaintiff
and admittedly, this bank guarantee pertaining to WO-1 has
already been cancelled as per the commercial settlement arrived
between the parties on 02.02.2023. This is also an admitted fact
that defendant has not asked for any bank guarantee for WO-2.
And admittely, no advance amount has been given by the
defendant no. 1 to the plaintiff for WO-1 for which the bank
guarantee was furnished by the plaintiff to the defendant no. 1.
24. I am also aware of the fact that defendant has advanced
10% of the amount which is approximately Rs. 50.97 Lacs for
WO-2 in favour of the plaintiff. This is also an admitted case that
defendant no. 1 has never asked for furnishing of any bank
guarantee from the plaintiff for this amount, the reason best know
to the defendant no. 1. Rather it is the case of defendant no. 1 that
after the advancement of this amount of Rs. 50.97 Lacs, defendant
no. 1 has further advanced the plaintiff another Rs. 50 Lakhs for
further execution of WO-2. Admittedly, after the settlement
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 59 of 61
between the parties, the WO-2 has also been cancelled and after
cancellation of WO-2, defendant no. 1 tried to encash the bank
guarantee which has been furnished by the plaintiff for WO-1
which is barred in law and cannot be allowed in light of judgment
passed by Hon’ble Apex Court in M/s Gangotri Enterprises Ltd
Vs. Union of India & Ors. (Supra) and also on the basis of ratio of
judgment relied upon by defendant no. 1, this Court cannot
interfere in the bank guarantee advanced by the plaintiff qua
WO-1 and for that reason, defendant no. 1 in no manner be
allowed to encash the same for claiming the damages, if any, for
WO-2. Admittedly, no claim petition in any manner/ no counter-
claim in any manner/ no set-off in any manner has been filed by
the defendant no. 1. Henceforth, the case of the defendant no. 1 is
outrightly rejected.
Issue No. 7. Whether the plaintiff entitled for cost of the suit? OPP
25. Parties to bear their own costs.
Relief
26. In view of the findings on the issues framed, the suit is
decreed in favor of the plaintiff. Consequently, Defendant No. 1 is
permanently restrained from encashing Bank Guarantee No.
2006IGF003487222 for Rs. 1,21,03,912/- dated 19.12.2022.
Defendant No. 1 is further directed to return the said Bank
CS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 60 of 61
Guarantee to the plaintiff immediately. Additionally, Defendant
No. 2 is directed to ensure that the bank guarantee is encashed in
favor of the plaintiff as per the applicable rules and regulations.
Parties to bear their own costs. Needless to say defendant no. 1
may file relevant suit for recovery for any losses suffered for the
work not performed by the plaintiff, if any, if law permits. Decree
sheet be drawn accordingly. File be consigned to record room after
due compliance. Digitally signed
by NEELAM
NEELAM SINGH
Announced & dictated SINGH Date:
2025.03.29
in the open Court on 04:09:58 +0530this 29th day of March, 2025 (NEELAM SINGH)
District Judge
(Commercial Court-02)
South-East, Saket Courts, NDCS(COMM)-1072/2023 Ishan Equipments Pvt Ltd. vs. Technip Energies Pvt Ltd. & Anr. Page 61 of 61