Writ jurisdiction should not be invoked in contractual matters.

1. After the amendment, the prayer of the petitioner is to direct the respondent No.1 not to disburse/honour the invoked Bank Guarantee No.1303911FG0000223 dated 03.02.2011 by the respondent Nos.2 and 3 i.e., Nagarjuna Construction Company Limited, Registered Office at Plot No.41, Nagarjuna Hills, Panjagutta, Hyderabad and NCC Power Projects Limited, Registered Office at 4th Floor, M.J.Towers, Road No.12, Banjara Hills, Hyderabad and consequently, direct the respondent Nos.2 and 3 to return the said Bank Guarantee to the petitioner, pursuant to the Termination Agreement dated 20.01.2012.

2. The petitioner is a company incorporated under the Laws of Peoples Republic of China having its Registered Office in China and a Reserve Bank of India approved Liaison Office in Mumbai, India. It is engaged inter alia, in the business of supply of power plant machinery. NCC Power Projects Limited/respondent No.3 is a company incorporated under the Companies Act, 1956 and engaged in the business of building, owning and operating power plants. It being a power generating company desired to build, own and operate a pulverized coal fired thermal power plant consisting of 2 X 660 MW Super Critical boiler based power plant at Painapuram village, Mathukur mandal, Nellore district in Andhra Pradesh and appointed its group company M/s.Nagarjuna Construction Company Limited/respondent no.2, which is also a company incorporated under the Companies Act, 1956, engaged inter alia in the supply and erection of power plant equipments, as the Contractor.

3. On 11.4.2011 a supply contract was executed between respondent nos. 2, 3 and the petitioner for supply, CIF to provide certain supplies (including the engineering equipment and design thereof) for the project, all of which to be provided outside India and on a fixed price (CIF).

4. Supply contract envisaged three Advance payment Guarantees (APG) by the supplier. On 3.2.2011, petitioner submitted the first advance payment guarantee for Two Million US Dollars (for short USD 2M) through respondent no.1 with counter guarantee from Bank of China. The Bank Guarantee was valid upto 15.5.2013 with the claim period upto 15.7.2013. The counter guarantee of Bank of China was, however, valid upto 14.6.2013 and claim period upto 14.8.2013. Against the submission of the first advance payment guarantee, respondent no.3 made advance payment of USD 2M to the petitioner. Petitioner also submitted performance bank guarantee as well as the second advance payment guarantee for the next trench of 5% advance payment (which was due after 2 months of commence date). No advance payment was made against the second advance payment guarantee, by respondent no.3 to the petitioner.

5. On 20.1.2012 after mutual consent, the contract was bilaterally terminated by petitioner and respondent no.2. On 6.9.2012 a notice was received by the petitioner's banker-the Bank of China from respondent no.1 quoting the invocation of the first advance payment guarantee on the ground of 'default on the part of the petitioner' under the terms of the supply contract. This necessitated process of negotiation resulting in respondent no.3 putting on hold invocation of first Advance Payment Guarantee. The period of bank guarantee was extended from 15.5.2013 to 15.8.2013 and claim period from 16.8.2013 to 15.10.2013. The counter guarantee of bank of China was also extended to be valid upto 14.9.2013 and claim period upto 14.11.2013.

6. On 9.10.2013, respondent no.3 requested the petitioner to extend the Bank Guarantee till March, 2014 and to inform of such extension on or before 11.10.2013. Petitioner was put on notice that as per Reserve Bank of India guidelines, Bank Guarnatee has to be encashed if validity is not extended. Since respondent no.3 did not receive any intimation of extension of Bank Guarantee, respondent no.3 invoked Bank Guarantee. Hence this writ petition.

7. Heard the learned counsel for petitioner Sri C.R.Sridharan, learned