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2012 Supreme(Bom) 1899
High Court of Judicature at Bombay
S.J. KATHAWALLA, J.
M/s. ABG Ports Limited & Another
Versus
M/s. PSA International Pte Limited & Others
NOTICE OF MOTION (L) NO. 2890 OF 2012 IN SUIT (LODGING) NO. 2544OF 2012
Decided on : 05-10-2012
For the Plaintiffs:Virag Tulzapurkar, Senior Advocate, along with Indranil Deshmukh & Ms. Ankita Godbole, instructed by M/s. Amarchand & Mangaldas & Suresh A. Shroff & Co., Advocates.
For the Respondents:D1 & D2, Darius Khambata, Senior Advocate, along with Nikhil Sakhardande, Rajendra Barot, Ashwin Ramanathan, A. Iyer & Himanshoo Tembe instructed by M/s. AZB & Partners, D4, Omprakash Jha, instructed by M/s. The Law Point, Advocates.
Headnote:Contract Act, 1872 - Sections 43 and 126 - Bank Guarantee.
An unconditional and irrevocable Bank Guarantee being an independent contract, cannot be injuncted on mere bald assertion of fraud. - An unconditional and irrevocable Bank Guarantee is an indpendent contract and whether encashment of the same ought to be permitted or not has to be considered without any reference to the underlying or main contract or to the disputes/claims thereunder.
It is also pertinent to note that though the plaintiff has alleged fraud on the part of defendant Nos. 1 and 2, the plaintiff has till date not rescinded the JBA which speaks volume about the seriousness of the allegation of fraud made by them against defendant Nos. 1 and 2. The allegation therefore made by the plaintiff that the invocation of the Bank Guarantee is vitiated by fraud cannot be accepted and the said contention is rejected.
The above Suit is filed by the Plaintiff inter alia seeking a declaration that the Joint Bidding Agreement (“JBA”), the Counter Guarantee, and its invocation by Defendant No.1, vide its letter dated 21st September, 2012 (Exhibit-J to the Plaint), is illegal, wrongful and vitiated by fraud and is therefore, null and void, non-est and of no effect whatsoever.
2. The facts as narrated by the Plaintiff are briefly set out hereunder:
3. On 2nd March, 2009, Defendant No. 4 issued a Global Invitation of Request for Qualification vide Tender No. PPD/M1/4th CT/T60/2009 (“RFQ”) inviting applications for the development of 4th Container Terminal Project on Design, Build, Finance, Operate and Transfer (“DBFOT”) basis (“the said Project”).
4. By and under the JBA dated 21st August, 2009, entered into between the Plaintiff and Defendant No.2 (“Consortium”) for the purpose of bidding for the Project, Defendant No.2 was to be the Lead Member, Technical Member, Financial Member of the Consortium while the Plaintiff was to be the Other Member in the Consortium. Admittedly, the Plaintiff has a 26 per cent share and the Defendant No.2 has the balance 74 per cent share in the Consortium.
5. The Plaintiff executed a Power of Attorney dated 21st July, 2009 in favour of Defendant No.1, irrevocably designating, nominating, constituting, appointing and authorizing Defendant No.1 as the Lead Member and the true and lawful Attorney of the Consortium, for the purposes of the said Project.
6. The Consortium submitted their RFQ dated 31st August, 2009 to Defendant No.4. Based on the RFQ, the Consortium was prequalified for the said Project and issued the Request for Proposal (“RFP”).
7. On 15th October, 2010, the Consortium submitted its RFP bid for the said Project. On 28th June, 2011, the RFP bids were opened and the Consortium was declared the successful bidder for the said Project. On 26th September, 2011, Defendant No.4 issued the Letter of Award (LOA) vide letter No. PPD/CM/BOT/4th CT/2011 dated 26th September, 2011 to Defendant No.2, a copy of which was returned duly signed and accepted by Defendant No. 2 to Defendant No.4 vide letter dated 29th September, 2011.
8. Under the RFP, a Bid Bond of Rs.67 crores was required to be furnished by the Consortium. Defendant No.2 provided a Bank Guarantee (“Bid Bond”) dated 15th October 2010, issued by Standard Chartered Bank for Rs.67 crores, in favour of Defendant No.4 as bid security for the said Project. The said Bid Bond was extended from time to time and the last extension was upto 30th September 2012. Defendant No.1, of which Defendant No.2 is a 100% subsidiary furnished a Counter Indemnity to Standard Chartered Bank, securing its obligation under the Bid Bond.
9. The Plaintiff provided a Bank Guarantee being Bank Guarantee No. 29101GPER018310 dated 13th October, 2010 issued by Defendant No.3 for a sum of Rs. 17,42,00,000/-in favour of Defendant No. 1 (“Counter Guarantee”). The Counter Guarantee has been extended by the Plaintiff from time to time and presently has been extended till 30th September, 2012.
10. The Concession Agreement was required to be signed by and between the successful bidder i.e. Consortium and Defendant No.4 within 30 days of issuance of the LOA. However, according to the Plaintiff, Defendant No. 2 has consistently sought extensions for signing the Concession Agreement on some pretext or the other. However, vide its letter dated 3rd January, 2012, Defendant No.2 agreed to sign the Concession Agreement on 11th January, 2012. However, due to further delays no action has been taken towards signing the Concession Agreement even until 26th March, 2012.
11. The Plaintiff vide its letter dated 31st March, 2012, communicated to Defendant Nos. 1 and 2 that it was agreeable to withdrawing from the Consortium, subject to the approval of Defendant No.4, if the same would help resolve issues between PSA and Defendant No.4 with respect to the said Project.
12. Defendant No.2 addressed a l
