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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Naresh H. Patil, G. S. Kulkarni, JJ.
In the matter between : Ahluwalia Contracts (India) Ltd. – Appellant
Versus
Bellamy Constructions & Infrastructure Pvt. Ltd. and anr. – Respondents
Notice of Motion Lodging No. 596 of 2018 In Commercial Appeal Lodging No. 279 of 2018 Along With Commercial Appeal Lodging No. 279 Of 2018 In Commercial Suit No. 65 of 2013 With Notice of Motion Lodging No. 597 Of 2018 (For Stay)
Decided On : 06-09-2018
Civil Procedure Code, 1908 - Rule 10 - Order I - Contract Act, 1872 - Section 28 - Business of real estate development and construction activities - Conditions of original bank guarantees - Plaintiffs contention that relying on said nine bank guarantees all plaintiff paid to ACIL mobilization advances four letters all January addressed by defendant to plaintiff period of validity of first four bank guarantees was extended up to April from January - Period of validity of nine bank guarantees was extended up to July - Communications issued in this behalf indicated that defendant was liable to pay guaranteed amount to plaintiff on plaintiff serving upon defendant written claim or demand on before and all other terms and conditions of original bank guarantees remain unchanged – Held, In fact contractual period of invocation bank guarantees stood extended by consent of parties and now it would not be permissible and appropriate appellant to raise an issue of time limit of invocation of bank guarantees - Court find sufficient force in submissions Senior Counsel appearing for respondent plaintiff that bank guarantee itself is an independent contract and respondent plaintiff was entitled to invoke bank guarantees which was unconditional one - Bank guarantees and relevant documents do not support submission advanced on behalf of appellant herein that it was not bank guarantee but document of indemnity - Court do not accept submission that respondent invoked bank guarantees second time - In view of clear stipulation in communications made by bank time limit itself was extended and condition initial bank guarantees stood amended by way of extension of time - Court find that invocation of bank guarantees was done in accordance with terms of contract and bank guarantees - Invocation letter is part of compilation which states that respondent – Plaintiff would like to encase nine bank guarantees which are detailed in communications - Single Judge has properly construed terms of bank guarantees contractual relationship between appellant and respondent and reached conclusions which are reasonable and proper - Court do not see any perversity in view adopted by Single Judge - View taken by Single Judge is possible one and does not call for any interference at appellate stage – Appeal dismissed
Naresh H. Patil,
1. The Notice of Motion (L) No. 596 of 2018 is filed seeking leave to appeal for challenging the Judgment and Order dated 14th & 15th February, 2018 delivered by the learned Single Judge in Commercial Suit No. 65 of 2013 and for condoning the delay in filing the appeal.
2. The respondent No.1 - Bellamy Constructions & Infrastructure Pvt. Ltd., Original Plaintiff, filed Commercial Suit No. 65 of 2013 against the respondent no. 2 – Bank of India, Original sole Defendant seeking a decree for a sum of Rs.4.80 crores. The plaintiff contends in the said Suit that it is a company registered under the Companies Act, 1956 and engaged in the business of real estate development and construction activities. The plaintiff stated that plaintiff is the owner of land bearing CTS No.25A of Chakala and CTS No.215/B of Mulgaon Mahakali Caves Road, Andheri-Kurla Road, Andheri (East), Mumbai – 400 093. Under the Letter of Intent dated 8th July, 2011 addressed by the plaintiff to Ahluwalia Contracts (India) Ltd., applicant/appellant herein, (hereinafter referred to as “ACIL”) and confirmed by ACIL, the plaintiff confirmed their intention to enter into a contract with ACIL for supply, erection, protection and commissioning of the Shell and Core Works at the Litolier Hotel project of the plaintiff at Andheri (East), Mumbai for total contract value of Rs.42,00,00,000/-. Under the Letter of Intent dated 8th July, 2011 it was prescribed that 13% of the contract value would be paid by the plaintiff to ACIL as a mobilization advance against on-demand bank guarantees for an equivalent amount. The ACIL was to commence the work at site on 22nd July 2011 and complete it by 22nd May, 2012.
3. Consequent to the contract and Letter of Intent, ACIL submitted 9 (nine) bank guarantees all dated 18th July, 2011 issued by the Defendant – Bank of Inida in favour of the plaintiff for amounts aggregating to Rs.4,46,00,000/-. The details of the bank guarantees i.e. numbers, dates and amounts are mentioned in para 5 of the plaint. Copies of the bank guarantees are also annexed to the plaint.
4. It is the plaintiff's contention that relying on the said nine bank guarantees, all dated 18th July, 2011, the plaintiff paid to ACIL mobilization advances of Rs.4,46,00,000/-. Under four letters all dated 17th January, 2012, addressed by the defendant to the plaintiff, the period of validity of the first four bank guarantees was extended upto 17th April, 2012 from 17th January, 2012. The period of validity of nine bank guarantees was extended upto 17th July, 2012. The communications issued in this behalf indicated that the defendant was liable to pay the guaranteed amount to the plaintiff on the plaintiff serving upon the defendant a written claim or demand on or before 17th July, 2012 and all other terms and conditions of the original bank guarantees remain unchanged.
5. The plaintiff contends that ACIL failed to observe, perform and fulfill the terms of the contract between the plaintiff and ACIL. The subject work was not completed in time and, therefore, by letter dated 17th July, 2012 addressed to defendant, the plaintiff claimed and demanded encashment of the said nine bank guarantees dated 18th July, 2011 for a total sum Rs.4,46,00,000/-. The plaintiff called upon the defendant to remit the full payment of the said amount.
6. The defendant by its communication dated 18th July, 2012 informed the plaintiff that the invocation of the nine bank guarantees, issued by the defendant in favour of the plaintiff, was not in conformity with the terms of the bank guarantees and it would not be possible for the defendant to accede to the request of the plaintiff.
7. On 19th July, 2012, the ACIL filed Arbitration Petition (L) No. 964 of 2012 in this Court against the plaintiff and the defendant. According to the plaintiff, a statement was made before the court that since ACIL has objected to the contents of the letter invoking the bank guarantees, the plaintiff shall i
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