The main legal point established in the judgment is the application of legal principles related to bank guarantees, fraud, and irretrievable injustice in a construction contract dispute.

V.K. Shali, J.

1. This order shall dispose of applications bearing No. 14978/2009 under Order XXXIX Rules 1 and 2 CPC, 15460/2009 under Order XXXIX Rule 4 code of Civil Procedure and 15480/2009 under Order VI Rule 17 CPC.

2. Briefly stated the Plaintiff is a company incorporated under the Companies Act, 1956 having its registered office at C-4, Phase-II, Noida (U.P.) and Branch Office at 159, Okhla Industrial Estate, Phase-III, New Delhi-110020. The present suit for declaration, cancellation and mandatory injunction was filed through its senior General Manager and authorized signatory who is stated to be duly authorized in this regard. It was alleged in the plaint that the Defendant No. 1 is a private limited company duly registered under the Companies Act, 1956. It is engaged in construction work and providing infrastructure facilities. It was awarded a Work Order by DDA for construction of swimming pool, training hall, fitness centre and athletic track at Commonwealth Games Village near Akshardham Temple, Delhi for a total value of Rs. 63 crores. The Defendant No. 1 assigned a part of the said work for structural steel fabrication to the Plaintiff, the value of which was approximately Rs. 6 crores. This offer was accepted by the Plaintiff on 25.11.2008. It is alleged that the Plaintiff had completed 80 % of the work and submitted bills for a sum of Rs. 4.46 crores to the Defendant No. 1 out of which an amount of Rs. 3.38 crores was released in its favour and a sum of Rs. 1.08 crores remained unpaid. It is alleged that the Plaintiff company vide letter dated 03.08.2009 requested the Defendant No. 1 to clear its bills which was not done and deficiencies in the work was pointed out. It is alleged that the DDA had repeatedly pointed out to the Defendant No. 1 the slow progress of the work on account of lack of planning and because of non deployment of agreed financial resources by it in the work. It is alleged that the DDA vide letter dated 24.07.2009 pointed out to the Defendant No. 1 that by that time 75% of the work ought to have been executed while as only 40% of the work had been done. Eventually on being dissatisfied with the work carried out by the Defendant No. 1, DDA issued a letter dated 13.10.2009 to the Defendant No. 1 terminating the contract. It is the case of the Plaintiff that although Plaintiff was the sub contractor of the Defendant No. 1 for execution of a specified work, the DDA after termination of the contract of the Defendant No. 1, vide letters dated 12.11.2009 and 19.11.2009 gave the work to the Plaintiff which was earlier being sub contracted to them.

3. The Plaintiff had furnished a bank guarantee of its banker State Bank of Patiala in favour of the Defendant No. 1 for a sum of Rs. 50,00,000/- on 03.06.2009. The Defendant No. 1 sought to encash the bank guarantee furnished by the Plaintiff vide letter dated 16.10.2009 but this invocation was subsequently withdrawn by the Defendant No. 1 on the ground that they wanted to settle the matter with the DDA as is reflected in the letter dated 16.10.2009. In the meantime, it is alleged that the Plaintiff had extended the bank guarantee from 12.11.2009 to 22.01.2010. It is alleged that on account of termination of the contract the DDA filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996 for reference of the dispute between DDA and Defendant No. 1 to arbitration. The Plaintiff alleges that the Defendant No. 1 concealed from this Court the aspect of the arbitration petition having been filed.

4. Since the circumstances did not change, the Defendant No. 1 issued a fresh letter of invocation dated 17.11.2009 to the Defendant No. 2 invoking the bank guarantee despite the fact that an amount of Rs. 1.50 crores was still due and payable to the Plaintiff on account of the work having been executed by them and in respect of which the Plaintiff has filed a suit bearing No. 578/2010 which is pending in this Court. The Plaintiff has alleged t