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2015 Supreme(Del) 138
High Court of Delhi
S. MURALIDHAR, J.
M/s. Amkv-Tecpro - Appellant
Versus
Gail (India) Limited & Another - Respondents
O.M.P. Nos. 145, 151 of 2014
Decided on: 30-01-2015
For the Petitioner:Sudhir Nandrajog, Senior Advocate with Tarun Johri, Advocate.
For the Respondents:Ramji Srinivasan, Senior Advocate with Deepika Tusir, Ghanshyam Joshi, Advocates.
Prima facie case for restraining the invocation and encashment of bank guarantees due to incomplete ROU acquisition and work completion.
Headnote:
Arbitration and Conciliation Act - Interim Reliefs - Section 9 - [ROU Acquisition and Bank Guarantees] - [Section 37, 11, 24 of ITB, SCC, GCC] - The court discussed the requirements for ROU acquisition and the conditions for invoking bank guarantees under the ITB, SCC, and GCC. It found that the Petitioner had a prima facie case in its favor for restraining the Respondent from invoking and encashing the PBGs and ABGs due to incomplete ROU acquisition and work completion.
Fact of the Case:
The Petitioner, a consortium, undertook turnkey projects for a pipeline project. It claimed that the Respondent misrepresented the acquisition of ROUs, leading to delays and protests by landowners. The Petitioner sought provisional extension of time and restrained the Respondent from invoking bank guarantees.
Finding of the Court:
The court found that the Petitioner had a prima facie case in its favor for restraining the Respondent from invoking and encashing the PBGs and ABGs due to incomplete ROU acquisition and work completion.
Issues: Misrepresentation of ROU acquisition, delay in work completion, and the validity of bank guarantees.
Ratio Decidendi: The court considered the clauses of the ITB, SCC, and GCC related to ROU acquisition and bank guarantees, and found that the Petitioner had a prima facie case for restraining the Respondent from invoking and encashing the PBGs and ABGs.
Final Decision: The court directed that the interim order restraining the Respondent from invoking and encashing the PBGs and ABGs would continue during the pendency of the arbitral proceedings, subject to the Petitioner keeping the guarantees alive.
1. These are two petitions under Section 9 of the Arbitration and Conciliation Act, 1996 (‘Act’) seeking interim reliefs.
2. The Petitioner M/s AMKV-TECPRO is a consortium of TECPRO Systems Limited which undertakes turnkey projects. Mecon Limited (Respondent No.2), on behalf of Gail (India) Limited (Respondent No.1) floated an e-tender on 28th June, 2011 inviting bids on open international competition basis for laying of the Phase-II of the Kochi-Koottanad-Mangalore-Bangalore Pipeline Project (KKMBPP) which involved testing and commissioning of 884 Kms long steel pipeline for transportation and distribution of re-gasified Liquid Natural Gag (LNG) and associated facilities in the states of Kerala, Tamil Nadu and Karnataka from intermediate piping system (IPS) of Phase-I at FACT Udyogmandal to IPS of Phase-II at Kootanad and from there to Bangalore and Mangalore.
3. The Petitioner submitted two bids, one for Section-I and the other for Section-II. By separate letters dated 12th January 2012 Respondent No.1 intimated to the Petitioner the acceptance of both its above bids at the contract price of Rs.89,82,69650/- and Rs.68,97,37,075/- respectively. The details of Section-I and Section-II awarded to the Petitioner were as under:
| “Section-I30” x 91km | Pipeline from dispatch terminal at existing I.P. Station-I at FACT Udyoghmandal of Phase-I at Ch.0.000Km to IP Station-1 of Phase-II at Approx. Ch. 90.615 Km at Koottand including piping works at despatch terminal at existing IP Station-I, SV-1, SV-2, SV-3, SV-4 & SV-5 Stations and IP Station-I at Kootanad.” |
| “Section-II24” x 114km | Pipeline from IP Station-1 at Approx. Ch. 90.615 Km at Koottand to IP Station-2 at Ch. 188.80 Km plus IP Station-1 (Ch 90.615) to SV- 1M (Ch 15.99 Km on Mangalore spur line) including piping works at SV-1M, SV-6, SV-7, SV-8, SV-9 & SV-10 and IP Station-2.” |
4. The work was to be completed and kept ready for commissioning within 12 months from the Fax of Acceptance (FOA) i.e. from 12th January 2012. The commissioning of gas including all stations/terminals was to be effected within three months after mechanical completion. Respondent No.1 issued letters of acceptance in respect of both bids on 2nd February 2012. In respect of each of the sections a separate contract agreement dated 20th January 2012 was executed by the Petitioner and Respondent No.1.
5. In terms of Clause 37 of the instructions to bidders (ITB) read with Clause 11 of the Special Conditions of Contract (SCC) and Clause 24 of the General Conditions of Contract (GCC) the Petitioner had to furnish, in respect of each contract, Performance Bank Guarantee (PBG) for 10% of the contract price within 15 days of the receipt of the FOA which was to be valid till expiry of 90 days after the end of the defect liability period. Further in terms of Clause 26 of the SCC, the Petitioner was to furnish Advance Bank Guarantees (ABGs) for 11% of the contract price. In respect of both sections the Petitioner furnished to Respondent No.1 the following bank guarantees:
ADVANCE BANK GUARANTEE with IDBI BANK LTD CHENNAI
| Sl. No. | BG No. | Expiry Date | Amt(Rs) | Section |
| 1 | 1203801BGA00136 | 13.05.2015 | 49404721.00 | I |
| 2 | 1203801BGA00137 | 13.05.2015 | 49404721.00 | I |
| 3 | 1203801BGA00138 | 13.05.2015 | 37935539.00 | II |
PERFORMANCE BANK GUARANTEE with AXIS BANK CHENNAI
| Sl.No. | BG No. | Expiry Date | Amt(Rs) | Section |
| 1 | 11650100001747 | 31.07.2015 | 89826765.00 | I |
| 2 | 11650100001748 | 31.07.2015 | 68973708.00 | II |
6. Since the project involved laying, testing and commissioning of the pipeline for transportation of long steel pipeline, Respondent No.1 had to acquire the Right of User (ROU) over the land through which the proposed pipeline was to be laid. According to the Petitioner, it was represented to it by Respondent No.1 tha
