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2017 Supreme(Del) 4286
IN THE HIGH COURT OF DELHI AT NEW DELHI
SANJEEV SACHDEVA, J.
Wipro Limited – Petitioner
Versus
Employees State Insurance Corporation & Another – Respondents
O.M.P.(I)(COMM.) 393 of 2017
Decided On : 25-09-2017
For the Petitioner:Mr. Sandeep Sethi, Senior Advocate and Mr. Dayan Krishnan, Senior Advocate with Mr. Dhirendra Negi and Ms. Pragya Chauhan.
For the Respondent: Mr. Saurabh Chadda
The court emphasized the importance of following the previous court order and the direction of the Tribunal, and clarified the consequences of not filing an application under Section 17 within a week.
Headnote:
Arbitration & Conciliation Act - Restraint on invoking bank guarantee - Section 9
Fact of the Case:
The petitioner seeks a restraint on respondent No.1 from invoking and encashing the bank guarantee dated 26.03.2009 in the sum of Rs.23,63,64,340/- and a direction to respondent No.2 – Bank not to pay any amount to respondent No.1 under the said bank guarantee.
Finding of the Court:
The court directed the petitioner to file an application under Section 17 of the Act with the Tribunal within a week, and requested the Tribunal to convene a sitting to decide the question of the validity of invocation. It also directed that until the Tribunal takes up the issue, the Bank shall not remit the amount of the Bank Guarantee to Respondent No. 1.
Issues: Maintainability of the petition, validity of invocation, and jurisdiction of the Tribunal.
Ratio Decidendi: The court held that the matter should be placed before the Tribunal to be considered in terms of the previous court order and the direction of the Tribunal. It also clarified the consequences of not filing an application under Section 17 within a week.
Final Decision: The petition is disposed of with the petitioner permitted to file an application under Section 17 of the Act with the Tribunal within a week, and the Bank is directed not to remit the amount of the Bank Guarantee to Respondent No. 1 until the Tribunal takes up the issue.
SANJEEV SACHDEVA, J.
IA No.11261/2017(exemption)
Allowed, subject to all just exceptions.
O.M.P.(I) (COMM.) 393/2017
1. The petitioner, by this petition under Section 9 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as ‘the Act’), seeks a restraint on respondent No.1 from invoking and encashing the bank guarantee dated 26.03.2009 in the sum of Rs.23,63,64,340/- and a direction to respondent No.2 – Bank not to pay any amount to respondent No.1 under the said bank guarantee.
2. As per the petitioner, the express term of the bank guarantee is that it could be invoked by respondent No.1 only in respect of claims arising upto and until midnight of 08.06.2016.
3. It is contended by learned senior counsel for the petitioner that the claims, based on which the bank guarantee is sought to be invoked, are claims which have arisen after 08.06.2016.
4. The contention of the petitioner is disputed by the learned counsel for the respondent.
5. Since respondent No.1 had earlier sought to invoke the bank guarantee, the petitioner had approached this Court by filing a petition under Section 9 being OMP(I)(COMM.) 406/2016.
6. Said petition was disposed of by this Court by relegating the parties to the Arbitral Tribunal and further restraining respondent No.1 from invoking the bank guarantee until the time the Arbitral Tribunal passes an order varying, modifying or vacating the said interim order in accordance with law. The petitioner was directed to keep the bank guarantee alive in the meantime. The bank guarantee is valid upto 08.06.2018.
7. The Arbitral Tribunal, by its order dated 12.08.2017, has noticed the contention of the petitioner that the bank guarantee is limited to claims arising prior to 08.06.2016 and since the cause for invocation occurred only after 08.06.2016, the Bank is not obliged to permit encashment of the bank guarantee.
8. The Tribunal, without expressing any opinion on the merits of the rival contentions, declined to consider the said issue on the ground that the matter was yet to be considered by the Bank, which had issued the bank guarantee.
9. The interim order dated 08.12.2016 passed by this Court in OMP(I)(COMM.) 406/2016 was modified by the Arbitral Tribunal to the extent that it would be open to the respondent to invoke the bank guarantee and the Bank to take a decision in the matter having regard to the relevant facts and its obligations under the bank guarantee.
10. The Bank was left to take an independent decision in the matter, however, the Bank was directed not to give effect to its decision for a period of ten days, in case it took the view in favour of the encashment of the bank guarantee.
11. Learned senior counsel for the petitioner submits that the petitioner neither has been provided with a copy of the invocation letter nor has been furnished, by the Bank, with any decision taken by it on invocation by the respondent No.1.
12. It is, however, contended that an e-mail has been received on 21.09.2017, which reads as under:-
“We refer to Bank Guarantee No.PEBBGE090268 (Bank Guarantee) issued by us on behalf of Wipro Ltd favouring Employee’s State Insurance Corporation (ESIC) for an amount of INR 23,63,64,340/- (Rupees Twenty Three Crore Sixty Three Lakhs Sixty Four Thousand Three Hundred Forty One Only).
We have received an invocation from ESIC demanding payment under this Bank Guarantee.
We, therefore, request you to kindly fund your account with us by 28th September, 2017, to enable us to honor the above invocation.”
13. Learned senior counsel for the petitioner contends that the Bank has communicated neither the decision nor the reasons as to why it has decided to honour the invocation.
14. Learned counsel for the respondent has handed over a copy of the invocation letter to the learned senior counsel for the petitioner.
15. Learned counsel for the respondent, per contra, contends that the present petition is not maintainable inasmuch as the petitioner had earlier filed a petition under Se
