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2018 Supreme(Del) 3160
IN THE HIGH COURT OF DELHI AT NEW DELHI
VALMIKI J. MEHTA, J.
Savan Godiawala, In His Capacity of Liquidator and on Behalf of Lanco Infratech Limited - Petitioner
Versus
Steel Authority of India Limited & Anr. - Respondents
OMP(I)(COMM) No.407 of 2018
Decided On : 20-11-2018
For the Petitioners:Mr. Sandeep Sethi, Senior Advocate with Mr. Vaijayant Paliwal, Advocate with Mr. Jasveen Kaur, Advocate and Ms. Srishti Khare, Advocate.
For the Respondents:Mr. Parag P. Tripathi, Senior Advocate with Mr. Arun Kathpalia, Senior Advocate, Mr. Mandeep Singh Vinaik, Advocate, Ms. Anjali Sharma, Advocate, Mr. Deepak Bashta, Advocate and Mr. Lalltaksh Joshi, Advocate, Mr. Karan Khanna, Advocate with Mr. Mohit Taneja, Advocate.
The court emphasized the limitations on specific performance and injunction relief as per the provisions of the Specific Relief Act, 1963, and upheld the rights of the respondent no. 1 to terminate the contract as per the CMSA.
Headnote:
Arbitration and Conciliation Act - Injunction Order - Section 9 of the Arbitration and Conciliation Act, 1996 - [Section 9]
Fact of the Case:
The petitioner sought an injunction order against the respondent no. 1 from acting upon the impugned Termination Notice and from invoking the Performance Bank Guarantee. The petitioner also sought to bring on record the facts that the proposed assignee of the contract was eligible to submit the original bid.
Finding of the Court:
The court found that the respondent no. 1 was justified in seeking termination of the contract as per the terms of the Coal Mining Service Agreement (CMSA) due to the petitioner's liquidation. The court also dismissed the petition based on the provisions of the Specific Relief Act, 1963, as specific performance and injunction relief could not be granted.
Issues: The issues involved the validity of the termination notice, the eligibility of the proposed assignee, and the grant of injunction against invocation and encashment of the bank guarantee.
Ratio Decidendi: The court's decision was influenced by the provisions of the Specific Relief Act, 1963, which prohibited specific performance and injunction relief in certain contract scenarios. The court also upheld the respondent no. 1's right to terminate the contract as per the CMSA.
Final Decision: The petition was dismissed as the court found no merit in granting the reliefs sought by the petitioner.
VALMIKI J. MEHTA, J.
I.A. No.14596/2018 (exemption)
1. Exemption allowed subject to just exceptions.
I.A. stands disposed of.
O.M.P.(I)(COMM) No. 407/2018 and I.A. Nos. 15751/2018 (under Section 151 CPC) & 17753/2018 (for condonation of delay)
2. This is a petition filed under Section 9 of the Arbitration and Conciliation Act, 1996 whereby the petitioner seeks an injunction order against the respondent no. 1 from in any manner acting upon the impugned Termination Notice dated 24.09.2018. An injunction order is also prayed by the petitioner to restrain the respondent no. 1 from invoking the Performance Bank Guarantee dated 20.01.2014 (valid for 5 years) for a sum of Rs. 50 crores. Ad-interim ex parte orders are also prayed qua the aforesaid two prayers.
3. On 26.10.2018, this Court passed the following order :
1. Counsel for the petitioner says that petitioner will file a detailed affidavit setting out exactly and how the proposed assignee of the contract to whom the contract is sought to be assigned fulfils all the necessary technical bid requirements of the contract which was originally awarded to Lanco Infratech Limited.
2. The affidavit will be supported by the relevant documents and cross reference will be made in the affidavit to the relevant portions of the documents. The said affidavit be filed within four days from today.
3. Respondent no. 1 will file reply affidavit to the affidavit which is now to be filed by the petitioner within four days thereafter. Petitioner will file rejoinder affidavit if so required within a period of four days of filing of the affidavit by respondent no. 1.
4. Besides the fact that this order is without prejudice to the respective rights and contentions, however, it is noted that this Court prima facie feels that respondent no. 1 can take a holistic view of the matter that in case the proposed assignee satisfies the technical bid parameters, then there is no reason why the respondent no. 1 should not be interested in going through the contract as regards its performance and which performance, already started with the contracting company Lanco Infratech Limited, and which is presently in liquidation.
5. Re-notify on 20th November, 2018.”
4. The petitioner has filed its affidavit as per Order dated 26.10.2018. The respondent no. 1 has filed its affidavit in response thereto. The petitioner has in the meanwhile moved an application being I.A. No. 15751/2018 for amendment of the petition whereby the petitioner seeks to amend the petition to bring on record the facts that the proposed assignee of the contract being, M/s Tasra Mining and Energy Company Private Limited, was eligible to submit the original bid as it was technically and financially competent to do so. This amendment was prayed along with a prayer for taking on record an additional affidavit dated 31.10.2018. Basically, the petitioner wants to bring on record the fact that the proposed assignee M/s Tasra Mining and Energy Company Private Limited was financially and technically competent as the original contracting party M/s Lanco Infratech Limited which was awarded the original contract being the Coal Mining Services Agreement (hereinafter 'CMSA') dated 23.09.2013 by the respondent no. 1.
5. The respondent no. 1 has filed a reply to the amended petition itself, and therefore really I.A. No. 15751/2018 is not effectively opposed, of course, without prejudice to the rights of the respondent no. 1 to contest the petition on merits by denying the averments and prayers as made by the petitioner.
6. The facts of the case are that the respondent no. 1 has entered into a CMSA on 23.09.2013 with M/s Lanco Infratech Limited. The petitioner is acting through Mr. Savan Godiawala, who is the Liquidator acting on behalf of M/s Lanco Infratech Limited. Mr. Savan Godiawala is an insolvency professional, and so appointed by the National Company Law Tribunal, Hyderabad Bench vide Order dated 27.08.2017 for M/s Lanco Infratech Limited. Mr. Savan Godiawala e
