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2019 Supreme(Del) 1999
IN THE HIGH COURT OF DELHI AT NEW DELHI
Yogesh Khanna, J.
Consortium Of Worlds Window Exim Pvt. Ltd. And Others - Appellant
Vs.
Axis Bank Ltd. And Others - Respondent
Writ Petition (Civil) No. 14068 of 2018; Civil Miscellaneous Application No. 54875 of 2018, 5938 of 2019, 34374 of 2019
Decided On : 16-09-2019
Rajiv Nayyar, Adv., K. Datta, Adv., Abhishek Puri, Adv., Pallavi Srivastava, Adv., Surbhi Gupta, Adv., Kanika Singh, Adv., Sandeep Sethi, Adv., Tushar Mehta, Adv., Vaijayant Paliwal, Adv., Charu Bansal, Adv.
The bank guarantee was found to be unconditional and irrevocable, and the termination was held to be in accordance with the IPLOI and RFP Document.
Headnote:
Termination of Agreement - Bank Guarantee - RFP Document, IPLOI - Clause 2.7.5, Clause (x) of IPLOI dated 17.08.2018 - Bank Guarantee Unconditional and Irrevocable
Fact of the Case:
The petitioner sought writs to quash the termination letter and restrain the respondents from acting on it. The issues raised included the legality of the termination, invocation of bank guarantee, and alleged fraud by the respondents. The court analyzed the clauses of the RFP Document and IPLOI, the unconditional nature of the bank guarantee, and the alleged fraud by the respondents.
Finding of the Court:
The court found that the termination was valid as per the terms of the IPLOI and RFP Document. It held that the bank guarantee was unconditional and irrevocable, and the alleged fraud by the respondents was not convincing. The court dismissed the writ petition and disposed of pending applications.
Issues: Legality of termination, Invocation of bank guarantee, Alleged fraud by respondents
Ratio Decidendi: The termination was in accordance with the IPLOI and RFP Document. The bank guarantee was unconditional and irrevocable, and the alleged fraud was not substantiated.
Final Decision: The writ petition was dismissed, and pending applications were disposed of. The status quo regarding encashment of the bank guarantee was extended for three days.
JUDGMENT :
Yogesh Khanna, J.
This writ petition is filed with the following prayers:-
"(a) Issue an appropriate writ in the nature of a certiorari and/ or any other appropriate writ order/ direction quashing the impugned Letter dated 05.11.2018 issued by Respondent No.1 to the Petitioner No.1 purportedly cancelling the "In principle Letter of Interest" issued in favour of the Petitioners;
(b) Issue an appropriate writ/order/direction restraining Respondent No.1-13 to act in pursuance to the impugned Letter dated 05.11.2018 issued by Respondent No.1 to the Petitioner No.1;
(c) Issue an appropriate writ/order/direction restraining Respondents from taking any steps which would jeopardize or impede or prevent the acquisition of 60% of the shares in Jhabua Power Ltd;
(d) Issue an appropriate writ/order/direction restraining Respondent No.1 to invoke Bank Guarantee No.OGT0005180024145 dated 06.09.2018 issued by Respondent No.14 for an amount of 100,00,00,000/- (Rupees Hundred Crores Only) on behalf of Petitioner No.2 in favour of Respondent No.1 i.e. the lead Bank;
(e) Issue an appropriate writ/ order/direction calling for the entire record of Respondent nos.1-13 pertaining to the process for acquisition of controlling shareholding in Jhabua Power Ltd. including the records pertaining to consideration of the financial proposal submitted by the petitioners, cancellation of the IPLOI dated 17.08.2018, meeting held by the Evaluation Committee of the lenders on 19.11.2018 and any other subsequent meetings held by or between the Respondent nos. 1 - 12 in this regard; and
(f) Issue an appropriate writ/order/direction calling for the entire record from Respondent No.1 of CP (IB) No.1291/KB/2018 filed by Respondent No.1 before NCLT, Kolkata.
2. The learned senior counsel for the petitioner has raised three issues in the present petition - a) the termination letter dated 05.11.2018 could not have been issued at the instance of any single bank but could be issued only by the Evaluation Committee (of which respondents No.1,2,3,9, and 11 were the members) and that too after determining breach of contract, hence the termination at the instance of Axis Bank is bad; b) the final LOI was never issued and even Definitive Agreement was never entered into, hence bank guarantee could never be invoked in the absence of a definitive contract/agreement; and c) the respondents have no right to invoke insolvency proceedings without informing the petitioner and rather a fraud was committed upon the petitioner as the petitioner was made to submit the performance bank guarantee of 100 Crores on 18.09.2018 and that too after the insolvency procedure was invoked on 11.09.2018.
3. Qua (a) and (b) viz illegality in issuing the termination letter, the learned senior counsel for the petitioner has referred to the following clauses of the Request for Proposal Document (RFP), viz:-
"2.1 The Bid Process shall include the following steps;
a. Step I-Selection of Qualified Bidder;
b. Step II-Submission of Bid by the Qualified Bidder;
c. Step III- Evaluation of Bid;
d. Step IV - Selection of Selected Bidder(s), submission of their Bid(s) to the Credit Rating Agencies (where applicable) and declaration of Selected Rating Compliant Bidder(s);
e. Step V- Negotiation between the Evaluation Committee and the Highest Selected Rating Compliant Bidder and submission of the revised final Financial Proposal by such Highest Selected Rating Compliant Bidder;
f. Step VI - Declaration of Recommended Bidder and issuance of In Principle Letter of Intent; and
g. Step VII- Declaration of Successful Bidder and Issuance of Final Letter of Intent.
2.6 Step V - Negotiation between the Evaluation Committee and the Highest Selected Rating Compliant Bidder and submission of the revised final Financial Proposal by such Highest Selected Rating Compliant Bidder
2.6.3 Based on the negotiations as per Clause2.6.2, the
