Judgment

Air Vice Marshal J. Rajendra, AVSM VSM (Retd.), Member—The present Consumer Complaints have been filed under Section 21 of the Consumer Protection Act, 1986 (for short “the Act”) by M/s. Dalmia Bharat Sugar & Industries Limited against Central Bank of India. Since the facts and questions of law involved in both complaints are substantially similar, these are being disposed of by this common Order. For ease of reference, Consumer Complaint No. 46 of 2012 is being considered as the lead case, and the facts outlined below are derived therefrom.

2. The Complainant in Consumer Complaint No. 46/2012 has sought the following relief:

“a) pass an order directing the Opposite Party to pay to the Complainant a sum of Rs.3,95,71,930/- (Rupees Three crores Ninety-five Lacs Seventy-one Thousand Nine hundred thirty only) towards compensation for damage/loss suffered.

b) Pendente -lite interest @24% per annum from the date of filing till the date of recovery

c) Any such or further order, which this Hon’ble Commission deem fit and proper in the facts and circumstances of present case may kindly be passed.”

3. Brief facts of the case, as per the Complainant are that, the Complainant is a company engaged in the business of manufacturing and marketing of white crystal sugar and cement etc. The OP is a Public Sector Bank and provides various financial services relating to banking business including issuance of Bank Guarantee for its customers for consideration. In 2005, the Complainant was in the process of setting up a Sugar Plant/ Milling Tandem in their proposed Sugar Mill at Jawaharpur and Nigohi under the name and style of “M/s. Dalmia Chini Mills” when it was approached by M/s. Thyssen Krupp Industries India Pvt. Ltd. (‘the Supplier’) for the supply, erection and commissioning of a Milling Tandem. Relying on the Supplier’s representation that it possessed the requisite technical expertise and capability to fulfil the contract specifications, the Complainant issued a Letter of Intent dated 14.12.2005 to the Supplier for design, manufacture, procurement, supply, erection, testing, and commissioning of the said Milling Tandem. Subsequent to further discussions, the clause relating to Scope of Supply was amended vide Letter dated 30.01.2006 and accepted by supplier. To secure the performance of its contractual obligations, the Supplier was required to furnish various bank guarantees. Pursuant thereto, at the instance of the Supplier, the OP Bank issued irrevocable Performance Bank Guarantee (PBG) No. 39/168 dated 27.12.2006 in favour of the Complainant for an amount of Rs. 1,55,79,500, being 10% of the total contract value. The said PBG obligated the Bank to pay the guaranteed amount upon the first demand made by the Complainant, accompanied by a written declaration stating that the performance guarantee had not been fulfilled, along with results of the performance tests. The equipment was installed on 15.12.2006. Thereafter, performance trials were conducted on 09.01.2009 and 10.01.2009 in the presence of representatives of both parties, which revealed that the machinery failed to meet critical performance parameters, particularly in respect of maceration fibre percentage, and moisture content in bagasse. These deficiencies were again confirmed in independent tests conducted by an external technical consultant, Shri H.N. Gupta, on 16.09.2009 and 17.09.2009. A further trial was held jointly on 13.01.2010 and 15.01.2010, the results of which again confirmed failure to meet the agreed standards. In view of the supplier’s continued failure to meet the guaranteed performance, the Complainant invoked the Performance Bank Guarantee on 24.02.2010 by submitting a written demand along with the required declaration and supporting document-tation, including test reports. However, the OP Bank, despite its unequivocal and irrevocable obligation under the Guarantee, refused to honour the same vide its letter dated 08.03.2010, raising objections