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2017 Supreme(Mad) 939
IN THE HIGH COURT OF JUDICATURE AT MADRAS
S. VIMALA, J.
M/s. Rajasthan Rajya Vidyut Prasaran Nigam Limited, Represented by its Superintending Engineer - Petitioner
Vs.
M/s. Easun Products of India (P) Ltd., Represented by its Authorized signatory, Mr. N. Rajan, - Respondent
Civil Revision Petition (PD) Nos.4833 & 4834 of 2015 and M.P.Nos.1 & 1 of 2015
Decided On : 02-05-2017
For the Petitioner: Mr. Prateek Kasliwal
For the Respondent: Ms. K.Sunitha, M/s. A.Karthikeyan
The court emphasized the importance of adhering to contract terms, the expiration of Bank Guarantee, and the limitations on the maintainability of Revision Petitions.
Headnote:
Bank Guarantee - Termination of Contract - Indian Companies Act, 1956 - Section 115 of the CPC
Fact of the Case:
The first respondent filed a suit seeking a declaration that the termination notice issued by the petitioner is null and void and for a permanent injunction restraining the petitioner from invoking or encashing the Bank Guarantee. The petitioner company terminated the contract and attempted to invoke the Bank Guarantee without following the conditions of the contract.
Finding of the Court:
The court found that the termination notice was bad as it was in violation of the contract terms. The court also noted that the Bank Guarantee had expired, and there was no necessity to invoke it. The court dismissed the application for injunction and upheld the order issuing notices.
Issues: The main issues were the validity of the termination notice, the expiration of the Bank Guarantee, and the maintainability of the Revision Petition.
Ratio Decidendi: The court held that the termination notice was bad as it violated the contract terms. The court also found that the Bank Guarantee had expired, and the Revision Petition was not maintainable at that stage.
Final Decision: The court dismissed the Civil Revision Petitions and directed the suit and related matters to be disposed of within three months.
For the sake of clarity, the nomenclature as adopted by the learned III Assistant City Civil Judge, Chennai, in O.S.No.1679 of 2015, has been used in these Civil Revision Petitions.
1.1. The first defendant in O.S.No.1679 of 2015 is the Revision Petitioner and the plaintiff therein is the first respondent herein.
2. The first respondent herein, as plaintiff, filed a suit in O.S.No.1679 of 2015 on the file of the learned III Assistant Judge, City Civil Court, Chennai, seeking for a declaration that the termination notice, dated 12.05.2014, issued by the Civil Revision Petitioner (first defendant) is null and void and for a permanent injunction restraining the defendants therein from invoking or encashing the Bank Guarantee.
3. The company of the Revision Petitioner is a Public Sector Company, registered under the Indian Companies Act, 1956, providing transmission of electricity to the State of Rajasthan and the company of the first respondent is a company providing complete range of power management products, systems, solutions and services spreading across on generation, transmission, distribution and industrial application segments and turnkey solutions. The second and third respondents are the Bankers of the first respondent company.
3.1. The Revision Petitioner awarded a contract to the first respondent for designing, engineering, manufacturing, assembling, stage testing inspection and testing and ex-works of supply of all equipments / materials for construction of 400 KV GSS at Jodhpur, on 27.10.2013. As per the terms of the award, the first respondent company has provided a Bank Guarantee for security deposit equivalent to the amount of 2% of the contract value. The second respondent, through the third respondent, issued the Bank Guarantee on 13.07.2013, to the first respondent.
3.2. The petitioner company issued a termination notice dated 12.05.2014 alleging various reasons. Contending that as the project has been commenced and therefore, the termination is bad, the first respondent company issued a letter dated 16.05.2014. Thereafter, the petitioner company had withdrawn the termination notice, on 23.06.2014.
3.3. The petitioner company, while terminating the contract, had made an attempt to invoke the Bank Guarantee without following the conditions of contract, fraudulently and illegally.
3.4. Under such circumstances, a suit was filed in O.S.No.1679 of 2015 by the first respondent herein and also sought for an order of injunction, restraining the petitioner company from invoking or encashing the Bank Guarantee, pending disposal of the suit.
3.5. On 24.03.2015, the learned III Assistant Judge, granted exparte ad-interim injunction and extended the same till 01.12.2015.
3.6. During the pendency of the Interim Application, the petitioner company informed that the Bank Guarantee has expired on 30.09.2015. The Court has recorded the submission and giving a finding that there is no necessity to invoke the Bank Guarantee, as the termination notice has been withdrawn and also that the Bank Guarantee has expired, the Injunction Application deserves to be dismissed and thus, dismissed the application on 01.12.2015 (stating that the matter has become infructuous).
3.7. Thereafter, the petitioner company filed an appeal against the final order made in I.A.No.4579 of 2015 in O.S.No.1629 of 2015 before the XIX Additional Sessions Judge, Chennai, in CMA No.139 of 2015, along with three applications in CMP Nos.82 to 84 of 2015 and sought for an order of interim stay against the final order. The Court did not grant interim stay, but ordered notice on the ground that Caveat is pending. Pending consideration of those applications, aggrieved over issuance of notice, the petitioner has preferred the Civil Revision Petition.
4. The main grievance of the learned counsel appearing for the Revision Petitioner is that, the Court ought to have granted interim order to safeguard the bank guarantee, which were expiring on 31.12.2015; in case of ext
