J U D G M E N T

MANMOHAN, J: (Oral)

1. Present writ petition has been filed seeking stay of encashment of the bank guarantees dated 15th May, 2014 by the respondent no.1

2. Mr. Parag Tripathi, learned senior counsel for petitioner submits that the encashment letters are in violation of Regulation 16 of the Petroleum and Natural Gas Regulatory Board (PNGRB) as no prior notice was issued to the petitioner. Since Regulation 16 of PNGRB has been relied upon by learned senior counsel for the petitioner, the relevant portion of the same is reproduced hereinbelow:-

“16. Consequences of default and termination of authorization procedure.

(1) An authorized entity shall abide by all the terms and conditions specified in these regulations and any failure in doing so, except for the default of the service obligation under sub-regulation (1) of regulation 14 and force majeure, shall be dealt with as per the following procedure, namely:-

(a) the Board shall issue a notice to the defaulting entity allowing it a reasonable time to fulfil its obligations under the regulations;

(b) no further action shall be taken in case remedial action is taken by the entity within the specified period to the satisfaction of the Board;

(c) In case of failure to take remedial action, the Board may encash the performance bond of the entity on the following basis, namely:-.............”

(emphasis supplied)

3. Mr. Tripathi further contends that the delay in construction of the project was for reasons beyond the control of the petitioner and constitutes ‘force majeure’. In support of his submission, he relies upon the following judgments of this Court:-

(a) M/s Basic Tele Services Ltd. Vs. Unoin of India & Anr., I.A. No. 11070/96 in Suit No. 2686/96 decided on 5th October, 1999

33. I am also tempted here to cite a few lines from a judgment delivered by the Supreme Court as reported in Delhi Science Forum & Others Vs. Union of India & Anr. Jt. 1996 (2) S.C. 295 the Hon‟ble Supreme Court laid down the guidelines as to under what circumstances administrative decision of the Government or of the statutory authority of the Government can be challenged. It was observed “......... Many administrative decisions including decisions relating to awarding of contracts are vested in a statutory authority or a body constituted under an administrative order. Any decision taken by such authority or a body can be questioned primarily on the grounds: (i) decision has been taken in bad faith; (ii) decision is based on irrational or irrelevant considerations; (iii) decision has been taken without following the prescribed procedure which is imperative in nature. While exercising the power of judicial review even in respect of contracts entered on behalf of the Government or authority which can be held to be State within meaning of Article 12 of the constitution courts have to address while examining of grievance of any petitioner as to whether the decision has been vitiated on one ground or the other. It is well settled that the onus to demonstrate that such decision has been vitiated because of adopting a procedure not sanctioned by law, or because of bad faith or taking into consideration factors which are irrelevant, is on the persons who questions the validity thereof.......”

xxx xxx xxx

37. In the above circumstances I am of the view that the plaintiff have shown a prima facie case in their favour. In case the injunction is not issued in that eventuality the bank guarantee which was furnished by the plaintiff by way of earnest money in favour of defendant No.1 would be encashed, the plaintiff would suffer irreparable loss and injury in a much as they would be deprived of their hard earned money without any justification and for no fault of their own. On the other hand, in case an injunction is granted it would be simply tantamount to delay in encashing the bank guarantee if the defendant ultimately succeed. In any case the plaintiff the institution of the present suit have raised a substantia