JUDGMENT

Dated this the 18th day of January, 2022 S.Manikumar, C.J.

Before the writ court, the petitioner has sought for the following reliefs:

“i. To issue writ, order or direction in the nature of mandamus directing the 3rd and 4th respondent to take up Ext.P7 and initiate appropriate action, following the dictum in Ext.P1 judgment and to keep in abeyance the further proceedings of 5th respondent under Ext.P6, in the interest of justice.

ii. To call for the entire records leading to issuance of Ext.P6 from the 5th respondent, as it is illegal and arbitrary, following the dictum in Ext.P1 Judgment, in the interest of justice.

Iii. To issue writ, order or direction in the nature of mandamus directing the 5th respondent to stop the further proceedings under Ext.P6, following the dictum in Ext.P1 judgment and to reject the claim for expired bank guarantee, in the interest of justice. ”

2. Facts necessitated for the filing of the writ petition are as hereunder:

The petitioner is aggrieved by the action taken by the 5th respondent to invoke the expired bank guarantee of the petitioner, which was executed as bank guarantee Nos. 7029119BG0000055, 7029119BG0000053, 7029119BG0000058 executed at State Bank of India, SME Kalamassery branch, Pathadipalam, Ernakulam. The petitioner is having the registered ofÏce at XXVII/532, Trinity Castle, Edappally, Cochin-

24.

2. The petitioner have requisite experience and expertise in developing infrastructure. The petitioner has number of contracts with government bodies and public sector undertakings. The petitioner normally issue bank guarantee in the course of performance of contract. In fact all the bank guarantee Nos.7029119BG0000055, 7029119BG0000053, 7029119BG0000058 was having guarantee cover from 20.09.2019 to 31.12.2020. Therefore the bank guarantee cover would expire on 31.12.2020. Hence those bank guarantees cannot be invoked after 31.12.2020. The bank also ensures that the letter of guarantee shall become null and void immediately upon its expiry whether it is returned or not and no claim may be made hereunder after such expiry. Hence as per the bank guarantee, it cannot be invoked after 31.12.2020.

3. It is submitted that as per the bank guarantees the stipulated period is up to 31.12.2020. The bank guarantees are executed at Ernakulam only. It is submitted that the bank guarantee period expired on 31.12.2020 and the 5th respondent bank cannot invoke the "expired bank guarantee". Hence the bank has no duty to encash the bank guarantee as per the request. The bank guarantee specifically stated that the letter of guarantee shall remain in full force and shall be valid up to 31.12.2020 and the bank is liable to pay guarantee amount only if makes any written claim or demand on or before the expiry of the guarantee. Hence the action of the 5th respondent to act on an "expired bank guarantee" for the claim amount is illegal, arbitrary and against law.

4. In the present case, there is no demand before the expiry of bank guarantee. Hence the respondent is not entitled to invoke the guarantee after the expiry of the validity period of bank guarantee. The expired bank guarantee cannot be invoked. Hence the letter issued to invoke the "expired bank guarantees" of the 5th respondent bank is illegal and arbitrary. The issuance of Ext.P6 to the 5th respondent on expired bank guarantees is illegal, arbitrary and against law. The entire process of Ext.P6 for invocation of bank guarantee issued by 5th respondent of the petitioner, has to be interfered with. The petitioner had no other option but to approach the 3rd and 4th respondent for redressal of the grievance of the petitioner. Unless there is direction issued, there will be no effective action taken by 3rd and 4th respondent. Hence this writ petition is filed.

3. Taking note of the averments, on 27.08.2021, a learned single Judge has passed the following order in W.P.

(C)No.15426 of 2021:

“Admit.

Standing Counsel takes notice for respondents 3 to 6.

Central G