The court ruled that expired bank guarantees cannot be invoked, reiterating the necessity of proper jurisdiction in commercial disputes.

JUDGMENT

AVM J. RAJENDRA, AVSM VSM (Retd.), MEMBER

1. The present Consumer Complaint has been filed under Section 21 (a)(i)of the Consumer Protection Act, 1986 (for short “the Act”) against the Opposite Party seeking to direct the OPs:

A. Pass an order directing Respondent No. 1 and 2 to encash the Bank Guarantee No. 0008BG00139110 amounting to Rs.99,59,100 and Bank Guarantee No. 0008BG00071812 amounting to Rs.25,81,581; and/or.;

B. Grant interest at the rate of 24% from the date of invocation of the bank guarantees; and/or;

C.Award compensation to the Petitioner for harassment and mental agony cause by unlawful actions of the Respondent No. 1 and 2; and/or;

D. Direct Respondent No. 4 to take stern action against Respondent No. 1 and 2; and/or;

E. Any other orders, which this Hon’ble Tribunal may deem fit in the facts and circumstances of the case;

2. Brief facts of the case, as per the Complainant, is that in 2011, the Government of Rajasthan, through the Petitioner (RUIDP), floated a tender for various sewage infrastructure works at Rajsamand under contract package RUSDIP/TR-02/RSM/WW/02 LOT-1 & 2. On 30.11.2009, the Petitioner awarded the project to OP-3, the lowest tenderer, and entered into a contract agreement for Rs.19,91,81,264, with completion stipulated by 19.05.2012, within a period of 2 years. As per the contract terms, OP-3 submitted two unconditional bank guarantees from ICICI Bank: Bank Guarantee No. 0008BG00139110 dated 20.12.2010, amounting to Rs.99,59,100, valid until 31.12.2014, and Bank Guarantee No. 0008BG00071812 dated 15.10.2011, amounting to Rs.25,81,581, valid until 14.07.2012, and subsequently extended to 31.03.2015. OP-3 failed significantly in adhering to the contract terms and failed to complete the project despite numerous reminders, causing delay of over 4 years. The complainant forwarded multiple letters regarding the slow progress, dated 22.03.2011, 02.06.2011, 16.06.2011, 17.11.2011, 25.01.2012, 16.03.2012, 05.04.2012, 27.04.2012, 08.05.2012, 28.08.2012 and 05.12.2012. However, OP-3 took no steps to address the slow progress issue. On 09.05.2014, a final show-cause notice was issued to OP-3 for contract termination, to which no reply or representation was received. On 06.08.2014, the termination notice was sent to OP-3, informing them of the breach of contract conditions and the intention of the complainant to terminate the contract. Prior to this, on 24.07.2014, OP-3 filed an Application for injunction under Section 9 of the Indian Arbitration and Conciliation Act, 1996 , before the Court of ADJ No. 8, Jaipur Metropolitan, Jaipur. The learned Judge directed all Respondents to maintain status quo regarding the invocation of Bank Guarantees. On 28.11.2014, the complainant forwarded letters Nos. RUSDIP/RSM/BG/ 2014-15/CAMP-JPR-4 and RUSDIP/RSM/BG/2014-15/CAMP-JPR-7 to OP-2, clearly informing them of OP-3's contract breach and requesting invocation of bank guarantees amounting to Rs.99,59,100 and Rs.25,81,581. The Original Bank Guarantees were submitted to the Bank along with these letters and were retained by the bank. On 02.12.2014, OP-2 replied that the stay orders dated 24.07.2014, by learned ADJ No. 8, Jaipur Metropolitan, were not vacated by a specific order, with the next hearing fixed for 09.01.2015, and, therefore, the OP-2 Bank could not invoke the Bank Guarantees. Notably, OP-2 retained the original bank guarantees without returning them to the complainant. On 13.01.2015, the learned Court of ADJ No. 8, Jaipur dismissed OP-3's Injunction Application with a reasoned order. Subsequently, on 22.04.2015, OP-3 filed an Appeal before the Hon'ble High Court of Rajasthan at Jaipur aga