"C/SCA/2838/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 2838 of 2018 With CIVIL APPLICATION NO. 1 of 2018 ========================================================== LANCO INFRATECH LTD. Versus GUJARAT ENERGY TRANSMISSION CORPORATION LIMITED ========================================================== Appearance: MR PERCY KAVINA, SR. ADVOCATE WITH MR.BHASH H MANKAD(6258) for the PETITIONER(s) No. 1 MR SP HASURKAR(345) for the RESPONDENT(s) No. 1 MR PRANAV DESAI, for RESPONDENT No.2 NOTICE SERVED BY DS(5) for the RESPONDENT(s) No.3 ========================================================== CORAM: HONOURABLE MR.JUSTICE A.J. SHASTRI Date : 07/05/2018 ORAL ORDER 1. The present petition under Article 226 of the Constitution of India is filed by the petitioner – company for seeking quashment of the impugned communications dated 28.9.2017 and 22.11.2017 issued by the respondent No.1, whereby the respondent No.1 has sought to invoke Clause 79 of the contract agreement. 2. The basic facts leading to the rise of present controversy involved in the petition are that respondent No.1 i.e. Gujarat Energy Transmission Corporation Ltd. has floated one tender in the month of October,2010 bearing No.GETCO/TR­II/TL/400KV/S&E/ 2131 for the purpose of supply, erection and commissioning of following 400kV D/C Mundra­Zerda transmission line No.1 – 330.563 km; i) Package­I: Page 1 of 42 C/SCA/2838/2018 ORDER 79.928 km. (Mundra to PA34), ii) Package­II : 94.532 km (AP34 to AP46) and iii) Package­III : 156.103 km (AP46 to Zerda) including supply of 400 kV D/C tower materials including Bolt­Nuts and accessories, earth wire, silicone rubber insulators (suspension type 120 kN and tension type – 160 kN), hardware for conductor and earth wire etc. on turnkey basis (hereinafter after referred to as ‘Tender’). 2.1 In response to the said tender notice, for the purpose of securing work under the contract, the petitioner entered into a joint venture agreement with one M/s.Deepak Cables and M/s.Archon Engicon Pvt. Ltd. and the petitioner was nominated as the leader of the consortium / lawful attorney on behalf of the consortium / joint venture company members by way of specific power of attorney dated 20.10.2010. Resultantly, in the said capacity, the bid was also submitted with respect to the said project. It is the case of the petitioner that after evaluation of the bid received, the respondent No.1 herein accepted the bid of the petitioner and issued orders for supply and erection of 400 kV D/C Mundra­Zerda line No.1 on turnkey basis for package­I ­ 94.532 km (AP34 to AP46) (hereinafter referred to as ‘supply and erection orders for package­II). Said package­II has prescribed a period of completion of contract for supply and erection portion was 9 months and 12 months respectively. The respondent No.1 has further placed an order on 2.7.2011 for supply and erection of 400 kV D/C (Mundra – Zerda) line No.1 on turnkey Page 2 of 42 C/SCA/2838/2018 ORDER basis for even package­I – 79.928 km (Mundra to AP34) (hereinafter referred to supply and erection for package­I). The Clause­4 for package­I is also stipulating the time for supply and erection as 9 months and 12 months respectively. Under Part­B Schedule­2 of erection orders dated 2.7.2011, the cost of right of way and tree clearances / crop compensation / way leave etc. was fixed at Rs.20,000/­ per unit / km for the quantity of 95 km and 80km totalling around Rs.20,61,709/­ and Rs.19,69,559.95 which compensation was to be paid by the petitioner to the land owners on behalf of respondent No.1. Hence, as per the case of the petitioner, it is on the basis of this price, Rs.20,000/­ fixed as compensation for right of way and tree/crop clearance, that the petitioner structured its price bid submitted to the respondent No.1. It is the further case of the petitioner that by virtue of clause­3 of supply and erection orders for package­I and package­II, the petitioner had furnished the bank guarantees as per the requirement to the extent of 10% of the contract value in respect of supply and erection orders in the following terms: Sr. No. Bank BG No. Date of Opening Expiry Amount of month BG 1 Andhra Bank 008411IGP ER0022 28.9.2011 Jul-19 3,19,11,850 2 Andhra Bank 008411IGP ER0023 28.9.2011 Jul-19 63,82,370 3 Andhra Bank 008411IGP ER0024 28.9.2011 Jul-19 46,66,142 4 Andhra Bank 008411IGP ER0025 28.9.2011 Jul-19 9,33,228 Page 3 of 42 C/SCA/2838/2018 ORDER 5 Andhra Bank 008411IGP ER0010 09/06/11 Oct-18 2,58,01,014 6 Andhra Bank 008411IGP ER0011 09/06/11 Oct-18 51,60,203 7 Andhra Bank 008411IGP ER0013 09/06/11 Oct-18 40,59,957 8 Andhra Bank 008411IGP ER0012 09/06/11 Oct-18 8,11,991 7,97,26,755 2.2 The petitioner has further asserted that by virtue of the terms of the contract, the access and the possession to the site to be provided by respondent No.1 which is a part of erection condition of the contract to the tender and as such, to provide such access and possession of the site, it remaining an obligation of respondent No.1. The petitioner has further stated that this access and possession includes a right of way and free clearance of the site and the Government of Gujarat (Energy and Petrochemical Department) has specifically notified respondent No.1 as ‘State Transmission Utility’ under Section 39 of the Electricity Act,2003 w.e.f. 1.6.2004 and by virtue of such, the main function of respondent No.1 is to see the development of an integrated and efficient power transmission system network in the State of Gujarat. By virtue of acquiring the status as ‘State Transmission Utility’, the provisions contained under Section 164 of the Electricity Act and the provisions of the Indian Telegraph Act,1885 are made applicable, entrusting all powers vested in telegraph authority under Part­3 of the Indian Telegraph Act,1885. On account of this, Page 4 of 42 C/SCA/2838/2018 ORDER the petitioner, as a natural belief, has an assumption that respondent No.1 would take appropriate steps in accordance with law to ensure that petitioner’s right of way and access to the site would be provided thoroughly to the petitioner. 2.3 The case of the petitioner further travels to the effect that during May,2011, by virtue of such entrustment of work, the petitioner had mobilized its resources for taking up an activity of execution of supply and erection orders for Package Nos.1 and 2. However, it has been revealed that respondent No.1 has reneged from its obligation under the tender contract and consequently, the petitioner was prevented from carrying out its obligation effectively well withing stipulated time which has adversely affected the progress and viability of the ultimate project. On account of failure to provide route alignment and details survey for accurate zone and line, the petitioner could not carry out the obligation within the time and details whereof are prescribed as to how and in what manner the respondent No.1 has failed to provide such and Para.5.7.1 has highlighted the manner in which failure has taken place on the part of respondent No.1. Similarly, it has also been asserted by the petitioner in Para.5.7.2 specifically that respondent No.1 has failed to provide suitable access to and possession of the site for execution of the work which was basic and preliminary an obligation of respondent No.1. How that failure has taken place is Page 5 of 42 C/SCA/2838/2018 ORDER unlisted in the aforesaid paragraphs. With a view to avoid unnecessary burden in the present order, the same is not reproduced hereinafter. But, nonetheless, by highlighting such issue, it has been contended that on account of inaction and proper steps by respondent No.1, the circumstances were created such for the petitioner which is not possible to carry out the work effectively and well within time. It has also been asserted that had the effective steps be taken well in time by respondent No.1, there was no occasion for the petitioner to repeat the request for police protection in some of the areas to respondent No.1. For the period commencing from 2.1.2012 to 28.2.2012, the petitioner has achieved a remarkable progress in execution of work in the area in which the police protection was made available by respondent No.1. However, during the passage of time, some land owners had approached this Court against respondent No.1 and its official, who initiated erection of transmission of towers without hearing them or without granting any compensation for the loss sustained in their agricultural activity and it is only after an order 18.7.2012, on the basis of consensus between farmers / land owners and respondent No.1, the further work of erection of transmission towers was possible by submitting application before the District Magistrate. Now, this litigation between GETCO and the land owners again thereafter reached the Court, as allegedly the respondent No.1 has used the police machinery with a view to forcibly erect transmission towers on the Page 6 of 42 C/SCA/2838/2018 ORDER land of private parties i.e. farmers and land owners, who had initiated contempt proceedings and by passing an order on 5.9.2012, a cost of Rs.10,000/­ was also imposed upon the officials and the respondent No.1 company. Pursuant to the orders passed by this Court, the rights and contentions of both the sides were kept open; with respect to an issue related to determination of compensation to the land owners as well as the issue of dispute pertaining to crop compensation which were raised coupled with resistance offered by land owners were ordered to be decided by the District Magistrate and it is only after the orders passed by this Court on 18.7.2012 and 5.9.2012, appropriate applications were made before the concerned District Magistrate with a view to put an end to the issue permanently. Though the applications with respect to 97 locations across 12 villages were submitted before the District Magistrate, Kutch­Bhuj in and around September,2012. However, it was only after a lapse of 2 years’ period, in the year 2014 the orders were passed with respect to about 58 locations. The petitioner was never a party to such litigations and, therefore, was depending upon the information to be passed on by respondent No.1. Even it has been stated on oath by the petitioner that out of 97 locations, 39 locations are still pending for orders before the District Magistrate. Even after the orders, the controversy appears to have not been resolved and with aid and assistance of State Reserve Police Force, an issue of right of way was sought to be resolved. In a meeting Page 7 of 42 C/SCA/2838/2018 ORDER dated 9.4.2013, the petitioner has expressed its inability to resolve the right of way issue without the help of State Reserve Police. Additionally, it has also been noticed that such issues were stretched beyond proportion and on account of these controversies and the situations, not only the supply of work has been brought down but, there arose a significant increased in idling cost and project overheads of the petitioner. The overhead cost has abnormally increased and that has also been indicated by the petitioner vide letter dated 29.4.2013. Despite aforesaid circumstances which are prevailing and which are well within the knowledge of respondent No.1, instead of resolving the issue the respondent No.1 vide letter dated 27.5.2013 served a notice to the petitioner by virtue of clause­79 of Part­I (GCC) of the tender by alleging that the petitioner has contravened the provisions of the contract and by virtue of such, the respondent No.1 is entitled to have the work completed through a third party at the risk and cost of the petitioner. On the contrary, it is the case of the petitioner that it is an obligation on the part of respondent No.1 to provide site with free access so as to enable the petitioner to carry out the tender work and, therefore, on the contrary, it has been alleged that there is a clear violation of statutory obligation on the part of respondent No.1 authority and resultantly, a breach of the contract by respondent No.1. During the passage of time, at one point of time, the petitioner was even agreeable to pay the enhanced compensation Page 8 of 42 C/SCA/2838/2018 ORDER around Rs.1 to Rs.1.50 lakh per unit i.e. almost 5 to 7.5 times than the agreed amount if the petitioner will be allowed to carry out the work. However, the farmers have turned down such request and in the absence of police protection being made available to the petitioner by respondent No.1, the land owners continued to create hindrance and obstructions in execution of work by the petitioner. The petitioner since realized that this grievance is beyond the control of the petitioner, at one point of time, the petitioner requested the respondent No.1 for invocation of clause­77 (force majeure) and clause­81 (frustration of contract) and sought a closure of contract on ‘as is where is’ basis in case if respondent No.1 is not agreeable to the amendments in terms of the contract including time extension till 31.3.2015. A copy of the said letter is also attached at Annexure­N dated 13.6.2013. Even after approach to the revenue authorities – civil administration and the Collector, the issue with respect to right of way was not materialized and despite the failure on the part of respondent No.1 authority in aforesaid issues of providing the facilities to the petitioner, the respondent No.1 has refrained from releasing the payment of the petitioner. On account of aforesaid critical situation beyond the control of the petitioner and on account of failure on the part of respondent No.1, even a meeting was also held on 17.12.2013 and in view of the deliberation which took place, the respondent No.1 agreed, on the contrary, to extend the time limit for performance of the Page 9 of 42 C/SCA/2838/2018 ORDER contract with respect to package­I. It was further agreed that respondent No.1 would release 10% retention amount out of 20% upon submission of bank guarantee after amendment. The respondent No.1 acknowledged the fact that work on the project could not proceed due to serious issue of right of way problem and the respondent No.1 though has assured to provide police protection, nothing further has taken place. In view of revised orders and the terms, even the bank guarantees in the following forms has also been provided to the petitioner to the extent of Rs.83,16,120/­, the particulars whereof are as under : Sr. No. Bank BG No. Date of Opening Expiry Amount of month BG 1 BOB 0129514B G0000004 11/01/14 Jul-19 69,30,1000 2 BOB 0129514B G0000005 11/01/14 Jul-19 13,86,020 83,16,120 2.4 It is further the case of the petitioner that despite the repeated request of the petitioner and by repeated assurances by respondent No.1, the respondent No.1 has failed to organize police protection through police machinery so as to enable the petitioner to carry out uninterpreted work. Again, a request was made in two meetings which took place in between on 1.2.2014 and 29.3.2014. But even after that also, no improvement has taken place almost with respect to both the work orders regarding Package­I and II. The position was such that Page 10 of 42 C/SCA/2838/2018 ORDER petitioner was constrained to once again wrote a specific letter to respondent No.1 on 9.6.2014 indicating specifically that there is inability to execute the work at Moti Khakar and Siracha village due to the serious issue of right of way. During the passage of time, it is the case of the petitioner that despite the specific orders of the District Magistrate for giving police protection by intimating to the office of the Police Commissioner, Western Kutch at Gandhidham, the respondent No.1 has failed to take any steps regarding the same. Now when even after the orders of the District Magistrate if the issue of right of way was not possible to be controlled, as per the say of the petitioner, it was the responsibility of respondent No.1 to lodge the complaint for non­compliance of the orders by proceeding ahead under Section 188 of the IPC. But no such steps have been taken. Even at a site meeting, the respondent No.1 realized that land owners were demanding exorbitant amount of compensation ranging from Rs.5 lakhs to Rs.25 laksh per location and so much so that in the region like Mundra, the demand was raised to the extent of Rs.2 crores. This demand was not possible to be fulfilled by the petitioner and the respondent No.1 being the statutory authority has miserably failed in discharging its statutory obligation by taking steps under Section 13(3) of the Indian Telegraph Act. As a result of this, as per the say of the petitioner, once again for no fault on its part, a letter was required to be written on 21.12.2015 expressing inability to complete the Page 11 of 42 C/SCA/2838/2018 ORDER balance work. Since this was the situation, the petitioner had requested respondent No.1 to extend the time limit for completion of work upto 31.12.2016 without imposition of liquidated damages. Such request was made by way of letter dated 21.12.2015. Now this failure is not that of the petitioner but, it is respondent No.1 which is at fault in not allowing the petitioner to complete the work in a time schedule manner and for that purpose, it has been specifically observed that to provide such infrastructure to the petitioner, it was respondent No.1’s responsibility which was not shouldered. However, on account of these issues, huge loss in the form of incurring cost had been undertaken by the petitioner; had repeatedly mobilized and demobilized the resources wherever problem arose and also law and order situation was also faced by the petitioner and, therefore, once again, without imposing liquidated damages, extension of time to complete the work was required to be taken vide communication dated 31.3.2017. By way of letter dated 14.4.2017, it was intimated to respondent No.1 of the plan for execution of balance work depending upon availability of fronts. Again, a request for police protection was reiterated which appears to have not been adhered to. This situation and acute financial crunch which resulted on account of aforesaid situation, in the interregnum, the corporate insolvency resolution process was initiated against the petitioner under Section 7 of the Insolvency and Bankruptcy Code,2017 numbered as C.P. (IB) No.111/7/HDB/2017 and the Page 12 of 42 C/SCA/2838/2018 ORDER process of such insolvency proceeding was commenced by virtue of an order dated 7.8.2017 in which the appointment of Insolvency Resolution Professional (IRP) was also made under the provisions of the Code which order is passed by NCLT on 17.8.2017. By virtue of effect of Sections 17 and 18, the moment IRP is appointed, it takes over the management of the affairs of the corporate debtor i.e. petitioner and the powers of the Board stands suspended. Pursuant to such appointment of IRP, on behalf of the petitioner, said IRP had attended the meeting on 15.9.2017 with respondent No.1 along with an official of petitioner company, namely, Shri Shyam Chandra Das. Despite aforesaid meeting, by alleging that no representative remained present of the petitioner to attend the meeting and assumed that no interest of the petitioner to execute the work left and as such, decided to take appropriate steps to carry out the incomplete work at the cost and risk of the petitioner and other consortium members. To this, a letter was also written of the petitioner on 26.10.2017, inter­alia, contending that it is incorrect to state that no one remained present in a meeting dated 15.7.2017. On the contrary, a categorical mention is made in the said letter that there was a complete failure on the part of respondent No.1 authority to provide proper infrastructure and specifically denied the allegations which are levelled against the petitioner. However, without considering such detailed reply dated 28.9.2017 and 26.10.2017, Page 13 of 42 C/SCA/2838/2018 ORDER abruptly, with a malafide intent the respondent No.1 wrote once again a letter dated 22.11.2017 threatening to invoke clause­79 of the tender agreement i.e. to carry out the balance work at the risk and cost of the petitioner and consequent action and due to this specific threat given by respondent No.1, the petitioner has a grave apprehension that respondent No.1 may choose to invoke bank guarantees amounting to Rs.8,80,42,875/­. It is the case of the petitioner that respondent No.1 cannot take advantage of its own wrong and shift the burden of non­ execution of work within stipulated period and as such, two letters which have been written by respondent No.1 dated 28.9.2017 and 22.11.2017, the petitioner has to approach this Court by way of present petition under Article 226 of the Constitution of India. 3. In the background of aforesaid situation, on 19.2.2018 it is brought to the notice of the Court a decision delivered by the Division Bench of this Court dated 5.11.2015 rendered in SCA No.18833 of 2015 and requested that under this serious urgent apprehension, a short notice may be issued to the authority and especially when there is a serious apprehension that at any point of time, the respondent No.1 authority would like to encash the bank guarantee. Hence, the notice was issued. In turn, on 21.2.2018, when the matter was called out, Mr.S.P.Hasurkar, learned advocate, has stated before the Court that he has got telephonic instructions to appear on behalf of Page 14 of 42 C/SCA/2838/2018 ORDER respondent No.1 authority and Mr.Pranav G. Desai, learned advocate, has received the instructions to appear on behalf of respondent No.2 – Andhra Bank and though served, the respondent No.1 has chosen not to appear at the relevant point of time which is the main authority and as such, under this situation the Court had posted the matter for further hearing on 27.2.2018 with an order not to take any coercive steps by the respondent authorities and it is under this set of circumstance, thereafter Mr.S.P.Hasurkar, learned advocate, has received the instructions and all the parties to the proceedings have been heard at length and upon their request, the matter is kept for orders in view of aforesaid peculiar set of circumstance. 4. Mr.Percy Kavina, learned Senior Advocate with Ms.Garima Malhotra, learned advocate, has represented the petitioner, whereas main contesting party has been represented by Mr.S.P.Hasurkar, learned advocate and the matter was, with this background, heard at length. 5. Mr.Percy Kavina, learned Senior Advocate, has vehemently submitted that there was a clear obligation on the part of respondent No.1 authority to provide access and possession to the site under the terms of contract, particularly clause­4 and unless and until the same is being provided smoothly, the petitioner was obviously not able to carry out the work which was absolutely well within the Page 15 of 42 C/SCA/2838/2018 ORDER knowledge of respondent No.1 authority. Still the onus of their failure is tried to be shifted upon the petitioner and the impugned communications have been sent. It has also been contended that by virtue of the fact that respondent No.1 was notified as ‘State Transmission Utility’, it was an obvious, reasonable and bonafide belief that respondent No.1 would ensure the petitioner right of way and access to the site so as to enable it to carry out the work of supply and erection at the site. However, looking to the chronology which has been mentioned in the petition and the supportive documents, the respondent No.1 has miserably failed in discharging its statutory obligation to ensure free and uninterrupted access and that has rather prevented the petitioner to execute the work, despite efforts. Learned Senior Advocate has further submitted that series of communications have been written by the petitioner to the respondent No.1 pointing out specifically the hurdles being faced by the petitioner and on account of disturbances on the part of land owners / farmers but, despite request the respondent No.1 has not even provided adequate police protection. On the contrary, by taking a specific contention that despite the orders from the District Magistrate and despite intimating to it, no adequate police protection has been made available as there was a serious issue with regard to right of way. It was the responsibility of respondent No.1 to file appropriate complaint before the District Magistrate against the farmers, who have not complied with the orders of even District Page 16 of 42 C/SCA/2838/2018 ORDER Magistrate by taking action under Section 188 of the IPC. Even that has not been initiated by the respondent No.1. It has also been asserted that though there was a specific power entrusted, the respondent No.1 has miserably failed in discharge of its function and the issue with regard to the demand of compensation has also not been resolved by the respondent No.1 which was exorbitantly enhanced looking the prevailing situation and to some of the areas ranging from Rs.5 lakhs to Rs.25 lakhs and in Mudra area, the demand was raised upto Rs.2 crores and though the respondent No.1 was well within the knowledge of such acute situation which has been erupted, has miserably failed in taking steps and, therefore, now to allege against the petitioner about inaction or non­compliance of work within the scheduled time, the same cannot be said to be a just act on the part of respondent No.1 authority. 5.1 Mr.Percy Kavina, learned Senior Advocate, has further contended that by virtue of provisions contained under the Indian Contract Act, more precisely Section 54 thereof, there is an onus on respondent No.1 alone to ensure the right of free and uninterrupted access to the land so as to ensure that petitioner had no hurdle in completion of the work in a time scheduled manner. Learned Senior Counsel has further contended that happening of such events during the course of time while executing the project work, the situation was beyond the control of the petitioner and that was not anticipated by the Page 17 of 42 C/SCA/2838/2018 ORDER petitioner that time and again the petitioner shall have to make extension application on account of such non­providing of uninterrupted site and the time extension applications were very much pending, in the meantime the respondent No.1 had issued notice under clause­79 (GCC) and threatening of encashment of bank guarantee cannot be said to be just and fair. Learned Senior Counsel has further contended that in the background of this peculiar set of circumstance, to resort to clause­79 (GCC) is an attempt which is thoroughly unjustified and in contrast to the principle of fair playing action. It has also been contended that there are series of correspondence which took place inter­se and though the respondent No.1 authority had an advantage to take some precaution by virtue of its authority, on one hand has not responded to the petitioner’s repeated request and on the other hand, making an attempt to switch over the burden to the petitioner which is absolutely arbitrary, wholly unjustified and inequitable exercise of power which calls for interference under Article 226 of the Constitution of India. 5.2 Mr.Percy Kavina, learned Senior Advocate, has contended that normally, this being an issue erupted out of contractual obligation but, the facts and circumstances are such peculiar and apparent which would clearly falls within the purview of extraordinary jurisdiction. Basically, the voluminous documents which are attached to the petition Page 18 of 42 C/SCA/2838/2018 ORDER compilation, out of which one apparent circumstance which is undisputed is that despite repeated request, the respondent No.1 has not been able to provide adequate protection. It was also coming out from the record that there was a serious problem with regard to right of way and it has also been reflecting that for that issue, the District Magistrate had repeatedly been requested to be approached and, therefore, when such a situation is undisputedly emerging from the record, it cannot be so easily conveyed by respondent No.1 that it is the fault on the part of petitioner in not maintaining the time schedule under the contract. As a result of this, the relief sought in the petition deserves to be granted. 5.3 Mr.Percy Kavina, learned Senior Advocate, has submitted that the bank guarantee is sought to be encashed abruptly despite aforesaid situation is an act of arbitrary and malafide exercise of power and as such, the relief prayed for deserves to be granted. Hence, considering the totality of circumstance, learned Senior Counsel has submitted that the impugned communications are the example of arbitrary and malafide exercise of power and are not sustainable and the background of fact is such wherein the respondent No.1 is required to be estopped from taking any step of encashing the bank guarantees which are enlisted in the prayer clause. Resultantly, after drawing the attention of this Court to the terms of the contract and the documents which are attached to the petition compilation, a Page 19 of 42 C/SCA/2838/2018 ORDER request is made that appropriate orders be passed in the context of relief which has been prayed for. No other submissions have been made. 6. To meet with the stand taken by learned Senior Counsel for the petitioner, Mr.S.P.Hasurkar, learned advocate appearing for the main contesting party i.e. respondent No.1, has vehemently contended that the present petition is containing highly disputed questions of fact and as such, the same cannot be the subject matter of exercise of extraordinary jurisdiction. It has also been contended that the petitioner has miserably failed in adhering the terms of the contract and despite having considered the grievance of the petitioner and despite once having granted the extension, even in extended period also the petitioner has not been able to carry out and complete the work. Learned advocate has further contended that the details which are provided in the affidavit­in­reply is clearly indicating that it is a fault on the part of petitioner in not complying the terms of the contract and such an important work, though entrusted, the petitioner has miserably failed in performing its obligation. By way of affidavit­in­ reply, it has been contended that in a meeting which has taken place on 12.2.2018, it was clearly concluded that petitioner was put to the notice of consequences which may fall back in case of failure to resume the work by the petitioner. The minutes of the meeting were also drawn and forwarded to the petitioner on 21.2.2018 but, the petitioner has not Page 20 of 42 C/SCA/2838/2018 ORDER uttered a word about such meeting in the petition and has created a falsified scene of urgency and, therefore, on account of such conduct on the part of petitioner, no equitable jurisdiction to be exercised. It has also been contended that present SCA is filed on 15.2.2018 and all of a sudden, so called urgency was posed and on account of adequate availability of time, no proper arrangement could have been made of placing proper particulars before the Court. In fact, in reality, certain particulars which were very relevant have not been presented in the petitioner like a communication dated 1.2.2018 in which the respondent No.1 authority has addressed a letter to the petitioner, inter­alia, clearly stating that the conductors contained in large number of drums are lying in godown which were supplied to the petitioner for the purpose of undertaking the work for free of cost from the deponent GETCO are required to be used immediately in on­going project. Said valuable material remained in custody of the petitioner and the petitioner has deserted the work later on finding it not viable to the petitioner. This material valuable in nature is kept in the custody which is to be used for public utility project and thereby, by retaining custody thereof, the petitioner has seen to it that by virtue of clause contained under the contract, the work cannot be completed through other agency at the cost of petitioner and, therefore, conveniently, on one hand, the valuable material which is to be used for public utility project to the extent of approximately Rs.22 Page 21 of 42 C/SCA/2838/2018 ORDER crores kept in the godown so as to see that from the said custody, the respondent No.1 cannot take such material. The entire project has been halted on account of complete inaction on the part of respondent No.1 authority and after creating such situation, the petitioner has chosen to rush down to this Court as if there is no fault on the part of petitioner. 6.1 Mr.S.P.Hasurkar, learned advocate, has further contended that not only the valuable material free of cost is provided by the respondent No.1 to the petitioner but, whatever facility was to be provided had also been provided and despite that fact, no proper particulars are placed on record and sought the relief which otherwise not possible to be granted in exercise of extraordinary jurisdiction. Learned advocate has further contended that ultimately what has been contended is that respondent No.1 has not provided the possession of the site, whereas the respondent No.1 is of the opinion that work has been abandoned conveniently after retaining valuable goods in the godown. Now, these issues are the issues which require proper adjudication and examination which cannot be adjudicated or examined in exercise of extraordinary jurisdiction and, therefore, the petition, on the basis of such factual matrix, may not be entertained. It has also been contended that the petitioner has construed the terms of the contract conveniently to its stand. But in fact the terms of the contract are specifically permitting Page 22 of 42 C/SCA/2838/2018 ORDER respondent No.1 to initiate appropriate step against the petitioner. On the contrary, an attempt is made to misuse the process of law by bringing the petition before this Court. It has been contended that the breach of contract which ultimately a center of controversy in the present proceeding can well be adjudicated upon through a mode of arbitration which is one of the stipulations contained in the contract which has been voluntarily signed by the petitioner and, therefore, now it is not open for the petitioner to resile from the same and bring the controversy before this Court by way of present petition under one pretext or the other. Ultimately, there is a specific issue that the petitioner has failed to observe the obligation contained in the contract which has visited appropriate action by respondent No.1 and if there is any grievance then, there is a specific condition in which the petitioner is supposed to approach instead of present writ petition. Hence, the relief prayed for may not be granted or adjudicated in the present proceeding. For the purpose strengthening the submission with regard to approach to the arbitrator by the petitioner, a reliance is placed in a decision of the Apex Court reported in (2004) 3 SCC 553, more particularly Para.69.2, in which the clause contained under the contract can be resorted to if there is any grievance to the petitioner. Considering this specific condition to approach and resolve the dispute through proper mode of arbitration, no petition could have been brought before this Court. Page 23 of 42 C/SCA/2838/2018 ORDER 6.2 Mr.S.P.Hasurkar, learned advocate, has further contended that ultimately by bringing to the notice of this Court and by alleging some inaction on the part of respondent No.1, what has been essentially prayed is to grant an injunction against encashment of bank guarantees which, in no circumstance, possible to be granted in view of settled position of law. Learned advocate has further submitted that series of decisions have made it clear that in such a controversial situation, stay against the encashment of bank guarantee cannot be granted and for the said purpose, a decision of the Apex Court reported in (2007) 8 SCC 110 is relied upon. 6.3 By bringing further affidavit­in­reply, some more particulars have also been provided by the learned advocate for the respondent No.1 in which it has been mentioned that total huge outstanding amount pending for clearance. The total dues to store rent is to the extent of Rs.2,78,179/­, the total dues with respect to security services are Rs.15,31,714.23/­ and the dues to the extent of Rs.12.67 crores are pending with GETCO. By way of submitting table, in Para.3, the total outstanding amount of the petitioner reads as under : Store Rent Security Charges Other Misc. like electricity bill / shade &light repairing / water charges Page 24 of 42 C/SCA/2838/2018 ORDER Chandiya store rent of package-1 Rs.2,78,079.00 Rs.17,70,300.00 – Kunjisar store rent of package-2 Rs.2,92,000.00 Rs.3,31,000.00 Rs.53,790.00 Rapar store rent of package-2 Rs.5,80,220.00 Rs.1,62,000.00 Rs.55,000.00 Total Rs.11,50,299.00 Rs.22,63,300.00 Rs.1,08,790.00 6.3 As such, by bringing it to the notice of the Court, Mr.Hasurkar, learned advocate, has contended that on the contrary, on account of plightful possession of the petitioner company, there arose a clear breach at petitioner’s end. Hence, at the instance of petitioner, no equitable jurisdiction deserves to be exercised. It has further been contended by Mr.Hasurkar, learned advocate, that the petitioner has not even paid the premium of insurance policy towards the storage­cum­erection insurance and it has to be renewed to safeguard the material lying the store as well as the erected site. This was the term of the contract which the petitioner was supposed to obey and it has been categorically asserted in further affidavit that non­payment of insurance premium would hold the petitioner liable for loss of damage or theft of material lying in the store. It has also been mentioned that progress achieved with respect to the work is based upon the assistant from respondent No.1. On the contrary, the petitioner has not made any attempt to complete the balance work since August,2014 even despite repeated follow up by respondent No.1. As per the terms of the contract, for the supply order, total 20% retention money is deducted from the supply bill, out of which Page 25 of 42 C/SCA/2838/2018 ORDER 10% retention money can be released after commissioning of line and balance 10% retention money can be released only after final bill and material reconciliation. For erection part, only 10% retention money is deducted from R.A. bill which can be released only after final bill and material reconciliation and the related clauses of the contract are clause­9, terms of payment of supply order (pg.167 and 168). Hence, in view of such, Mr.Hasurkar, learned advocate, has contended specifically that this is not a fit case in which in an abstract form these factual details can be adjudicated in extraordinary jurisdiction. The fact finding authority and the appropriate forum which has been stipulated in the clause contained in the contract which is binding on both the parties can be allowed to adjudicate such issue and as such, the petition being devoid of merit, raises serious disputed question of law, the conduct of the petitioner is also worth to be examined, all these issued are required to be allowed to be adjudicated by way of process of arbitration which is agreed upon right from day one while the agreement was signed by the parties and as such, even in case of bank guarantee also, no relief is possible to be granted in the present proceedings. Learned advocate has further contended that every issue can be agitated before an appropriate forum and this is not a case in which extraordinary equitable jurisdiction to be exercised. On the further issue of bank guarantee, some of the recent pronouncements have been relied Page 26 of 42 C/SCA/2838/2018 ORDER upon by learned advocate for the respondent No.1; (I) (2015) 14 SCC 375 and (ii) (2016) 10 SCC 46, which clearly indicate that this is not a case in which any extension can be granted with respect to even encashment of bank guarantee. Mr.Hasurkar, learned advocate, has further relied upon one decision of the Delhi High Court in case of very petitioner company in which also such issues with regard to encashment of bank guarantee is dealt with and after taking note of the conduct as well as the issue of bank guarantee, no relief was granted and this is the very company having specific knowledge about the few of the Delhi High Court, has made an attempt to persuade this Court to grant the relief at least against the encashment of bank guarantee which, in no circumstance, in respectful submission of learned advocate, be permitted. The overall circumstance entangled in the present proceeding requires threadbare adjudication and, therefore, appropriate forum may be allowed to adjudicate the issues. Hence, the present petition deserves to be dismissed with costs. No other submissions have been made. 7. Having heard the learned advocates appearing for the respective parties and having gone through the entire material on record, following circumstances are not possible to be ignored by this Court : (1) An impression is sought to be created by the petitioner that as per the terms of the contract, it is respondent No.1 who is to provide right of way and Page 27 of 42 C/SCA/2838/2018 ORDER possession of the site and only thereafter, the work can be commenced. But during the passage of time, whatever circumstances happened have clearly suggested that deliberation took place in between and more than adequate co­operation appears to have been granted to the petitioner. The gist of the meeting which took place between respondent No.1 and the petitioner company with respect to package­I reflecting on page­398 of the petition compilation, has found that there was a clear failure visible on the part of petitioner company. As a result of this, GETCO has decided to take conductor back for utilization of the same for other projects, for which the petitioner was directed to hand over such conductor to the GETCO. The meeting has further reflected that the details with respect to insurance policy were also a subject matter of controversy and it was held that for the shortage of material lying in the store and/or erected, full responsibility was found that of the petitioner. It was also noticed in the said meeting that petitioner is not agreeable to execute the work in the present condition and as such, GETCO was left with no other option but, to execute the said work of public importance at the risk and cost of the petitioner, as per the terms and conditions of the contract. Further meeting with respect to package­II also reflects such kind of similar situation and, therefore, this situation which has been created is on account of whom is the subject matter of serious controversy as it appears from the record. Page 28 of 42 C/SCA/2838/2018 ORDER (2) From the record it further appears that what has been challenged in the petition is two communications in the form of final notices but, the preface of said final notices reflects that such notices have been issued though in the month of September,2017 and not in November,2017, even thereafter statement is continued. There was a specific assertion made in the said impugned communication that protection intimation was given to the petitioner by GETCO to furnish planning for execution work enabling GETCO to arrange for police protection. But no prompt response was given by the petitioner and now, making an accusation on authority that it is on account of inaction on the part of respondent No.1 to offer police protection, the petitioner could not carry out the work. This aspect is also a subject matter of controversy which can be gone into at length upon examination of factual details. It appears that several letters have been written as is reflecting in the impugned communications but, no correspondence series in number have been even responded. (3) It has also been noticed from the record that on account of financial crunch, some steps have also been taken against the petitioner company and IRP has been appointed to see the affairs of the company. On the contrary, from the overall record, it appears that at whose instance the terms of the contract are violated is also a Page 29 of 42 C/SCA/2838/2018 ORDER matter of controversy which requires extensive examination of material. (4) Now, coming to these controversies which are reflecting and looking to the clause contained in the contract, the contention raised by learned advocate for the petitioner is also not possible to be accepted regarding frustration of contract and also the force majeure. Clause-77 deals with force majeure reflecting on page-90 is presupposes the inability beyond the control of the petitioner which in fact looking to the correspondence and the material on record is highly debatable and, therefore, prima facie, it appears that whether such clause can be resorted to is also not only debatable but, an issue which attracts an element of detailed inquiry. The Court has no hesitation in opining that these are the clauses which require adjudication which is not possible in extraordinary jurisdiction. Since ex-facie it is not possible to come to a definite conclusion that petitioner is thoroughly not responsible and as such, keeping these circumstances in mind, it appears that the resolution of dispute which arose in the present proceedings by virtue of contract which has been signed specifically and the terms are biding upon both the sides, the petitioner will have to approach the appropriate authority at the initial stage itself and for that purpose, settlement of Page 30 of 42 C/SCA/2838/2018 ORDER dispute and resolution of dispute is enlisted in clauses 83 and 84 of the contract which is reflecting on page-94 and 95 of the petition compilation. The most relevant clauses are clauses-83 and 84 which read as under : “RESOLUTION OF DISPUTES 83.0 SETTLEMENT OF DISPUTES 83.1 Any dispute(s) or difference arising out of or in connection with the Contract shall, to the extent possible, be settled amicably between the parties. 83.2 If any dispute or difference of any kind, whatsoever, shall arise between the Owner and the Contractor, arising out of the contract for the performance of the works whether during the progress of the works or after its completion or whether before or after the termination, abandonment or breach of the contract, it shall, in the first place, be referred to and settled by the Engineer, who, within a period of thirty (30) days after being requested by either party to do so, shall give written notice of his decision to the owner and the contractor. 83.3 Save as hereinafter provided, such decision in respect of every matters so referred shall be final and binding upon the parties until the completion of the works and shall forthwith be given effect to by the contractor who shall proceed with the works with all due diligence, whether he or the owner requires arbitration as hereinafter provided or not. 83.4 If after the engineer has given written notice of his decision to the parties, no claim to arbitration has been communicated to Page 31 of 42 C/SCA/2838/2018 ORDER him by either party within thirty (30) days from the receipt of such notice, the said decision shall become final and binding on the parties. 83.5 In the event of the Engineer failing to notify his decision as aforesaid within thirty (30) days after being requested as aforesaid, or in the event of either the owner or the contractor being dissatisfied with any such decision, or within thirty (30) days after the expiry of the first mentioned period of third days, as the case may be, either party may require that the matters in dispute be referred to arbitration as hereinafter provided. 84.0 ARBITRATION 84.1 All the questions, disputes or differences, whatsoever which may at any time arise between the parties to this contract in connection with the contract OR any mater arising out of OR in relation there to, shall be referred to the ‘GUJARAT PUBLIC WORKS CONTRACTS DISPUTES ARBITRATION TRIBUNAL’ As per the provisions of the Gujarat Public works contracts disputes arbitration Tribunal Act,1992. a) Affect the right of the engineer-in- charge to take possession of all or ant tools, plants, materials and stores, in or upon the work or site thereof or belonging to the contractor or procured by him and intended to be used for the execution of the work or any part thereof. b) Preclude the Engineer-in-charge from utilizing the materials purchased by the contractor in any work or from removing such materials to other place, during the period the work is stopped or suspended in pursuance of notice given to the contractor under Page 32 of 42 C/SCA/2838/2018 ORDER general conditions. c) Entitle the contractor to stop the progress of the work or carrying out the additional or altered work in accordance with the provision of General Condition for the work where there is no specification. d) Preclude the GETCO from getting the work done by another agency. Neither party is entitled to bring a claim to arbitration latest by thirty days after the expiration of the defects liability period. The provisions of the Arbitration Act,1992, Gujarat Public Works Contract Disputes Arbitration Tribunal Act,1992 and the rules made there under shall apply to the arbitration proceeding under this clause.” (5) The above view of the situation is rather constraining the Court to indicate that this is not a fit case in which exercise of extraordinary jurisdiction equitable in nature to be undertaken. There are series of decisions in which the scope of writ jurisdiction is enlisted and well propounded and as such, keeping in view such proposition in mind, the Court is of the considered opinion that this is not a fit case in which equitable extraordinary jurisdiction is possible to be exercised. (6) The recent decision in addition to earlier decisions are kept in mind by the Court for coming to this conclusion and one of such Page 33 of 42 C/SCA/2838/2018 ORDER decisions of recent time in case of Gujarat Maritime Board v. Larsen and Toubro Infrastructure Development Projects Ltd & Anr., reported in (2016) 10 SCC 46, the relevant extract of which are reproduced hereinafter: “11.It is contended on behalf of the first respondent that the invocation of Bank Guarantee depends on the cancellation of the contract and once the cancellation of the contract is not justified, the invocation of Bank Guarantee also is not justified. We are afraid that the contention cannot be appreciated. The bank guarantee is a separate contact and is not qualified by the contract on performance of the obligations. No doubt, in terms of the bank guarantee also, the invocation is only against a breach of the conditions in the LoI. But between the appellant and the bank, it has been stipulated that the decision of the appellant as to the breach shall be absolute and binding on the bank.” 8. No doubt, the scope of judicial review is not that much circumscribed but then, the same has to be exercised in proper case and this is not a case in which the jurisdiction under Article 226 of the Constitution of India deserves to be exercised. 9. Coming to an issue of arbitration to be approached by the petitioner, the reliance which has been placed by the learned advocate appearing for the GETCO is in a decision delivered by the Apex Court in case of ABL International Ltd. & Page 34 of 42 C/SCA/2838/2018 ORDER Anr. v. Export Credit Guarantee Corporation of India Ltd. & Ors., reported in (2004) 3 SCC 553. There appears to be some relevance and, therefore, quoted hereinafter. “Whenever a particular mode of settlement of dispute is provided in the contract, the High Court would refuse to exercise its discretion under Article 226 of the Constitution of India and relegate the parties to the mode of settlement particularly when the settlement of the dispute has to be resolved through the means of arbitration.” 10. Keeping in view this proposition of law and in view of reiteration of said principle in recent time also, the Court is of the opinion that this is a case in which the petitioner has to approach the arbitration proceedings rather than invoking extraordinary jurisdiction of this Court. Since the issue on this principle is quite vogue, further decisions are not being reproduced hereinafter in the present order. Hence, keeping aforesaid principle in mind, this is not a fit case in which the powers under Article 226 of the Constitution of India are to be exercised. 11. Additionally, the contention which has been raised, predominantly, by the learned advocate for the petitioner, is about encashment of bank guarantee issue. By narrating the various Page 35 of 42 C/SCA/2838/2018 ORDER reliefs, an ultimate substantial grievance and the protection which has been sought is against encashment of bank guarantee. Now, the bank guarantees which have been narrated in the prayer clauses is to the tune of Rs.8,80,42,875/- in total reflecting on page-30/H of the petition. Apart from said position of law not to grant relief against encashment of bank guarantee, one of the further equitable consideration which is kept in mind by the Court is the conduct of the petitioner and its huge liability. A specific assertion is made on oath by the deponent of respondent No.1 that approximately the valuable material to be utilized for public utility project to the extent of Rs.22 crores is lying in the godown of the petitioner and the respondent No.1 has not been allowed to lift the same for its on-going project. So, on one hand, an injunction is sought against the encashment of bank guarantee to the extent of approximately Rs.8 crores, a sizable amount of material is kept in hand by the petitioner company, undisputedly of respondent No.1 and that too, to the extent of Rs.22 crores. Apart from this, the liability which the petitioner is facing to the extent of Rs.2,78,179/- towards store rent, security charges to the extent of Rs.15… and further dues to the extent of Rs.12.67 crores are pending with GETCO. These details are not permitting the Court Page 36 of 42 C/SCA/2838/2018 ORDER to exercise the extraordinary equitable jurisdiction. These details are not possible to be ignored by this Court even while considering the request of the petitioner in respect of the relief against the encashment of bank guarantee. Apart from this equitable relief, the proposition of law on the issue of ‘no relief against the encashment of bank guarantee’ is well defined by series of decisions and one of such decisions of the Apex Court in case of …v…, reported in (2016) 10 SCC 46, the relevant observations whereof are reproduced hereinafter: 12. Looking the aforesaid principle also, this Court is of the view that this is not a fit case in which the relief against encashment of bank guarantee can be considered. Additionally, it has also been found and brought to the notice of this Court that this very company has also approached with some another dispute before the Delhi High Court for seeking such kind of relief requesting the injunction against invoking and encashing 26 bank guarantees and that was also a case based upon the alleged breach of terms of the contract and in the said petition, relying upon some of the decisions of the Apex Court, the Delhi High Court has not considered the request of the petitioner, in addition to the other issues. The relevant extracts with regard to encashment of Page 37 of 42 C/SCA/2838/2018 ORDER bank guarantee issue, since relevant, are reproduced hereinafter : “The learned senior counsel for respondent No.1 opposed the interim stay and his argument is two­fold i.e. (a) bank guarantee is an independent contract and invocation/encashment can be stayed only if a fraud in execution of such bank guarantee is alleged to be of an egregious nature and (b) the petitioner considerably delayed the project and even had used sub­standard material which led to the explosion of a boiler in unit No.2 and that despite numerous requests to conduct various tests at different stages, per the contract, the petitioner had failed to co­operate with respondent No.1. On limb (a) of the argument, suffice is to refer to Vinitec Electronics Pvt. Ltd. V. HCL Infosystems Ltd. (2008) 1 SCC 544, wherein it was held as under : “It is equally well settled in law that bank guarantee is an independent contract between bank and the beneficiary thereof. The bank is always obliged to honour its guarantee as long as it is an unconditional and irrevocable one. The dispute between the beneficiary and the party at whose instance the bank has given the guarantee is immaterial and of no consequence.” And in Hindustan Steel Works Construction Ltd. V. Tarapore & Co. & Anr. (1996) 5 SCC 34 the following was held: “In taking that view the High Court has overlooked the correct position that a bank guarantees is a independent and Page 38 of 42 C/SCA/2838/2018 ORDER distinct contract between the bank and the beneficiary and is not qualified by the underlying transaction and the primary contract between the person at whose instance the bank guarantee is given and the beneficiary. What the High Court has observed would applicable only to the parties to the underlying transaction or the primary contract but can have no relevance to the bank guarantee given by the bank, as the transaction between the bank and the beneficiary is independent and of a different nature. In case of an unconditional bank guarantee the nature of obligation of the bank is absolute and not dependent upon any dispute or proceeding between the party at whose instance the bank guarantee is given and the beneficiary.” And in State Trading Corporation of India Ltd. V. Jainsons Clothing Corporation & Anr. (1994) 6 SCC 597 the Court held : “It is settled law that the court, before issuing the injunction under Order 39, Rules 1 and 2, CPC should prima facie be satisfied that there is triable issue strong prima facie case of fraud or irretrievable injury and balance of convenience is in favour of issuing injunction to prevent irremediable injury. The court should normally insist upon enforcement of the bank guarantee and the court should not interfere with the enforcement of the contract of guarantee unless there is a specific plea of fraud or special equities in favour of the plaintiff. He must necessarily plead and produce all the necessary evidence in proof of the fraud in execution­of the contract of the guarantee, but not the contract either of the original contract or any of the subsequent events that may happen as a ground for fraud.” Page 39 of 42 C/SCA/2838/2018 ORDER Admittedly, the Bank Guarantees are unconditional and no fraud qua its execution is alleged in the entire petition.” 13. In view of aforesaid situation which is prevailing on record, this Court is of the considered opinion that this is not a fit case in which the relief prayed for by the petitioner is possible to be granted. Additionally, the Court has also found that a strenuous attempt is made by learned advocate for the petitioner by relying upon a decision delivered by this Court dated 5.11.2015 in SCA No.18833 of 2015 and thereby, contended that in the said case, the Division Bench of this Court has granted the relief against encashment of bank guarantee. But then it appears that no details are much reflecting as to whether the case is similar in nature. Here is a case in which as against the relief of encashment of bank guarantee to the extent of Rs.8 crores, the goods and the valuable material worth more than Rs.22 crores are retained by the petitioner which is not in dispute and the same are lying in the store which also having huge liability of rent and as such, in this peculiar set of circumstance, it is not possible for this Court to observe the said decision as a straitjacket formula in case on hand. On the contrary, it is settled position of law that if the facts are Page 40 of 42 C/SCA/2838/2018 ORDER different or even on additional fact would make a world of difference in applying the precedent and, therefore, applying such well recognized principle, this Court is of the opinion that in the absence of any detail with regard to background of such case i.e. SCA No.18833 of 2015, this Court is unable to grant the relief by ignoring this peculiar background of fact of case on hand. Hence, in the considered opinion of this Court the relief prayed for is not possible to be granted. Additionally, the Court is also of the opinion that when any relief which can be compensated in terms of money and any circumstance which can be mitigated by awarding some relief in mandatory form, no injunction should be granted. Here is a case in which, prima facie, there appears to be no case in favour of the petitioner for exercise of extraordinary jurisdiction and looking to the facts and circumstances narrated hereinbefore, no irreparable loss or balance of convenience strike in favour of the petitioner and in absence thereof, it is not possible for this Court to extend such relief as has been prayed for. Hence, the petition being devoid of merit, deserves to be dismissed and the same is dismissed hereby, with no order as to costs. Notice is discharged. Interim relief, if any, granted earlier stands vacated. Page 41 of 42 C/SCA/2838/2018 ORDER Consequently, Civil Application No.1 of 2018 does not survive and the same is disposed of accordingly. (A.J. SHASTRI, J) V.J. SATWARA Page 42 of 42 "