WALCHANDNAGAR INDUSTRIES LTD Vs. SARASWATI INDUSTRIAL SYNDICATE LTD

JUDGEMENT

(1.) The facts germane for a decision in these Appeals are that in respect of a Sugar Mill Project to be established in Ethiopia, funding has been made available by the Government of India through the aegis of EXIM Bank. The Project has been sub divided into seven sub-projects for which separate and independent tenders were floated. These are - (1) Steam Generation (2) Process House (3) Juice Extraction (4) Power Generation (5) Diesel Generation (6) Factory Workshop and (7) Plant Water System. It was further decided that for ease and facility of implementation of the Project, instead of dealing separately with all the successful Tenderers, the Tenderer who had been awarded the largest number of projects, would act as the lead party; a single Engineering, Procurement and Construction (EPC) contract would be entered into with this party. Saraswati Industrial Syndicate Ltd. was the Successful Tenderer in respect of Steam Generation; Uttam Sucrotech International Pvt. Ltd. in respect of Process House; and since in respect of Juice Extraction and Power Generation the successful Tenderer was OIA, it was agreed that Overseas Infrastructure Alliance India Pvt. Ltd. (OIA) would act as the single EPC Contractor.

(2.) The Appellants assert that a completed contract had already evolved in their favour, whereas OIA contends that while Saraswati Industrial Syndicate Ltd. and Uttam Sucrotech International Pvt. Ltd. were successful Tenderers, a contract between them was required to be executed and this had not transpired. It is not in controversy that OIA had demanded fifteen per cent commission/charges from the Appellants and all other successful Tenderers ostensibly to cover expenses that OIA would inevitably have to incur as the single EPC Contractor. The Appellants assert that Walchandnagar Industries Ltd. was illegally introduced into the subject Sugar Mill Project by OIA by engineering the removal of both Saraswati Industrial Syndicate Ltd. and Uttam Sucrotech International Pvt. Ltd. owing to their reluctance to make the payment of the said fifteen per cent commission/charges. The Ethiopian party, namely, TENDAHO Sugar Factory Project has not contested either the suit or this Appeal.

(3.) Saraswati Industrial Syndicate filed a Suit for perpetual and mandatory injunction, being CS(OS) No. 1368/2008, pleading, inter alia, in paragraph 16 that OIA "has failed and/or neglected to execute the formal contract document with the Plaintiff and is threatening to introduce a third party in place of the Plaintiff". Most significantly, in paragraph 7 of the original Plaint, it has been pleaded that on or about 7th December, 2007, TENDAHO reiterated in writing to OIA that "the winning bidders of other packages are to be retained as sub contractors without any alteration in the agreed technical and financial aspects as already finalized with the individual bidder". This averment has not been denied but in response to the said paragraph, OIA has pleaded as follows: