MUKAND LIMITED Vs. TYAZHPROM EXPORT

JUDGEMENT

(1.) Due to the alleged existence of a negative covenant in the agreement stated to have been arrived at between the plaintiff and defendant No.l, the plaintiff, by this suit, wants to restrain defendant No.l from in any manner directly or indirectly pursuing or making any other agreements with defendant No.2 or with any other party with respect to the contract for Sinter Plant-3 (Package SP3-2), raw material, storage and handling system at Bhilai Steel Plant of defendant No.2. Alternatively, the plaintiff has claimed a decree for Rs.5 crores against defendant No.l along With the pendente lite interest. Along with the suit, an application for injunction was filed for restraining defendant No.1 from directly or indirectly pursuing or making any other agreements with defendant No.2 or with any other person with respect to the aforesaid contract and further directing the said defendant to exclusively deal and cooperate with the plaintiff for the performance of the said contract, as contained in the consortium agreement dated August 19, 1995. Brief facts giving rise to the present suit are : -

(2.) That defendant No.l invited global tenders for pre-qualification for constructing a main Sinter Plant machine and raw material storage and handling system at their Bhilai Steel Plant for Sinter Plant-3 (in short referred to as the "project") and defendant No.1 got pre-qualified in February 1995 for the said project. Proposals for the said project were thereafter to be submitted to defendant No.2 and it was at that stage that a Memorandum of Understanding was allegedly entered into between the plaintiff and defendant No.1 on March 7, 1995 whereby they agreed to jointlyarticipate in the submission of tenders for the said project. Thereafter on March 20, 1995 another Memorandum of Understanding (in short referred as "MoU") was entered into between the plaintiff, defendant No.l and defendant No.4 whereby they agreed to act as consortium and collaborate on "exclusive right basis" in preparation and submission of the proposals for the said project and in case the same was awarded, to execute the same. The plaintiff and defendant No.l were already working jointly for the BOF shop of the Rourkela Steel Plant. It is alleged that the parties had agreed to frame a detailed consortium agreement similar to the one signed between them for the Rourkela Steel Plant. It is further alleged that at the request of defendant No.l, the plaintiff got two bank guarantees issued in the sum of collars 80,000 each required for the two tenders; that when an application was made for the bank guarantees, the Reserve Bank of India had insisted that defendant No.3 should satisfy itself that the plaintiff was involved in the. execution of the project and in the event the guarantees were invoked, the plaintiff shall have recourse to defendant No.l; that defendant No.1 confirmed in writing by letter dated April 25, 1995 that in case of revocation of bank guarantees furnished by the plaintiff, defendant No.l undertakes to reimburse the said amount of bank guarantees to the plaintiff; subsequently, defendant No.5was also made a member of the consortium and in August, 1995 a consortium agreement was alleged to have been entered into whereby the parties had jointly collaborated to work on "exclusive right basis" for preparation and submission of their proposals for the project and in the event of award, for execution of the same. Reliance in the suit has been placed upon the "Exclusivity Clause" as contained in article 13 of the consortium agreement which is as under : -

(3.) An abridged agreement is stated to have been made out for submission to defendant No.2 to satisfy its formal requirement and the said agreement was submitted on August 26, 1995 to the said defendant Consortium's Techno Commercial bid was stated to have been found in order and defendant No.2 had, therefore, invited price bids on 29th September and October 19, 1995 for the two packages under the project. The price bids were submitted by the consortium for each of the two bids and the package of the consortium was found to be third lowest for the first package and lowest for the second package i.e. raw material storage and handling system at Bhilai Steel Plaint. It is alleged that defendant No.2 then requested the consortium to give their best possible discount in price for this second package by December 19, 1995. It is alleged that though the consortium had agreed to give a discount of 5% spread over two instalments of initial 4% and subsequent 1% which was also communicated by joint letter dated December 20, 1995 to defendant No.1, the said defendant had started attempts to exclude the consortium members and instead joined some other persons for execution of the contract and the plaintiff is alleged to .have been shocked to receive a letter from defendant No.l on December 20, 1995 alleging that as no price reduction was given byother consortium members, defendant No.l had solely prepared and submitted a revised offer to defendant No.2;