CONSORTIUM OF SAI RAMA ENGINEERING ENTERPRISES AND MEGHA ENGINEERING & INFRASTRUCTURES LTD. Vs. OIL AND NATURAL GAS CORPORATION LIMITED

JUDGEMENT

(1.) The present writ petition is directed against the order of the second respondent dated 19.12.2015 invoking the bank guarantee furnished by the petitioner on the third respondent bank.

(2.) Petitioner states that he is the successful tenderer, who was awarded the work, in question, under an agreement dated 27.03.2008 with respondents 1 and 2. In terms of the said contract, the petitioner has given performance guarantee as per clause 3.3 of the agreement. Petitioner also submits that the time for completion of the contract was extended up to 31.12.2015 and the respondents had reserved their right to levy liquidated damages for delay in completion of the work. While so, the invocation of bank guarantee is questioned by challenging the impugned letter of the second respondent, primarily, on the ground that the bank guarantee itself is conditional and is only invocable subject to any breach having been committed. Petitioner states that there is no allegation of breach of any term of the contract by the petitioner and as such, the invocation of the bank guarantee is clearly arbitrary. The present writ petition is, accordingly, filed by contending that the petitioner is executing the work of more than Rs.8,000/ - crores under various contracts in the country and the credit rating of the petitioner would come down having adverse impact on the business, if the bank guarantee is allowed to be encashed.

(3.) This Court on 21.12.2015, after hearing the learned counsel for the petitioner, passed the following order while issuing notice to the first respondent: