MBL INFRASTRUCTURES LIMITED Vs. IRCON INTERNATIONAL LIMITED

JUDGEMENT

(1.) This facile exercise has been undertaken merely to scare the Court with a heavy bunch of papers and ensure that the pay-out does not take place immediately. This is not new in commercial matters where a defeated party seeks to delay the execution and actual realisation for as long as it can, preying on the limited time available to Court and making a mountain out of a molehill of a challenge.

(2.) The respondent herein was engaged by the National Highways Authority of India to construct a highway or a part thereof. The respondent had due authority to engage sub-contractors for the purpose of completing the work. The respondent engaged the appellant herein for undertaking the construction of the relevant highway from Km 129 to Km 145. The contract envisaged that the work for construction of the 15-km stretch would be completed in a year. The contractor was to get the mobilisation advance against furnishing a bank guarantee covering the mobilisation amount and the interest in respect thereof. The contractor was also required to furnish a performance guarantee by way of an unconditional bank guarantee.

(3.) The original value of the contract was in excess of Rs.14 crores. Though the amount of the contract was subsequently reduced to slightly over Rs.10 crore, the appellant contractor was required to furnish an unconditional bank guarantee in lieu of performance security to the extent of 5% of the original contract price, or about Rs.73 lakh. It is not in dispute that a bank guarantee for the mobilisation advance to the extent of about Rs.71 lakh was furnished by the contractor to the employer. In addition, a bank guarantee of about Rs.5 lakh covering the interest on the mobilisation advance was also furnished. The third bank guarantee caused to be furnished at the behest of the contractor was on account of the performance security to the extent of about Rs.73 lakh.