HINDUSTAN STEEL WORKS CONSTRUCTION Vs. STATE OF BIHAR

JUDGEMENT

(1.) THE petitioner in both these writ petitions are the same being Hindustan Steel Works Construction Limited, a Government of India Undertaking. It had undertaken two road widening - cum -strengthening projects of NABARD for being executed on behalf of the State of Bihar from respective area Executive Engineers. Two bank guarantees for each work were furnished by the petitioner from the Respondent -State Bank of India in favour of the State of Bihar and its invocation and payment thereof by the State of Bihar and the Respondent -State Bank of India respectively is indisputed, the legality and propriety of which is, in question, in the present writ petitions. No facts are in dispute and the plain and simple question is, whether State of Bihar at all legally invoked the bank guarantee and even if they invoked the guarantees, was State Bank of India legally competent and justified in permitting its encashment.

(2.) THE facts and issues being similar in both the writ petitions, with consent of parties the writ petitions were taken up for hearing at the stage of admission itself for its disposal. The petitioner -Hindustan Steel Works Construction 'Limited is a Government of India undertaking having its registered Office at Kolkata. Facts of "CWJC No. 12868 of 2006";

(3.) PURSUANT to notice inviting tender by the Road Construction Department, Road Division No. 1, Muzaffarpur for widening and strengthening Muzaffarpur -Pusa road measuring about 30.08 Kms. and construction of RCC culverts under NABARD scheme, petitioners tendered. The tender was awarded to the petitioner for the said work. Before agreement was executed petitioner -company was required to furnish two bank guarantees. It accordingly requested its banker State Bank of India to issue requisite bank guarantee in favour of the Executive Engineer, Road Construction Department, Road Division No. 1,. Muzaffarpur. First was BG No. 0654005 BG 0000174 dated 19.12.2005 (Annexure -3) was issued by the Respondent -State Bank of India in favour of the Respondent -Executive Engineer for Rs. 55,00,000/ - and was valid up to 18.6.2006. It is not in dispute that on 15.6.2006 it was revalidated and renewed up to 18.12.2007. The second was BG No. 39/03 dated 5.5.2006 for Rs. 55,61,884/ - and was valid up to 4.5.2008 in favour of Respondent -Executive Engineer. The bank guarantees having thus been obtained, on 6.5.2006 agreement being Agreement No. 1F2 of 2006 -07 dated 6.5.2006 was executed between the petitioner and the Respondent -Executive Engineer for widening and strengthening work of Muzaffarpur -Pusaroad measuring 30.08 Kms. and culvert (Annexure -1). These bank guarantees were invoked by letters dated 19.9.2006 (Annexures -5 and 6 respectively for the two bank guarantees). Facts of "CWJC No. 2688 of 2007":