Hindustan Construction Co. Ltd v. National Hydro Electric Power Corporation Ltd

ASHA MENON, J.

RAJIV SAHAI ENDLAW, J. SEPTEMBER 22, 2020 s*

* IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of Decision: 22nd September, 2020 + FAO (OS) (COMM) 106/2020 HINDUSTAN CONSTRUCTION CO. LTD. .....Appellant Through: Mr. Dayan Krishnan, Senior Advocate with Mr. Jayant Mehta, Mr. Rishi Agrawala, Ms. Shruti Arora, Mr. Ankit Banati and Mr. Sanjeevi Seshadri, Advocates versus NATIONAL HYDRO ELECTRIC POWER CORPORATION LTD. .....Respondent Through: Ms. Maninder Acharya, Senior Advocate with Mr. Piyush Sharma, Advocate CORAM: HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW HON'BLE MS. JUSTICE ASHA MENON [VIA VIDEO CONFERENCING] JUSTICE ASHA MENON FAO (OS) (COMM) 106/2020, C.M. Appln. No.21839/2020 (of the appellant for stay of impugned judgement and order) 1. This is an appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996 ("Act", for short) read with Section 13 of the Commercial Courts Act, 2015 against the judgement of the learned Single Judge dated 27th August, 2020 dismissing the petition filed by the appellant/Hindustan Construction Co. Ltd. ("HCC", for short), under Section 9 of the Act seeking an injunction restraining the respondent/ National Hydro-Electric Power Corporation Ltd. ("NHPC", for short) from invoking/encashing any or all of its Bank Guarantees (BGs) cumulatively worth ₹214.36 crores. 2. The facts as are relevant for the disposal of the present appeal may be set out in brief. The respondent/NHPC being a Public Sector Undertaking involved in the setting up of and execution of hydro-electric power projects in India, invited bids on 25th October, 2006 from pre- qualified bidders for turnkey execution of the 330 MW hydro-electric power plant on the Kishanganga River in Bandipora, Jammu & Kashmir (the "Kishanganga Project"). The bid of the appellant/HCC was accepted on 22nd January, 2009 and a contract was signed between the parties on 9th March, 2009 for the execution of the Kishanganga Project. The scope of the work was defined including the construction of Units I, II & III with power generation capacities of 110 MW each, along with other civil work. The contract price was ₹19,258,390,000/- and the work was to be completed in 84 months i.e. by 21st January, 2016. As part of its contractual obligations the appellant/HCC was required to furnish Performance Bank Guarantees for ₹101.32 crores, Retention Bank Guarantees for ₹107.80 crores and Advance Bank Guarantees for ₹5.24 crores, which it furnished. 3. The appellant/HCC were informed on 20th June, 2020 through email by the ICICI Bank that the respondent/NHPC had invoked two BGs issued by them for ₹65,00,000.00 and ₹1,50,00,000 vide letter dated 19th June, 2020. On the same day, again through email, the Punjab National Bank also informed the appellant/HCC that the respondent/NHPC had that day, invoked three BGs issued by them for ₹1,65,00,000/-, ₹2,60,00,000/- and ₹3,36,84,272/-. On 22nd June, 2020, the Jammu and Kashmir Bank also informed them of the request of the respondent/NHPC for the encashment of 11 BGs worth ₹29,48,38,964/- issued towards Retention Money BG. At this juncture, the appellant/HCC approached the Court to prevent encashment of any of the 48 BGs given by it. 4. Initially, on 23rd June, 2020, the Court restrained the respondent/NHPC from encashing 16 of 48 BGs furnished by the appellant/HCC. On 26th June, 2020 however, the Court extended this ad-interim injunction to prevent the encashment of the remaining 32 BGs as well. Ultimately, the learned Single Judge vide the impugned judgement dated 27th August, 2020 concluded, that neither was fraud on the part of the respondent/NHPC established, nor were any special equities existing in favour of the appellant/HCC which could prevail upon the Court to grant an injunction in their favour restraining the respondent/NHPC from encashing the 48 BGs and accordingly dismissed the petition under Section 9 of the Act. 5. However, in view of the fact that the respondent/NHPC had been restrained from encashing the BGs during the pendency of the said peti