TaxTMI 
TaxTMI 
2016 (9) TMI 1623
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.... to seek relief from the Arbitral Tribunal, which would be constituted shortly. In view of the aforesaid submission, GGL is restrained from invocation of the Performance BG till ARIO's application under Section 17 of the Act -which the learned counsel for ARIO states will be filed as soon as the Arbitral Tribunal is constituted - is disposed of by the Arbitral Tribunal. This direction is conditional upon ARIO filing an appropriate application under Section 17 of the Act within a period of two weeks of the Arbitral Tribunal being constituted. 3. Insofar as the present petition is concerned, the controversy is now limited to invocation of the Mobilization BG to the extent of Rs. 77,32,154/- (as on 02.06.2016). The mobilization advance provided by GGL was to be recovered from amount payable for the work contracted to ARIO. It is ARIO's case that since GGL had failed to provide the necessary work fronts, ARIO could not perform the work as contracted and, therefore, GGL cannot recover the unadjusted mobilization advance. ARIO further states that it had mobilized all resources for execution of the LMC Contract and had utilized the mobilization advance for the said purpose; but, ....
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.... to be provided a work front of 19,000 mtrs (18 kms. approximately) for execution of the LMC contract but was provided only 996 mtrs. It is also claimed that GGL did not have the necessary permission for execution of the entire work and, therefore, ARIO could execute works only in respect of 18 customers. 5.5 It is stated that ARIO sent several letters informing GGL as to the lack of work fronts and on 21.05.2015, sent a letter informing GGL that it would be demobilizing from the site from 30.05.2015. At the material time, ARIO had issued only RA Bills aggregating a sum of Rs. 13,73,856/-. On 08.06.2015, ARIO submitted a claim of Rs. 74,69,110/- for idling of manpower and machinery due to non-availability of the work fronts. It is stated that, thereafter by an email dated 16.10.2014, GGL called upon ARIO to lay a pipe line from GAIL terminal inside Mathura Refinery to CNG Station being developed Opposite IOCL Mathura Refinery. The said pipeline was for a length of approximately 2.5 kms. According to ARIO, this work was miniscule and ARIO declined to take up the said work unless the balance work fronts were also made available. It is stated that, thereafter, a meeting took place b....
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....contended that GGL had perpetuated a fraud on ARIO and had invited bids and awarded works without obtaining the necessary permissions. He referred to the minutes of the kick-off meeting held on 12.08.2014 and drew the attention of the Court to the following statement recorded therein:-- "Total 38 Industrial customers who have submitted the security Deposit and have clearance from Agra marketing are to be connected at the earliest. A list of 38 such consumers was handed over by Agra Mktg to M/s. Ario and 17 are to be connected on priority. M/s. ARIO to complete the field survey of all the 38 industries and submit the BOM for the Last mile connectivity for the same. OIC-GAIL GAS Agra emphasised that the tapping from the existing underground P/L will be done with Hot tapping and the same may be reviewed while submitting the report by the team." 10. He submitted that GGL's aforesaid representation made on 12.08.2014 was patently misleading as GGL admittedly did not have the requisite clearances and, therefore, could not provide the necessary work fronts for ARIO to execute the works. He submitted that ARIO mobilized its resources to carry out the works on the basis that th....
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....ance for mobilizing the necessary resources. He contended that ARIO had made a claim on account of idle labour and machinery and the mobilization advance could be recovered against the claims already made by ARIO. 15. The learned counsel for GGL countered the submissions made on behalf of ARIO. She submitted that in terms of Schedule of Rates, GGL was only to reimburse the costs for obtaining the permissions and it was within ARIO's scope of work to obtain the necessary permissions. She submitted that ARIO was required to conduct a survey and obtain the necessary permissions. She submitted that in the circumstances, GGL could not be faulted for non-provision of the work fronts. She fairly submitted that the works as originally contemplated could not be executed because TTZ Commissioner had issued the order for stoppage of the work. However, she contended that GGL had provided substantial alternate works which could be pursued by ARIO. 16. She further countered the submission that ARIO had mobilized the necessary resources. She submitted that ARIO was executing another contract in the vicinity and had used the resources from those works and, therefore, ARIO's claim that it....
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....nly question that is to be answered is whether GGL should be interdicted from invoking the mobilization BG only on the basis of the aforesaid disputes between the parties. 23. It is the ARIO's case that GGL has played a fraud inasmuch as it had represented that 38 industrial customers had clearances from Agra Marketing and were to be connected at the earliest. ARIO had contended that it was implicit in the aforesaid representation that all clearances for execution of the works in relation to the 38 industrial customers was available while, in fact, the necessary clearances were not available on the date of the kick off meeting (that is, 12.08.2014) when such representation was made. 24. In Svenska Handelsbanken v. M/s. Indian Charge Chrome and Others: (1994) 1 SCC 502, the Supreme Court had held as under:-- "...in case of confirmed bank guarantees/irrevocable letters of credit, it cannot be interfered with unless there is fraud and irretrievable injustice involved in the case and fraud has to be an established fraud... ...irretrievable injustice which was made the basis for grant of injunction really was on the ground that the guarantee was not encashable on its terms... ....
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....submission of initial security deposit, in the following manner." 29. It is apparent from the above that mobilization advance provided were in the nature of loan and, admittedly, GGL is entitled to recover the same. 30. The question whether ARIO is entitled to retain the advances and adjust the same against its claim is the subject matter of disputes between the parties. The terms of the Mobilization BG expressly provide as under: "The right of the OWNER to recover the outstanding sum of advance upto Rs. 82,12,450/- (Rupees Eighty Two Lakhs Twelve Thousands Four Hundred Fifty Only) from the BANK in the manner aforesaid will not be affected or suspended by reason of the fact that any dispute or disputes has or have been raised by the CONTRACTOR and/or that any dispute or disputes is or are pending before any officer, tribunal or court and any demand made by OWNER on the BANK shall be conclusive and binding." 31. The aforesaid terms make it amply clear that GGL is entitled to recover the same notwithstanding the disputes between the parties. Indisputably, the purpose of Mobilization BG is to secure GGL in recovery of mobilization advance. The entire purpose for securing the mobi....