TaxTMI 
TaxTMI 
2020 (1) TMI 1607
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.... (b)Declare the action of defendant No.1 of issuing letter dt.18.10.2019 to defendant No.2 to invoke Bank Guarantee dt.11.08.2017, bearing BG No.003GT02172230034 as fraudulent, illegal and void; (c) Consequently grant a decree of permanent injunction restraining defendant No.1 from invoking/enforcing the Bank Guarantee dt.22.02.2017, bearing BG No.003GT02170510009; (d)Consequently grant a decree of permanent injunction restraining defendant No.1 from invoking/enforcing the Bank Guarantee dt.11.08.2017, bearing BG No.003GT02172230034; (e) Award costs of the suit. The case of the plaintiff/1st respondent 3. The case of the 1st respondent/plaintiff in COS No.42 of 2019 is that there were two Tripartite Agreements dt.17.01.2017, one for erection and another for supply, between the appellant, the 1st respondent and the 3rd respondent, wherein the 1st respondent was appointed as subcontractor to carry out erection and supply of balance of plant equipments/systems scope at the appellant's thermal power plant situated in Nellore District in Andhra Pradesh. 4. The 1st respondent furnished a Bank Guarantee dt.22.02.2017 bearing BG No.003GT0217051000....
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.... was attempting to invoke the Bank Guarantees fraudulently and illegally and therefore, it should be restrained from encashing the Bank Guarantees. 9. It is contended that the 4th respondent, along with consortium of lenders, financed the appellant's thermal power plant in Nellore District, Andhra Pradesh to the tune of Rs.3,462.17 Crore; and it had written letter dt.02.04.2018 to the 2nd respondent Bank informing the 2nd respondent that they represent the consortium of lenders; and by the said letter, the 4th respondent informed assignment of Bank Guarantees furnished in favour of the appellant by virtue of the 4th respondent being the financier of the appellant's project. 10. It is contended that if the Bank Guarantees are encashed, it would be impossible to retrieve the same and there are proceedings pending before the National Company Law Tribunal (NCLT), Hyderabad Bench against the appellant and there is no assurance as to who would be managing the appellant company. It is also contended that there is a proceeding against the appellant company under the Insolvency and Bankruptcy Code as well. I.A.No.723 of 2019 and I.A.No.724 of 2019 fled by 1st respondent 11. Alon....
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....t also denied that there was any delay in payments and it is contended that payment would be released only if the 1st respondent's part of the contract is performed in its true perspective. It is contended that the 1st respondent failed to perform its part of the contract in terms of the Tripartite Agreements and the Bank Guarantees were thus rightfully invoked by the appellant. 19. It is also contended that the 4th respondent, in its letter dt.02.05.2018 addressed to the 2nd respondent, only stated that if the Bank Guarantees were invoked by the appellant, the entire money under the two Bank Guarantees should be credited to the trust account maintained by the consortium of banks and financial institutions i.e., the lenders of the appellant. It is also stated that the appellant, in its letter of invocation, had requested the 2nd respondent Bank to credit the entire money covered by the two Bank Guarantees to the sub TRA account. Reference is also made to a similar letter dt.19.10.2019 addressed by the appellant to the 2nd respondent. It denied that there were any oppression and mismanagement proceedings pending against the appellant before the NCLT. 20. It is contended that t....
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....uded that Ex.P9 indicates that there was an agreement between the parties to terminate the contract on certain terms and conditions and it was agreed under Ex.P9 that the Bank Guarantees would be returned. 27. That apart, after referring to certain cases cited by the parties relating to grant of injunctions restraining invocation of Bank Guarantees, the Court below also considered the terms of both Bank Guarantees and noticed that they were irrevocable Bank Guarantees and that the letter of invocation of the said Bank Guarantees under Ex.P39 was proper. It then referred to other documents and came to the conclusion that there was a bonafide dispute regarding the authority of the appellant to invoke the Bank Guarantees. It observed that though invocation of Bank Guarantees does not amount to fraud , while deciding an application for ad interim injunction, the Court should consider the consequences of the order and if such injunction is not granted, the amount would go to one of the creditors of the appellant. It then held that the balance of convenience is also in favour of the 1st respondent and that the 1st respondent had entered into a contract and had performed a par....
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....w to modify the prayer in the interim applications and restrain the appellant from "continuing the process of invocation" when the Bank Guarantees had already been invoked by it. 32. We are also of the prima facie view that the last sentence in Ex.P9 indicates clearly that the issue of return of Bank Guarantees would be further discussed in a future meeting to be held on 25.05.2018. Thus it cannot be said that the appellant had unequivocally agreed to return the two Bank Guarantees in the said meeting. 33. Clause 2 of both the Bank Guarantees states: "2. The Bank shall effect the payments to MEL under this guarantee, without further proof or conditions and without any delay, reservation, contest, recourse protest or demur and without any enquiry to EDAC or the SUB CONTRACTOR, without reference to the SUB CONTRACTOR, immediately upon MEL's written request indicating the amount demanded by MEL stating therein that the Sub Contractor has failed to perform its obligations as per the above mentioned agreement. Any such demand made by MEL on the BANK shall be conclusive and binding notwithstanding any differences between MEL, EDAC, the SUB CONTRACTOR or any other person or....