Disposed

Gmm Pfaudler Ltd. v. M/S. Kerala Minerals & Metals Ltd.

Kerala HC14 Jun 2011WP(C)/4679/2011

Case brief

AI extract

What is this about?

This is a civil dispute over a works contract and bank guarantee. The Court held it is not a writ proceeding and relegated the petitioner to alternative remedies, granting a temporary stay on encashment pending renewal of the guarantee. No substantive law invoked.

What did the court decide?

Encashment of bank guarantee stayed for three months, provided petitioner renews the guarantee for at least another three months, pending proceedings under appropriate remedy.

Gmm Pfaudler Ltd. Vs M/S. Kerala Minerals… — Contract and Commercial Disputes | Kerala HC (2011)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT :

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THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON

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TUESDAY, THE 14TH JUNE 2011 / 24TH JYAISHTA 1933

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WP(C).No. 4679 of 2011(H) --------------------------------------

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PETITIONER(S):

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----------------------

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GMM PFAUDLER LTD., 1001, PENINSULA TOWERS, PENINSULA CORPORATE PARK, G.K. MARG, LOWER PAREL, MUMBAI- 400 13, REPRESENTED BY SHRI UDAYAN SHAH, SR.GENERAL MANAGER MARKETING.

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BY SRI.N.N.SUGUNAPALAN, SENIOR ADVOCATE, ADV. SRI.S.SUJIN.

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RESPONDENT(S):

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-------------------------

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1. M/S KERALA MINERALS & METALS LTD., SANKARAMANGALAM, CHAVARA, KOLLAM DISTRICT, REPRESENTED BY ITS MANAGING DIRECTOR, 691 583.

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2. CHIEF MANAGER, STATE BANK OF INDIA, SPECIAL COMMERCIAL BRANCH, JAYALAKSHMI PLAZA, NEAR GANESH CIRCLE, ANAND, GUJARAT-388 001.

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3. STATE OF KERALA, REPRESENTED BY CHIEF SECRETARY, SECRETARIAT, THIRUVANANTHAPURAM-695 001.

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R1 BY ADV. SRI.B.S.KRISHNAN, SC. KMML, SRI.K.ANAND, SMT.LATHA KRISHNAN. R3 BY GOVT. PLEADER

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 14/06/2011,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WP(C).No. 4679 of 2011(H)

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APPENDIX

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PETITIONER'S EXHIBITS:

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EXT.P1: COPY OF THE GENERAL CONDITIONS FOR CONTRACT ENTRUSTED WITH THE PETITIONER.

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EXT.P2: COPY OF THE LETTER DATED 12/03/2007 SENT BY THE PETITIONER TO THE 1ST RESPONDENT COMPANY.

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EXT.P3: COPY OF THE LETTER DATED 01/07/2010 SENT BY THE PETITIONER TO THE 2ND RESPONDENT.

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EXT.P4: COPY OF THE INTIMATION DATED 02/07/2010 ISSUED BY THE 2ND RESPONDENT BANK.

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EXT.P5: COPY OF THE PHOTOGRAPHS (5 IN NUMBERS) OF DIFFERENT ITEMS MANUFACTURED BY THE PETITIONER FOR THE EXECUTION OF THE PROJECT.

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RESPONDENT'S EXHIBITS: NIL

//TRUE COPY//

P.A. TO JUDGE

P.R.RAMACHANDRA MENON, J.

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W.P(C) No.4679 of 2011

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Dated the 14^th day of June, 2011

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JUDGMENT

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The petitioner is a contractor, who was awarded a works contract by the first respondent, pursuant to which, an advance amount to a tune of Rs.14,45,354/- was released to the petitioner, who in turn executed a bank guarantee in this regard

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The case of the petitioner is that, though the work was awarded in the year 2006 and the petitioner had invested much amounts for procuring raw materials and to complete the work, the same was intercepted by the respondents in the year 2008 and, the petitioner has not been told as to whether the petitioner should continue with the work or not, which made the petitioner to approach this court with the following prayers as given below:

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“(i) To issue a writ of Mandamus or any other appropriate Writ, order or direction, directing the 1^st respondent not to invoke the Bank Guarantee covered by Ext.P4 and the 2^nd respondent not to encash the Bank Guarantee in favour of the 1^st respondent as required by the 1^st respondent.

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(ii) To issue a Writ of Mandamus or any other appropriate Writ, order or direction, directing the 1^st respondent to take a decision on the question of contract as to whether the contract is to continue or not and direct the 1^st respondent to allow the petitioner to continue with the contract by paying the amount spent by the petitioner in furtherance of the execution of the contract.”

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W.P(C) No.4679 Of 2011 (H) -:2:-

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The first respondent has filed a counter affidavit disputing the averments and allegations levelled against the respondents in the writ petition. It has been pointed out that, in spite of awarding the work to the petitioner, no work was actually carried out nor did the petitioner effect any supply of the materials to the respondents. It is also pointed out that some other contract was also awarded to the petitioner, wherein also the petitioner was stated to be a defaulter. The matter was taken note of by the Government and based on a Government Order, a “stop memo” was issued by the first respondent to the petitioner on 27.03.2008. The learned counsel for the first respondent submits that, because of the lapse on the part of the petitioner, the entire contract work has been cancelled and that the petitioner is not entitled to get any relief. It is also stated that the first respondent is having every right to proceed with the Bank Guarantee furnished by the petitioner.

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After considering the rival pleadings, this Court finds that, it is purely a civil matter, which requires to be adjudicated based on the pleadings and evidence to be let in, which is not possible in a proceeding under Article 226 by this Court and the petitioner has necessarily to be relegated to avail other alternative remedy.

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The learned counsel for the petitioner submits that the

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W.P(C) No.4679 Of 2011 (H) -:3:-

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petitioner is ready and willing to work out the remedies in accordance with the relevant provisions of law by invoking the Arbitration clause provided in the agreement and to seek for appropriate relief to direct the respondents to keep the bank guarantee in tact, without being encashed, for a reasonable time. The learned counsel for the first respondent submits that such a course could be pursued, if the petitioner agrees to renew the bank guarantee, the validity of which, as it stands now expires on 2.07.2011.

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In the above circumstances, the petitioner is relegated to avail other appropriate alternate remedy, in accordance with the relevant provisions of the law. The encashment of the bank guarantee shall be kept in abeyance for a period of 'three months', on a condition that the petitioner renews the bank guarantee for a further period not less than three months. The encashment of the bank guarantee will however, depend upon the orders to be passed in the proceedings, if any, as above.

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Writ Petition is disposed of.

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Sd/-

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P.R.RAMACHANDRA MENON

JUDGE

//TRUE COPY//

P.A. TO JUDGE

krj

Gmm Pfaudler Ltd. v. M/S. Kerala Minerals & Metals Ltd.

Case brief

What is this about?

What did the court decide?

Gmm Pfaudler Ltd. v. M/S. Kerala Minerals & Metals Ltd.

Case brief

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