Order 1

Order Details: Notice of Motion
Pdf Text: 1 NM no 1052-18 STAM no. 3767-2018
CNR MHCC010034112018
IN THE CITY CIVIL COURT FOR GREATER BOMBAY
AT BOMBAY.
NOTICE OF MOTION NO.1052 OF 2018
IN
STAMP NO.3767 OF 2018
Yogesh Construction Private Limited ]..Plaintiff
Versus
Municipal Corporation of Gr. Mumbai ]
& 3 Ors. ]... Defendants
Coram : M.S. Deshpande, Judge
(Court Room no. 05)
Date : 25th April, 2018.
Mr.Uday Shankar Samudrala, advocate for plaintiff.
Mr. Mhatre, advocate for defendant nos.1 to 3.
M.G. Rane, Manager of defendant no.4.
ORDER
1. Heard respective advocates at length. The learned
advocate for the plaintiff submitted that on work contract for providing
and laying various sewer works lying at various places, three Bank
guarantees for security deposit and retention money were given in
2011. The said Bank guarantees were subject matter of accounts
between the plaintiff and the defendants upon finalization of the bills.
According to him, the plaintiff is entitled for an amount of Rs.30 lakhs
to 40 lakhs to be recovered from the defendant. However, in spite of
the completion of the work, the defendants did not prepare final bills
and they sought extension of the bank guarantees from time to time for
last four years. According to him, the work is also handed over. He
further submitted that the defendants illegally encashed one of the
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three bank guarantees. He submitted that the bank guarantees could be
encashed only if some amount is to be recovered from the plaintiff.
However, here the defendant Corporation has to finalize the bill and
pay the amount of the work carried out to the plaintiff. He has placed
reliance on the ratio laid down by the Hon'ble Supreme Court in
Hindustan Construction Co. Ltd. vs. The State of Bihar & Ors. to the
effect that the terms of Bank guarantee are extremely material and
therefore, amount covered by the guarantee is payable only if
obligations under contract are not fulfilled by the contractor or there is
misappropriations. It is also held that the invocation of bank guarantee
will have to be in accordance with the terms of bank guarantee.
2. On the other hand, the learned advocate for the defendant
nos.1 to 3 (for short, “the defendants”) submitted that as per the
general conditions of contract, clause no.96 in case of dispute / claim by
other party, the aggrieved party should refer the same to Assistant
Municipal Commissioner and the A.M.C. should constitute a committee
which shall give a decision. There is provision for appeal to Municipal
Commissioner against such decision and his decision would be final. He
further submitted that considering the provision of appeal the plaint
should be returned to the plaintiff. The plaintiff is trying to prevent the
defendant from executing the terms and conditions of the contract.
3. He further submitted that the plaintiff has not properly
carried out the work under contract and is also not ready to carry out
rectification work, and therefore, the remaining work was required to
be given to other agency and therefore, final bill was not prepared.
According to him, for such reasons the security deposit and retention
money kept in the form of Bank guarantees are required to be enforced.
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4. Prima facie, it is undisputed that the defendant has
encashed the Bank guarantee dated 4.11.2011 for
Rs.2,08,200/ which was given towards security for refund of retention
money. There are two other Bank guarantees for Rs.10,03,000/ and
Rs.13,76,026/ issued towards contract and security deposits and for
security for refund of retention money etc. Prima facie, it is undisputed
that the bank guarantees were required to be kept in force till
finalization of the account and payment of final bill. The total costs for
the work under contract was Rs.5,25,60,760/ and the work was to be
completed within stipulated time. The validity of the remaining two
bank guarantees was extended till 13.4.2018.
5. The plaintiff has filed suit for declaration that the
defendant no.3 is not entitled to encash any of the bank guarantees on
the pretext that validity of the bank guarantee is/ was not extended by
the plaintiff and further for a consequential relief of injunction for
restraining the defendants from encashing remaining two bank
guarantees. The scope of the suit is very limited.
6. It prima facie appears, on 3.10.2007 the tender given by
the plaintiff was accepted by the defendants with request to commence
the work from 25.10.2007 and complete the same within 15 months
exclusive of monsoon period. It was also given under general
conditions of contract for civil works that if the bank guarantee is not
renewed within 7 days before the expiry of validity period, it will be
encashed, and that security deposit, retention money, performance
guarantee shall be refunded to the contractor only on finalization of
final bill, settlement of accounts of the work by the contractor in all
respect or after completion of defect liability period whichever is later.
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7. Prima facie it appears that on 22.9.2017, the defendants
issued show cause notice under clause 90(a) of General conditions of
Contract calling upon the plaintiff to explain the reasons for not fixing
C.I.F. frame covers for manholes, cleaning, removing of debris etc. in
respect of the various sites. It also appears that there are allegations
against each other through cross correspondence and such details are
required to be considered on merits. However, it prima facie appears
that the plaintiff has not observed the basic conditions i.e. renewal of
bank guarantees and further referring the aforesaid dispute to the
Assistant Municipal Commissioner as contemplated under the general
conditions of contract for Civil work. Undisputedly, the accounts were
not settled and final bills were not prepared. Therefore, intervention of
this Court is not warranted at adinterim stage. Therefore, the
following order is passed:
ORDER
1. Adinterim relief is rejected.
2. As there was order of statusquo granted earlier, in terms of the
same, so as to facilitate the plaintiff to approach the Hon'ble High
Court, the order of statusquo is continued till 03.5.2018 with a
direction that it will not be extended on any count.
3. An ordinary copy of this order duly authenticated by the
Sheristedar of this Court be supplied to respective parties.
Sd/-
(M.S. Deshpande)
Ad hoc Judge,
City Civil Court, Mumbai.
Directly typed on : 25/04/2018.
Checked by HHJ on : 25/04/2018.
Signed by HHJ on : 25/04/2018.
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“CERTIFIED TO BE TRUE AND CORRECT COPY OF THE ORIGINAL SIG
JUDGMENT/ORDER.”
UPLOAD DATE AND TIME : 27.04.2018 At 11.16 a.m.
NAME OF STENOGRAPHER : Mrs. V. U. Pawar
Name of the Judge (With Court
Room no.)
HHJ Shri. M. S. Deshpande
C.R. no.05
Date of Pronouncement of
JUDGMENT/ORDER
25.04.2018
JUDGMENT/ORDER signed by P.O.
on
25.04.2018
JUDGMENT/ORDER uploaded on 27.04.2018
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