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TMI Blog2016 (9) TMI 1619X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of LoI are extracted below: 1.7 The Lead Promoter shall submit a detailed project report within 12 months of issue of this Letter of Intent (LOI) and present it to Gujarat Maritime Board for their approval. 1.8 The Lead Promoter shall obtain all environment clearances and coastal Regulation zone (CRZ) clearances and effective financial closure and all such other clearances and permissions within 18 months or issue of this Letter of Intent 1.9 A Performance Guarantee/Bank Guarantee of Rs. 5 Crores (Rupees Five crores only) shall be submitted to Gujarat Maritime Board within 4 weeks of issue of this Letter of Intent in the Performa annexed herewith. (Annexure 1). This performance/bank guarantee is against the submission of Detailed Project Report within 12 months and obtaining environment clearance, coastal Regulation zone clearance and effecting financial closure within 18 months as mentioned in para 1.7 and 1.8 above, failing which Gujarat Maritime Board/Government shall cancel this Letter of Intent and bank guarantee shall be forfeited. 4. On 07.05.2010, the first Respondent requested for change of location from Sutrapada to Kachchigarh and the bank guarantee was extende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort and (b) forfeit the Bank Guarantee worth Rs. 5 crores submitted by the Company. In view of the above direction of the Government, the Letter of Intent dated 06.02.2008 issued to you for development of Kachchigarh port (earlier Sutrapada port) is hereby cancelled. Further, the issuing Bank of the Bank Guarantee has been informed about GMB's claim on the Bank Guarantee. XXX XXX XXX XXX 6. On the same day, the Appellant also invoked the bank guarantee furnished by the Yes Bank Limited at the instance of the first Respondent. The communication reads as follows: This is with reference to the above mentioned Performance Bank Guarantee issued by your bank on behalf of M/s. L & T Infrastructure Development Projects Ltd. ("the Company") towards securing the fulfilment of conditions set out in the Letter of Intent ("LOI") dated 15.07.2010 and having its validity till March 31, 2015 worth Rs. 5,00,00,000/- (Rupees Five crore only) submitted to Gujarat Maritime Board (GMB). Whereas, in view of breach of the conditions set out in the LOI by the Company, the Gujarat Maritime Board/Government intends to exercise its right in accordance with Clause 1.9 and has decided to cancel th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had frustrated on account of impossibility, we have serious doubt whether GMB could forfeit security deposit citing the reason that whatever be the reason, the Petitioner failed to perform its obligations and, therefore, must be visited with the penalty of forfeiture. However, there is an additional reason why we must reject such a contention. We may recall, the initial project was for construction of port at Sutrapada. On account of the Respondents not being able to make the land available for such project, the same had to be shelved. Only as an alternative, the Petitioner suggested Kachchigarh as a site where the port could be developed. Surely, the Petitioner was not expected to carry out complete environmental assessment before coming up with such an alternative suggestion nor GMB understood the offer of the Petitioner as to one which will irrespective of environment concerns, be accepted. When there was a fundamental shift in the initial project envisaged in the letter of intent, the contention that whatever be the difficulties in executing the contract, forfeiture must follow, need to be viewed in the background of such material changes. 25. The contention that having given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctual matters. The paragraphs which deal with the situation relevant to the case under appeal, read as follows: 68. The Court thereafter summarised the legal position in the following manner: (ABL International Ltd. Case (2004) 3 SCC 553) 27. From the above discussion of ours, following legal principles emerge as to the maintainability of a writ petition: (a) In an appropriate case, a writ petition as against a State or an instrumentality of a State arising out of a contractual obligation is maintainable. (b) Merely because some disputed questions of facts arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule. (c) A writ petition involving a consequential relief of monetary claim is also maintainable. 28. However, while entertaining an objection as to the maintainability of a writ petition Under Article 226 of the Constitution of India, the court should bear in mind the fact that the power to issue prerogative writs Under Article 226 of the Constitution is plenary in nature and is not limited by any other provisions of the Constitution. The High Court having regard to the facts of the case, has a discret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ractual field, is under obligation to act fairly and cannot practise some discrimination. 70.3. Even in cases where question is of choice or consideration of competing claims before entering into the field of contract, facts have to be investigated and found before the question of a violation of Article 14 of the Constitution could arise. If those facts are disputed and require assessment of evidence the correctness of which can only be tested satisfactorily by taking detailed evidence, involving examination and cross-examination of witnesses, the case could not be conveniently or satisfactorily decided in proceedings Under Article 226 of the Constitution. In such cases the Court can direct the aggrieved party to resort to alternate remedy of civil suit, etc. 70.4. Writ jurisdiction of the High Court Under Article 226 of the Constitution was not intended to facilitate avoidance of obligation voluntarily incurred. 70.5. Writ petition was not maintainable to avoid contractual obligation. Occurrence of commercial difficulty, inconvenience or hardship in performance of the conditions agreed to in the contract can provide no justification in not complying with the terms of contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. (iii) The courts should be slow in granting an order of injunction to restrain the realisation of a bank guarantee or a letter of credit. (iv) Since a bank guarantee or a letter of credit is an independent and a separate contract and is absolute in nature, the existence of any dispute between the parties to the contract is not a ground for issuing an order of injunction to restrain enforcement of bank guarantees or letters of credit. (v) Fraud of an egregious nature which would vitiate the very foundation of such a bank guarantee or letter of credit and the beneficiary seeks to take advantage of the situation. (vi) Allowing encashment of an unconditional bank guarantee or a letter of credit would result in irretrievable harm or injustice to one of the parties concerned. 13. Guarantee given by the bank to the Appellant contains only the condition that in case of breach by the lead promoter, viz., the first Respondent of the conditions of LoI, the Appellant is free to invoke the bank guarantee and the bank should honour it... "without any demur, merely on a demand from GMB (appellant) stating that the said lead promoter failed to perform the covenants...". It has also bee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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