Q: Elaborate the citation of KSE Electricals Pvt. Ltd. Vs Project Director, Bangladesh Rural Electrification Board And Anr (Calcutta High Court) ?

Ans:

KSE Electricals Pvt. Ltd. Vs Project Director, Bangladesh Rural Electrification Board And Anr (Calcutta High Court), 2021.

The  Calcutta High Court held that the petitioner was awarded a contract for supply of conductor and related accessories to the respondent No. 1 pursuant to a global tender floated by the latter. The contract dated 15.11.2-15 was a Carriage and Insurance Paid contract for a price of USD 830,290 + BDT 371,000. The petitioner was required to furnish a performance security for an amount of USD 83,505 for a period of 24 months under the relevant clause of the General Conditions of Contract. By an order dated 10.05.2021 a learned Single Judge restrained the respondent No. 2 from making any payment under a bank guarantee invoked by the respondent No. 1. The said order was modified on 18.05.2021 by another Learned Judge confirming the interim order of injunction and further restraining the respondent No. 1 from encashing the bank guarantee.

The High Court observed that the petitioner has satisfied two of the three ingredients, namely special equity and the invocation not being in terms of the guarantee. The clauses in the contract and more particularly the General Conditions Contract clearly demonstrate that the bank guarantee was furnished towards performance security. There can be no issue with regard to performance since the petitioner has already received 90% of the contract price. The invocation letter also demonstrates that there cannot be any performance issue with regard to the supplies effected by the petitioner. The invocation letter does not contain any allegation of a breach of performance obligations by the petitioner. The special equity also stands satisfied by reason of the petitioner facing an immediate and irreversible financial loss if the payment is made by Citibank NA, Dhaka to the respondent No. 1 in terms of the Letter of Invocation. If Citibank NA, Dhaka has the temerity to frustrate the orders of injunction passed against the respondents, it must also bear the risk and consequence of such action.

The interim orders passed by learned judges on 10.05.2021 and modified on 18.05.2021 were on a particular set of facts before filing of affidavits. The court may have considered altering or further modifying the orders of injunction at the instance of the respondent No. 2 having compelling facts disclosed subsequently on affidavits. Apart from territorial jurisdiction, no other grounds have been pleaded or shown which would warrant varying the orders when all relevant facts were taken into consideration by the learned Judges. It is also significant that the respondent no. 1 has not appeared or contested these proceedings and respondent no. 2 has taken to 'shadow boxing' on behalf of the absentee wrongdoer.

The High Court confirmed the order dated 10.05.2021 as modified by the order dated 18.05.2021 and made absolute.

In case of KSE Electricals Pvt. Ltd. Vs Project Director, Bangladesh Rural Electrification Board And Anr (Calcutta High Court), the Calcutta high court held that if there is no fraud of egregious nature and special equities , the invocation of bank guarantee will not be restrained.