M/s Alectrona Energy Pvt. Ltd. v. Kerala State Electricity Board Ltd., State of Kerala, and DCB Bank Ltd.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE N.NAGARESH** **WEDNESDAY, THE 17TH DAY OF FEBRUARY 2021 / 28TH MAGHA,1942 WP(C).No.24907 OF 2020(K)** ## **PETITIONER:** **M/s ALECTRONA ENERGY PVT. LTD., REP. BY ITS MANAGING DIRECTOR, MR.ROHIT RABINDERNATH, S/O.LATE MR.RABINDERNATH, AGED 42 YEARS, HAVING ITS REGISTERED OFFICE AT 3RD FLOOR, BLOCK A, BANNARI AMMAN TOWERS, NO.29, DR.RADHAKRISHNAN ROAD, MYLAPORE, CHENNAI-600 004** **BY ADVS. SRI.M.R.HARIRAJ SRI.THANUJA ROSHAN GEORGE SHRI.VISHWAJITH C.K SMT.GANGA A.SANKAR SHRI.CHACKOCHEN VITHAYATHIL SMT.GISHA G. RAJ SHRI.REJIVUE** ## **RESPONDENTS:** **1 KERALA STATE ELECTRICITY BOARD LTD., A GOVT OF KERALA UNDERTAKING, REP. BY ITS CHIEF ENGINEER 9TH FLOOR, VYDYUTHI BHAVANAM, PATTOM, THIRUVANANTHAPURAM-695 001 2 STATE OF KERALA, REP. BY THE SECRETARY TO GOVERNMENT OF KERALA, DEPARTMENT OF ELECTRICITY, THIRUVANANTHAPURAM-695 001** WP(C) No.24907/2020 : 2 : **3 DCB BANK LTD., HAVING ITS CENTRAL OFFICE AT 601 AND 602, PENINSULA BUSINESS PARK, 6TH FLOOR, TOWER A, SENAPATHI BAPAT MARG, LOWER PAREL, MUMBAI 400013, REP. BY ITS MANAGER NUNGAMBAKKAM BRANCH** **R1 BY ADV. SRI.SUDHEER GANESH KUMAR.R.,SC R2 BY GOVERNMENT PLEADER SMT. RASHMI K.M.** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 17.02.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** WP(C) No.24907/2020 : 3 : ## **J U D G M E N T** ~ ~ ~ ~ ~ ~ ~ ~ ~ _**Dated this the 17[th] day of February, 2021**_ The petitioner, a Company in the business of manufacture and installation of Solar Photovoltaic Modules, Electronic Controls, Solar Inverters and Solar Water pumps, is before this Court seeking to quash Ext.P19 and to direct the respondents to allow the petitioner to complete the execution of agreement. 2. The 1[st] respondent-KSEB invited tenders for erection of 1.0 MW solar power plant at Mylatty as per Ext.P1. The petitioner participated in the tender successfully and was given Ext.P2 work order on 07.12.2017. The petitioner would contend that there were certain issues relating to tax structure which would have affected the price quoted. The said issue delayed execution of the agreement. Finally, the agreement was executed in the month of March, 2018 as per Ext.P3. WP(C) No.24907/2020 : 4 : 3. The petitioner submits that the 1[st] respondent called a meeting relating to execution of the contract on 21.02.2019. The petitioner submitted Ext.P5 revised schedule of project implementation. The petitioner also sent Ext.P6 e-mail with an update on the AC and DC works. In the said e-mail, the petitioner informed the respondents of engaging of local labour as local contractor. The respondents took the engagement of local labours as sub contract and on that ground and without issuing any show-cause notice, issued Ext.P7 terminating the project agreement. 4. By Ext.P8 dated 10.07.2019, the petitioner clarified to the respondents that what was meant by the petitioner was only engagement of local labour for the work and it was not a question of sub contracting. 5. The petitioner challenged Ext.P7 filing W.P.(C) No.20009/2019. This Court found the said writ petition as premature and dismissed the writ petition. Thereafter, the petitioner sought constitution of a Dispute Resolution Committee by Ext.P10 representation dated 03.10.2019. The WP(C) No.24907/2020 : 5 : Dispute Resolution Committee was constituted and a meeting was held on 04.02.2020. In the said meeting, the petitioner pointed out that the original photovoltaic modules offered in the contract have become obsolete and the petitioner is ready to provide their own modules of new model, which are more efficient, without any additional cost. 6. Subsequently, the petitioner was served with Ext.P11 minutes of the meeting of the Dispute Resolution Committee. In Ext.P11, it was stated that the Chair agreed to the request of the petitioner in principle subject to the condition that the petitioner shall pay the KSEB an amount equal to the generation loss (deemed) during the period of such extension. It was stated in Ext.P11 that the amount equal to generation loss per year comes approximately to ₹50,57,500/-. Ext.P11 further stated that if the project is not successfully completed and handed over to the Board as agreed, the said generation loss will be deducted from the Bank Guarantee executed in favour of the KSEB. WP(C) No.24907/2020 : 6 : 7. The petitioner was not agreeable to the quantum of generation loss. Therefore, the petitioner sent Ext.P12 representation dated 03.03.2020 to the Chief Engineer (RE & ES), KSEB. The 1[st] respondent required that the Bank Guarantee submitted by the petitioner through the 3[rd] respondent may be extended. The 1[st] respondent extended the time of contract by four months as per Ext.P14 communication dated 01.04.2020. 8. The petitioner wold submit that Ext.P14 was served to the petitioner during the lock down period consequent to Covid-19 pandemic. When the Company office started functioning, the petitioner requested the respondents to confirm if the project could be implemented using the new modules. However, to the surprise and predicament of the petitioner, the 1[st] respondent issued Ext.P19 letter to the 3[rd] respondent-Bank demanding that the Bank Guarantee provided by the petitioner be encashed. It is aggrieved by the arbitrary and illegal action of the respondents to realise the Bank Guarantee that the petitioner is before this Court. WP(C) No.24907/2020 : 7 : 9. The learned counsel for the petitioner would submit that the termination of the agreement without hearing the petitioner is violative of the principles of natural justice. The termination of the project agreement is devoid of any justifiable reason. There was no deficiency on the part of the petitioner in executing the work. The Dispute Resolution Committee deemed it fit to extent the time of the contract. The petitioner also offered to complete the contract with new technology module. When the petitioner was willing to complete the project using new technology module and since there was extension of time to complete the agreed work, the respondents are not justified in invoking the Bank Guarantee. 10. The respondents defended the writ petition filing counter affidavit. The respondents contended that the intention of the petitioner in approaching this Court is not to carry out the petitioner's contractual obligation in accordance with the agreement but to delay and prolong the project. In view of the judgment in _**Hindustan Steel Construction Ltd. v. Tarapore & Co. and another** [(1996) 5 SCC 34],_ the WP(C) No.24907/2020 : 8 : respondents are justified in invoking invoking the Bank Guarantee. A prior notice or determination or quantification of loss is not required for invoking Bank Guarantee, contended the Standing Counsel for the respondents. 11. The Standing Counsel for the respondents further argued that the offer of new technology module made by the petitioner is not acceptable to the respondents. The respondents wanted the petitioner to proceed with the project using the agreed module. The petitioner has failed to execute the project within the extended time given by the respondents. Therefore, the present writ petition is only a ruse to hinder realisation of Bank Guarantee by the respondents. 12. I have heard the learned counsel for the petitioner and the learned Standing Counsel appearing for the respondents. 13. It is to be noted that the work was awarded to the petitioner on 07.12.2017. However, the petitioner came forward to execute the agreement only on 01.03.2018. Subsequently, the petitioner took almost five months to take WP(C) No.24907/2020 : 9 : over the site for implementation of the project. The project had to be completed by 13.02.2019. The respondents granted extension of time to the petitioner-Company. It is the case of the respondents that the petitioner has not even started the work. The delay in execution of the work is therefore attributable to the petitioner. 14. From the pleadings, it is evident that there was unexplained delay in implementation of the project by the petitioner at various stages. There was delay in executing the agreement. There was delay in taking over the site. In spite of the extension of time granted by the respondents, the petitioner could not execute the work. On the other hand, the petitioner has been offering implementation of the project through alternate technology, which is not acceptable to the respondents. 15. The pleadings would also indicate that there was some disputes between the shareholders of the Company which has delayed the starting of the work. Though the petitioner had assured the completion of work by 15.05.2019, WP(C) No.24907/2020 : 10 : that is within three months from 12.02.2019, it was not done. In the circumstances, this Court is of the considered opinion that the decision of the respondents to invoke and realise the Bank Guarantee is justifiable. 16. The petitioner would contend that the Bank Guarantee had to be reduced to 3% by Exts.P22 and P23 orders issued by the Government of India. I have considered the said arguments. Paragraph 3 of Ext.P22 order would show that when there is a dispute or litigations are contemplated, the amounts of Bank Guarantee are not expected to be reduced by the authorities. In view of all the above facts, this Court finds no reason to interfere with the decision of the respondents in invoking Bank Guarantee. The writ petition fails and it is accordingly dismissed. Sd/- **N. NAGARESH, JUDGE** aks/17.02.2021 WP(C) No.24907/2020 : 11 : ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** **EXHIBIT P1** **TRUE COPY OF TENDER NO.8/KSEBL/CE (RESS)/SPV-MYLT/1.0MW/ 2016-17** **EXHIBIT P2 TRUE COPY OF WORK ORDER NO.4/2017-18 DATED 7.12.2017** **EXHIBIT P3 TRUE COPY OF AGREEMENT NO.20/2017-18 DATED 1.3.2018** **EXHIBIT P4 TRUE COPY OF MINUTES OF MEETING DATED 21.2.2019** **EXHIBIT P5 TRUE COPY OF REVISED SCHEDULE OF PROJECT IMPLEMENTATION SUBMITTED BY THE PETITIONER** **EXHIBIT P6 TRUE COPY OF EMAIL SENT BY THE PETITIONER DATED 20.6.2019** **EXHIBIT P7** **TRUE COPY OF ORDER NO.CE(RESS) PROJECTS/AEE1/SPV MYLATTY/2019-20/532 DATED 2.7.2019** **EXHIBIT P8 TRUE COPY OF EMAIL SENT BY THE PETITIONER TO THE FIRST RESPONDENT DATED 10.7.2019** **EXHIBIT P9 TRUE COPY OF THE JUDGMENT DATED 30.9.2019 IN WP(C) 20009/2019 OF THIS HONOURABLE COURT** **EXHIBIT P10 TRUE COPY OF REPRESENTATION DATED 3.10.2019** WP(C) No.24907/2020 : 12 : **EXHIBIT P11 TRUE COPY OF THE MINUTES OF THE MEETING OF DISPUTE RESOLUTION COMMITTEE ON 4.2.2020** **EXHIBIT P12 TRUE COPY OF THE REPRESENTATION DATED 3.3.2020** **EXHIBIT P13(A) TRUE COPY OF THE LETTER NO.CE(REES)/ SOLAR/MYLATTY/1MW/2019-20/2045 DATED 19.2.2020** **EXHIBIT P13(B) TRUE COPY OF THE LETTER NO.CE(REES)/ SOLAR/MYLATTY/1MW/2019-20/2047 DATED 19.2.2020** **EXHIBIT P14 TRUE COPY OF THE LETTER NO.CE(REES)/ PROJECTS/AEEZ/SPV/MYLATTY/2019-20/2341 DATED 1.4.2020** **EXHIBIT P15 TRUE COPY OF REPRESENTATION DATED 23.6.2020** **EXHIBIT P16** **TRUE COPY OF REPRESENTATION DATED 27.6.2020** **EXHIBIT P17 TRUE COPY OF REPRESENTATION DATED 29.8.2020** **EXHIBIT P18 TRUE COPY OF REPRESENTATION DATED 20.10.2020** **EXHIBIT P19 TRUE COPY OF LETTER NO.CE(REES)/ PROJECTS/AE-2/SPU MYLATTY/ 2020-21/888 DATED 12.11.2020** **EXHIBIT P20 TRUE COPY OF OM.NO.283/18/2020-GRID SOLAR DATED 13.8.2020.** **EXHIBIT P21 TRUE COPY OF OM NO.F.9/4/2020-PPD DATED 12.11.2020 FOR BID SECURITY.** **EXHIBIT P22 TRUE COPY OF OM NO.F.9/4/2020-PPD DATED 12.11.2020 FOR PERFORMANCE SECURITY.** WP(C) No.24907/2020 : 13 : - **EXHIBIT P23 OM.F.NO.32/645/2017-SPV DIVISION (PART-3) DATED 07.12.2020.** - **EXHIBIT P24 TRUE COPY OF THE CERTIFICATE ISSUED BY THE TUVRHEINLAND FOR THE PRODUCT OF THE PETITIONER** - **EXHIBIT P25 TRUE COPY OF LETTER NO.1016/SHLSCFL/SCHEMES/2013-14 DATED 10/12/2020 ISSUED BY TAMILNADU ENERGY DEVELOPMENT AGENCY.** - **EXHIBIT P26 TRUE COPY OF THE LETTER REFERENCE NO.NREDCAP/SE/SPVPS/ISSUE OF EXPERIENCE CERTIFICATE/2017-18 DATD 23/4/2018 ISSUED BY NEW AND RENEWABLE ENERGY DEVELOPMENT CORPORATION OF ANDHRA PRADESH LTD.** - **EXHIBIT P27 TRUE COPY OF CERTIFICATE OF COMPLETION REFERENCE NO.3917/CREDA/SSY/2019-20 DATED 19/6/2019 ISSUED BY CHHATTISGARH STATE RENEWABLE ENERGY DEVELOPMENT AGENCY (CREDA)** - **EXHIBIT P28 TRUE COPY OF CERTIFICATE DATED 28/1/2016 ISSUED BY THE CHENNAI PORT TRUST** - **EXHIBIT P29 TRUE COPY OF PERFORMANCE CERTIFICATE DATED 17/1/2017 ISSUED BY GRASSROOT TRADING NETWORK FOR WOMEN, AHMEDABAD, GUJARAT** - **RESPONDENTS' EXHIBITS:** - **EXHIBIT R1 A THE TRUE COPY OF THE BANK GUARANTEES EXECUTED BY THE PETITIONER DATED 03.02.2018.** - **EXHIBIT R1 B THE TRUE COPY OF LETTER DATED 19.12.2017, E-MAIL DATED 05.01.2018 AND LETTER DATED 05.02.2018 FROM THE PETITIONER SEEKING TIME EXTENSION FOR EXECUTING THE AGREEMENT.** - **EXHIBIT R1 C THE TRUE COPY OF B.O (FTD) NO.05/2020(CE(REES)/SPV-MYLTY/2019-20) TVPM DATED 06.01.2020 REGARDING FORMATION OF DISPUTE RESOLUTION COMMITTEE.** - **EXHIBIT R1 D THE TRUE COPY OF B.O(FTD) NO.244/2020/ CE(REES)/SPV-MYLTY/2019-20 DATED, TVM 30.03.2020 REGARDING TIME EXTENSION.** WP(C) No.24907/2020 : 14 : **EXHIBIT R1 E THE TRUE COPY OF LETTER AND E-MAIL DATED 01.04.2020 REGARDING THE TIME EXTENSION. EXHIBIT R1 F THE TRUE COPY OF LETTER DATED 07.06.2018, 08.10.2018 REGARDING THE MAKE OF PV MODULES.** SR