Case Note & Summary
The dispute arose between the plaintiff, IRB MP Expressway Private Limited, and the defendant, Mumbai Pune Expressway Limited, regarding a sub-concession agreement for the operation and maintenance of the Yashwantrao Chavan Expressway. The plaintiff sought an injunction to prevent the defendant from recovering an amount of Rs. 1,09,96,23,389/- through bank guarantees, claiming that a mutual agreement for compensation had been established due to losses incurred during the COVID-19 lockdown. The plaintiff argued that the defendant had acknowledged the loss of toll collection for 25 days and had agreed to compensate the plaintiff accordingly. The defendant, however, contended that the bank guarantees were unconditional and could be invoked regardless of the contractual dispute. The court analyzed the submissions from both parties, focusing on the existence of a written agreement for compensation and the implications of invoking the bank guarantee. The court found that the defendant's attempt to revoke the compensation agreement based on an internal communication from the Accountant General was not valid, as it was not binding on the plaintiff. The court concluded that the plaintiff had made a prima facie case for irreparable harm and granted the interim injunction, preventing the defendant from recovering the amount through bank guarantees. The decision emphasized the importance of written agreements and the need to protect parties from unjust financial harm during contractual disputes.
Headnote
A) Contract Law - Performance Guarantee - Invocation of Unconditional Bank Guarantee - Indian Contract Act, 1872, Section 73 - The court held that the invocation of an unconditional bank guarantee can only be restrained in cases of fraud or irretrievable harm. In this case, the plaintiff demonstrated a prima facie case of irretrievable harm due to the defendant's attempt to recover compensation already granted. (Paras 35-43).
Issue of Consideration
Whether the defendant can recover an amount from the plaintiff by encashing bank guarantees despite a mutual agreement for compensation.
Final Decision
The court granted the interim injunction, restraining the defendant from recovering the amount of Rs. 1,09,96,23,389/- by encashing bank guarantees or otherwise, based on the established agreement for compensation and the potential for irretrievable harm to the plaintiff.
Law Points
- Injunction
- Performance Guarantee
- Force Majeure
- Compensation
- Sub-concession Agreement
