IN THE HIGH COURT OF JUDICATURE AT PATNA Letters Patent Appeal No.902 of 2008 IN (CIVIL WRIT JURISDICTION CASE 12868/2006) ======================================================= ==== 1. State Bank Of India, Industrial Finance Branch, Nageshwar Colony, Boaring Road, Patna 2. State Bank Of India, 10 Middleton Row, Kolkata- 700071 .... .... Appellant/s Versus 1. M/S Hindustan Steel Works Construction Limited, A Company Incorporated Under The Companies Act, 1956 As Well As A Public Sector Under Taking Under The Ministry Of Steel, Government Of India, Having Its Registered Office At P-34a, Garia Hat Road (South) Kolkata- 700031, Corporate Office At 5/1 Commissariat Road, Kolkata-700022 And A Branch Office At The Land Development Bank Building, Third Floor, Budh Marg, Patna- G.P.O, P.S- Kotwali, Distt- Patna, Pin 800001 Through Its Assistant General Manager, Mohammad Tufuail Ahmad Ansari, Son Of Mohammad Sulaiman, Resident Of Vill-Temuhan, P.O- Bachhwara, P.S- Monsoorchak, Distt- Begusarai 2. The State Of Bihar Through The Secretary And Commissioner Department Of Road Construction Bihar, Patna 3. The Commissioner-Cum-Secretary, Road Construction Department, Muzaffarpur, Division No.1, Government Of Bihar, Patna 4. The Executive Engineer, Road Cosntruction Department, Division No.1, Muzaffarpur .... .... Respondent/s with Letters Patent Appeal No. 903 of 2008 IN (CIVIL WRIT JURISDICTION CASE 2688/2006) ======================================================= ==== State Bank Of India, 10 Middleton Row, Kolkata-700071 .... .... Appellant Versus 1. Hindustan Steel Works Construction Limited, Company Incorporated Under 2 The Companies Act, 1956 As Well As A Public Sector Under Taking Under The Ministry Of Steel, Government Of India, Having Its Registered Office At P-34A, Gariahat Road (South) Kolkata- 700031, Corporate Office At 5/1 Commissariat Road, Kolkata-700022 And A Branch Office At The Land Development Bank Building, Third Floor, Budh Marg, Patna-G.P.O, P.S- Kotwali, Distt- Patna, Pin 800001 Through Its Assistant General Manager, Mohammad Tufuail Ahmad Ansari, Son Of Mohammad Sulaiman, aged about 56 years, Resident Of Vill-Termuhan, P.O- Bachhwara, P.S. Mansur Chak in the District of Begusarai 2. Bihar State Bridge Construction Corporation Ltd. Patna through its Chairman .... .... Respondents with Letters Patent Appeal No. 1404 of 2009 IN (CIVIL WRIT JURISDICTION CASE 2688/2007) ======================================================= ==== 1. The State Of Bihar Through The Secretary And Commissioner Department Of Road Construction Bihar, Patna 2. The Engineer - In- Chief - Cum- Special Secretary, Department Of Road Construction Bihar, Patna 3. The Chief Engineer, Road Construction Department Communication North Bihar Circle, Road Construction Department , Darbhanga 4. The Superintending Engineer Saran Road Circle, Hazipur 5. The Executive Engineer, Road Construction Division Vaishali At Hajipur .... .... Appellant/s Versus 1. M/S Hindustan Steel Works Construction Limited Through Its Chief Project Manager , Namely Ashanuzzser @Quaiser S/O Late Mansur Alam C/O Hindustan Steel Works Unit- Land Development Bank' S Building, Third Floor, Buddh Marg , P.S. Kotwali, In The Town And Distt- Patna 2. State Bank Of India, Midddleton Row, 10, 3 Branch -10, Kolkata- 700071 3. Bihar State Bridge Construction Corporation , Patna Through Its Additional Commissioner- Cum- Special Secretary, Patna Patna .... .... Respondent/s with Letters Patent Appeal No. 1510 of 2009 IN (CIVIL WRIT JURISDICTION CASE 12868/2006) ======================================================= ==== 1. The State Of Bihar Through The Secretary, Public Works Department, Government Of Bihar, Patna 2. The Commissioner-Cum-Secretary, Road Construction Department, Muzaffarpur, Division No.1, Government Of Bihar, Patna 3. The Executive Engineer, Road Construction Department, Division No.1, Muzaffarpur .... .... Appellant/s Versus 1. M/S Hindustan Steel Works Construction Limited, A Company Incorporated Under The Companies Act, 1956 As Well As A Public Sector Under Taking Under The Ministry Of Steel, Government Of India, Having Its Registered Office At P-34a, Garia Hat Road (South) Kolkata- 700031, Corporate Office At 5/1 Commissariat Road, Kolkata-700022 And A Branch Office At The Land Development Bank Building, Third Floor, Budh Marg, Patna-G.P.O, P.S- Kotwali, Distt- Patna, Pin 800001 Through Its Assistant General Manager, Mohammad Tufuail Ahmad Ansari, Son Of Mohammad Sulaiman, Resident Of Vill-Temuhan, P.O- Bachhwara, P.S- Monsoorchak, Distt-Begusarai 2. State Bank Of India, Industrial Finance Branch, Nageshwar Colony, Boaring Road, Patna 3. State Bank Of India, 10 Middleton Row, Kolkata- 700071 .... .... Respondent/s ======================================================= ==== Appearance : (In LPA No. 902 of 2008) For the Appellant/s : Mr. Y. V. Giri, Sr. Advocate Mr. RAJU GIRI, Adv. Mr. Sanjiv Kumar, Adv. Mr. Ashish Giri, Adv. 4 For the State : Mr. P.N. Shahi, AAG Mr. Shashi Bhushan Kumar, SC-7 For the HSCL Mr. Chittranjan Sinha, Sr. Adv. Mr.Manish Kumar, Advocate (In LPA No. 903 of 2008) For the Appellant/s : Mr. Y. V. Giri, Sr. Advocate Mr. RAJU GIRI, Adv. Mr. Sanjiv Kumar, Adv. Mr. Ashish Giri, Adv. For the Respondent/s :Mr. P.N. Shahi, AAG Mr. Shashi Bhushan Kumar, SC-7 For the HSCL Mr. Chittranjan Sinha, Sr. Adv. Mr.Manish Kumar, Advocate (In LPA No. 1404 of 2009) For the Appellant/s : Mr. Pushkar Narain Shahi, AAG XIV Mr. Vishwajeet Singh, A.C to AAG-XIV For the HSCL Mr. Chittranjan Sinha, Sr. Adv. Mr.Manish Kumar, Advocate (In LPA No. 1510 of 2009) For the Appellant/s : Mr. Pushkar Narain Shahi, AAG XIV Mr. Vishwajeet Singh, A.C to AAG-XIV For the HSCL Mr. Chittranjan Sinha, Sr. Adv. Mr.Manish Kumar, Advocate ======================================================= ==== CORAM: HONOURABLE JUSTICE SMT. T. MEENA KUMARI and HONOURABLE MR. JUSTICE AHSANUDDIN AMANULLAH ORAL JUDGMENT (Per: HONOURABLE JUSTICE SMT. T. MEENA KUMARI) These appeals have been filed against the common order dated 30.09.2008 passed in C.W.J.C. No.12868 of 2006 with regard to payment of the amount which was the subject matter of the Bank Guarantee extended by the unofficial respondent- 5 herein for the award of contract of construction of widening the road of Muzaffarpur to Pusa and also for constructing of RCC Culvert i.e. 0 to 30.08 K.M. for the year 2005-06 under NABARD’s scheme. As the respondent-petitioner was successful at the initial stage he invited tender for the same. In this regard, a Bank Guarantee with the Appellate Bank i.e. State Bank of India was furnished in favour of the Executive Engineer, Road Construction Division, Muzaffarpur. But as the unofficial respondent could not complete the contractual work, the same was awarded to third party and some other contract was also awarded to the unofficial respondent under different schemes. But as the contract re-tendered to the third party, according to the A.A.G., on the request made by the State Government, the appellant-Bank has revoked the Bank Guarantee. Aggrieved by the same, the unofficial respondent has chosen to file the writ petition questioning the action of the Bank to release the Bank Guarantee. 6 The learned Single Judge having heard all the parties observed that the Bank ought not have revoked the Bank Guarantee and such action of the Bank is arbitrary, unjust, illegal and unlawfuly enriched itself with tacit connivance of the Bank. Accordingly, the learned Single Judge directed the appellant-Bank to refund the amount with interest @ 6% per annum and further also liberty is granted to the Bank to take appropriate remedial measures for recovery of its money from the State, because, the Bank was at fault and voluntarily paid the amount to which it was not bound to pay. Aggrieved by the same, the present appeal has been filed. It has been contended before us by learned Sr. Counsel that conditions of the Bank Guarantee per se itself makes it clear that the Bank Guarantee can be revoked by the State Government as and when required and there is no violation of the conditions and the Bank has just followed the conditions of the Bank Guarantee and on the request of the State Government, the Bank was obliged to comply with its obligation 7 and hence it has released the amount for which the Bank cannot be penalized by the directions of the learned Single Judge. It has been contended by the learned A.A.G. that as the work was not completed by the contractor i.e. the unofficial respondent, the action of the State was perfectly legal in revoking of the Bank Guarantee. But however, the learned A.A.G. submits that a Tribunal has been constituted by the State of Bihar under the nomenclature of “Bihar Public Works Control Disputes Arbitration Tribunal Act, 2008” and the unofficial respondent is entitled to go before the Arbitrator for the relief sought for in the writ petition. In view of the above submission, we are of the opinion that the unofficial respondent can approach the said Tribunal. We also make it clear that the State Govt. is not the aggrieved person with regard to the arbitration and the lis is in between the unofficial respondent and the Bank. It is also made clear that the payment of amount of Bank Guarantee which was subject matter of the writ petition and as revoked 8 by the State Govt. shall be subject to result of the arbitration proceeding. We also make it clear that as the Bank has complied its obligation under the Bank Guarantee, we are of the view that the learned Single Judge ought not to have directed the appellant-Bank to revoke the amount and refund the amount with 6% interest per annum as the Bank is not at fault as they have complied the conditions of the Bank Guarantee. We accordingly, set aside the order of the learned Single Judge with regard to the direction to the appellant Bank to refund the amount to the unofficial respondent. We also make it clear that the unofficial respondent is entitled to recover the amount from the State Govt. if he raises the disputes before the Arbitration Tribunal and succeeds the same. We also make it clear that as and when unofficial respondent approached such Tribunal the Tribunal shall dispose of the same in accordance with law as expeditiously as possible, preferably within a period of six months from the date 9 of commencement of such Arbitration proceedings. With the above modification in the order of the learned Single Judge, the appeal is allowed to the extent indicated supra. Patna High Court Dated 26th of July, 2011 Ashwini/N.A.F.R. (T.Meena Kumari,J.) (Ahsanuddin Amanullah, J.)