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Demand for encashment of Bank Guarantee cannot be injuncted

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07th-Apr-2018       
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High Court Division :
(Special Original Jurisdiction)
Tariq ul Hakim J
Md Faruque (M  Faruque) J
Judgment
August 23rd, 2016
Akram Hossain................Petitioner in all the Writ Petitioner
Vs
Bangladesh Rural Electrification Board, represented by its Chairman and others ...
............. Respondents
Bank Guarantee
The demand for encashment of Bank Guarantees cannot be injuncted by a Court unless there is clear evidence of fraud and the Bank has notice of it. ......(15)
Continental Construction Ltd. vs Sailuj jal Vidhut Nigam Ltd. a decision of the Indian High Court, 2006 (1) ARBLR 321; Volivintar Oil SA vs Chase Manhattan Bank (1984) 1 All ER 351; Nuvista Pharma Ltd. vs Chairman, National Board of Revenue 65 DLR (AD) 302 and Uttara Bank vs Macneill & Kilburn 33 DLR (AD) 298 ref.
Sk Md Morshed Advocate-For the Petitioner in all the Wirt Petitions.
Shaikh Mohammad Zakir Hossain Advocate-For the Respondent No.1.
Judgment
Tariq ul Hakim J : Rules Nisi were issued calling upon the respondents to show cause why the orders under. Memo Nos. BREB/DP/IF-29-56/2016/756, BREB/DP IF-31-61/ 2016/760, BREB/DP /IF-31-60/2016/759 and BREB/DP/IF-29-57/2016/758 all dated 28-1-2016 (Annexure-II) issued under the signature of the Respondent No.4, Director (CC) (Procurement), Bangladesh Rural Electrification Board ordering forfeiture and encashment of Bank Guarantee Nos. 159/ 2015 dated 6-10-2015, 172/2015 dated 26-10-2015, 171/2015 dated 26-10-2015 and 160/6/2015 dated 0-10-2015 submitted by the petitioner against Tender Sub-Package Nos. IF-29-56, IF-31-61, IF-31-60 and I F-29-57 respectively should not be declared to have been issued without lawful authority and are of no legal effect and why the Respondents should not be directed to refund Bank Guarantee Nos 159/2015 dated 6-10-2015, 172/2015 dated 26-10-2015, 171/2015 dated 26-10-2015 and 160/2015 dated 6-10-2015 to the petitioner and/or pass such other or further order or orders, as to this Court may seem fit and proper.
2. In all these applications under Article 102 of the Constitution it has been stated that Bangladesh Rural Electrification Board invited tenders on 8-9-2015 and 22-9-2015 under Tender Package No. IF-29 and Sub-Package No. IF-29-56, Tender Package No. IF-31 and Sub-Package No. IF-31-61, Tender Package No. IF-31 and Sub Package No. IF·31-60 and Tender Package No. IF-29 and Sub-Package No. IF-29-57 respectively for supply of electrical line construction materials. The petitioner participated in the tenders, by depositing security money amounting to Taka 35,00,000 (thirty five lac) for each of the tenders in the form of Bank Guarantee No. 159/2015 dated 6-10-2015. 172/2015 dated 26-10-2015, 171/2015 dated 26-10-2015 and 160/2015 dated 6-10-2015. After evaluating the tender offers the respondents found the petitioner's offer to be the lowest and by letters under Memo Nos. BREB/DP /IF-29-56/2015/511, BREB/DP /IF-31-61/2015/508, BREB/DP /IF-31-60/2015/513 and BREB/DP / IF-29-57/2015/512 all dated 27-12-2015 issued Notifications of Awards against Sub-Package Nos. IF-29-56, IF-31-61, IF-31-60 and IF-29-57 respectively and requested the petitioner to accept the said Notifications of Awards within 7 days. The petitioner by his letter dated 3-1-2015 accepted the said Notifications of Awards and as per terms of the said Notifications of Awards he was required to submit performance guarantees of various amounts and sign a formal contract. In the meantime on 12-11-2015 the petitioner received a letter from the respondent No.4 seeking clarification about some allegations against him for defalcation of Government revenue stating that until disposal of the aforesaid matter the petitioner's offer for supply of goods under the aforesaid tenders will not be approved by the respondents. The petitioner on the same day submitted a clarification against the allegations raised against him but not having received any confirmation of acceptance of the said clarification he apprehended that he may be harassed and victimized in connection with the said Notifications of Awards relating to the aforesaid tenders. In view of the aforesaid unwarranted and unexpected situation the petitioner was no longer willing to continue with the supply of goods under the aforesaid tenders and requested the respondents to refund the tender security money. Thereafter the respondents by their letters under Memo Nos. BREB/DP /IF-29-56/2016/756, BREB/DP/IF-31-61/2016/760, BREB/DP/IF-31-60/2016/759 and BREB/DP/IF-29-57/2016/758 all dated 28-1-2016 decided to forfeit the petitioner's security money and demanded encashment of the Bank Guarantees each amounting to Taka 35,00,000 (thirty five lac) from the Issuing Bank i.e. Export Import Bank of Bangladesh Limited (EXIM Ltd); Motijheel Branch, Dhaka in favour of Bangladesh Rural Electrification Board (BREB). Thereafter the said EXIM Ltd. requested the petitioner to deposit the requisite amount of funds against the said Bank Guarantees fortheir encashment.
3. Being aggrieved, the petitioner has come to this Court and obtained the present Rules.
4. The Rules are being contested by the Respondent No. 1 by filing Affidavits-in- Opposition stating inter alia that the Notification of Awards issued in favour of the petitioner amounted to formation of a contractual obligation which became binding upon the petitioner. Once the petitioner informed the respondents that he would not supply the materials pursuant to the said tenders and failed to sign a formal contract he was in breach of his commitment causing loss to the respondents in consequence of which they demanded encashment of the Bank Guarantees in accordance with Rule 102(4) of the Public Procurement Rules, 2008 and ITT clause No. 60.3 of the tender document. It has been further stated that in the tender documents there is a provision for settling disputes between the parties amicably and thereafter by Arbitration in accordance with the Arbitration Act, 2001 and therefore the instant Writ Petitions are not maintainable. It is further staled that., the petitioner by his letters dated 13-1-2016 stated his inability to perform his contract amounting to a repudiatory breach of the contract.
 (To be continued)

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