2096-P

IN THE
HON’BLE HIGH COURT
AT KOLKATA

—IN THE MATTERS OF—

STATE OF WEST BENGAL .... PETITIONER

(REPRESENTED BY ADVOCATE GENERAL)
vs.
ICICI BANK .... RESPONDENT
(REPRESENTED BY THE COUNSEL)

CIVIL PETITION NO. XXX/2023

________________________________________________________________________

(UNDER ORDER XXXVII RULE 1 OF THE CODE OF CIVIL PROCEDURE, 1908)

MEMORIAL ON BEHALF OF THE PLAINTIFF

 TABLE OF CONTENTS
INDEX OF AUTHORITIES ................................................................................................. iii

STATEMENT OF JURISDICTION ..................................................................................... iv

STATEMENT OF FACTS ...................................................................................................... v

ISSUES FOR CONSIDERATION ........................................................................................ vi

SUMMARY OF ARGUMENTS ...........................................................................................vii

ARGUMENTS ADVANCED .................................................................................................. 1

I. THE OBLIGATIONS TO PAY UNDER THE PERFORMANCE BOND ARE

ABSOLUTE AND ICICI BANK IS LIABLE TO PAY THE REQUISITE AMOUNT.
1

II. THE DEVELOPMENTS SURROUNDING THE COVID-19 PANDEMIC AND

THE RUSSIA UKRAINE WAR DO NOT AMOUNT TO ‘SPECIAL INEQUITIES’.2

PRAYER FOR RELIEF.......................................................................................................... 3

ii
 INDEX OF AUTHORITIES

Cases
Commercial Arbitration Petition (L) No. 404 of 2020, April 8, 2020 ....................................... 2
Edward Owen Engineering Ltd. vs. Barclays Bank International Ltd. (1978) 1 All ER 97..... 1
Indrajit Power Private Limited vs. Union of India, ................................................................... 2
RD Harbottle (Mercantile) Limited vs. National Westminster Bank Limited (1978) 1 QB 14 1
Standard Chartered Bank Ltd. vs. Heavy Engineering Corporation Ltd. 2019 SCC Online SC
1638........................................................................................................................................ 1
Standard Retail Pvt. Ltd. vs. M/s G.S. Global Corp. & Ors ...................................................... 2
W.P.(C) 2957/2020 & CM Nos.10268-70/2020 (URGENT), April 28, 2020 .......................... 2

iii
 STATEMENT OF JURISDICTION

The Respondent most humbly submits that this Hon’ble High Court at Rajarhat, Kolkata has
the jurisdiction to hear the present matter of:

(1) CIVIL PETITION NO. XXX/2023 filed by the State of West Bengal under Order
XXXVII Rule 1 of the Code of Civil Procedure, 1908.

All of which is urged in detail in the written submission and is submitted most respectfully.

iv
 STATEMENT OF FACTS

(1) Elsevier Constructions Pvt. Ltd. entered into a contract with State of West Bengal to
complete a residential housing project in the Kolkata city extension of New Town
Action Area 4. According to the contract executed on February 1, 2020, Elsevier was
obligated to complete the project by December 31, 2022, and effect the handover to the
state government by January 5, 2023. Under the contract, ICICI Bank furnished a
performance bond to the state government for an amount of Rs. 10 crores.

(2) However, due to interruptions caused by COVID 19 at the beginning of 2020, and the
Russia Ukraine War towards the end of 2022 led to multiple default in payments by
Elsevier and subsequent disruption of work. Elsevier agreed to complete the work if
additional time was granted, a commitment which even ICICI Bank was ready to
guarantee, however, the state government demanded Rs. 10 crores from ICICI Bank
which it claimed was an absolute commitment and would enable it to meet demands of
refund of booking amount to eligible allottees.

(3) Meanwhile, Elsevier ran into financial difficulties and was subject to liquidation
proceedings before NCLT, Kolkata. ICICI Bank pleaded that the unanticipated
developments surrounding the pandemic and the war amounted to ‘special inequities’
which was sufficient ground to provide at least a temporary discharge to the surety.

(4) The state government filed a suit before the Commercial Court, Rajarhat, Kolkata,
against ICICI Bank and claimed that the obligation under the performance bond was
absolute and any payment thereunder would be critical to the government’s ability to
meet its obligations to the allottee.

Hence the present matter before this Learned Court.

v
 ISSUES FOR CONSIDERATION

(1) WHETHER THE OBLIGATIONS OF ICICI BANK TO PAY, UNDER THE

PERFORMANCE BOND, IS ABSOLUTE?

(2) WHETHER THE DEVELOPMENTS SURROUNDING THE COVID-19

PANDEMIC AND THE RUSSIA-UKRAINE WAR AMOUNT TO ‘SPECIAL
INEQUITIES’?

vi
 SUMMARY OF ARGUMENTS

I. THE OBLIGATIONS TO PAY UNDER THE PERFORMANCE BOND ARE

ABSOLUTE AND ICICI BANK IS LIABLE TO PAY THE REQUISITE
AMOUNT.

The plaintiff submits the bank guarantee is unconditional and irrevocable and there cannot
be any embargo on encashment of the case in the absence of fraud and/or irretrievable
justice. The principal debtor has indulged in multiple default of payments, mere financial
distress is not a ground of stay and thus the surety must pay the amount of Rs. 10 crores to
enable the state government to meet the demands of refund of booking amount to eligible
allottees.

II. THE DEVELOPMENTS SURROUNDING THE COVID-19 PANDEMIC

AND THE RUSSIA UKRAINE WAR DO NOT AMOUNT TO ‘SPECIAL
INEQUITIES’.
The plaintiff submits that since the onset of the Covid-19 and the Russia-Ukraine war, a
reasonable amount of time has passed for these to qualify as special inequities as one would
have sufficient time to reconsider alternatives as to recuperate from these circumstances.
The project was undertaken shortly prior to the imposition of lockdown, and the
government has been issuing instructions to mitigate the difficulties that have resulted. The
difficulties were for a ‘limited period’ and cannot come to the rescue to prevent the surety
from temporarily discharging the liability.

vii
 ARGUMENTS ADVANCED

I. THE OBLIGATIONS TO PAY UNDER THE PERFORMANCE BOND ARE

ABSOLUTE AND ICICI BANK IS LIABLE TO PAY THE REQUISITE

AMOUNT.

The plaintiff submits the bank guarantee is unconditional and irrevocable and there cannot be
any embargo on encashment of the case in the absence of fraud and/or irretrievable justice. The
principal debtor has indulged in multiple default of payments, mere financial distress is not a
ground of stay and thus the surety must pay the amount of Rs. 10 crores to enable the state
government to meet the demands of refund of booking amount to eligible allottees.

The courts are not concerned with their difficulties to enforce such claims; those are risks which
the merchants take as such a risk is inherent in the transactions.1

Performance guarantees are effectively obligations to pay on demand within the terms of the
guarantee, irrespective of the rights and wrongs of any dispute between beneficiary and
principal under the terms of their separate contract.2

The bank guarantee is an independent contract between bank and the beneficiary and the bank
is always obliged to honour its guarantee as long as it is an unconditional and irrevocable one.
The dispute between the beneficiary and the party at whose instance the bank has given the
guarantee is immaterial and is of no consequence. There are, however, exceptions to this Rule
when there is a clear case of fraud, irretrievable injustice or special equities. The Court
ordinarily should not interfere with the invocation or encashment of the bank guarantee so long
as the invocation is in terms of the bank guarantee.3

Therefore, the obligation under the performance bond was absolute and any payment
thereunder would be critical to the government’s ability to meet its obligations to the allottee.

1
RD Harbottle (Mercantile) Limited vs. National Westminster Bank Limited (1978) 1 QB 146
2
Edward Owen Engineering Ltd. vs. Barclays Bank International Ltd. (1978) 1 All ER 976
3
Standard Chartered Bank Ltd. vs. Heavy Engineering Corporation Ltd. 2019 SCC Online SC 1638

1
 II. THE DEVELOPMENTS SURROUNDING THE COVID-19 PANDEMIC

AND THE RUSSIA UKRAINE WAR DO NOT AMOUNT TO ‘SPECIAL

INEQUITIES’.

The plaintiff submits that since the onset of the Covid-19 and the Russia-Ukraine war, a
reasonable amount of time has passed for these to qualify as special inequities as one would
have sufficient time to reconsider alternatives as to recuperate from these circumstances. The
project was undertaken shortly prior to the imposition of lockdown, and the government has
been issuing instructions to mitigate the difficulties that have resulted. The difficulties were for
a ‘limited period’ and cannot come to the rescue to prevent the surety from temporarily
discharging the liability, as adopted in the case of Standard Retail Pvt. Ltd. vs. M/s G.S. Global
Corp. & Ors.4
In Indrajit Power Private Limited vs. Union of India,5 it was pointed out as follows: Judicial
notice can also be taken of the fact that the complete lockdown lasted for at most, for a couple
of months (i.e., for 68 days) and therefore, the pandemic and lockdown, post the relevant period
under consideration for the appropriation does not create any special inequities. In the
aforementioned case, it was contended that it had no immediate source of revenue and if the
amount from the bank guarantees was appropriated, it would ultimately result in it being
declared as a non-performing asset. The argument of the Union of India was that the bank
guarantee is unconditional and irrevocable and there cannot be any embargo on encashment of
the case in the absence of fraud and/or irretrievable justice. It was also reiterated that merely
because invocation will cause financial distress is not a ground of stay unless the exception of
irrevocable injury has been proved. Basis these facts, the Hon’ble Delhi High Court dismissed
the petition. The courts have not resorted to granting injunctions in cases where parties have
tried to take the plea of COVID-19 for justifying their non-fulfilment of obligations, even
though they were given ample time before the crisis hit the world, and subsequently have had
ample time after the crisis to take necessary measures to fulfil their obligations.

4
Commercial Arbitration Petition (L) No. 404 of 2020, April 8, 2020
5
W.P.(C) 2957/2020 & CM Nos.10268-70/2020 (URGENT), April 28, 2020

2
 PRAYER FOR RELIEF

Wherefore, in light of the facts stated, issues raised, arguments advanced and authorities cited,
it is most humbly and respectfully prayed before this Hon’ble High Court, that it may be
pleased to
(1) Hold ICICI Bank liable to pay the liquidated amount of Rs. 10 crores as part of its
obligations under the performance bond, and not grant temporary discharge of liability
on grounds of ‘special inequities’.
And pass any other order that it may deem fit in the ends of justice, equity, and good
conscience.

Date: 3rd February, 2023 Counsel No. 2096-P

Place: Rajarhat, Kolkata (Counsel for Plaintiff)