SEPCO ELECTRIC POWER CONSTRUCTION CORPORATION versus POWER MECH PROJECTS LTD.

SEPCO ELECTRIC POWER CONSTRUCTION CORPORATION versus POWER MECH PROJECTS LTD.

One Judge (Indira Banerjee, J.) held that ICBC is a Scheduled Bank included in the Second Schedule to the RBI Act and that the irrevocable bank guarantee issued by ICBC complied with the High Court's direction for a scheduled bank located in India; the High Court erred in directing substitution with a guarantee from a 'Scheduled Indian Bank' in the absence of adverse material regarding ICBC’s credibility, and therefore the Division Bench order and specified High Court orders were set aside. The other Judge (V. Ramasubramanian, J.) held that the matter arose from an offer made in court to furnish a guarantee from a 'Scheduled Indian Bank' and that the subsequent correction of the order to...

Parties
Appellant: SEPCO Electric Power Construction Corporation; Respondent: Power Mech Projects Ltd.
Jurisdiction
India
Judgment Date
24 August 2021
Procedural Posture
Civil Appeal / Appeal From Judgment and Order Dated 12.03.2021 of the High Court of Delhi in Review Petition No.5 of 2021 in FAO (os)(comm) 136 of 2019; Arising From Interim Orders Under Section 9 and Appeal Under Section 37 of the Arbitration and Conciliation Act, 1996
Outcome
Split decision: one Judge allowed the appeal and set aside the High Court orders requiring substitution of the ICBC bank guarantee; the other Judge would have dismissed the Special Leave Petitions. Because the bench was not unanimous, the matter was directed to be placed before the Chief Justice of India for...
Legal Topics
Bank Guarantee, Scheduled Bank, Reserve Bank of India Act, 1934, Section 9 Arbitration, Section 34 Arbitration, Section 37 Arbitration, Commercial Courts Act S.13(1 A), URDG 758
Arbitration Banking Law Commercial Courts Civil Procedure Bank Guarantee Scheduled Bank Reserve Bank of India Act, 1934 Section 9 Arbitration +4 more

Case Brief

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Parties

SEPCO Electric Power Construction Corporation

Appellant

Power Mech Projects Ltd.

Respondent

Procedural Posture

Civil Appeal / Appeal From Judgment and Order Dated 12.03.2021 of the High Court of Delhi in Review Petition No.5 of 2021 in FAO (os)(comm) 136 of 2019; Arising From Interim Orders Under Section 9 and Appeal Under Section 37 of the Arbitration and Conciliation Act, 1996

Legal Issues

  1. 1 Whether a bank guarantee issued by Industrial and Commercial Bank of China Limited (ICBC), Mumbai branch, a bank included in the Second Schedule to the Reserve Bank of India Act, 1934, is acceptable in compliance with a High Court direction to furnish a bank guarantee from a 'scheduled bank located in India' or whether substitution by a guarantee from a 'Scheduled Indian Bank' could be directed
  2. 2 Whether there exists a statutory distinction between a 'Scheduled Indian Bank' and a 'Scheduled Bank located in India' under the RBI Act or the Banking Regulation Act
  3. 3 Whether the High Court erred in directing substitution of an already furnished irrevocable bank guarantee and in altering its interim direction after compliance and expenditure by the judgment-debtor

Ratio Decidendi

One Judge (Indira Banerjee, J.) held that ICBC is a Scheduled Bank included in the Second Schedule to the RBI Act and that the irrevocable bank guarantee issued by ICBC complied with the High Court's direction for a scheduled bank located in India; the High Court erred in directing substitution with a guarantee from a 'Scheduled Indian Bank' in the absence of adverse material regarding ICBC’s credibility, and therefore the Division Bench order and specified High Court orders were set aside. The other Judge (V. Ramasubramanian, J.) held that the matter arose from an offer made in court to furnish a guarantee from a 'Scheduled Indian Bank' and that the subsequent correction of the order to...

Court Disposition

Split decision: one Judge allowed the appeal and set aside the High Court orders requiring substitution of the ICBC bank guarantee; the other Judge would have dismissed the Special Leave Petitions. Because the bench was not unanimous, the matter was directed to be placed before the Chief Justice of India for...

Orders

  • Impugned judgment and order of the Division Bench dated 27.11.2020 in FAO(OS)(COMM) No.136 of 2019 set aside (per Indira Banerjee, J.)
  • Orders dated 09.04.2019 and 16.05.2019 in OMP (I)(COMM) 523/2017 set aside (per Indira Banerjee, J.)