Reliance Infrastructure on Tuesday moved the Supreme Court seeking to restrain Tamil Nadu-based NLC India from enchasing its advance bank guarantees (ABGs) to the tune of over Rs 150 crore. The BGs were given during setting up of two 250 MW thermal power stations at Bithnok and Barsingsar in Rajasthan at the cost of around Rs 3,700 crore in 2016.
A bench led by Chief Justice NV Ramana while seeking response from NLC India and the three banks – State Bank of India, Canara Bank and IDBI Bank – also asked the parties to maintain staus quo with regard to ABGs issued by the lenders at RInfra’s behest, under a Letter of Award of November 2016. NLC had extended an advance of Rs 261.21 crore to Reliance Infrastructure against 12 ABGs furnished by three banks.
Challenging the Bombay High Court’s March 22 order that rejected its petition to restrain NLC from encashing the ABGs, RInfra told the apex court that NLC had itself foreclosed and terminated the contract citing unforseen circumstances on account of refusal by Rajasthan Urja Vikas Nigam to buy power from NLC. This according to NLC had resulted in frustration considering that the project was envisaged on the Rajasthan government procuring power from the project, it said, adding that all the BGs were conditional and could be encashed only for breach of a contractual stipulation on its part.
While holding that the bank guarantees were unconditional, the HC had held that in view of the express language of the bank guarantees, which makes it clear that NLC’s decision as to whether RInfra had failed to fulfil its contractual obligations was final and conclusive.