Delhi High Court restrains SECI from invoking Bank Guarantee

Delhi High Court restrains SECI from invoking Bank Guarantee

The Delhi High Court (HC) restrained the Solar Energy Corporation of India (SECI) to invoke bank guarantees furnished by Solar Energy Developer

The dispute between the Phelan Energy India R J Pvt. Ltd. (Petitioner) that is a Solar Energy Developer and Minister of New and Renewable Energy & Ors./ Social Energy Corporation of India (SECI)/ (Respondents). The dispute arose between the parties regarding the delay in commissioning of solar power project that was caused due to imposition of safeguard-duty on the petitioner.

In the meantime, the SECI proceeded with the encashment of the bank guarantee without supplying the decision copy of Dispute Resolution Committee (DRC) to the petitioner.

The petitioner contended that the decision process of DRC, which is set up under MNRE mandate for Procedural Guidelines for Dispute Resolution Mechanism (DRM) being a quasi-judicial body needs to be transparent. It was urged that the Ministry has violated the principles of natural justice by failing to share DRC's decision copy.

The DRC's decision based on which the Bank Guarantee was encashed was not shared with Petitioner and hence the entire decision making process was objectionable and subject to writ jurisdiction.

A writ petition was filed by the petitioner whereby he sought return of the amounts, to the extent of Rs. 1,92,00,000/-, received by SECI due to encashment of the bank guarantee. It also sought restraint on encashment of bank guarantee till the final disposal of appeal against decision of DRC, SECI should be restrained from taking any coercive action.

The matter was listed before the Single Judge Bench of the HC Justice Navin Chawla. The Judge went through the Ministry's Circular dated18 June 2019 which established the DRM and Clause 12 of Circular dated 20 September 2019 that contained clarifications of the procedural guidelines for DRM.

The HC restrained the SECI from taking any coercive action against the petitioner and it also stayed the encashment of Bank Guarantee by SECI due to failure of Ministry of New and Renewable Energy (MNRE) to supply decision copy of DRC to the petitioner.