Delhi High Court Restrains Vedanta From Invoking Halliburton’s Bank Guarantees
Interests of justice would justify an ad interim injunction, restraining invocation of the bank guarantees, the court said.
The Delhi High Court in an interim order today restrained Vedanta Ltd. from invoking eight bank guarantees of Halliburton Offshore Services Pvt. Ltd. after the latter expressed its inability to develop oil blocks for Vedanta within the deadline.
A bench headed by Justice C Hari Shankar has stayed invocation of the guarantees until May 11, the next date of hearing. The guarantees were issued by ICICI Bank Ltd. on the instructions of Halliburton—of which five are due to expire on June 30, 2020, and the remaining on Nov. 24.
Halliburton, represented by Senior Advocate Sandeep Sethi and assisted by law firm Unity Legal, argued that Vedanta had earlier extended the project deadline till March 31, 2020. A substantial portion of the project was completed prior to the deadline, Sethi said, adding that pending works like drilling of wells—comprising 5 percent of the total work—couldn’t be finished due to the lockdown enforced by the Indian government following the novel coronavirus outbreak.
The company said project completion required the travel of people from outside India as well as workmen from various parts of the country—both of which have been barred amid the lockdown.
Senior Advocate Dr. Abhishek Manu Singhvi, representing Vedanta, said the invocation of bank guarantees can be stayed only on the grounds of egregious fraud. He argued that the three projects were to be completed on Jan. 16, March 16 and June 16 respectively, and the company had not agreed to condone the delay as argued by Halliburton.
Dr. Singhvi argued that the communication dated March 31 by Halliburton seeking an extension of time cannot be considered as consent by Vedanta as it had merely recorded the communication. Vedanta also pointed out that the project in question was specifically exempted from the lockdown through a government circular dated March 26, 2020.
“I’m convinced, prima facie, that, in view of the submission, of the petitioner, that it was actually working on the project till the imposition of lockdown on March 22, 2020, or at least shortly prior thereto, and in view of the sudden and emergent imposition of lockdown, the interests of justice would justify an ad-interim injunction, restraining invocation or encashment of the aforesaid eight bank guarantees, till the expiry of exactly one week from 3rd May, 2020,” the court order read.