Being aggrieved by the order passed by the learned Single Judge in CMA No.5699/2009 in Suit No.795/2009, the instant appeal has been assailed. Brief facts of the case are that the Appellant set up a company for the purposes of operation of electric power generation projects. The counsel for the Appellant contended that on account of shortfall of electricity in the country, Respondents No.1 & 2 formulated power policy to invite private sector for investing in and by setting up Independent Power Projects (IPPs) for the generation of electricity in the light of Power Policy, 2002 of the Government, the Appellant intended setting up of 200 MW power plant in Gujranwala and to take benefit of the said policy submitted application along with nonrefundable fee of US$100,000 to the Respondent No.1 for the purpose of processing and evaluation of the project proposed by the Appellant. Pursuant to such fulfilling of entry requirements PPIB issued a Letter of Support (LOS) in favour of the Appellant dated 15.09.2008. Per Article 5.2 (clause 48) of the Power Policy 2002, each bidder (including the Appellant) was required to provide a bid bond of US$1,000 per Mega Watt at the time of submission of bid and having selected, successful bidder was required to provide a Performance Guarantee @US$5,000 per MW (applied for) in favour of PPIB for a period of three months in excess of the validity of the LOS.
The policy provided that the said Performance Guaranty was required to secure that the successful bidder fulfills his obligations to execute the Implementation Agreement (“IA”), Power Purchase Agreement (“PPA”) and other relevant agreements and to achieve financial closings within the time specified in the LOS. Pursuant to clause 49 of the said policy, LOS was intended to be issued to the successful bidders for a period ranging from 15 to 18 months, during which period, the sponsor was required to achieve financial closing for the project under terms specified in the LOS (the said term of financial closing has defined in the LOS to mean the execution and delivery of the financing documents that together with equity, commitment, evidence sufficient financing for the construction, testing, completion and commissioning of the project). As required by the said policy, the Appellant submitted a Bank Guaranty in the sum of US Dollars One Million issued by the Respondent No.4 (“the bank”). Having provided the said Bank Guaranty the said LOS was issued (on 15.09.2008), terms of which were duly agreed and accepted by the Appellant. Preface of the said LOS vide Article A(iv) provided that the said LOS has been issued to the Appellant having provided and delivered irrevocable, unconditional, on demand Bank Guaranty on the terms acceptable to PPIB.
With regard to the Performance Guaranty (since the matter pertains primarily thereto),the learned counsel for the Appellant walked us through the relevant portion of the LOS, which regulate matters related to the said Guarantee. Pursuant to paragraph 2 on the second page of LOS, the intent and purpose of Performance Guarantee are provided, which are reproduced as under:
“The Performance Guarantee shall secure the Sponsor‟s (as defined in the LOS) and the Project Company‟s obligations (i) to cause the execution of the Implementation Agreement (IA) and the Power Purchase Agreement (PPA) (together the Project Agreements) (ii) to achieve Financial Closing (as defined hereunder) not later than nine (9) months from the issuance date of this LOS under and in accordance with the terms of this LOS (iii) to achieve the commercial operations date no later than the 30th June, 2011 (“Commercial Operations Date”) under and in accordance with the terms of this LOS, and (iv) of the Project Company exercises the “Termination Option” (as defined hereunder) under under and in accordance with the terms of this LOS.”
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