Gujarat High Court notice to biofuel company for alleged fraud

The Gujarat High Court has restrained renewable fuel company My Eco Energy Private Limited from encashing a bank guarantee furnished by a fuel station owner after the latter moved court alleging that the company is committing fraud across the country and he is one of the victims.

The petitioner Dipenkumar Patel, a resident of Kalol in Gandhinagar, alleged that he had invested a considerable sum after the representatives of the company approached him for opening a bio-diesel fuel station on a franchise basis, but the company has failed to supply any bio-diesel to him or any other franchise. Notably, the company had in August 2018 claimed that it intends to open 300 outlets across Gujarat for selling its bio-diesel under the brand name 'Indizel'.

During the hearing of the petition, the counsel for the petitioner Nishit Gandhi contended that the company is committing fraud with him by not fulfilling the agreement and similar frauds have been committed by it across the country. It was argued that the directors of the company are already in jail. It was also argued that the petitioner has paid all the necessary amounts and charges to the company, but despite that, it has failed to supply Indizel.

The advocate also contended that the company failed in fulfilling its responsibility and despite that is planning to encash the bank guarantee of Rs 30 lakh in an illegal, fraudulent, and arbitrary manner. It was also argued that if the same is allowed to be done, it would cause irreparable damage to the petitioner and therefore, his rights need to be protected.

Following the arguments, the court remarked that it is a well-settled principle that invocation of bank guarantee is not stayed by the court except for fraud and injustice to one of the parties. In the present case, it appears that the company has not supplied any material to the petitioner and tried to invoke the bank guarantee, the court pointed out.

Thereafter, the court issued a notice to the state government and the private company, while restraining the bank from encashing the bank guarantee in favour of the company.

Stern Action

• The court issued a notice to the state government and the private company
•  It restrained the bank from encashing the bank guarantee in favour of the company