w w w . L a w y e r S e r v i c e s . i n



Oil India Limited, Assam v/s Asian Oil Field Services Limited & Another


Company & Directors' Information:- OIL INDIA LIMITED [Active] CIN = L11101AS1959GOI001148

Company & Directors' Information:- S R P OIL PVT LTD [Active] CIN = U23209DL1996PTC303594

Company & Directors' Information:- AMP E - SERVICES PRIVATE LIMITED [Active] CIN = U51909MN2013PTC008361

Company & Directors' Information:- A. B. D. OIL FIELD PRIVATE LIMITED [Strike Off] CIN = U23300GJ2007PTC051481

Company & Directors' Information:- M K S OIL PRIVATE LIMITED [Active] CIN = U23201DL2013PTC250459

Company & Directors' Information:- OIL FIELD SERVICES(INDIA) PRIVATE LIMITED [Active] CIN = U28129MH1985PTC035462

Company & Directors' Information:- OIL CORPORATION OF INDIA PRIVATE LIMITED [Active] CIN = U15133UP1952PTC002471

Company & Directors' Information:- O.I.L PRIVATE LIMITED [Active] CIN = U15400DL2013PTC255692

Company & Directors' Information:- INDIA CORPORATION PRIVATE LIMITED [Active] CIN = U65990MH1941PTC003461

Company & Directors' Information:- P P OIL PRIVATE LIMITED [Active] CIN = U15141MH1999PTC117925

Company & Directors' Information:- B F OIL PRIVATE LIMITED [Strike Off] CIN = U15141DL1993PTC052160

    Case No. I.A. (Civil) 4285 of 2019 & Arb. A. 19 of 2019

    Decided On, 02 January 2020

    At, High Court of Gauhati

    By, THE HONOURABLE MR. JUSTICE KALYAN RAI SURANA

    For the Petitioner: S.N. Sarma, Advocate. For the Respondent: G. Khandelia, Advocate.



Judgment Text


1. Heard Mr. S.N. Sarma, learned senior counsel, assisted by Mr. K. Kalita, the lea/rned counsel for the appellant and Mr. B. Chatterjee, learned counsel, assisted by Mr. G. Khandelia, the learned counsel for the respondent.

2) By this application, the applicant has prayed for stay of the impugned order dated 27.11.2019, passed by the learned District Judge, Dibrugarh in Misc. Arb. Case No. 3/2019, thereby granting ad interim injunction in exercise of power under Section 9 of the Arbitration & Conciliation Act, 1996 thereby restraining the applicant- appellant from invoking the relevant clause of contract invoking security/ performance bank guarantee dated 17.09.2018 issued through RBL Bank, Parel, Mumbai for an amount of Rs.12,25,00,000/-.

3) The learned senior counsel for the applicant has extensively referred to the contract agreement between the parties and other documents annexed to the connected memo of appeal. His submissions can be clubbed under two parts. Firstly, it is submitted that on 26.11.2019, the applicant had filed a caveat, which was registered and numbered as Misc. (Caveat) Case No. 30/2019, pursuant to which the learned District Judge, Dibrugarh had passed an order dated 26.11.2019 to the effect that if the opposite party herein files any suit, proceeding, etc., the caveat be put up with the record of the connected suit., however, the impugned order was passed the very next date without any notice to the applicant- caveator. Secondly, it is submitted that while granting ex parte ad interim injunction, the learned Court below did not record its satisfaction that in the case in hand, the applicant as a beneficiary of the performance bank guarantee (PGB for short) wanted to take advantage of any fraud and moreover, the learned Court below did not make any effort to consider the comparative hardship and loss which the public sector enterprise would suffer if there is any interference with the invocation of PGB.

4) It is submitted that the applicant had floated a tender for engaging contractor for "2D Seismic Date Acquisition of 870 LKM covering parts of Manipur from unappraised areas of North East India ", to be completed within a period of 14 months and in the process the applicant was found to be the eligible tenderer. Accordingly, the applicant and the opposite party entered into a Contract Agreement No. 6208190/CDG2130/ GPHY/2016 dated 15.03.2017. The estimated time of completion was 14 months. As per terms and conditions, the opposite party had provided PBG dated 02.02.2017, issued by ICICI Bank for a sum of Rs.12,25,00,000/- (Rupees Twelve crore twenty five lakh only). The said PGB was substituted by submitting another PGB issued by RBL Bank Ltd., bearing No. PBG101001800056 issued on 07.03.2018, having claim expiry date on 30.09.2019. In course of time, by way of an amendment to the said PGB, the GB claim expiry date was extended to 30.03.2020.

5) It is submitted that although the opposite party claimed to have suffered various hindrances in carrying out the contract work, but the force majeure clause was never invoked. Thus, when the opposite party had miserably failed to complete the contract by 24.05.2019, the applicant had invoked the encashment of the said PGB by letter No. A/Cs/54/INV/3135/SAP-7073/ 2019-20 dated 26.11.2019. It is also submitted that neither of the parties had taken a stand that the contract agreement between them had terminated on 24.04.2019.

6) It is further submitted that the applicant had carried out inspection and it came to the notice of its officials that the opposite party had, amongst others, (i) removed their filed camp without intimating the applicant, (ii) without prior information, the data recording equipment was found removed and stated to be sent to USA for repair, (iii) the opposite party had mobilized only 746 WRU instead of requisite WRUs as per contract agreement, (iv) without informing the applicant, sub-contractors were terminated, (v) crew personnel, other men and equipment were removed from field without prior intimation to the applicant.

7) It is also submitted that the PBG was an independent contract and such guarantee was unconditional and, as such, for invoking the said PBG, no information to the opposite party or the concerned bank was required, it was also not necessary to quantify the loss before invoking the PBG. Nonetheless, the opposite party had raised bill for mobilization advance of Rs.16,89,64,523/- and that for the delay in mobilization, liquidated damages to the extent of Rs.5,89,28,408.55 has been calculated and levied on the opposite party. It is also submitted that as per statement made in paragraph 16 of the accompanying memo of appeal, out of 870 LKM (line kilo-metre) 2D seismic data, the opposite party had completed only 3.240 LKM of 2D seismic data, and that as per letter dated 27.07.2018, the opposite party had claimed to have collected seismic data for only 4.0 LKM. Thus, the agreed time for execution of the work had expired, but the opposite party had miserably failed to achieve the target.

8) Accordingly, it is submitted that the loss claimed to have suffered by the opposite party was comparatively negligible than the loss suffered by the applicant. Moreover, it is submitted that in view of the well settled law relating to grant of injunction against invocation of bank guarantee, the impugned order was not sustainable on facts and in law. In support of his submissions, the learned senior counsel for the applicant has cited the following cases:-

a. National Thermal Power Corporation Ltd. Vs. Flowmore Pvt. Ltd. & Anr., (1995) 4 SCC 515;

b. Hindustan Steel Workers Construction Ltd. Vs. G.S. Atwal & Co. (Engineers) Pvt.

Ltd., (1995) 6 SCC 76;

c. Andhra Pradesh Pollution Control Board Vs. CCL Products (India) Ltd., C.A. No. 7005/2017 decided on 22.07.2019: (2019) 0 Supreme (SC) 935.

d. The National Small Industries Corporation (NSIC) Limited & Ors. Vs. M/s. Glove Infracon Private Limited & Ors., CRP (I/O) 139/2015, decided on 06.01.2017.

9) Per contra, the learned counsel for the opposite parties has submitted that if any order is passed to stay the operation of the order impugned herein, not only the connected appeal, but the arbitration petition filed before the learned Court below would be rendered infructuous. The learned counsel for the opposite party has also submitted that he is instructed that the management of the opposite party is making sincere attempts to discuss the matter with the officials of the applicant so as to arrive at a negotiated settlement to end all their differences and disputes.

10) The learned counsel for the opposite party has also extensively referred to the contract agreement and documents annexed to the accompanying memo of appeal filed by the applicant. It is submitted that as on date, the opposite party had invoked the arbitration clause and, as such, it was a fit case where the order of stay of payment in respect of the bank guarantee be maintained till the arbitration proceeding is brought to its logical end.

11) It is submitted that the contract agreement between the parties had come to an end on 24.05.2019 by operation of Cause 12.1 on expiry of duration of contract. Moreover, as per clause 18.1 of the contract agreement, the performance guarantee was required to be kept valid for three months beyond the duration of the contract and, as such, by getting the original PBG extended, the applicant has perpetrated fraud upon the opposite party only to invoke the PBG without quantification of any dues payable by the opposite party to the applicant. The learned counsel for the opposite party has also submitted that he is instructed to the effect that the opposite party is entitled to a huge payment from the applicant for the work carried out so far and, as such, the invoking of payment under the PBG is not sustainable on facts or in law. It is submitted that for seeking payment under the PBG, the applicant has not cited a reason that due to any act or omission on part of the opposite party, the applicant has suffered any financial loss, or that for any particular breach of any clause of the contract agreement, the applicant had suffered any financial loss. It is submitted that the applicant had carried out an inspection and had projected as if the opposite party had removed men and machinery from the site, but when the allegations were brought to the notice of the opposite party, their management had given satisfactory reply to all the allegations and in the said context, it is submitted that the personnel at duty along with their fully equipped van were kidnapped by extremist groups operating in the area and despite assurance by the Chief Minister of Manipur and other officials and police of the State, the opposite parties were receiving threats from extremist groups and there were huge protests from the local public, making it impossible for the sub-contractors of the opposite to carry out work in field. It is submitted that hilly terrain, thick jungle and lack of proper road communication were major hurdles in timely completion of work, which were conditions of existence of force majeure and, as such, the opposite parties had requested for a change of site.

12) It is also submitted that there is a huge difference between a normal commercial bank guarantee and a PBG offered towards performance security. Accordingly, it is submitted that the condition precedent for invoking the PBG were not present, for which the passing of the order of ad interim injunction was fully justified by the learned Court below.

13) It is also submitted that as the next date of the case was fixed before the learned trial Court on 04.01.2020, as such, this was a fit and proper case wherein this Court may be pleased to relegate the parties to contest the proceedings of Misc. (Arb.) Case No. 3/2019 on merit.

14) In support of his submissions, the learned counsel for the opposite party has relied on the following cases:-

a. Maula Bux Vs. Union of India, (1969) 2 SCC 554;

b. Hindustan Construction Co. Ltd. Vs. State of Bihar & Ors., (1999) 8 SCC 436;

c. Adani Agri Fresh Ltd. Vs. Mahaboob Sharif & Ors., (2016) 14 SCC 517;

d. Asian Oilfield Services Ltd. Vs. Oil & Natural Gas Corpn. Ltd., FAO No. 18/2016, decided by this Court on 28.04.2016;

e. Maharashtra State Handloom Corpn. Ltd. Vs. Association of Corporations and Apex Societies of Handlooms (ACASH) & Ors., 2004 (77) DRJ 347.

15) The issue of caveat is taken up first. In this connection, the Court is of the considered opinion that any order that is passed by Court without complying with the requirement of sub-section (3) of section 148A CPC does not render the order to be one without jurisdiction. Therefore, the order passed without notice to the caveator remains operative till such order is interfered with or set aside in accordance with law. At least, the counsel for the opposite party cannot be accused of non- service of notice on the counsel for the applicant because the lodgment of the caveat was not brought to their notice.

16) The impugned order is now examined on merit. For the proper appreciation of the matter, it would be necessary to extract the relevant clause 18 of the contract agreement relating to PBG, as well as Clause 19 relating to performance.

18.0 PERFORMANCE SECURITY/ PERFORMANCE BANK GUARANTEE:

18.1 The contractor has furnished to Company a Bank Guarantee No. 0393BGFD005217 dated 02.02.2017 issued by ICICI Bank Limited, 163, H.T. Parekh Marg, Churchgate, Mumbai-400020 for Rs.12,25,00,000/- valid till 30.09.2018 towards performance security. The performance security shall be kept valid for three (3) months beyond the duration of the contract and shall be payable to Company as compensation for any loss resulting from contractor's failure to fulfill obligations under the Contract. In the event of extension of the Contract period, the validity of the bank guarantee shall be suitably extended by the Contractor. The bank guarantee will be discharged by Company not later than 30 days following its expiry.

18.2 In the event, Contractor fails to honor any of the commitments entered into under the contract or in the event of termination of the contract under provisions of Integrity Pact and/ or in respect of any amount due from the Contractor to Company, the Company shall have unconditional option under the guarantee to invoke the performance security and claim the amount from Bank. The bank shall be obliged to pay the amount to the Company on demand.

19.0 PERFORMANCE:

The Contractor shall undertake to perform all services under the contract with reasonable skill and due diligence & care in accordance with sound industry practice to the satisfaction of Company and accept full responsibility for the satisfactory quality and timely completion of such services. Any defect, deficiencies and ambiguity noticed in the Contractor's services shall be promptly remedied by the Contractor, without any extra cost to Company, within a maximum of fifteen (15) days from the date of notice issued by Company advising to improve performance, failing which the contract may be terminated.

17) The learned counsel for the opposite party had sought to distinguish PBG with a normal un-conditional contract of guarantee. In this connection, it would be relevant to quote paragraph 8 and 9 of the case of Hindustan Construction Co. Ltd. (supra):-

"7. Now, a bank guarantee is the common mode of securing payment of money in commercial dealings as the beneficiary, under the guarantee, is entitled to realise the whole of the amount under that guarantee in terms thereof irrespective of any pending dispute between the person on whose behalf the guarantee was given and the beneficiary. In contracts awarded to private individuals by the Government, which involve huge expenditure, as for example, construction contracts, bank guarantees are usually required to be furnished in favour of the Government to secure payments made to the contractor as "advance" from time to time during the course of the contract as also to secure performance of the work entrusted under the contract. Such guarantees are encashable in terms thereof on the lapse of the contractor either in the performance of the work or in paying back to the Government "advance", the guarantee is invoked and the amount is recovered from the Bank. It is for this reason that the Courts are reluctant in granting an injunction against the invocation of bank guarantee, except in the case of fraud, which should be as established fraud, or where irretrievable injury was likely to be caused to the Guarantor. This was the principle laid down by this Court in various decisions. In U. P. Co-operative Federation Ltd. v. Singh Consultants and Engineers Pvt. Ltd., (1988) 1 SCC 174, the law laid down in Bolivinter Oil SA v. Chase Manhattan Bank, (1984) 1 All ER 351 was approved and it was held that an unconditional bank guarantee could be invoked in terms thereof by the person in whose favour the bank guarantee was given and the Courts would not grant any injunction restraining the invocation except in the case of fraud or irretrievable injury. In Svenska Handelsbanken v. Indian Charge Chrome, (1994) 1 SCC 502; Larsen & Toubro Ltd. v. Maharashtra State Electricity Board, (1995) 6 SCC 68; Hindustan Steel Works Construction Ltd. v. G. S. Atwal & Co. (Engineers) (P) Ltd., (1995) 6 SCC 76; National Thermal Power Corporation Ltd. v. Flowmore (P) Ltd., (1995) 4 SCC 515; State of Maharashtra v. National Construction Co., (1996) 1 SCC 735; Hindustan Steel Works Construction Ltd. v. Tarapore & Co., (1996) 5 SCC 34 as also in U.P. State Sugar Corporation v. Sumac International Ltd., (1997) 1 SCC 568, the same principle has been laid down and reiterated.

8. What is important, therefore, is that the bank guarantee should be in unequivocal terms, unconditional and recite that the amount would be paid without demur or objection and irrespective of any dispute that might have cropped up or might have been pending between the beneficiary under the bank guarantee or the person on whose behalf the guarantee was furnished. The terms of the bank guarantee are, therefore, extremely material. Since the bank guarantee represents an independent contract between the bank and the beneficiary, both the parties would be bound by the terms thereof. The invocation, therefore, will have to be in accordance with the terms of the bank guarantee, or else, the invocation itself would be bad ."

18) While granting ad interim injunction, had expressed its view that it is true that the bank guarantee, if invoked, will cause irreparable loss despite the fact that the loss can be compensated, as it relates to loss measurable in terms of money. However, the learned Court below had observed that the opposite party had travelled into the interiors of Manipur with workforce including labourers and artisans, skilled and unskilled workers and the opposite party had experienced incident of kidnapping of its officials. The learned Court was of the view that when reputation of the opposite party will be tarnished and then they would be without work due to the termination of the contract, the opposite party will suffer irreparable loss. The Court finds that in making such observations, the learned Court below failed to consider the fact that it was the very essence of the contract agreement that the opposite party shall venture into interior of Manipur containing hilly terrain with bad road condition and topography to collect 2D seismic data, thus, the act of traveling in the interior of Manipur with men and material was an integral part of contract, for which it is projected in the accompanying memo of appeal that the opposite party had raised an invoice for a sum of Rs.16,89,64,523/- vide letter dated 01.11.2017, but the learned Court below failed to appreciate that the period of completion of the entire work was 24.05.2019 and by that time only a miniscule portion of the contract work was completed. In respect of public protests, ransom demand and kidnapping of officials is concerned, there is a possibility that the force majeure condition might be prevailing, but from the materials available on record, the learned counsel for the opposite party has not been able to disclose that the force majeure clause was invoked by seeking termination of contract. Thus, it is presumed that in terms of Clause 1.0 of Section- II of the Contract Agreement, the opposite party had conducted the reconnaissance of the area and was carrying out the work inspite of the prevailing condition. It is also seen that the learned Court did not cite any reason to show that how by grant of ad interim injunction restraining the invoking of the bank guarantee would help the opposite party protection from terminating the contract, which would purportedly lead to the opposite party to be without work. Thus, it appears that the finding of the learned Court below, based on which the said learned Court had discussed the principle of "irreparable loss and injury" is not sustainable under the well established Wednesbury's principle of reasonableness to the effect that if one visits interior places, and that if anyone is expecting termination of contract due to non- performance, or that if unconditional PBG is invoked, he would suffer irreparable loss and injury and the balance of convenience will tilt in his favour, and that such person would be entitled to an order of ad interim injunction against invoking of bank guarantee by the adversarial/ other side.

19) It appears that the learned Court below visited the matter of grant of ad interim on consideration if bank guarantee is invoked, the reputation of the opposite party would suffer. In this regard, upon reading clause 18.0, 18.1, 18.2 and 19 of the contract agreement as quoted above, leaves room for no doubt that the opposite party had completion 2D seismic data collection of only 3.240 to 4.0 LKM out of 870 LKM (line kilo- metre), which is about 0.46% of contract work and by no means, the Court can be persuaded to accept that the opposite party had shown satisfactory performance of the contract agreement. Thus, the only issue is whether force majeure condition, although not specifically invoked was the cause of non- performance of the contract work, which may be a issue required to be tried and/or gone into, but merely by inference, no ad interim injunction can be granted to restrain the applicant from invoking the PBG. However, the learned Court, while discussing balance of convenience was of the view that the opposite party herein had to overcome many hurdles and could not complete the work within stipulated time, which, in the considered opinion of the Court, amounts to granting premium or bonanza for failure to perform the work under the contract agreement. It is further seen that in Clause- 1 of Section- II of the contract agreement, the applicant had advised the opposite party to have a thorough reconnaissance of the area, if required to know the terrain and get themselves fully acquainted with details of surface topographic features, fair weather slot, weather conditions, working culture in the area, socio- political environment, security aspects and law of the land, further providing that the same would help them to judiciously select proper inputs for successful execution of the project. Moreover, in Section- II, under Clause- 3.0, 3.1, 3.2, 3.3 and 3.4, the geology of the area was provided and under Clause- 4.0 of Section- II, it was provided that the objective of the proposed 2D Seismic Survey in the un-appraised areas of North East India covering parts of Manipur was (i) to identify strati- structural projects in the area, and (ii) for imaging of tertiary sediments and fractured basement prospects. Thus, this was not a project for actual petroleum exploration and/or extraction of petroleum products.

20) The learned counsel for the opposite party had submitted that due to prevailing conditions, the opposite party had requested for change of site, but the said proposition does not appeal to the Court because there is no clause in the contract agreement, by virtue of which one can be permitted to bid for allotment of work in one area and then seek to work in another area.

21) It is seen that in the memo of appeal, the applicant has annexed a copy of caveat, being Misc. (Caveat) No. 30/2019, and in paragraphs 4 and 5 thereof, it has been specifically mentioned that the applicant had invoked the encashment of the said PGB by letter No. A/Cs/54/INV/3135/SAP-7073/ 2019-20 dated 26.11.2019. Thus, on 27.11.2019, the date when the ad interim injunction was granted in Misc. Arb. Case No. 3/2019, by restraining the applicant from invoking the relevant clause of contract invoking security/ performance bank guarantee dated 17.09.2018, the applicant had already invoked the PBG.

22) The learned counsel for the opposite parties had relied on the case citations, referred herein before. The said cases are discussed herein below:-

a. Maula Bux (supra):

It was submitted that as the applicant was seeking to invoke payment under PBG, it was incumbent upon them to quantify their loss. In this regard, it is submitted that although the contract period was over on 24.05.2019, the applicant has not quantified their loss till date. In this regard, the above referred case was cited to bring home the point that when loss in terms of money can be determined, the party claiming compensation must prove loss suffered by him. However, on a perusal of the said case, it appears that the facts of the said case is distinguishable from the facts of the present case in hand because in the case of Maula Bux (supra), the Supreme Court of India was dealing with Section 74 of the Contract Act, 1872, which deals within the measure of damages (i) where contract names a sum to be paid in case of breach, and (ii) where the contract contains any other stipulation by way of penalty and in the said case, the plaintiff had commenced a suit against the Union of India for a decree of Rs.20,000/-, being the amount deposited with the Union of India for due performance of the contract, and on facts, it was held that although the plaintiff was guilty of breach of contract, but it was decreed that the Union of India would pay to the plaintiff a sum of Rs.18,500/- with interest at the rate of 3% from the date of suit till payment. However, in the present case in hand, the subject matter is an unconditional PBG, which could have been invoked under the terms of the contract agreement.

b. Hindustan Construction Co. Ltd. (supra):

In the said case it has been held that if bank guarantee is conditional, the beneficiary cannot have unfettered right to invoke the guarantee and Court can issue injunction against invocation of bank guarantee. On facts of the case, the Supreme Court of India had held that the guarantee was not unequivocal or unconditional and, as such, the trial Court was held to be justified in granting injunction. However, in the present case in hand, the reading of the contents of PBG leaves no room for any doubt that the guarantee was unconditional. Moreover, even the learned Court below had not given its prima facie finding to the effect that the PBG was conditional. Thus, in light of Clause 18.0, 18.1, 18.02 and 19.0 of Section- I of the contract agreement, the Court is of the considered opinion that the PBG was unconditional, as such, the cited case is of no help to the opposite party.

c. Adani Agri Fresh Ltd. (supra):

The said cited case also does not appear to help the opposite party in any manner because, in the said case, the Supreme Court of India had held that the Courts below were not justified to grant injunction of an unconditional bank guarantee. In this regard, paragraph 14 thereof is quoted below:-

"13. In deciding the present controversy, we will therefore have to adopt the principles laid down by this Court in U.P. Cooperative Federation Ltd. vs. Singh Consultants and Engineers (P) Ltd. (1988) 1 SCC 174, and in Vinitec Electronics Private Ltd. vs. HCL Infosystems Ltd. (2008) 1 SCC 544. Having given our thoughtful consideration to the law laid down by this Court, in respect of grant/refusal of an injunction of an unconditional bank guarantee, and keeping in mind the terms and conditions, more particularly of the contractual conditions extracted and narrated above, we are satisfied that the courts below were not justified in injuncting the invocation of the three bank guarantees, executed by the State Bank of Mysore, at the instance of M/s RMSFC. We accordingly hereby direct respondent Nos.2 and 3 - the State Bank of Mysore to honour the same forthwith ."

d. Asian Oilfield Services Ltd. (supra):

In the said case, no ratio was laid down by this Court in the matter of grant of ad- interim injunction. Moreover, no case law in respect of ad interim injunction was appreciated by this Court. This Court had merely relegated the parties to approach the learned trial Court without entering into the merit of the case. Therefore, the said case does not help the opposite party in any manner.

e. Maharashtra State Handloom Corpn. Ltd. (supra):

In the said case, supplies was commenced within the time of 30 days, but the respondents had sent a request to discontinue supplies as it had some problem with the Govt. of Bihar, yet supplies was made to the extent of advance paid by the respondent, as such, it was held that the respondent cannot take advantage of its own wrong and that in view of the stand of the petitioner, it did not invoke the arbitration clause, as such, it was held that to say that there was no manifest intention on the part of the petitioner to take recourse to the Arbitral proceedings is neither correct nor acceptable. It was also held that the letter of invocation suffers from the vice of non-disclosure of cause of action apart from being not in terms of Bank Guarantee, as such, by way of interim injunction the respondents were restrained from invoking the Bank Guarantee till the conclusion of arbitral proceedings in case these are initiated by any of the parties. Thus, the present case in hand is distinguishable on facts and in law, for which the ratio laid down in the said cited case does not help the opposite party in any way.

23) The Court is conscious of the well settled law to the effect that an appellate court will not interfere when lower court has not exercised its discretion arbitrarily or perversely. If one needs any authority on the point, the case of Wander Ltd. V. Antox India Ltd., (1990) Supp SCC 727, may be referred to. In view of the discussions above, it appears that while granting ad interim injunction, to restrain invoking of the PBG, the learned Court below had failed to appreciate the well settled law that a bank guarantee which is payable on demand implies that the bank is liable to pay as and when a demand is made upon the bank by the beneficiary and that the bank is not concerned with any inter se disputes between the beneficiary and the person at whose instance the bank had issued the bank guarantee. If one needs any authority on the point, the case of National Thermal Power Corpn. Ltd. (supra) may be referred to. Moreover, in the case of Hindustan Steel Workers Construction Ltd. (supra), it has been held that in the case of confirmed Bank Guarantees/Irrevocable Letters of Credit, the Court will not interfere with the same unless there is fraud and irretrievable damages are involved in the case and fraud has to be an established fraud and that in respect of the reasoning of the learned single Judge that before invoking the Performance Guarantee the appellant should assess the quantum of loss and damages and mention the ascertained figure, cannot be put forward to restrain the appellant from invoking the unconditional Guarantee, the Supreme Court of India had held that the learned Judge acted illegally and without jurisdiction in affirming the interim order of injunction against the appellant restraining it from enforcing the bank guarantees till disposal of the arbitration proceedings, as such, the impugned order passed by the learned single Judge was set aside and the appeal was allowed. Thus, in light of the said two herein above cited cases, the Court has no hesitation to hold that the learned Court below had acted arbitrarily by ignoring the well settled law against grant of injunct

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ion in the matter of invoking of bank guarantee. The learned Court below had totally failed to appreciate that the opposite party had been awarded the contract agreement after being a successful tenderer and that the opposite party had entered into a voluminous contract agreement on 15.03.2017, for " 2D Seismic Date Acquisition of 870 LKM covering parts of Manipur from unappraised areas of North East India", to be completed within a period of 14 months and that PBG was offered by the opposite party as provided for in the said agreement, as such, there is no way to hold that the applicant was guilty of fraud committed either against the RBL Bank Limited or against the opposite party herein. Moreover, there is no prima facie finding by the learned trial Court that how and why the opposite party would suffer irretrievable injustice if PBG of Rs.12,25,00,000/- is invoked, when the contract value was INR 142,86,98,954/- as per Schedule-IV relating to Schedule of Rates as contained in the contract agreement dated 15.03.2017, when it is the specific submission by the learned counsel for the opposite party that arbitration clause of the contract agreement has been invoked. 24) The learned counsel for the opposite party had submitted that if any order is passed to stay the operation of the order impugned herein, not only the connected appeal, but the arbitration petition filed before the learned Court below would be rendered infructuous. In this regard, it is the unhesitant opinion of the Court that the impugned order of ad interim injunction to restrain the applicant from invoking the PBG was passed by the learned trial Court without applying its judicial mind on the well settled law that ad interim injunction against invoking of PBG can be granted on existence of (i) fraud, and (ii) party would suffer irretrievable injustice. Thus, the exception to the case of Wander Ltd. (supra) is found to be present in the case in hand as the impugned order of injunction is found to be arbitrary and contrary to the ratio laid down in the case of (i) National Thermal Power Corporation Ltd. (supra), (ii) Hindustan Steel Workers Construction Ltd. (supra) , and (iii) Andhra Pradesh Pollution Control Board (supra) . Moreover, the impugned order is also found to be perverse because the learned Court below had not recorded its satisfaction that the invoking of the PBG guarantee was not in terms of any particular clause of the contract agreement. 25) In view of the discussions above, this is found to be a fit and proper case wherein the impugned order is liable to be stayed by invoking power and jurisdiction under Order XLI Rule 5 CPC, moreso, when the connected appeal filed by the applicant has also been admitted for hearing. 26) This application for stay stands disposed of. 27) It is clarified that this decision and the observations made herein are merely for the purpose of deciding this application for stay and, as such, the same shall not be construed to be the opinion of the Court touching upon the merit of the accompanying appeal or on the merit of the dispute, if any, raised before the learned Arbitral Tribunal. Thus, this order and observations made herein shall prejudice none of the parties herein (i) in course of hearing of the connected appeal, (ii) before the learned Court below in connection with Misc. Arb. Case No.3/2019, and/or (iii) before the Arbitral Tribunal.
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