( 1 ) LEAVE granted.

( 2 ) THE appellant, petitioner in arbitration petition Lodg. No. 240/94 in the High Court of Judicature at Bombay, initiated under Section 41 of the Arbitration Act, has filed this appeal by special leave against the order passed by N. D. Vyas, J. dated 20-10-1994. The appellants prayer for injunction against the first respondent (Maharashtra State Electricity Board) from invoking or claiming or demanding or releasing any amount whatsoever under certain bank guarantees given by the respondent Nos. 2 to 5 was dismissed by the aforesaid order by the learned Judge. Respondent Nos. 1 to 5 in the arbitration petition Lodg. No. 240/94 as also in this appeal are - (1) Maharashtra State Electricity Board, Bombay; (2) Standard Chartered Bank, branch Bombay; (3) Grindlays Bank p. l. c. , branch Bombay; (4) City Bank, N. A. branch Bombay; and (5) Bank of Baroda, branch Bombay.

( 3 ) THE first respondent invited tenders for supply and commission of Coal Handling Plant. The appellants tender, which was accepted, culminated in a contract, executed between the parties, dated 9-3-1989. The value of the contract was Rs. 61,11,200. 00. The appellant furnished the following five Bank Guarantees;

THE completion of the Plant seems to have been delayed. The parties are blaming each other for the delay. After taking the trial and performance test, the Plant was taken over by the first respondent on 10-6-1994. On the same day a take over certificate was also issued. It is seen that earlier on 29-3-1994, the appellant lodged its claim. The first respondent denied the claims so made. They did not make any counter-claim then. On 4-6-1994, the appellant invoked the arbitration clause as per the contract. A meeting of the Arbitrators took place on 14-9-1994. The Arbitrators gave certain directions. In pursuance thereto the appellant filed its claim on 30-9-1994. The Arbitrators gave time to the first respondent to file their counter-claim on or before 30-11-1994. In the meanwhile on 1-10-1994 the first respondent invoked all the Bank Guarantees except Guarantee No. 2 mentioned hereinabove (Performance Guarantee ). The Court passed an order directing the status quo to be maintained on 17-10-1994. Appellant filed arbitration petition Lodg. No. 240/94 and contended that the Bank Guarantees have been fraudulently and dishonestly invoked. Regarding Guarantees in respect of advance and liquidated damages, it was further alleged that they were invoked after the date of expiry of the said Guarantees. Vyas, J. rejected the above pleas and declined to grant the interim relief as prayed for by the appellant. As agreed to by counsel on both sides, the interim order was made the order in the main petition itself. Arbitration Petition Lodg. No. 240/94 was dismissed. Hence this appeal by special leave.

( 4 ) BANK of Baroda, Respondent No. 573/309security against liquidated damage6,13,40,97826-9-94

( 5 ) STANDARD Chartered Bank, Respondent No. 2529/93/380partial release of retention money1,12,00,00031-12-94

( 6 ) IN the order appealed against the learned Judge has referred to the decisions aforesaid and has held thus:-

". . . Only in the event of fraud or irretrievable injustice, the Court would be entitled to interfere in a transaction involving a bank guarantee and under no other circumstances. The petitioners have failed on both these counts".

(PAPER Book - Vol. I. p. 7)

( 7 ) APPELLANTs counsel contended that the Bank Guarantees have been fraudulently and dishonestly invoked by the first respondent. It was submitted that so far as the Bank Guarantee towards advance was concerned, no amount remains as balance towards advance and in fact a sum of Rs. 27,000. 00 is recoverable from the first respondent. With regard to the two Bank Guarantees, dealing with retention money (Item Nos. 3 and 5) it was contended that the trial was taken by the first respondent after which performance test was also done and thereafter the take over was completed and so, on th