Bank guarantees can be invoked only if the invocation itself is legal, and the party seeking injunction must show that allowing encashment would result in irretrievable harm or injustice.

ORDER :

Petitioners filed the arbitration application under Section 9 of the Arbitration and Conciliation Act, 1996 (for short “Act 1996”) seeking to –

(a) restrain the 1st respondent during the pendency or until conclusion of the Arbitral proceedings bearing ICC Case No.26939/HTG by way of temporary order and injunction from encashing/invoking or taking any precepitative steps or receiving any monies under the (i) Bank Guarantee bearing No.0305ILG014516 dated 15.12.2016 for an amount of Euro 1663717 (Euro One Million Six Hundred Sixty Three Thousand Seven Hundred Seventeen) issued by Punjab National Bank on behalf of petitioner No.1 and (ii) Bank Guarantee bearing No.0305ILG014616 dated 15.12.2016 for an amount of Euro 1663717 (Euro One Million Six Hundred Sixty Three Thousand Seven Hundred Seventeen) issued by Punjab National Bank on behalf of petitioner No.1;

(b) direct the 2nd respondent not to release any amount to 1st respondent against the bank guarantees referred above;

(c) Direct the Respondent No.1 to deposit the amount encashed by it against (i) Bank Guarantee bearing no.4044IPEBG090051 dated April 25, 2009 for an amount of INR 11678824 (Rupees One Crore Sixteen Lakh Seventy Eight Thousand Eight Hundred Twenty Four) issued by Bank of India on behalf of Petitioner No.3, (ii) Bank Guarantee bearing no.4044IPEBG140046 dated September 15, 2014 for an amount of INR 206781 (Rupees Two Lakh Six Thousand Seven Eighty One) issued by Bank of India on behalf of Petitioner No.3, (iii) Bank Guarantee bearing no.4044IPEBG140047 dated September 15, 2014 for an amount of INR 2699681 (Rupees Twenty Six Lakh Ninety Nine Thousand Six Hundred Eighty One) issued by Bank of India on behalf of Petitioner No.3; and (iv) Bank Guarantee bearing no.4044IPEBG140048 dated September 15, 2014 for an amount of INR 8772363 (Rupees Eighty Seven Lakh Seventy Two Thousand Three Hundred Sixty Three) issued by Bank of India on behalf of Petitioner No.3; (v) Bank Guarantee bearing no.2451NDCG00030621 dated September 11, 2020 for an amount of INR 83017139 (Rupees Eight Crore Thirty Lakh Seventeen Thousand One Hundred Thirty Nine) issued by ICICI Bank; (vi) Bank Guarantee bearing no.11640100014587 dated October 29, 2021 for an amount of INR 83017139 (Rupees Eight Crore Thirty Lakh Seventeen Thousand One Hundred Thirty Nine) issued by Axis Bank on behalf of Petitioner No.2 with the Arbitral Tribunal or this Hon’ble Court till the final date arbitration proceedings between the Petitioners and the Respondent No.1.

2. (a) 1st Petitioner is a company incorporated under the laws of Italy, represented by its authorized representative; 2nd Petitioner is a company incorporated under the laws of India, represented by its authorized representative and 3rd Petitioner is also a company incorporated under the laws of India, represented by its authorized representative.

(b) 1st Respondent is a company existing under the laws of India and incorporated under the Companies Act, 1956 (for short “Act 1956”) having its registered officer at Administrative Building, Visakhapatnam Steel Plant, Visakhapatnam. 1st Respondent is a public sector enterprise. It intends to build and bring a regular operation Structural Mill under its 6.3 MTPA Expansion Project (for short “the Project”) at Visakhapatnam Steel Plant. 2nd Respondent is a public sector bank and issued bank guarantees on behalf of 1st petitioner.

(c) 1st Respondent having decided to building and bring into regular operation Structural Mill under its 6.3 MTPA Expansion Project, invited bids for “Imported design and engineering for structural mill as per the agreed scope of work …”, “Manufacture and supply of imported plant, machinery & equipment for structural mill including refractories, commissioning Spares and Insurance Spares as per the agreed scope of work …”, “Foreign supervision of erection, start up, testing, commissioning, PG Tests …”.

(d) Petitioners formed a consortium and submitted their bid. Petitioners and 1st respon