ORAL JUDGMENT:----This is an appeal preferred by original Respondents to challenge Order dated January 27th, 1993 passed by the Learned Single Judge in Arbitration Petition No. 45 of 1993. By the impugned order, the Learned Single Judge made the Petition absolute and pending arbitration, restrained the Appellants herein from encashing or receiving any amount under the Bank Guarantees mentioned in Exhibit `F' thereto. The facts which gave rise to the filing of the said Petition are as follows.

2. In or about the year 1987, the Appellants had floated a tender notice inviting tenders in respect of construction of an underground tunnel which was part of the Bombay III Water Supply Project. Along with their letter dated 16th May 1988, the Respondents had submitted their tender for construction of underground tunnel between Dr. E. Moses Road and Ruparel College, Bombay, a part of the said project which was accepted by the Appellants and a contract bearing No. 2769-IN/1750-IN/W/20 (for short `the said Contract') was entered into by and between the Appellants and Respondents in respect thereof on the terms and conditions mentioned therein including the general conditions of Contract. Under the terms of the said Contract, the Respondents were required to deposit with the Appellants the sum of Rs. 33,06,948/- as security. In respect of the said amount, the Respondents furnished a bank guarantee of Dena Bank, being the Bank Guarantee No. IPB/608/89 dated 15th September 1989 to the Appellants. As per Condition No. 83(2)(d) of the General Conditions of Contract, the Respondents were entitled to advance of Rs. 66,13,895/- being 4% of the contract sum for being utilized for construction work only against bank guarantees. Accordingly, the Respondents furnished six bank guarantees of Dena Bank bearing Nos. IFB/349/90, IFB/350/90, IFB/351/90, IFB/352/90, IFB/353/90 and IFB/354/90 all dated 6th June 1990 for Rs. 10 lacs each and a bank guarantee bearing No. IFB/355/90 dated 8th June 1990 for Rs. 13,895/- to the Appellants. On or about 16th October 1989, the Respondents commenced the work under the said Contract. However, disputes and differences arose between the Appellants and Respondents including with regard to threatened termination/cancellation of the said Contract by the Appellants. The Respondents filed an arbitration suit being Suit bearing No. 2984 of 1992 under section 20 of The Arbitration Act, 1940 (for short `the Act') in this Court for filing the arbitration agreement in this Court and for an order of reference to arbitration. By consent an order being Order dated 16th October 1992 was passed in the said suit by which all disputes by and between the Appellants and the Respondents including and pertaining to and arising out of the said Contract including the dispute regarding validity of termination thereof were referred to the sole arbitration of Mr. Justice D.M. Rege (Retired). On 20th November 1992, a meeting before the Arbitrator was held whereat directions including for filing respective claims and replies were given to the Appellants and Respondents. On 5th December 1992, the Appellants addressed a letter to the Respondents, inter alia, terminating the said Contract. By their letter dated 1st January 1993, addressed to the Respondents, the Appellants demanded payment of Rs. 1,02,64,728.88 for refund of balance advance and interest calculated upto 15th January 1993 and communicated to the Respondents that all the said bank guarantees furnished to them would be encashed if the payment of the said amount would not be made to the Appellants within the time specified therein. In view of the threatened action of the Appellants to invoke the said bank guarantees, pending the arbitration proceedings, the Respondents filed the Arbitration Petition No. 45 of 1993 under section 41 of the Act to restrain the Appellants from encashing or receiving any amount under the said bank guarantees. The impugned order was passed

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