The main legal point established in the judgment is that courts should be slow in granting injunctions to restrain the realization of unconditional bank guarantees.

1. Mr. D.J. Khambatta, learned Senior Counsel appearing on behalf of the respondent states that respondent would proceed on the basis of the denial. The statement is accepted. By consent of parties taken up for final hearing at the admission stage.

2. By this petition filed under Section 9 of the Arbitration and Conciliation Act, 1996, petitioner seeks injunction against respondent from encashing Performance Bank Guarantee of Rs. 15.95 crores issued by HSBC Bank on their behalf and also seeks return of the said Performance Bank Guarantee. Some of the relevant facts for the purpose of deciding this petition are setout hereinafter:-

i) In July 2010, by a tender notice Sardar Sarovar Narmada Nigam Limited invited tenders for the work of constructing Canal Earthwork, Canal Lining, Structures and Services Roads of the distributaries and minors of Limbdi Canal including Maintenance and Operation for a period of five years. The respondent submitted their bid and were awarded the said contract by issuing a Letter of Acceptance cum Work Order on 20th April, 2011 by the said Sardar Sarovar Narmada Nigam Limited. The said Sardar Sarovar Narmada Nigam Limited thereafter executed a contract in favour of the respondent on 26th April, 2011. On 9th August, 2011 out of the said work awarded to the respondent by the said Sardar Sarovar Narmada Nigam Limited the respondent awarded a portion of the said work i.e. for the distributaries LD-1 to LD-12 and minors MO-01 to MO-03 to the petitioners by Work Order dated 9th August, 2011 on the terms and conditions recorded therein. Pursuant to the said award of the work in favour of the petitioner on 19th August, 2011 the petitioner executed the Performance Bank Guarantee in the sum of Rs. 13.15 crores. The amount of bank guarantee was subsequently enhanced to 15.95 crores without any change in the terms and conditions on 22nd September, 2011.

ii) Clause 25.2 of the Work Order issued by the respondent to the petitioner provided that “If Employer i.e. Sardar Sarovar Narmada Nigam Limited terminates the original contract with the Contractor i.e. the respondent herein, subsequently the contract with the sub-contractor will be automatically terminated.

iii) On 27th February, 2012 the said Sardar Sarovar Narmada Nigam Limited issued a notice proposing termination of contract between them and the respondent. On the apprehension of the petitioner that in view of the proposed action on the part of the said Sardar Sarovar Narmada Nigam Limited to terminate the contract, petitioner filed a petition in this Court under Section 9 of the Arbitration and Conciliation Act, 1996 for seeking similar interim measures. By an order dated 4th May, 2012 passed by this Court, the said Arbitration Petition (L) No.606 of 2012 filed by the petitioner came to be dismissed. It is not in dispute that the respondent did not invoke and/or encash the said bank guarantee inspite of order dated 4.5.2012 passed by this Court dismissing the Arbitration Petition filed by the Petitioner.

iv) On 10th May, 2012 the said Sardar Sarovar Narmada Nigam Limited terminated the contract between them and the respondent. It is the case of the petitioner that inspite of the said termination of the contract between the Sardar Sarovar Narmada Nigam Limited and the respondent, petitioner continued to mobilize the resources on site and demobilized only in the month of February, 2013 and thereafter submitted final bill for payment to the respondent. Dr. Sathe, the learned senior counsel appearing on behalf of the petitioner invited my attention to the order passed by this Court rejecting the earlier petition filed by the petitioner under Section 9. The learned senior counsel submits that when the said order was passed by this Court, there was no termination of contract by the said Sardar Sarovar Narmada Nigam Limited. In view of the termination subsequently by the Sardar Sarovar Narmada Nigam Limited on 10.5.2012 the petitioner apprehends that