JUDGMENT :

Moushumi Bhattacharya, J.

1. The applicant, Yes Bank, seeks vacating of an order of injunction restraining Yes Bank from honouring a counter-guarantee to a performance guarantee issued in favour of the petitioner/supplier KSE Electricals. The injunction was passed in the present Arbitration Petition filed under Section 9 of The Arbitration and Conciliation Act, 1996, by KSE Electricals, for a restraint on the respondent no.1 purchaser, the Project Director, Bangladesh Rural Electrification Board, from realising a sum of USD 331,500 under the Counter Guarantee issued by Yes Bank through its correspondent bank being Eastern Bank, Dhaka. Yes Bank is the second respondent in the Arbitration Petition.

2. The order of injunction dated 7th May, 2021, was passed ex parte on KSE’s application, restraining the respondent no.1 from invoking the bank guarantee dated 1st April 2019 in terms of a letter of invocation received by KSE on 6th May 2021. The order was communicated to Yes Bank and to Eastern Bank. The order of 7th May, 2021 was modified by an order of 15th June, 2021 at the instance of Yes Bank recording the fact of the counter guarantee.

3. The present application of Yes Bank is pursuant to a communication of Eastern Bank, Dhaka to the effect that payment of USD 331,500 was made by Eastern Bank to the Bangladesh Rural Electrification Board (respondent no.1) on 29th June, 2021 in response to the said respondent invoking the bank guarantee. Yes Bank feels that it is therefore obligated to honour its counter guarantee and replenish Eastern Bank to the extent of the said amount. The present application has been filed for clearing the impediment of the orders of injunction and enabling Yes Bank to pay USD 331,500 to Eastern Bank.

A brief outline of the facts :

4. KSE (petitioner in the section 9 application) entered into a contract with Bangladesh Rural Electrification Board (respondent no1) for supply of line hardware for a project undertaken by the respondent no1. KSE submitted a performance guarantee in terms of the contract issued by Eastern Bank covering 10% of the contract value. Yes Bank gave a counter guarantee to Eastern Bank for and on behalf of KSE to secure Eastern Bank, Dhaka. KSE filed the application under section 9 of the 1996 Act upon receipt of a letter dated 7th April, 2021 from the respondent no.1 calling upon the petitioner KSE to deposit USD 10,385 and BDT 20,06,754 with a threat of invocation of the performance guarantee. The petitioner paid the aforesaid amount to the respondent no.1. The case of KSE was that the respondent no.1 wrongfully withheld 10% of the contract value as retention amount and refused to release the performance guarantee. The urgency shown is also on account of a notice from Eastern Bank informing KSE of a request made by the respondent no.1 to Eastern Bank to encash the bank guarantee.

Contentions of the applicant -Yes Bank – who seeks vacating of the order of injunction :

5. According to Ms. Suchishmita Ghosh, learned counsel appearing for Yes Bank, the counter guarantee issued by the applicant is irrevocable in nature and is a separate contract and that the injunction should be vacated since Eastern Bank has already made payment to the respondent no.1 upon invocation of the bank guarantee. It is further submitted that the bank guarantee is governed by the ICC Uniform Rules for Demand Guarantees (URDG-758), 2010 which provides that the governing law shall be the law of the location of the guarantor’s branch or office that issued the guarantee, which is Bangladesh in the present case. Moreover, the contract between KSE and the respondent no.1 shows that the parties had chosen the substantive, arbitration and procedural laws to be that of Bangladesh.

Contentions of the petitioner – KSE – in whose favour the order of injunction was passed :

6. Mr Sabyasachi Chowdhury, learned Senior Counsel and Mr. Rajarshi Dutta, learned counsel for KSE submit that the proceeding is an international comme