IMPORTANT POINT
The independence of bank guarantees, the discretion of bank managers in invoking them, and the jurisdiction of the court to implement its own orders and the remedies available to the petitioners.

JUDGMENT :

Sabyasachi Bhattacharyya, J.

1. The petitioners came out successful in a tender process floated by the respondent no. 2 and entered into a work agreement. Pursuant to such agreement, three bank guarantees were executed in favour of respondent no. 2 by the petitioners. Subsequently a dispute arose between the petitioners and the respondent no. 2 and the said respondent terminated the contract with the petitioners on September 30, 2023. One of the bank guarantees bearing no. BG O5172ILG000321for Rs. 1,06,46,000/- was invoked and encashed by respondent no. 2 by a letter dated September 25, 2023 from the respondent no. 5, that is the Branch Manager of the Punjab National Bank (PNB), Broad Street Branch.

2. Two other bank guarantees remained to be encashed. The petitioners approached the Commercial Court at Rajarhat under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as, “the 1996 Act”) giving rise to MISC. CASE (ARB) No. 76 of 2023, inter alia praying for injunction restraining the respondents from taking any steps and/or in furtherance of any notice for invocation of bank guarantees bearing no. BG O51721LG000621 and BG 045720ILPER0008. The petitioners also sought an order for setting apart a sum of Rs. 1,06,46,000/- which had already been received by the respondent no. 1 towards encashment of the earlier bank guarantee. On October 4, 2023, the Commercial Court passed an ad interim injunction in terms of prayer (c) till October 18, 2023. Prayer (c), it is to be noted, pertained to the prayer restraining the respondents from taking any steps and/or in furtherance of any notice for invocation of the remaining two bank guarantees. However, no order was passed regarding setting apart the amount already encashed in respect of the third.

3. According to the petitioners, the order was communicated on the same day to respondent no. 4 and 5, the Branch Managers of the Park Street and Broad Street Branches of the PNB respectively. Whereas respondent no. 5, the Manager of the Broad Street Branch, despite the bank guarantee being already invoked, reversed the process by cancelling the demand draft issued to respondent no. 2 and returned the amount of Rs. 5,64,00,000/- with regard to BG O51721LG000621, respondent no. 4, the Park Street Branch Manager, did not do so and proceeded with invocation of BG 045720ILPER0008 for Rs. 5,56,52,128/-.

4. It is verbally submitted by learned counsel for the petitioners that although an application was filed under Order XXXIX Rule 2A of the Code of Civil Procedure before the Court taking up the application under Section 9 of the 1996 Act, the same was dropped since, in the meantime, the matter was referred to arbitration.

5. The writ petitioners claim remittance of the amount of Rs. 5,56,52,128/- and crediting of the said amount to their account and a similar prayer regarding the amount previously encashed after invocation by respondent no. 5.

6. Learned counsel for the petitioners argues that despite having knowledge of the order the Commercial Court, the respondent no. 4 deliberately proceeded with invocation of the Bank Guarantee. It is argued that on the ground of parity, since the respondent no. 5, in similar circumstances, reversed the process and re-credited the amount to the account of the petitioners, similar action ought to have been taken by the respondent no. 4.

7. Such invocation at the behest of respondent no. 4 was in blatant violation of the order passed by the Commercial Court under Section 9 and, as such, a direction be given to respondent no. 4 to reverse the process.

8. It is argued that such invocation being in the teeth of the order of the Commercial Court, the same was illegal and, thus, ought to be reversed in any event.

9. It is argued that since arbitration has already commenced before the Tribunal, the remedy of implementation of the order passed under Section 9 or punishment of the respondent no. 2 for non-compliance of the same before the Court