( 1 ) THIS is a petition under Section 41 read with Schedule B of the Arbitration Act, 1940 (for short "the Act") seeking injunction against invoking and encashing of a Bank Guarantee.

( 2 ) THE respondent had awarded to the petitioner the work of construction of 52 Nos. Type d residences for IFFCO Township at Aonla, near Bareilly (U. P.) by means of letter No. 9/6/142 dated 10. 10. 1985 followed by a formal contract executed on 16. 12. 1985. The total cost of the project was Rs. 1,93,21,192. 40 and the work was to be completed within a period of 15 months. The contract provided for furnishing by the petitioner of performance Bank Guarantee equivalent to 5% of the value of the work valid for a period of 12 months till after the completion of the work. Bank Guarantee No. 23/87 dated 22. 12. 1987 in the sum of Rs. 11,50,000. 00 of State Bank of Indore, Gandhidham Branch was furnished. The case of the petitioner is that they completed the work to the satisfaction of the respondent and a completion certificate dated 16. 9. 1987 (Annexure "d") was issued by the respondent and no complaint about the work was made either during construction or after 12 months of its completion or even till the filing of the petition. On the other hand, their final bill has been withheld and not settled and dues amounting to about Rs. 1. 5 crores (as per details given) are due from the respondent. They had also sought the disputes being referred to arbitration. It is alleged that although the work was completed in time and maintenance period of 12 months having expired on 20. 10. 1988, the validity of the Bank Guarantee has expired, however, by withholding the final bill, the respondent has been inducing the petitioner to get the Bank Guarantee extended from time-to-time and under such undue influence it was extended till 5. 12. 1992; and thereafter the petitioner was not willing to extend it further, and the respondent wants to invoke the same illegally. The petition was filed on 3. 12. 1992. Interim injunction against invocation of the Bank Guarantee was granted on 7. 12. 1992 and the Bank Guarantee has been kept alive.

( 3 ) THE respondent in the reply has contested the claim of the petitioner. It is, however, not disputed that the work was completed by the petitioner satisfactorily and also that no defect was pointed out during the maintenance period of 12 months afterwards. It is pleaded that certain other construction works were also awarded to the petitioner and on 16th December, 1989, inter alia the petitioner had agreed that whilst the matters concerning various other work/contract were pending, the petitioner would extend the aforesaid Bank Guarantee and,another guarantee for Rs. 7. 74 lakhs available with IFFCO would be discharged. The Bank Guarantee was extended upto 5th December, 1992 which was being extended pending settlement and resolution of other works and as such it is not open to the petitioner to raise objection. The alleged disputes or claim of Rs. 1. 50 crores raised by the petitioner is denied. The encashment of the Bank Guarantee is valid and proper since the petitioner had obtained discharge of another Bank Guarantee agreeing to keep this Bank Guarantee extended. And this Bank Guarantee is encashable for satisfaction of the amounts that may be due on final settlement of claims for other works. .

( 4 ) PETITIONER in its rejoinder affidavit has reiterated its case, whereas no counter affidavit nor any other relevant documents have been placed on. record by the respondent.

( 5 ) I have heard learned Counsel for the parties. Learned Counsel for the petitioner has contended that the Bank Guarantee stood exhausted and is liable to be discharged as no liability has been raised against it and on the other hand by wrongfully withholding the final bill/dues of the petitioner, the respondent has been inducing the petitioner to extend the Bank Guarantee illegally. The invocation of the Bank Guarantee in the circumstances is