Manmohan Singh, J.

1. By the way of the present petition filed under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) the petitioner seeks to restrain respondent No.1 from invoking, and respondents No.2 and 3 from allowing any purported encashment of the bank guarantees submitted by the petitioner to respondent No.1 pursuant to the contracts entered into between petitioner and respondent No.1.

2. The petitioner filed the petition under Section 9 of the Act being OMP No.557/2014 seeking to inter alia stay the invocation of the Bank Guarantees furnished by the petitioner to the respondent No.1 in terms of the Contract dated 22nd February, 2010 entered into between the parties. State Bank of India and State bank of Hyderabad are arrayed as respondents No.2 and 3 respectively, in this petition.

By order dated 16th May, 2014 it was directed that:

(i) subject to the bank guarantees being kept alive;

(ii) their encashment shall remain stayed in terms of prayer (a), (b) and (c) of the petition, till further orders.

3. It is submitted by the petitioner that the invocation of the Bank Guarantees is wrong, illegal and against the terms of the Contract and is fraudulent.

4. It is the case of the respondent No.1 that the Bank Guarantees have already been invoked and encashed and hence, the Petition has become infructuous as the relief sought for by the petitioner i.e. a stay on the invocation and encashment on the Bank Guarantees cannot be granted at this stage for the following reasons:

(i) In terms of the Contract, the respondent No. 1 issued letters dated 14th May, 2014 to the bank/Respondent No.2 invoking the unconditional Bank Guarantees furnished by the petitioner. The respondent No. 1 confirmed the invocation by returning the original Bank Guarantees to the respondent No. 2 on 15th May, 2014.

(ii) The respondent No. 2 honoured the invocation of the Bank Guarantees on 15th May, 2014 itself and issued demand drafts for a total amount of Rs.47.90 crores in favour of the respondent No. 1 at 4 PM towards the invocation of the Bank Guarantees.

(iii) On the same date (15th May, 2014), the respondent No. 1, after having received the Demand Drafts from the respondent No.2, deposited the same in its account at the Bank of Baroda in Hyderabad, and received copies of the pay-in slips as regards the same. Thus, the respondent No.2 had fulfilled its obligation in respect of the invocation of the unconditional Bank Guarantees by the respondent No. 1.

(iv) The order dated 16th May, 2014 records that the Bank Guarantees should be kept alive. However, since the bank guarantees were returned/cancelled in light of the demand drafts issued by the Respondent No. 2 on 15th May, 2014 itself, the directions passed vide the aforestated order have become infructuous.

(v) It is settled law that in case of a bank guarantee, when the proceeds have been debited from the account out of which the payment is to be made, the same is said to be encashed. [as held vide order dated 08.05.2014 passed by this Court in Thiess Minecs India Pvt. Ltd. & Anr. v. NTPC Limited & Anr., being OMP No.522 of 2014].

5. The respondent No.1 (for short “TPTL”) challenged the said order dated 16th May, 2014 by filing an appeal under Section 37 of the Act being FAO (OS) 250/2014. The said appeal was disposed of on 21st May, 2014 inter alia with certain directions. Relevant Paras 8 to 10 are reproduced hereunder:

“8. In view of the fact that by the date of the order under appeal the Demand Drafts were already issued, Dr. Abhishek Manu Singhvi, the learned Senior Counsel appearing for the appellant submitted that it would be in the interest of justice to direct that the sum of Rs.47.90 Crores covered by the Demand Drafts shall be kept in Fixed Deposit till an appropriate order is passed by the learned Single Judge. Shri Rajiv Nayar, learned Senior Counsel appearing for the respondent No.1 expressed no objection for the same.

9. Accord