The court emphasized that the Bank Guarantee is an independent and separate contract and should be honored as per its terms, except in cases of fraud or irretrievable harm.

1. This is a Petition filed under Section 9 of Arbitration & Conciliation Act, 1996 (“Act” in short) seeking the following reliefs:-

i) Restrain the Respondent from invoking or encashing the Performance Guarantee bearing No. 120377IBGP00479 dated 23.5.2012 till the disposal of this petition.

(ii) Restrain the Respondent from making any demand or receiving any money under the, Performance Guarantee bearing No. 120377IBGP00479 dated 23.5.2012 till the disputes between the parties are finally decided.

PETITIONER’S CASE

2. It is the case of the petitioner that the respondent had called for bids for design, engineering, finance, construction, operation and maintenance of six-laning of Kishangarh - Udaipur - Ahmedabad section of National Highway No. NH 79A, NH 79, NH 76 and NH 8. The Petitioner was the successful bidder and was awarded the Contract. The Concession Agreement was executed between the parties on November 30, 2011. Under the Concession Agreement, the respondent authority had to fulfill mandatory Conditions Precedent under clause 4 and the rights and obligations of the parties only come into effect after fulfillment of the Conditions Precedent. It is the case of the petitioner, that as per clause 4.1.2 of the Agreement, the respondent had to fulfill the following obligations;

i) Issue a Fee Notification;

ii) Providing a Right Of Way to the Site to the Concessionaire;

iii) Procure approval of the Railway Authorities to enable the Concessionaire to construct road over-bridges/underbridges at crossings on the highway project;

iv) Procure all Applicable Permits relating to environmental protection and conservation of the Site.

3. According to the petitioner, a notice by the Concessionaire under clause 4.1.2 is optional, while the satisfaction of Conditions Precedent prior to the ‘Appointed Date’ by the respondent is mandatory. Only, upon the respondent authority fulfilling the Conditions Precedent, the ‘Appointed Date’ takes place and the rights and obligations under the Concession Agreement come into effect. None of the Conditions Precedent is capable of being waived by the parties. The petitioner would state, that as per proviso to clause 4.1.2, the respondent authority has an option to extend the time required for performance of the Conditions Precedent relating to environmental clearances and approval from railway authorities, provided that the commercial operation date has taken place and the right of way has been handed over. Thus, compliance of the Conditions Precedent for right of way and the Fee Notification is a must before the ‘Appointed Date’.

4. The petitioner’s case is that, it had started to fulfill its obligations under the Concession Agreement and notified the respondent authority that it had appointed EPC contractors and sub-contractors and that mobilization had commenced. It would state, that it made significant investments and was ready to commence work. According to the petitioner, it had notified, time and again to the respondent authority that the respondent has an obligation to inter-alia publish the Fee Notification and grant environmental and forest clearances, which are necessary for the petitioner to commence operations. It had been submitting regularly, its status report to the respondent. The petitioner has referred to letter dated October 22, 2012 of the respondent whereby the respondent had written to the petitioner stating that the User Fee Notification would be issued shortly and the forest clearance proposal was still pending with the Ministry of Environment & Forest. It is the case of the petitioner that the said communication records a clear admission that the Fee Notification and the forest clearance proposal had not been obtained and thereby the Conditions Precedent had not been fulfilled. It is also averred that till date i.e. December 27, 2012, the respondent authority has not complied with its obligations and has failed to satisfy the Conditions Precedent, which would constitute materi