Sanjeev Sachdeva, J.

1. The appellant impugns order dated 28.08.2015 passed in OMP(I) 489/2015 whereby the learned single judge, in a petition under section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act), has been pleased to restrain encashment of the bank guarantee No. 17/14 dated 28th May, 2014.

2. The Appellant had issued a Letter of Intent in favour of the Respondent No. 1 on 23.04.2014 for transportation of materials from BHEL/B & R/Client Stores/Storage Yard to work site, erection, alignment, testing and commissioning, trial, operation and handing over of boiler structure and its auxiliaries including piping, insulation, final painting etc. for unit 4 of 2 x 660 MW NTPC, Mouda Project, District Nagpur on back to back basis.

3. In terms of the letter of intent, the Respondent No. 1 submitted with the Appellants, the Bank Guarantee No. 17/14 dated 28th May, 2014 with an aggregate limit of Rs. 36,64,392/-, in lieu of Cash Deposit against Security and due and faithful Performance of the said contract. The Bank Guarantee was issued by Canara Bank / Respondent No. 2.

4. The Bank Guarantee stipulated as under:

“We, CANARA BANK a body registered / constituted under the Banking Company (Acquisition and transfer of undertaking) Act, 1970 having registered and Head Office at 112, J.C. Road, Bangalore 560002 and Branch at Narayandas Chambers, Doodh Naka, Ulhasnagar – 421005 (MS) hereinafter called “the Bank”) at the request of the Contractor & with the intent to bind the Bank and its successors and permitted assigns, do hereby unconditionally & irrevocably guarantee of payment to the company of the unpaid balance upto an aggregate limit of Rs. 36,64,392/- (Rupees Thirty Six Lacs Sixty Four Thousand Three Hundred and ninety Two only) AND undertake to pay to the Company on demand and without protest and demur the unpaid balance of said Security cum Performance Guarantee subject to the aggregate limit of the aforesaid Rs. 36,64,392/- (Rupees Thirty Six Lacs Sixty Four Thousand Three Hundred and ninety Two only).”

5. The appellant invoked the bank guarantee by its letter dated 25.08.2015 in the following terms:

“As M/s Fab-Tech Works & Constructions Pvt. Ltd has failed to honour the terms of the work contract awarded to them vide letter No. ZIPL: Fabtech:2014-15:LOA:01 dated April 23, 2014, we hereby invoke the Bank Guarantee No. BG-17/14 dated 28/5/2014 issued by you and request you to pay us the full sum guaranteed under this Bank Guarantee……….”

6. On 27.08.2015, the Respondent No 1 filed the Petition under section 9 of the Act seeking, inter-alia, an order restraining the appellant from encashing the Bank Guarantee and further restraining the respondent No. 2 from releasing any payment to the Appellant herein.

7. By the impugned order dated 28.08.2015, the learned single judge has been pleased to restrain the Appellant and the Respondent No. 2 from encashing the Bank Guarantee.

8. The Appellant has filed the present appeal contending that the restraint order issued by the learned single judge cannot be sustained in view of the settled legal principles governing Bank Guarantees.

9. The principles with respect to grant of an injunction in Bank Guarantee cases have been settled by the Supreme Court of India.

10. The Supreme Court in the case of U.P. Coop. Federation Ltd. v. Singh Consultants and Engineers (P) Ltd. (1988) 1 SCC 174 has held that in order to restrain the operation either of irrevocable letter of credit or of confirmed letter of credit or of Bank Guarantee, there should be serious dispute and there should be good prima facie case of fraud and special equities in the form of preventing irretrievable injustice between the parties. Otherwise, the very purpose of Bank Guarantees would be negatived and the fabric of trading operation will get jeopardised. The Supreme Court further held that commitments of banks must be honoured free from interference by the courts. Otherwise, trust in commer