The court emphasized the principle that a determinable contract is not specifically enforceable and clarified the legal framework for injuncting encashment of bank guarantees.

VIBHU BAKHRU, J.

IA No. 11433/2016

1. Exemption is allowed, subject to all just exceptions.

2. The application stands disposed of.

3. The petitioner has filed the present Petition under Section 9 of the Arbitration & Conciliation Act, 1996, praying as under:-

"A. Issue ex parte direction, to be confirmed after notice of motion, to the respondent to maintain status quo, in respect of the contract dated 20.07.2015, awarded to the petitioner for construction of single storied row houses including 2 Nos. Community buildings, guard room, shops and all external services at IRWO's Rail Vihar, Kota (Rajasthan) (Agreement dated 20.07.2015).

B. Issue ex parte direction to the respondent, to be confirmed after notice of motion, that the Bank Guarantee of Rs. 66, 69,000/-, submitted by the petitioner, shall not been cashed;

C. Direct the respondent to attempt settlement of dispute through mutual settlement/conciliation m terms of the agreement dated 20.07.2015."

4. The petitioner, Ganga Contracts and Projects Limited, claims to be a reputed contractor and had bid for award of contract for "CONSTRUCTION OF SINGLE STOREYED ROW HOUSES INCLUDING 2 NOS COMMUNITY RUILDINGS, GUARD ROOM, SHOPS, AND ALL EXTERNAL SERVICES AT IRWO'S RAIL VIHAR, KOTA (RAJASTHAN)" (hereafter ‘the Project’) pursuant to bids invited by the respondent (hereafter 'IRWO').

5. The petitioner's bid was accepted and consequently IRWO entered into a contract dated 20.07.2015 (hereafter 'the Contract') for the construction of the Project. The petitioner states that right from the start its relationship with officials of IRWO was "not smooth”; the officials raised frivolous objections and made unreasonable deductions. It is stated that issues pertaining to delay and unreasonable deductions from running bills persisted and that in turn affected the petitioner's discharge of payment obligations to its staff, workers and other suppliers.

6. The petitioner further states that an incident took place on 27.06.2015, where the Site Engineer was stopped by certain workers, who demanded to know the status of payments by IRWO to the petitioner. IRWO alleged that the Site engineer had been gheraoed by the petitioner's labourers. The learned counsel for the petitioner submits that the said incident was exploited by certain vested interests and the relationship between the petitioner and IRWO deteriorated considerably.

7. It is stated that thereafter, IRWO sent a letter dated 12.07.2016 alleging that the progress of works at site was slow. It is stated that the aforesaid letters were followed by letters - five in number as listed in paragraph IV (x.) of the petition - alleging that the progress of work was poor. It is petitioner’s case that the said letters were not responded to on the advice of IRWO's officials.

8. Thereafter, IRWO sent a letter dated 31.08.2016, inter alia, stating that the work of the petitioner was not satisfactory and further alleging that petitioner had abandoned the work for more than two months. The letter clearly indicated that it was a notice in terms of clause 6.3 (vi, vii & viii) and clause 6.4 on IRWO General Conditions of Contract. The petitioner was put to notice that if he did not show progress of work during the period of seven days, IRWO would terminate the contract as per conditions of the Contract.

9. The petitioner responded to the aforesaid letter on 1.9.2016 admitting the delays in execution of the work but attributed the same to heavy rains in the locality and deductions made by IRWO in the last RA (running) Bill submitted by the Petitioner. The petitioner also assured IRWO that it would speed up the progress of the works.

10. Thereafter, on 7.9.2016, IRWO sent a notice in terms of clause 6.4 of the Contract. It was alleged that the work had been stopped since 26.06.2016 and despite the notice dated 31.08.2016, the work had not commenced. IRWO disputed that there were abnormal rains in the locality, which affected the mobilization of resources at site. The