The main legal point established in the judgment is the interpretation of the arbitration agreement and the criteria for interdiction of a Bank Guarantee.

Vibhu Bakhru, J.

1. The petitioner (hereafter ‘AMR’) has filed the present petition under Section 9 of the Arbitration and Conciliation Act, 1996 (hereafter ‘the Act’), inter alia, praying for an order restraining respondent no.2 (Bank of Maharashtra) from releasing any amount pursuant to invocation of the Bank Guarantee (Bank Guarantee bearing no. BOM/0387/BG/1056/10-11) dated 22.11.2011 furnished by AMR to respondent no.1 (hereafter ‘SDMC’).

2. On 23.03.2010, SDMC issued a notice inviting bids for the work of “improvement of road of 60 feet ROW and above by providing RMC pavement (Phase-I) in various zones in MCD and for work at RMC on Tigri Road from M.B. Road to Durga Vihar, Devli Road from M.B. Road to Devli Village, SSN Marg in village and EPDP road between Kalkaji in Central and South Zone”. The estimated cost of the said works was estimated at Rs.34,82,00,000/- and the same was to be completed within a period of 12 months. AMR (then known as AMR Constructions Ltd.) submitted its bid pursuant to the aforesaid invitation. By a letter dated 10.12.2010, AMR was awarded the contract at a value of Rs.29,96,23,189/-. Thereafter, on 29.12.2010, AMR and SDMC entered into a formal agreement (hereafter ‘the Agreement’). On 22.11.2011, SDMC released the mobilization advance to AMR against the Bank Guarantee in the sum of Rs.150 crores.

3. There are several disputes between the parties and AMR alleges that there were gross delays in execution of the works for reasons that are solely attributable to SDMC. AMR further alleges that although SDMC had released the mobilization advance, the same was also unreasonably delayed. AMR submits that a policy decision was taken by the Government of NCT of Delhi, whereby the works of improvement of roads were handed over to Public Works Department.

4. On 18.12.2014, SDMC sent a letter to the respondent no.2 seeking to encash the Bank Guarantee. Immediately, thereafter, on 19.12.2014, AMR approached SDMC and requested that all disputes be settled. On the same date, SDMC sent a letter calling upon AMR to extend the Bank Guarantee for a further period of six months. It is stated that, thereafter, SDMC cleared running bills to the extent of Rs.7.73 crores and also released three bank guarantees (other than the Bank Guarantee in question). SDMC sent a letter dated 30.10.2017 calling upon AMR to deposit a sum of Rs.1,06,61,517/- (One Crore Six Lakh Sixty One Thousand and Five Hundred Seventeen) on account of unrecovered mobilization advance. This was also followed by another letter dated 17.11.2017, wherein SDMC stated that in the event the said amount was not deposited, the same would be recovered along with further interest from the Bank Guarantee.

5. It is in the aforesaid circumstances that AMR has preferred the present petition seeking interim measure of protection.

6. Ms Biji Rajesh, learned counsel appearing for SDMC has opposed the present petition, principally, on two grounds. First, she submits that the Agreement does not contain any arbitration clause and, therefore, there is no arbitration agreement between the parties. Second, she contends that AMR had defaulted in completing the works in terms of the Agreement and SDMC has been unable to recover the mobilization advance. She states that although other bank guarantees may have been released, SDMC is entitled to encash the bank guarantee to the extent of unrecovered mobilization advance along with interest.

7. Mr. Arvind Kumar Gupta, learned counsel appearing for AMR has countered the submissions made on behalf of SDMC. He earnestly contended that since Clause 44 of the General Conditions of the Contract (GCC) expressly provided that the decisions of the Dispute Resolution Committee would be binding, the same clearly embodied the agreement between the parties to resolve the disputes by arbitration. He referred to the decisions of Coordinate Bench of this Court in SMS AAMW Tollways Private Ltd. v. South Delhi Municipal Corporation & Ors., AR