Bank guarantees are independent contracts and are not qualified by the contract under which they are given. The court may grant an injunction to restrain the encashment of a bank guarantee only in cases of fraud or irretrievable harm or injustice to one of the parties concerned.

NAVIN CHAWLA, J.

1. These petitions have been filed by the petitioner seeking an order restraining the respondent no. 1 from invoking and/or encashing the Performance Bank Guarantees furnished by the petitioner in terms of the Contracts executed between the parties. As common questions are involved in these petitions, the facts are taken from OMP (I) (COMM) 329/2018.

2. The petitioner had been awarded the work of construction of elevated viaduct, 6 elevated stations viz Aluva, Pulinchodu, Companypady, Ambattukavu, Muttom, Kalamassery (from chainage -120.000m to 7055.218m) including architectural finishing works of stations and connecting elevated viaduct and ramp to depot at Muttom on Aluva-Petta line'. The petitioner had submitted the Performance Bank Guarantee in question in compliance with the terms of the Agreement executed between the parties. The time for completion of the project was 24 months from the commencement date, however, admittedly there was delay in completion of the work, which the petitioner contends was for reasons attributable to the respondent no. 1. The respondent no. 1 had granted extension of time for completion of the work by various letters from time to time out of which the first extension of time was granted without levy of liquidated damages while on the other three occasions the respondent no. 1 levied the liquidated damages (in OMP (I) (COMM) 328/2018 the first extension was granted without levy of liquidated damages while the subsequent two were granted reserving the right to levy liquidated damages and the last was with levy of liquidated damages).

3. The respondent no. 1 vide its letter dated 20.06.2018, relying upon Clause 8.5 of the General Conditions of Contract and Appendix-2B of Employer’s Requirement levied liquidated damages of Rs. 14,60,82,088/- on the petitioner. By another letter of 20.06.2018 the respondent no. 1 called upon the petitioner to pay a further amount of Rs. 6,98,99,899.37/- as damages on account of “risk and cost”.

4. Further correspondence ensued between the parties and the respondent no. 1 by its letter dated 02.08.2018, while rejecting the representation of the petitioner, threatened invocation of the Bank Guarantees in accordance with Clause 13.2.7(ii) of the General Conditions of Contract. The petitioner had therefore filed the present petition seeking interim relief against such invocation and encashment of the Bank Guarantees.

5. Learned counsel for the petitioner submits that the work in question has been completed by the petitioner on 25.11.2017 and in fact, has been handed over to the respondent no. 1. He further submits that the disputes between the parties are pending in Conciliation in accordance with the contract and therefore, the respondent would not be justified in invoking the Bank Guarantees. In fact, in such Conciliation proceedings there is no claim raised by the respondent no. 1 for the liquidated damages or towards risk and cost. Further, relying upon the judgment of the Supreme Court in State of Karnataka vs. Shree Rameshwara Rice Mills Thirthahalli, (1987) 2 SCC 160 and of this Court in Vishal Engineers & Builders vs. Indian Oil Corporation Limited, (2012) 1 Arb LR 253 (DB), it is contended that the respondent no. 1 cannot adjudicate on the issue of defaults and recover liquidated damages by invoking the Performance Bank Guarantees as the question whether the petitioner is in default of its obligations under the contract and/or is liable to pay any liquidated damages or any amount as risk and cost are to be determined by the Arbitral Tribunal in accordance with the contractual terms.

6. I have considered the submissions made by the learned counsel for the petitioner, however, do not find any force in them. The Bank Guarantees in question are unconditional in nature and inter alia record as under:-

“5. After the Contractor has signed the aforementioned Contract with the Employer, the Bank is engaged to pay the Employer, any amount up to and i