S. RAVINDRA BHAT, J.

1. The question urged in this appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (hereafter "the Act") is that given the nature of the contract between the parties, could the Gas Authority of India (the respondent, hereafter referred to as "GAIL") have validly encashed the bank guarantees furnished by Osram India (P) Ltd, the claimant (the name of which has undergone a change, and consequently would be referred to as "Ledvance").

2. The parties to this dispute entered into a Gas Transmission Agreement ("GTA") on 01.05.2007; valid for 15 years i.e. up to 31.12.2022. In the GTA, the respondent was described as the "Shipper" and GAIL as the "Transporter". By Clause 2.2 of the GTA, the Shipper and the Transporter had to enter into transactions in relation to the "redelivery point" which required the Shipper to contract for "specified capacity for a specified duration for transportation of the gas through the Transporter's facilities and the Transporter shall provide Gas Transmission services for such duration." This transaction was