The court emphasized minimalistic interference in bank guarantee invocation and the need for evidence and trial in arbitration proceedings to determine contractual claims independently.

JUDGMENT :

I.A. 8565/2019 (Exemption)

1. Exemption allowed, subject to all just exceptions.

O.M.P.(I) (COMM.) 199/2019

Brief factual background

2. Petitioner is a construction company. Respondent No. 1 (Air Force Naval Housing Board, hereinafter “AFNHB”) is a society registered under the Societies Registration Act, 1860.

3. In 2017, the Respondent No. 1 issued a Notice Inviting Tender (NIT) dated 17th October 2017 for balance of construction of all civil work, external development work, internal and external sanitary plumbing work, water distribution system drainage work, landscaping including irrigation lifts and internal electrical works at its residential complex at Meerut (hereinafter, "the Meerut project"). The Petitioner submitted its bid and was selected. Thereafter, pursuant to Letter of Acceptance ("LoA") dated 30th November 2017, the Petitioner and Respondent No 1 entered into a formal agreement dated 17th January 2018 ("the Meerut Agreement"). Clause 18 of this agreement contains the arbitration clause. As a condition for submitting the tender, execution of work under the Contract and for other collateral purposes, the Petitioner furnished following Bank Guarantees:

S. No.	Bank Guarantee No.	Amount	Validity
1.	1480042317	50,00,000	13 September 2019
2.	1480053218	57,50,160	19 June 2019
3.	1480015618	38,33,440	25 June 2019
4.	1480001319	1,00,00,000	25 July 2019
5.	14800030718	38,33,440	9 August 2019
6.	14800023518	57,50,160	11 August 2019

4. It is the case of the Petitioner that Respondent No. 1 was informed through various letters about the various difficulties it was facing in timely completion of the project and requested for extension of time and the Respondent No. 1 vide its letter dated 6th June 2019 required the Petitioner to have the developing units in Towers 1, 6, 7 & 8 (comprising of 305 OUs) ready in all respects by 30th June 2019. It is also claimed that the Petitioner submitted two RA Bills dated 9th May 2019 and 12th June 2019 for Rs. 53.41 lacs for material advance and for Rs. 3,66,65,475.94/- respectively, the aggregate of which is more than the aggregate of above bank guarantees. Respondent No.1 claims that Petitioner has not completed the work as per the terms of the contract and has thus invoked the above noted Bank Guarantees vide invocation letter dated 13th June 2019. Petitioner aggrieved with the invocation, filed the present petition inter-alia seeking orders restraining the invocation and encashment of the bank Guarantees.

5. The present petition was first listed on 17th June 2019 before the Vacation Judge. On 24th June 2019, the Court directed Respondent No. 1 to file a reply to the petition within a period of two weeks. However, till date, no reply has been filed and the Court is now proceeding to hear the matter on the merits.

6. The present petition under Section 9 of the Arbitration and Conciliation Act (hereinafter referred to as ‘Act’), seeks interim reliefs as under:-

“a. allow the present application and as an interim measure, pass urgent suitable injunctive orders against the effect and operation of impugned letter dated 13.6.2019 of Respondent No.1 and thereby, restrain the said Respondent No.1, its employees, agents and all persons acting for and on its behalf from invoking/encashing subject bank guarantees (Annexure 5 Colly) as detailed in paragraph 2(ix) above and thereby, preserve the same under the authority of this Hon'ble Court pending final outcome of the arbitration proceedings which the Petitioner hereby, undertakes to commence by issuing the Notice of the Arbitration;

b. detain, preserve and secure the amounts aggregating subject bank guarantees (Annexure 5 Colly) as detailed in paragraph 2(ix), if encashed/paid by Respondent No. 2 to Respondent No. 1 under the impugned unlawful invocation letter dated 13.6