An unconditional bank guarantee can only be interdicted in cases of fraud or irretrievable injustice, and commercial difficulties do not excuse a party from performing its contractual obligations.

JUDGMENT

Vibhu Bakhru, J. - The petitioners have filed the present petition under Section 9 of the Arbitration and Conciliation Act, 1996 (hereafter the A&C Act), inter alia, praying as under:-

"a) Pass an order in the nature of an ex-parte ad-interim/interim nature restraining the Respondent No.1 from invoking the Bank Guarantee bearing BG No~240GT02201040006 dated 09.04.2020 for a BG amount of Rs.37.17 Crores issued by Respondent No.2 Bank (pursuant to the letter of termination dated 11.11.2021), issued by Petitioner No.1 for and on behalf of Petitioner No.2;

(b) Pass an order in the nature of an ex-parte ad-interim/interim nature staying the operation and effect of the termination letter dated 11.11.2021;

(c) Pass an order in the nature of an ex-parte/interim nature restraining the Respondent No.1 from issuing the press release for and in respect of the Termination Letter dated 11.11.2021 and if issued, to direct the Respondent to withdraw the said Press Release."

2. The respondent (hereafter RailTel) had issued a Request for Proposal (RFP) for "Selection of Digital Entertainment Service Provider (DESP) for delivering Content on Demand (COD) Services on Build Own Operate (BOO) model for Indian Railways". It is stated that petitioner no. 2 (Margo Networks Pvt. Ltd. hereinafter Margo) had submitted its bid pursuant to the RFP and was declared successful. Thereafter, RailTel issued a Letter of Award (LoA) dated 14.01.2020 awarding the contract to Margo.

3. In terms of the RFP, it was agreed that the contract to provide COD Services would be for a term of ten years. The contract was on revenue sharing basis whereby Margo had agreed to share revenue from the COD Services subject to payment of an Annual Minimum Guarantee amount (hereafter MG). The MG for the first year was agreed at ?63 crores. In terms of the RFP, Margo was also required to furnish a Performance Bank Guarantee equivalent of a value of 50% of the quoted MG within a period of thirty days of issue of the LoA. The parties agreed that for the second year, the MG amount would be increased to the revenue shared during the last applicable financial year if the same was higher than 50% of the MG.

4. Petitioner no.1 (hereafter ZEEL) is the holding company of Margo and had furnished the subject Bank Guarantee bearing BG No-240GT02201040006 dated 09.04.2020 issued by respondent no.2 (HDFC Bank) for an amount of ?37.17 Crores (hereafter referred to as the BG in question).

5. Margo states that after issuance of the BG in question, it had sent several emails to the Northern Railways with regard to implementation of the contract to provide COD Services in various trains.

6. Margo states that it had also exchanged correspondence with RailTel in regard to the Performance Bank Guarantee from March, 2020 onwards. The petitioners (ZEEL and Margo) contend that their resources were severely constrained in view of the nationwide lockdown imposed with effect from 23.03.2020, on account of Covid-19 pandemic. Margo also claims that there were significant delays on the part of RailTel on account of delay in receiving permission from the Railways for implementing the COD Services on various trains.

7. Margo made various requests for deferment/waiver of the MG payments but the said request was not entertained and RailTel continued to raise invoices for the MG amount and the interest charges thereon.

8. Margo states that it paid the MG for the first year along with the interest in terms of the RFP. The controversy between the parties is in respect of the MG payment for the second year.

9. Margo states that RailTel did not accept any of its proposals, however, agreed to defer the payment of the balance 50% of the first years MG till 01.03.2021 and the second years MG till 31.03.2021. The petitioners state that in the given compelling circumstances, Margo furnished the undertaking on 10.02.2021 as desired by RailTel and undertook to ensure the MG payments to RailTel in accordance with the terms and condit