The court reaffirmed the unconditional nature of bank guarantees, emphasizing that misinterpretations may necessitate judicial intervention under Section 34 of the Arbitration Act.

JUDGMENT

1. Present Petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the `Act') for setting aside the impugned Award dated 04.03.2017 passed by the Arbitral Tribunal comprising of a Sole Arbitrator whereby the Tribunal allowed some claims of the Respondent herein and rejected all the counter claims of the Petitioner herein. The Petitioner herein was the Respondent before the Tribunal and is being referred to as the Petitioner while the Respondent who was the claimant is being referred to as Respondent for the sake of convenience.

2. Before adverting to the contentions of the parties, it is necessary to give a brief narrative of the facts. Petitioner is a Joint Venture of Dhoot Developers Private Limited and Bengal Silver Spring Project Limited and both are Companies incorporated under the Companies Act, 1956 and engaged in the business of executing Civil Construction Contracts.

3. Petitioner-JV was awarded a contract by the DG-MAP (Ministry of Defence) for the work of "Construction of Dwelling Units including Allied services for Officers, JCOs/ORs at Gandhi Nagar, Chiloda and Ahmedabad on 11.11.2010 with completion period being 25 months, commencing on 11.11.2010 and ending on 10.12.2012 (hereinafter referred to as `Master Contract').

4. As per the case set out in the petition, Petitioner started the work immediately on award of the contract despite some hindrances encountered at the sites and executed preliminary mobilization work. The mobilization period was 60 days under the Master Contract. Petitioner engaged the Respondent as sub-contractor to execute the work at Chiloda and Gandhi Nagar sites and a Letter of Intent (LOI) dated 21.02.2011 was issued. Value of work was Rs.113,79,35,257.10p. Petitioner continued working at Ahmedabad site till 18.05.2011 when the work at the said site was also sub-contracted to the Respondent and second LOI dated 18.05.2011 was issued amending the first LOI, by enhancing the scope of work thereunder. The value of enhanced work was Rs.87,65,58,994.67 p.

5. Work executed by the Petitioner at the sites, before the same were handed over to the Respondent, was measured and the agreed amount was Rs.68 Lakhs. Agreement dated 25.05.2011 was executed and signed between the parties regarding both the LOIs and is being referred to hereinafter as `Agreement'. The total value of the Agreement under both LOIs was thus Rs.205,04,89,860.66p (Gross value including Cess and WCT). Respondent furnished the following Bank Guarantees (hereinafter referred to as `PBGs') towards performance of its obligations under the Agreement:

6. Respondent was entitled to interest bearing mobilization advance against Bank Guarantee equivalent to 10% of the Agreement value and was given the said amount. However, Respondent furnished BGs only for Rs.18,52,98,466/- as follows:

7. On the request of the Respondent, Petitioner gave additional advance to the tune of Rs.1.50 Crore in December 2011/January 2012 and the Respondent furnished the following BGs for total value of Rs.3 Crores, towards additional advance.

8. The Respondent being conscious of the time lines as per the Master Contract as also the time that had already lapsed, agreed to complete the entire work under the Agreement, within the time frame originally stipulated i.e. upto 10.12.2012. The Master Contract stipulated various internal Milestones to be achieved b