A party seeking to restrain the invocation of a bank guarantee must demonstrate either clear fraud or irretrievable injustice; mere contractual disputes do not suffice for injunctions.

JUDGMENT

[Hearing held through videoconferencing]

Vibhu Bakhru, J. (Oral)

IA Nos. 6495/2021, IA 6496/2021

1. Allowed, subject to all just exceptions.

O.M.P.(I) (COMM.) 158/2021

2. The petitioner has filed the present petition under Section 9 (1) of the Arbitration and Conciliation Act, 1996 (hereinafter the `A&C Act'), inter alia, praying as under:

"i) Direct the Respondent not to invoke and/or encash the Performance Bank Guarantees No. 003GT02180720033 of Rs.1,18,75,000/- dated 13.03.2018 till further orders;

ii) Direct the Respondent not to encash the HDFC bank cheque bearing No. 000209 amounting to Rs.1,18,75,000/- till further orders;

iii) Restrain the Respondent from taking any coercive steps against the Petitioner in relation to the Contract dated 27.12.2017."

3. Mr Nath, learned counsel appearing for the petitioner has, essentially, stressed on two reliefs. First, that this Court should restrain the invocation of the bank guarantee in question (Performance Bank Guarantee No. 003GT02180720033 of Rs.1,18,75,000 - hereinafter `the Bank Guarantee'); and second, that the respondent be directed not to encash the cheque furnished by the petitioner (Cheque bearing No. 000209 amounting to Rs.1,18,75,000/-) till further orders.

4. On 27.12.2017, the parties had entered into an Agreement (Contract No: DPSI-HO-Jawa-15 - hereafter `the Agreement') whereby the respondent sub-contracted CHS Civil Works of Jawaharpur Super Thermal Power Station (2 x 660 MW Project) to the petitioner. In terms of Clause 9.1 of the Agreement, the petitioner furnished the Bank Guarantee as a Performance Guarantee. The petitioner claims that it also issued a cheque for an equivalent value.

5. Clause 9.1 of the Agreement is relevant and set out below:

"9.1 Performance Bond

Performance Bank Guarantee equivalent to Two point Five percent (2.5%) of Contract Value.

In leu of Performance Bank Guarantee equivalent to Two point Five percent (2.5%) of Contract Value, Signed Cheque without date equivalent to Two point Five percent (2.5%) of Contract Value and Five Percent payment hold from progressive payment.

Contractor shall return the cheque and hold amount once Subcontractor submits Performance Bank Guarantee equivalent to Two point Five percent (2.5%) of Contract Value.

The Performance Bond shall expire after expiry date of Warranty Period as defined in Clause 12 [WARRANTY] in this Sub-contract. Such guarantee shall be binding notwithstanding any variations, alterations or extensions of time that may be given or be agreed upon. No interest shall be paid for this bond.

b) The Performance Bond shall be provided by a first class bank of the Country at Contractor's discretion in the form attached hereto acceptable to the Contractor."

6. The petitioner claims that the scope of the work was considerably enhanced and the petitioner requested the respondents to correspondingly enhance the value of the Agreement. It is stated that on 08.01.2019, a meeting was held between the parties to sort out the issue of additional financial implication and thereafter, on 21.08.2019, to commensurate with the enhanced scope of work, the value of the Agreement was revised to Rs.66.26 crores.

7. The petitioner claims that there was sign