Unconditional bank guarantees can only be interdict on grounds of egregious fraud or special equities; mere disputes about contract performance are insufficient for such a relief.

JUDGMENT

Vibhu Bakhru, J. (Oral)

[Hearing held through video-conferencing]

IA No. 3262/2022

1. Exemption is allowed, subject to all just exceptions.

2. The application stands disposed of.

O.M.P.(I) (COMM.) 68/2022

3. The petitioner has filed the present petition under Section 9 of the Arbitration and Conciliation Act, 1996 (hereafter `the A&C Act'), inter alia, praying that an order be passed restraining the respondent from taking any further action in terms of the letters dated 11.02.2022 and 16.02.2022.

4. In terms of the said letters, the respondent had called upon the petitioner to pay an amount of Rs.9,21,22,006.33/- failing which, it would be recovered by encashment of the Bank Guarantees available with the respondent. The petitioner, thus, also prays that an order be passed restraining the respondent from making any claim for payment under the Performance Bank Guarantees submitted by the petitioner.

5. The controversy in this case arises in the following context:

6. The respondent had issued a Notice Inviting Tender (NIT) for "construction of Behala Bazar, Taratala and Majerhat stations including all related works (architecture, electrical and mechanical (E&M), HVAC, fire detection and fire suppression system and Public health engineering works) in Joka BBD Bag corridor of Kolkata Metro Railway Line (JMS2)".

7. The petitioner submitted its bid in response to the said NIT on 09.02.2012. The petitioner was selected as the successful bidder and by a Notice of Award dated 14.04.2012, the respondent awarded the contract to the petitioner for a total value of Rs.1,62,66,53,074/-.

8. In terms of the tender conditions, the petitioner was required to deposit 10% of the contract amount, being Rs.16,26,65,307/- as performance security as well as an additional performance security of Rs.7,26,560/-.

9. The petitioner states that the value of the contract was subsequently reduced to Rs.80.76 crores, however, the Bank Guarantees furnished by the petitioner were not correspondingly reduced.

10. Mr. Mehta, learned senior counsel appearing for the petitioner, supported the prayers made in the present petition by contending that it was incumbent upon the respondent to reduce the value of the Performance Bank Guarantee, as in terms of the tender conditions, the value of the Performance Bank Guarantee was pegged at 10% of the contract value. Since the contract value had been reduced by removing certain works from the scope of works of the petitioner, commensurate with the reduced value of the contract, the Performance Bank Guarantees were required to be reduced as well.

11. He further submitted that apart from the fact that the respondent possessed the Performance Bank Guarantees of higher value, there were certain amounts due and payable by the respondent to the petitioner and therefore, there was no question of the respondent invoking any Bank Guarantee.

12. He submitted that the petitioner had made a claim amounting to Rs.156.35 crores, which was being considered by the committee constituted for resolving the claims as raised by the petitioner. He submitted that encashment of the Performance Bank Guarantee(s) at this stage would amount to mulcting the petitioner with an additional burden while delaying the resolution of the claims made by the petitioner.

13. Mr Udit Seth, learned counsel appearing for the respondent had sought time to take instructions as to whether any amount was otherwise due and payable to the petitioner for the work done or was under process. He states that the respondent has since, filed an affidavit clearly stating that no amount is payable to the petitioner. On the contrary, the resp