The invocation of a bank guarantee must strictly adhere to its stipulated terms, particularly the requirement to assert loss or damage; otherwise, it may be restrained.

JUDGMENT

Sanjeev Narula, J. (Oral)--By way of a separate order passed today in ARB.P. 12/2020, an Arbitral Tribunal for adjudication of disputes between the parties stands appointed.

2. In view of the above, before commencing hearing in the matter, Mr. Ashok Singh, counsel for the Respondent, has been queried as to whether he is agreeable for continuation of the interim order granting protection to the Petitioner, till such time that the Arbitral Tribunal decides the instant petition by treating it as one under Section 17 of the Act. Mr. Singh contests and argues that such course would amount to confirmation of the order of injunction of the Bank Guarantee.

3. Although Mr. Singh's contention is incorrect as the Court has only expressed tentative views in the interim order, nevertheless, since the matter pertains to stay on invocation of bank guarantee, counsel for the parties have been heard at length for final disposal of the petition.

FACTUAL BACKGROUND

4. The Petitioner vide Letter of Acceptance dated 27th May, 2019 was awarded the Contract for the work of `Earth work in filling, Blanketing, construction of station building, Passenger platform Minor bridges, foot over bridge, Limited height subways, Circulating area and other allied works for new crossing station at Dobh in connection with Rohtak-Meham-Hansi New line' [hereinafter, the "Contract"] by the Respondent.

5. In terms of the afore-noted Letter of Acceptance, Petitioner furnished a Performance Bank Guarantee [hereinafter, "PBG"] - equivalent to 5% of the contract amount - issued by Bank of Baroda [hereinafter, "the Bank"]. This bank guarantee is the subject-matter of the instant petition.

6. The stipulated period for completion of work under the Contract was six months from the date of issuance of the Letter of Acceptance. Petitioner alleges that Respondent delayed in handing over the site. Nevertheless, immediately after award of work, Petitioner made requisite arrangements to carry out the work under the Contract. It has been further contended that the execution of such work was not possible without working drawings and a clear site being provided by the Respondent, owing to which, Petitioner was prevented from completing the work within stipulated timelines. Respondents were oblivious to the difficulties faced by the Petitioner, and in order to cover their failure in performing their obligations, letters dated 15th July, 2019 and 1st August, 2019 were issued - invoking Clause 62 of the General Conditions of Contract ("GCC") for termination of the Contract. Petitioner, vide communication dated 8th August, 2019, responded to the above-stated notices and apprised the Respondent that the work awarded cannot be completed in absence of the working drawings and/or removal of hindrances at the site. However, instead of appreciating the Petitioner's grievances, the Respondent vide notice dated 9th August, 2019, terminated the Contract in terms of Clause 62 of the GCC.

7. Thereafter, Petitioner approached this Court at the first instance, by way of O.M.P. (I) (COMM.) 279/2019 seeking a stay on termination of the Contract, and as a consequence, a stay on invocation of PBG. However, the said petition was "dismissed as withdrawn", affording the Petitioner liberty to reapproach this Court, since an alternate remedy lay with the Petitioner by way of damages against such termination, and further, as on that date, there was no demand from the Respondent, in relation of the encashment of the PBG.

8. Subsequently, Petitioner received intimation from the Bank that Respondent had sought encashment of PBG. In these circumstances, Petitioner has approached thi