An interim order can restrain the encashment of bank guarantees pending arbitration if there is a risk of irreparable harm to the aggrieved party.

JUDGMENT

Neena Bansal Krishna, J. (Oral)--A petition under Section 9 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as the Act, 1996) read with Section 151 Code of Civil Procedure,1908 has been filed for grant of interim order to restrain the respondents from encashing the Performance Bank Guarantee.

2. It is submitted in the petition that the respondent had floated a tender for the work of redevelopment of Bapu Samaj Sewa Kendra, Panchkuian Road, New Delhi. The petitioner being the lowest bidder was awarded the contract which was accepted vide letter dated 07th February, 2018 by NDMC. The date of start of work was 22nd February, 2018 and the date of completion was 21st August, 2019. The stipulated period of work was eighteen months to be reckoned from 15th day of the issue of letter of Acceptance. The value of the work awarded was Rs.24,66,00,633/-. Petitioner in terms of paragraph 2 of Acceptance letter dated 07th February, 2018 furnished the Performance Guarantee in the shape of Bank Guarantee drawn on Punjab National Bank for an amount of Rs.1,23,30,032/- @ 5% of the tendered value, to be valid up to 31st August, 2019 valid up to 08th November, 2019 was deposited vide letter dated 13th February, 2018. However, later on the value of work was modified to Rs.24,54,00,633/- vide respondent's letter dated 12th March, 2018 and the performance guarantee was reduced to Rs.1,22,70,032/- which was furnished from Kotak Mahindra Bank Ltd., Rohini, Delhi, which was valid up to 02nd January, 2020. The site, however, was occupied by a dispensary and trees were standing on both the sides and on the requests of petitioner it was finally cleared only on 05th October, 2018. The petitioner has claimed that execution of work for its timely completion within the stipulated time was delayed essentially on account of respondent for the reasons stated as under:

(i) Non-approval of drawings, which otherwise is required to be provided along with the Agreement;

(ii) Initial delay in providing the site;

(iii) Approval of design mix was not provided timely which resulted in extra ordinary delay and thereafter had again changed the same;

(iv) Delay in approval of GFC Architectural and Structural drawings; and

(v) Others as referred in various letters.

3. The petitioner had apprised the respondents about the hindrances at site at regular intervals vide various letters and had further sought shifting of milestones and release of withheld amount of Rs.24,54,006/- which was wrongly withheld from the running bills, in addition to the amount retained towards security deposit over and above the amount of Rs.1,10,1,000/- for which Bank Guarantee dated 20th April, 2019 had been submitted by the petitioner. The petitioner executed gross work for value of Rs.6,71,83,639/and submitted the bill along with the measurements to the respondents on 21st September, 2019 but the respondents have failed to release the payment thereof. Though the respondents had admitted the payment for Rs.5,34,62,913/-, but the balance amount of Rs.1,37,20,726/- was claimed yet to be released.

4. It is claimed that the respondents were responsible unilaterally for delay and prolongation of contract Agreement. The petitioner had determined the contract on the expiry of stipulated date of completion i.e. 09.09.2019, 16.09.2019 and 19.09.2019 and had requested for release of his legitimate dues as the respondents had breached the contract Agreement. The petitioner in terms of Clause 25 of the Agreement, requested the Superintending Engineer for referring the claims as have arisen in the letter dated 24th October, 2019. The respondents have directed the petitioner to revalidate the Performance Guarantee for a period of one year vide