The court established that while bank guarantees cannot be prohibited from invocation, prior notice must be given to the petitioner due to ongoing project works, considering disputes related to timelines.

JUDGMENT

Neena Bansal Krishna, J. (Oral)

I.A. 9858/2022 (U/S 151 of CPC, 1908 for exemption from filing original/certified and typed/clear copies of the annexures/documents)

Allowed, subject to all just exceptions.

Application is disposed of.

O.M.P.(I) (COMM.) 208/2022

1. The present petition has been filed under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "A&C Act, 1996") by the petitioner seeking directions for appointment of an independent Agency to collaboratively look into the Report of IIT Madras to work out an effective way forward for completion of work and for restraining the respondents from invoking/encashing the seven Bank Guarantees during the pendency of the Arbitration proceedings.

Claim of the Petitioner:

2. The case of the petitioner is stated that a Notice Inviting Tender (hereinafter referred to as the "NIT") was issued on 16th June, 2016 by the respondent for the construction of the Inner and Outer Harbour for "Project Varsha" which is a highly confidential Defence project of national and strategic importance to the Indian Navy, located on the East Coast of India. Because of the highly sensitive nature of the Project, a confidential and limited survey was allowed at the time of the Tender. The designs and drawings were provided with the Tender by the respondent. However, the prospective bidders were allowed to submit their bids for the project comprising of elaborate technical proposals, qualifications and other such documents, based on the documents provided by the respondent after a Confidentiality Undertaking. The petitioner was awarded the Contract through a Letter of Acceptance dated 24th October, 2017 (hereinafter referred to as the "LoA") and consequently, the parties entered into the Contract on 19th December, 2017.

3. The completion period was contemplated as 42 months i.e., till 18th August, 2021, which stood extended upto 05th March, 2022. The commencement date was notified as 16th February, 2018 by the respondent vide its Letter dated 15th February, 2018. The Project required extensive investment and mobilization of resources. Accordingly, the Contract envisaged interest bearing advance payments, subject to the Contractor submitting the Bank/Performance Guarantees.

4. The petitioner has asserted that it is a well-known industry practice that marine activities such as dredging are carried out in the `Fair-Weather Season' i.e., the period without Monsoon. For the East Coast of India, the Fair-Weather Season generally falls between October and April, post which the Monsoon commences. Due to the delay in the commencement of the works, the petitioner lost the entire First Fair-Weather Season, which had a cascading effect on the completion of the entire project within the given time frame.

5. The petitioner has claimed that irrespective of these difficulties, it remained committed to the Project and made all endeavours to complete the construction activities in time. It began pre-construction surveying works, drafting of plans and method statements, mobilization of construction equipment and manpower, construction of temporary site facilities and off-site arrangements and procurement of temporary and permanent work material. However, as the work progressed for construction activities, it was found that original GFC drawings a