Court affirmed the importance of maintaining a bank guarantee during pending arbitration proceedings while allowing parties to explore their legal remedies regarding claims.

JUDGMENT

[Physical Hearing/Hybrid Hearing (as per request)]

Rajiv Shakdher, J.: (ORAL)

1. This appeal is directed against the order dated 06/18.04.2022.

2. The appellant is essentially aggrieved by the direction contained in paragraph 11 of the impugned order. The said paragraph reads as follows:

"11. Accordingly, the present petition is allowed with the direction that the bank guarantee for Rs. 15 crores which has been furnished before Court in O.M.P.(I.)(COMM.) 318/2018 shall be kept alive for a period of eight weeks from today."

3. This order was passed, based on a petition filed under Section 9 of the Arbitration and Conciliation Act, 1996 [in short "1996 Act"] by Canara Bank i.e., respondent no.1.

4. To be noted, the second respondent in the appeal is the State Trading Corporation of India Ltd. ["STC"].

5. The record shows, that this matter has a somewhat chequered history.

6. Qua the award dated 29.04.2016 respondent no.1 i.e., Canara Bank preferred a petition under Section 34 of the 1996 Act.

6.1. This petition was numbered OMP(COMM) 373/2016.

7. In the section 34 petition, a learned Single Judge of this Court issued following operative directions via judgement dated 21.12.2021 concerning the said award:

"28. In light of the above discussion, the nil award rendered by the Tribunal qua Canara Bank's claim of interest, noted above, is set aside.

29. Before parting, the Court may note that Mr. Chandhiok had fairly stated that he would have no objection to go back to the same Arbitral Tribunal for adjudication of Canara Bank's claim of interest if STC were to also join the said proceedings. However, Mr. Puri, representing STC, stated that STC is a government-controlled corporation, and such consent cannot be given. In these circumstances, the Court, while setting aside the nil award only to limited extent noted above, leaves Canara Bank the option open to exercise its remedies in accordance with law, for adjudication of its afore-noted claims."

8. As is evident from the extract hereinabove, the nil award rendered by the Arbitral Tribunal vis-a-vis Canara Bank's claim of interest was set aside.

9. Furthermore, the Court gave leeway to Canara Bank to exercise options that may be available to it, as per law, for having its claims adjudicated.

10. Admittedly, against the said judgment dated 21.12.2021, an appeal was preferred by Canara Bank i.e., FAO(OS)(COMM) 17/2022.

10.1. This appeal i.e., FAO(OS)(COMM) 17/2022, which was preferred under Section 37 of the 1996 Act, was confined to that part of the judgment dated 21.12.2021, whereby Canara Bank's application under Section 34(4) of the Act was dismissed.

11. However, via judgment dated 23.09.2022, the appeal was dismissed.

12. We are also informed, that Canara Bank has preferred an application under Section 11 of the 1996 Act, which is pending adjudication before a Single Judge of this Court.

12.1. This application is numbered Arbitration Petition 739/2022.

13. Therefore, clearly, arbitration proceedings have not commenced, as yet.

14. Both the appellant as well as STC have much to say about the Section 11 petition, filed by the Canara Bank.

15. At the moment, we are not concerned with the submissions and counter-submissions that will be made by the parties, in the Section 11 proceedings.

16. Via the impugned order, as noted above, the learned Single Judge has directed the appellant to keep the subject bank guarantee, amounting to Rs. 15 crores, aliv