JUDGMENT :

Sonia Gokani, J.

1. The appellant is before this Court with this appeal under Section 37(1) of the Arbitration and Conciliation Act, 1996 read with Section 13 of the Commercial Court Act against the order dated 03.09.2021 passed by the learned Additional District Judge, Rajula in Civil Misc. Application No. 08 of 2021 whereby the Court allowed the application of the respondent no.1 under Section 9 of the Arbitration and Conciliation Act, 1996 for stay on invocation of performance bank guarantee till finalization of the public works under the contract.

2. The grievance on the part of the appellant is that the contract between the parties stood terminated and yet the direction had been issued by the Court to complete the public work as agreed in the contract. The facts leading to the present appeal are as follows:-

2.1. The appellant invited the offer for work of Pile Foundations of Wet Limestone Based Flue Gas Desulphurization Plan for GSECL Wanakbori STPS Unit-8 (1*800 MW) FGD Project Construction and Installation, whereby the respondent no.1 submitted his final offer on 01.07.2020. A Letter of Award (for short ‘LOA’) dated 17.07.2020 was issued by the appellant to the respondent for the Flue Gas Desulphurization Package at Wanakbori for 800 MW Unit. The time of mobilization was within 15 days of issuance of LOA and for completion of the Pile Foundation Work the period granted was 120 days after mobilization.

2.2. A performance bank guarantee dated 31.07.2020 for the sum of Rs. 1,08,10,900/- vide No. 10050100000132 was submitted by the respondent no.1 and advance bank guarantee for the sum of Rs. 72,07,258/- was tendered which was valid till 30.11.2020.

2.3. It is averred by the appellant that the performance bank guarantee furnished by the respondent no.1 would entitle the appellant to make claims either in full or in part of the guarantee amount on or before 30.11.2022. It was also set out that the Court of Delhi would be the Court of competent jurisdiction and any dispute arising from or in connection with this guarantee shall be submitted to the Indian Council of Arbitration for arbitration to be conducted by a sole arbitrator in accordance with the Commission’s Arbitration Rules in effect at the time of applying for arbitration.

2.4. It is further averred by the appellant that the parties executed the contract for Pile Foundation Work of Wet Limestone Based Flue Gas Desulphurization Plant at Wanakbori for 800 MW unit (it would be referred to as ‘contract’ hereinafter) on 01.09.2020. Under the contract, the respondent no.1 was required to carry out the work of construction of Pile Foundation for Wet Limestone Based Flue Gas Desulphurization Plant. This obligation was not performed by the respondent no.1 under the contract who committed various defaults as averred by the appellant and the same included the delay in construction of the test piles, delay in submission of the report of test piles which were required to be approved before the construction of working piles and adopting a testing methodology which was not in conformity with the requirements under the contract.

2.5. It also averred that the results of the test piles which were constructed by the respondent no.1 did not meet the design requirement provided under the contract. Resultantly, the construction of the working piles could not be carried out. The attention of the respondent no.1 was drawn by various communications that the necessary standards were not matched which otherwise were required to be adhered to as per Article 3 read with Article 4 of the contract. These repeated failures, according to the appellant, had delayed the project completion and led to immense losses.

2.6. The appellant had also directed the respondent no.1 to ascertain the causes of failure, conduct soil investigation test once again, however, the respondent no.1 had made the demands which are alleged to be unreasonable and baseless and in complete breach of the terms of the contract