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DEVASHIS BARUAH
Union of India – Appellant
Versus
BEB-DDS-RKD (JV)-NAYAK (JV) A Joint Venture – Respondent
JUDGMENT :
DEVASHIS BARUAH, J.
1. Heard Mr. G. Goswami, the learned counsel for the appellants and Mr. U.K. Nair, the learned senior counsel assisted by Mr. R. Singha, the learned counsel appearing on behalf of the respondent.
2. This is an application under Section 37 (1) (b) of the Arbitration and Conciliation Act, 1996 (for short, the Act of 1996) challenging the order dated 15.11.2019, passed in Misc. (Arb) Case No. 57/2019 whereby the Court of the Additional District Judge, No. 1, (Kamrup (M) at Guwahati vide the said order had restrained the appellants herein from invoking or encashing the performance bank guarantee amounting to Rs.8,01,88,780/- furnished by the respondent herein and also from forfeiting the security deposit and earnest money deposited by it for the work allotted to it.
3. At this stage, it may be relevant herein to mention certain relevant facts before entering into the adjudication of the appeal. The order impugned is an ex-parte order. The appellants had filed the written objection in the said Misc (Arb.) Case No. 57/2019 and the Court of the Additional District Judge, No. 1, (Kamrup (M) at Guwahati is presently in seisin of the Section 9 proceedings. Further
The main legal point established in the judgment is the need for a good prima-facie case, balance of convenience, and irreparable injury for granting interim relief under Section 9 of the Arbitration....
Invocation of an unconditional bank guarantee cannot be restrained unless fraud or irretrievable injustice is established; the nature of bank guarantees is independent and absolute.
Bank guarantees are independent contracts and can only be restrained from invocation in cases of fraud or special equities, which were not established in this case.
A confirmed Bank Guarantee/irrevocable Letter of Credit cannot be interfered with unless there is established fraud or irretrievable injustice involved in case.
Courts should not interfere with the invocation or payment under an unconditional bank guarantee unless there is egregious fraud or special equity.
Unconditional bank guarantees may only be reviewed for egregious fraud or irretrievable injustice; disputes over contract performance must be resolved through arbitration.
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