The invocation of bank guarantees was found unjustifiable as it violated principles of fairness under Article 14, despite the stay period expiry, highlighting the need for due diligence from state authorities.

JUDGMENT

HARISANKAR V. MENON, J.

These two writ petitions are filed by the same petitioner, a Company, stated to have been engaged in the operation of duty- free shops at the Trivandrum and Calicut International Airports. The petitioner contends that the duty-free shops at the arrival/departure terminals in the afore airports were conducted by it on the basis of the license agreements executed with the respondent herein till 31.8.2017. It states that two bank guarantees for Rs.1,29,60,406/- and Rs.2,66,93,694/- were executed with reference to the license agreements in favour of the respondent authority herein. The petitioner states that there were some disputes with the respondent authority as regards the license fee payable and pursuant to the orders of this Court, a sole Arbitrator was appointed. The petitioner further contends that insofar as the arbitration proceedings were not completed within the prescribed time limit, it sought for substitution of the sole Arbitrator and extension of time for completion of the arbitration. Pursuant to Ext.P3 order dated 28.06.2022, this Court refused to consider the request for the substitution of the Arbitrator and the extension of time was also not granted. On the face of the afore, the petitioner instituted fresh proceedings as evidenced by Ext.P5 petition seeking the appointment of a new sole Arbitrator. Pending the said petition, the 1^st respondent served Ext.P6 letter dated 25.11.2022, seeking payment of an amount in excess of Rs.8.8 Crores from the petitioner. Therefore, anticipating steps against the bank guarantees referred to above, the petitioner approached the Commercial Court, Thiruvananthapuram, with a petition under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ’Act’) and pursuant to Ext.P7 order dated 16.03.2023, the Commercial Court ordered an injunction for a period of 90 days. However, the petitioner states that on 20.07.2023, the Commercial Court closed the matter recording that the period of 90 days is over.

2. It is in such circumstances that W.P(C) No.24021 of 2023 is filed seeking an order restraining the respondents from invoking/encashing the bank guarantees.

3. On 21.07.2023, while admitting the afore writ petition, this Court ordered that the respondent authority shall not invoke the bank guarantee for a period of one month. The stay was being extended from time to time. It is also to be noticed that on 30.10.2023 and 17.01.2024, “the stay was revived and extended” since the stay had, in the meantime, expired. On 26.09.2024, when the writ petition was posted, a learned Single Judge of this Court chose to “avoid” the writ petition, however, extending the interim order for a period of two weeks.

4. It is the contention of the petitioner that the matter ought to have been listed for further consideration within the afore period of two weeks or within a reasonable period thereafter. The petitioner contends that it was informed by its Bankers about some steps being taken by the respondent authority for encashing the bank guarantee. Thereupon, the petitioner on 22.01.2025 mentioned this matter before this Court and W.P(C) No.24021 of 2023 was posted to 24.01.2024. The petitioner, however, points out that on 22.01.2025 and 23.01.2025 itself, the two bank guarantees were encashed in favour of the respondent authority herein. The petitioner further points out that in the meantim