1. M/s. K. K. Gupta and Construction Engineers (JV), for short 'the Contractor', filed a Petition under Section 9 of the Jammu and Kashmir Arbitration and Conciliation Act, 1997 with Principal District Judge, Jammu, seeking Restraint directions against Union of India, Deputy Chief Engineer, Chief Engineer and Chief Administrative Officer, Construction, Northern Railways, New Delhi not to act on Chief Engineer/C/NW's Communication No. 74-W/1/1/349/ WA/JAT/D/Pt.I dated 14.3.2008 giving it seven days' Notice, in terms of Clause 62 of the General Conditions of Contract, to make good the progress in respect of Contract: Construction of Bridge No. 81 (25x26.20M) (Over all) spans over river UJH consisting of PSC girders with well/open foundations with RCC abutments and piers including earthwork in embankment/cutting and blanketing on approaches and other allied works between Km.34.110 to Km. 35.604 between Budhi-Chhan Arorian in connection with doubling JUC-PTK-JAT Section, And pass orders adverse to its interests including termination of work at its risk and cost, besides refraining from encashing Bank Guarantee valuing Rs. 97.5 Crores. Directions were sought against the Jammu and Kashmir Bank Limited, Residency Road, Srinagar also not to encash the Bank Guarantee. The Functionaries of Northern Railways contested the Application on various grounds.

2. Ruling against the Northern Railways on the issue of lack of jurisdiction of the Court to entertain Contractor's Application, besides its right to get the work executed at Contractor's risk and cost, the Learned Principal District Judge, allowed Contractor's Application but in part. The Restraint directions issued by the learned District Judge, on the Contractor's Application are reproduced hereunder:-

“Viewed thus, I order that respondents are at liberty to terminate the contract, if the work has not been completed even after the second extension and get the work completed through any other agency but the question as to whether it should be done at the risk and cost of the petitioner would be determined by the arbitrator. To make it clearer, thus, the fresh allotment of the contract as on now shall not be at the risk and cost of the petitioner. This direction shall remain in force unless and until modified by the arbitrator. As a corollary to the grant of above relief, relied ( C) as sought by the petitioner is also granted and the direction in this regard too shall be operative unless and until modified by the arbitrator. The ad interim directions issued vide orderdated 24.3.2008 now stands vacated.”

3. Dissatisfied with the learned District Judge's order, the Contractor has filed CIMA No. 278/2008 and Union of India, CIMA No. 147/2009, seeking setting aside of order dated December 15, 2008 of the learned District Judge, to the extent appealed against.

4. At the hearing of these Appeals, the Contractor's learned counsel restricted Appellant's relief in CIMA No. 278/2008 only to the extent of seeking setting aside of learned District Judge's order whereby it stood restrained from participation in the fresh contract which the Northern Railways may go in for pursuant to termination of the appellant's Contract. He, on instructions of the Appellant, however, stated that the Appellant would keep the Bank Guarantee alive during the operation of interim directions issued by the Court.

5. Learned counsel appearing for Union of India submitted that the Contractor having failed to complete the work despite having availed two extensions and that too, without penalty, the direction issued by the learned Principal District Judge against the Northern Railways not to encash Bank Guarantee, was unjustified.

6. Reliance is placed on General Electric Technical Services Company Inc. v. Punj Sons (P) Limited,reported as 1991(3) JT 360 by the learned counsel to support his submission.

7. Considered the submissions of learned counsel for the parties.

8. In passing the order impugned in the Appeals, the learned

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