ORDER

Rusia, J:--

1. This Arbitration Appeal under section 37 of the Arbitration and Conciliation Act, 1996 has been preferred against the order dated 25.2.2025 passed by the learned District Judge, Commercial Court, Indore in MJC AV No. 12 of 2025 whereby the learned Court while exercising powers under section 9 of the Arbitration and Conciliation Act, 1996 granted interim relief in favour of the Respondent.

THE FACTS OF THE CASE, IN SHORT, ARE AS UNDER:-

2. Appellant No.2 i.e. Divisional Manager, Western Railway, Ratlam had issued a Notice Inviting Tender (NIT) bearing No. EL-2024-2025-09 dated 27.7.2024 of installation of Solar Grid systems at various locations within the Ratlam Railway Division. The Respondent participated in the tendering process and was declared the lowest bidder (L1).

3. Consequently, a Letter of Acceptance (LOA) was issued in favour of the respondent on 29.11.2024. As per the terms of the LOA and the Indian Railways General Conditions of Contract (GCC), 2022, the Respondent was mandatorily required to submit a Performance Guarantee (PG) within 21 days, i.e., on or before 20.12.2024 with a provision for extension up to 60 days i.e. till 27.1.2025 on payment of penal interest.

4. The Respondent however failed to submit the requisite Performance Guarantee within 21 days and did not seek any extension from the competent authority before the expiry of the stipulated period. The respondent unilaterally sought to submit the Performance Guarantee beyond the permitted period without the payment of penal interest and thereby breached the mandatory terms of the LOA. As a consequence of the said breach and in accordance with the stipulations of the LOA and the GCC the Appellants rescinded the LOA on 29.1.2025.

5. Being aggrieved, the respondent approached the Commercial Court, Indore under section 9 of the Arbitration Act, 1996 seeking interim protection against the rescission of the LOA and to restrain the appellants from awarding the work to any other party. The Respondent claimed the existence of an arbitration clause within the standard contract documents to contend that the dispute is arbitrable. Whereas, the appellants contested the maintainability of the application on the ground that no concluded contract had come into existence and thus recourse to section 9 of the Arbitration and Conciliation Act was wholly misconceived.

6. Despite the objections raised by the appellants, the learned commercial court vide order dated 25.2.2025 allowed the application of the respondent to stay the operation of the tender and also restrained the appellants from awarding the work to any other bidder. Learned Court held that the Letter of Acceptance when read together with GCC, 2022 indicated the existence of an arbitration agreement sufficient to invoke section 9 despite the formal contract not being executed. The Court further observed that the delay in submission of the Performance Guarantee was marginal and denying interim protection would result in irreparable harm to the respondent who had already undertaken substantial preparation and investment. Consequently, balancing equities and public interest, it restrained the appellants from continuing with the fresh tender process.

7. Aggrieved by this order the appellants have now approached this Court seeking that the impugned order dated 25.2.2025 passed by the Commercial Court, Indore be set aside and the order dated 29.1.2025 rescinding the LOA be upheld also that the appellants be permitted to proceed with the execution of the tender work.

SUBMISSION OF APPELLANTS

8. The learned counsel for the appellants submitted that the learned Commercial Court erred in exercising jurisdiction under section 9 of the Arbitration & Conciliation Act in the absence of a concluded arbitration agreement between the parties. Learned counsel submitted that the issuance of a letter of acceptance without execution of a formal contract does not satisfy the mandatory requirement under section 7 of the A