Invocation of bank guarantees must adhere to existing court orders, and violations render such actions null and void.

1. The petitioner which undertakes various shipping activities, had entered in to an agreement dated 06.12.2018 with the 1st respondent Corporation for the purposes of "manning and technical management of DCI dredge XIV at various ports in India". This contract was for a period of one year, which was extendable by another year on behalf of the 1st respondent for a value of Rs.3,99,90,991/-. According to the terms of the agreement, the petitioner was required to offer a performance guarantee in the form of a bank guarantee. Accordingly, the petitioner had furnished a bank guarantee bearing No.0462OBG18022589 dated 04.12.2018 through the 2nd respondent for a sum of Rs.39,99,099/-. The Petitioner was put in possession of the said vessel and started managing the same.

2. By a letter dated 07.08.2019, the 1st respondent claimed default on the part of the petitioner and issued a notice of unilateral termination and takeover of the vessel belonging to the 1st respondent on 21.08.2019. The petitioner replied to the said notice on 12.08.2019 and sought amicable resolution of the issues. As there was no response, the petitioner again sent an e - mail dated 19.08.2019, denying the claims of the 1st respondent and sought clearance of pending dues before the vessel could be delivered to the 1st respondent.

3. The 1st respondent by an e - mail dated 20.08.2019 accepted the offer of the petitioner for a mutual resolution of the issues. However, the petitioner received another e - mail dated 20.08.2019, where the 1st respondent reiterated its intention to repossess the vessel on 21.08.2019 and that no payment would be made to the petitioner.
This was replied by the petitioner on 20.08.2018 itself. However, there was a meeting between the representatives of the petitioner and 1st respondent on 22.08.2018 during which, certain issues were discussed and minutes of the meeting were prepared. The petitioner contends that in this meeting, the 1st respondent had undertaken not to invoke the bank guarantee issued by the petitioner, as performance guarantee, pending resolution of the disputes. On that basis, the petitioner had handed over the vessel of the 1st respondent on 23.08.2019. However, on 26.08.2019, the 1st respondent sought a modification of the minutes to the effect that the undertaking of the 1st respondent was substituted to state that the same would be dealt as per contractual terms and conditions.

4. The petitioner further contends that even though the contract ended effectively on 23.08.2019 and the 1st respondent was bound under the general conditions of the contract to return the bank guarantee, the 1st respondent went ahead and sought encashment of the bank guarantee. At that stage, the petitioner approached this Court by way of Writ Petition No.8301 of 2020, challenging the action of the 1st respondent seeking to encash the bank guarantee. On 29.04.2020 this Court, by way of an interim order, had directed the respondents not to encash the bank guarantee for a period of one week after the lockdown is lifted. However, the bank guarantee was invoked and the proceeds were paid out to the 1st respondent.

5. Aggrieved by the said action of the respondents 1 and 2, the petitioner has now approached this Court contending that the invocation of the bank guarantee by the 1st respondent and the payment, arising out of such invocation, by the 2nd respondent is bad, arbitrary and required to be set aside for the following grounds:
A. In