CAV JUDGMENT

(PER : HONOURABLE MR. JUSTICE N.V.ANJARIA)

By preferring the present Appeal under Section 37 of the Arbitration and Conciliation Act, 1996 read with Section 13 of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015, read with Section 96 of the Code of Civil Procedure, 1908, the appellant seeks to call in question order dated 13th October, 2021 passed by the Commercial Court, Bhuj-Kutch, partially allowing application of respondent herein, under Section 9 of the Arbitration and Conciliation Act, 1996.

1.1 As per the impugned order, the Commercial Court directed the appellant herein-original opponent No.1 to deposit in the Court the amount of performance bank guarantees pertaining to Purchase Order Nos.1, 2, and 3 invoked by it. The direction regarding investment of the amount and further direction permitting the arbitral tribunal to pass any further interim measures in respect of the deposit after the commencement of the arbitral proceedings, were also passed.

2. Before hearing of this First Appeal, the parties filed the relevant pleadings and documents on record, about the contents of which they were ad idem. In that light and in view of learned advocates for both the sides stating that the pleadings were complete and no further pleadings were to be added or supplemented, and that they argued the appeal finally, with consent and request of the parties, the appeal was accordingly heard finally.

3. Shorn off unnecessary details, the relevant facts involved in the dispute are inter alia that respondent herein is a company engaged in manufacturing of domestic power cables. The appellant company awarded the contract through the tender process to the respondent. The contract work was in the nature of providing complete design, engineering, manufacturing, testing, supply, supervision of erection and commissioning of power cables approximately 478 km. long in the project.

3.1 Seven Purchase Orders came to be issued under the contract. The details of these Purchase Orders are-(i) PO No.SIL/PROJ/PO/1419000195, dated 0rd July, 2019; (ii) PO No.SIL/PROJ/PO/1419000198, dated 03rd July, 2019; (iii) PO No.SIL/PROJ/PO/1419000201, dated 03rd July, 2019; (iv) PO No.SIL/PROJ/PO/1419000571 (CPPII) & 1419000572 (Grinding Unit), dated 25th November, 2019; (v) PO No.SIL/PROJ/PO/1419000571 (CPPII) & 1419000572 (Grinding Unit), dated 25th November, 2019; (vi) PO No.SIL/PROJ/PO/1419000733, dated 24th January, 2020 and (vii) PO No.SIL/PROJ/PO/1419000732, dated 24th January, 2020. Out of the said seven Purchase Orders, for the subject matter dispute, the Purchase Orders sanctioned at (i), (ii) and (iii) above stand relevant.

3.1.1 In each of the three Purchase Orders which are subject matter herein, Clause 4 dealing with terms of payment is identically worded, reading thus.

“04. Payment Terms

1.10% of basis contract value shall be released as an advance against furnishing of order acceptance & Advance Bank Guarantee valid till completion of supply with one month period for any claim of equivalent amount.

2.80% contract value with 100% GST shall be released 30 days from the date of receipt of materials at site along with submission of original dispatch documents.

3.10% contract value shall be released after commissioning against submission of original performance bank guarantee (which shall be valid for 12 months from the date of commissioning or 18 months from the date of last supply whichever is earlier) or 60 days from the date of receipt of Last Consignment at site whichever is earlier.”

3.1.2 The respondent agreed to provide performance bank guarantees as stipulated under the terms of contract, upon the appellant releasing the last tranche of 10% of payment to the respondent commissioning the work. The three performance bank guarantees in connection with three Purchase Orders were given-(i) bearing No.03007BGK20000036 dated 20th February, 2020 for Rs.52,81,445/-, (ii) bearing No.03007BGK20000009 da