- (1.) ORDER:- This is an application under S. 41 of the Arbitration Act for an Order restraining the respondent No. 1 from enforcing seven Bank guarantees for a total sum of Rs.11,50,000/- furnished by the Bank of Madura Limited and the Indian Overseas Bank the respondents Nos.2 and 3 herein, on behalf of the petitioner in favour of the respondent No.1. These bank guarantees were given pursuant to the express terms of the contract dated 12-5-84 entered into between the petitioner and the respondent No.1 for construction works in the Farakka Super Power Thermal Project at Farakka. Out of the seven Bank guarantees, two are in lieu of security deposit and five are for securing mobilisation advance made by the respondent No. 1 to the petitioner.
(2.) The respondent No. 3 Indian Overseas Bank issued two guarantees particular whereof are set out below : 1) LG/013/8/84 dated 15-5-85 for Rs. 1,50,000/- . 2) LG/013/12/84 dated 26-9-84 for Rs. 1,00,000/- And the rest of these five Bank guarantees were issued by the Bank of Madura Limited, the respondent No. 2 herein, which were as follows: 1) LG/G/S/2/84 dated 7-3-84 for Rs. 4,00,000/- 2) LG/G/S/5/84 dated 15-3-84 for Rs. 2,00,000/- 3) LG/G/S/5/84 dated 28-4-84 for Rs.1,00,000/- 4) LG/RR/US/5/84 dated 28-4-84 for Rs. 1,00,000/- 3) LG/RR US/4/84 dated 28-4-84 for Rs. 1,00,000/-
(3.) The forms of two Guarantees for security deposit issued by the two Banks, were approved by the respondent No.1. The essential terms necessary for enforcing these Bank guarantees are as follows : 1) The Bank undertakes to indemnify the respondent No.1 to the extent of the amount specified in the guarantee against any loss or damage caused to or suffered by the respondent No.1 by reason of any breach of the petitioner of any of the terms and conditions of the contract between the petitioner and the respondent No. 1. 2) The Banks further agree that the respondent No.1 shall be the sole Judge as to whether the petitioner has committed any breach or breaches of the terms and conditions of the said contract and the extent of loss, damage, costs, charges and expenses caused to or suffered by or that may be caused to or suffered by the respondent No.1 on account thereof and the decision of the respondent No.1 on this point will be final and binding on the Banks.;