- (1.) These are two applications under section 9 of the Arbitration and Conciliation Act, 1996 filed by one of the contracting parties to a contract agreement. The petitioner has asked for the following reliefs from the court : "(a)Injunction restraining the respondent company, its agents servants and assigns from invoking the said Bank Guarantee No. G16/67 dated 17th December 1997 for Rs. 26,00,000/-issued by the Bank of India in favour of Indiana Conveyors Pvt. Ltd., at the instance of your petitioner; (b)Injunction restraining the respondent company, its servants, agents and assigns from receiving any payment from the Bank of India against the said Bank Guarantee No. G 16/67 dated 17th December, 1997; for Rs. 26,00,000/-; (c)Injunction restraining the respondent company, its agents, servants and assigns to receive any payment from Reliance Petroleum Ltd., and/or its project partners FMC-a U.S. based Multi-national without leaving a sum of Rs. 79,61,162.52 p. on account of your petitioner to secure its claim; (d)Ad interim order in terms of prayers (a), (b) and (c) above; (e)Costs of an incidental to this application be paid by the respondent; (f)Such further order or orders be passed as this Hon'ble Court may deem fit and proper."
(2.) At first sight, and on first impression this case also appeared to be yet another in the long series of cases coming up in the courts from time to time relating to the restraint orders against the invocation or encashment of unconditional Bank Guarantees executed by a Bank in favour of the beneficiary. After the arguments however have been concluded, I am convinced that this is not one of those usual cases where a party to a contract has come to court seeking a restraint order against the encashment/invocation of the bank guarantees. This case, both on facts as well as in law stands on an entirely different footing. Brief facts first : The petitioner claims to be the owner of a unit known as Messers Modern India Construction Company which has its workshop at Sodepur in the State of West Bengal. It claims to carry on the business of fabrication of structural steel material. It appears that Reliance Petroleum Ltd., a company which is not party to the present petition (nor was it required to be so) awarded a turnkey contract work to the respondent for Coke Handling Plant at Jamnagar in the State of Gujarat which the respondent undertook to execute along with its project partner, a U.S. based multi-national Company. By way of the allotment of a sub-contract in the course of execution of the aforesaid main Turnkey Contract, the respondent wanted the petitioner to carry out the work of fabrication and manufacture of steel structurals to be supplied by the petitioner to the respondent for errection/use in the aforesaid Coke Handling Plant of Reliance Petroleum Ltd. at Jamnagar, Gujarat. A Work Order accordingly was issued by the respondent in favour of the petitioner on 12th May, 1998 which was for the supply of Structural Steel, fabrication, sand blasting and painting as per the specifications of Reliance Petroleum Ltd. Since the Work Order dated 12th May, 1998 constitutes the foundation of the regulating terms and conditions of contract between the parties, it shall be worthwhile and desirable to refer to these terms and conditions in extenso.
(3.) The scope of the work has been defined in Clause 1 of the Work Order. It includes the work of the supply of structural Steel and fabrication as per the fabrication drawings to be given by the respondent to the petitioner. It also includes the work of sand blasting and painting of structurals as per the technical specifications to be given to the petitioner by the respondents. The quantum of work approximately has been mentioned at 700 M.T. and in the price column it is mentioned that Rs. 26,000/-per M.T. would be the rate/price charged by the petitioner from the respondents. The delivery period has been mentioned as 15th June, 1998. The clause relating to payment terms, being very important for our purposes is reproduced verbatim herein below. It reads as under : "Payment Terms (a)15% of the contract price as interest free advance on submission of Bank Guarantee of equivalent amount in our proforma valid for six month. (b)75% of the progressive payment on pro-rate basis against despatch documents. (c)10% final payment within one month from completion of total supply on submission of performance bank guarantee of equivalent amount on our proforma valid till warranty period. (d)You will also submit 10% valued of the contract price bank guarantee immediately and before claiming the first advance as security deposit valid till completion of the work.";