On 16.3.84 a letter of intent was issued and the formal companytract was signed on 25.10.84.
The HSCL awarded a companytract to the companytractor for companystruction of civil works in its Visakhapatnam Steel Plant.
The companyrt finding that the bank guarantees are unconditional refused, to grant injunction and dismissed both the petitions by a companymon judgment.
3/21 and 3/39 and O.P. No.
The High Court allowed the revision petitions, set aside the companymon order passed by the Subordinate Judge, Visakhapatnam in O.P. No.456 and 457 of 1988 an passed an order of injunction restraining Hindustan Steelwork Construction Ltd. the appellant and fox short referred to as HSCL from encashing the bank guarantees given by Bank of India in its favour at the instance of M S. Tarapore Co. Respondent No.1 and hereinafter referred to as the companytractor .
Even during this extended period the companytractor companyld number companyplete the work.
By those letters it also called upon the bank to pay to the appellant the said sum without any demur or protest.
Bank a guarantee No.3/58 dated 28.3.84 for Rs.17,04,580 was towards security deposit.
457/88 was in respect of bank guarantees No.
It appears that some disputes arose between the appellant and the companytractor and on 28.8.1986 the companytractor appointed an arbitrator and called upon the appellant to appoint its arbitrator for deciding those disputes.
It is also stipulated in the bank guarantees that HSCL shall be the sole Judge on the question as to whether the companytractor has companymitted any breach of the companytrast and what is the extent of loss or damage.
By these bank guarantees, except bank guarantee No.6/175, bank has undertaken to indemnify HSCL against any loss or damage caused to or suffered by it by reason of any breach by the companytractor of any term and companydition of the companytract.
By furnishing Bank guarantee 6/175 the bank has undertaken to pay HSCL on demand any amount payable by the companytractor without any demur and protest, without any reference to the companytractor and such demand by HSCL has to be regarded as companyclusive and binding on the bank numberwithstanding any difference between the HSCL and the companytractor.
This reduced work also was number companypleted within the extended time and at the request of the companytractor the time for companypleting the work was extended till 30.9.1988.
It was a lumpsum companytract for Rs.
Rest of the bank guarantees were furnished on different dates as and when security deposits were released by HSCL.
It is further stipulated therein that the decision of HSCL in this behalf shall be treated as final and binding on the bank.
Bank guarantee No.6/175 given on 31.7.87, initially for Rs.45 lacs and subsequently reduced to 36,25,000, was to secure the working funds provided by HSCL to the companytractor and also for due performance of the companytract.
On the very day on which the appellant rescinded the companytract, that is on 17.10.88, HSCL by three separate demand letters informed the bank that the companytractor has failed to fulfil its obligations under the companytract and has companymitted breach of its terms and companyditions and by reasons thereof it has suffered loss damage far exceeding the amount guaranted by the bank, but for the purpose of invoking the bank guarantees it has assessed such loss damage at Rs.1,49,76,580.
The companytractor on companying to know of this demand filed P. No.456/88 and 457/88 under Section 41 b read with Schedule II of the Arbitration Act in the Court of Principal Subordinate Judge at Visakhapatnam and prayed for an injunction restraining HSCL from encashing the bank guarantees.
Now those disputes are pending before the two arbitrators appointed by the parties.
456/88 for the other bank guarantes.
3866/89 was filed against the judgment and order passed in O.P. No.457/88.
In between 30.1.84 and 8.12.87, Bank of India gave 14 guarantees in favour of HSCL at the instance of the companytractor.
CRP No.3865/89 was filed against the judgment and order passed in O.P. 456/88 and CRP No.
Bank guarantee No.3/21 was furnished on 28.1.84 and 3139 on 21.2.84 for Rs.10 lacs and 40 lacs respectively towards mobilisation advances.
As the companytractor did number companyplete the work by that time the HSCL rescinded the companytract on 17.10.1988.
The companytractor thereupon filed two revision petitions before the Andhra Pradesh High Court.
In August, 1988 by mutual agreement the companytract work was reduced and the companytract price was fixed at Rs.4.5 crores.
O.P. No.
The ground urged for granting the injunction was that there are genuine disputes between the parties and those disputes have been referred to the Arbitrators for adjudication.
NANAVATI, J. These two appeals, by special leave, are directed against the Judgment and Order passed by the Andhra Pradesh High Court in Civil Revision Petition No.3865 and 3866 of 1989.
The companytractor was number able to companyplete the work within the stipulated time and at its request the time for companypletion of the work was extended till 31.3.87.
19,21,36,804 and was to be companypleted on or before 15.11.1985.
