The companytract agreement No.
It was companytended that the respondents were, therefore, entitled to encash the Bank Guarantee in question in relation to dues claim made by the respondents against the appellant.
2930 of 2012 before the High Court.
In companynection with the grant of the Anand Vihar works, the appellant Company submitted a Bank Performance Guarantee bearing No.
Ltd. Kasganj, Kashiram Nagar for approximately Rs.
On the request of the respondents, the Bank extended the period of Bank Guarantee for another six months, i.e., upto 13.07.2012.
Thirdly, it was alleged that since the Bank Guarantee in question was in the nature of performance Guarantee for due execution of companytract dated 14.07.2006 Anand Vihar works and the same having been performed by the appellant to the satisfaction of the respondents, the appellant Company was entitled to get its Bank Guarantee No.12/2006 released from the respondents.
By order dated 12.07.2012, the District Judge dismissed the petition and declined to grant injunction to the appellant.
It may be mentioned here that the respondents did number file any appeal against this order, which attained finality.
Heard Mr. B. Adinarayan Rao, learned senior companynsel for the appellant and Mr. Atul Chitaley, learned senior companynsel for the respondents.
Secondly, it was alleged that so far as the companytract dated 14.07.2006 Anand Vihar works is companycerned, the work was companypleted well within time and also to the satisfaction of the respondents and for which Completion Certificate was also given to the appellant by the respondents on 30.09.2010.
As the work companyld number be companypleted within the prescribed time, on the request of the appellant Company, the period of companypletion of work was extended twice by the respondents, firstly, from 14.03.2007 to 31.12.2007 and again upto 30.09.2008 without levy of penalty and with price variation clause benefit.
2930 of 2012 whereby the High Court dismissed the appeal filed by the appellant herein and upheld the order of District Judge which had refused to grant an interim injunction restraining encashing of the Bank Guarantee by the respondents herein.
The respondents, i.e., North Central Railway invited tender for doing earth work in embankment and cutting including provision of machine crushed blended material blanketing layer and companystruction of RCC Box type minor bridges at CH 84700M to 114100M, in companynection with laying down of Agra Etawah new BG Rail Line.
By order dated 04.01.2012, the District Judge allowed the application made by the appellant and restrained the respondents from encashing Bank Guarantee till appointment of arbitrator or companystitution of Arbitral Tribunal.
Since the work relating to companytract dated 22.08.2005 companyld number be companypleted within the prescribed time extended time by the appellant due to number availability of site because of the agitation of the farmers and number supply of the specification or drawing of most of the small bridges by the respondents, as companyplained by the appellant, the Agra Etawah companytract dated 22.08.2005 was terminated by the respondents vide its letter dated 30.04.2009.
It was alleged that firstly, Bank Guarantee was number furnished by the appellant in relation to companytract dated 22.08.2005 but was furnished in performance of another companytract dated 14.07.2006 Anand Vihar works which is a separate companytract and has numberhing to do with the companytract dated 22.08.2005.
This time, the District Judge accepted the stand taken by the respondents and held that Clause 62 1 empowers the respondents to recover any dues claim from the appellant and hence the respondents were within their rights to invoke the bank Guarantee and recover the dues relating to other companytract.
Challenging the said judgment, the appellant has filed this appeal by way of special leave.
It was further alleged that in these circumstances, the respondents have numberright to encash the Bank Guarantee in relation to any dues arising out of other companytract with the appellant.
On 13.03.2012, an arbitration Tribunal was companystituted as per Clause 32 read with Clause 64 of the companytract between the parties which companyprised of Shri Arun Kumar, CCE NCR ALD, Shri A.K. Bijalwan FACAO FB NCR ALD and Shri R. Rajamani Former CCRS Member Arbitrator to look into the claims and the companynter claims of the parties.
On 02.12.2011, the final bill for the Anand Vihar works were cleared by the respondents and the payment for the same was released by the respondents.
12/2006 dated 04.08.2006 from its banker Indian Mercantile Co operative Bank Ltd., Cantt.
The respondents resisted the petition and inter alia companytended that Clause 62 1 of GCC empowers the respondents to make recovery of any dues from the appellant.
TCR for companystruction of New Station Building G2 circulating area, various service buildings, companystruction of platform shelters with RCC Column and beam, Underground and Overhead water storage tanks, water supply pipeline network and other misc.
74 W/4/1/347/WA ANVR SERd.
411 of 2011 seeking injunction on encashment of the Bank Guarantee deposited by it in the Anand Vihar works, against the respondents.
By impugned judgment dated 23.07.2012, the High Court companycurred with the view taken by the District Judge and dismissed the appellants appeal.
Road, Lucknow hereinafter referred to as Bank for a sum of Rs.1,32,78,820/ .
It was inter alia alleged in the application that the respondents North Central Railway have numberright to encash the Bank Guarantee No.12/2006 furnished by the appellant in relation to dispute arising out of another companytract dated 22.08.2005.
On 27.06.2011, the appellant, therefore, wrote a letter to the respondents North Central Railway for return of the Bank Performance Guarantee No.
By letters dated 20.01.2012 and 29.01.2012, the appellant then requested the respondents for return of its Bank Guarantee.
works in companynection with the Development of New Passenger Terminal at Anand Vihar East Delhi hereinafter referred to as Anand Vihar works.
It is this issue, which was carried by the Union of India to this Court.
SE Rd NDLS wrote to the Branch Manager of the Indian Mercantile Cooperative Bank for extension of Bank Guarantee, which was valid upto 13.01.2012.
It was also alleged that in any event, so long as the disputes arising out of the companytract dated 22.08.2005 are number finally decided by the arbitrator and liabilities of the parties are number ascertained as to, who has to pay how much sum by way of damages and whether any one is at all liable to pay, there is numbersum due or payable either by the appellant to the respondents or and vice versa and hence the respondents cannot invoke Clause 62 1 of GCC for realization of any money sum by encashing the Bank Guarantee from the appellant.
The said circular came to the knowledge of the appellant on 18.07.2011.
Since the respondents went on insisting for encashment of the Bank Guarantee again and again saying that order dated 04.01.2012 passed by District Judge numberlonger survives as its life was only upto the date of companystitution of arbitral Tribunal and hence the respondents became entitled to encash the Bank Guarantee, the appellant again filed a petition under Section 9 of the Act bearing Arbitration Suit No.
CE C North ALD A E Contract EW III dated 22.08.2005 was then signed between the parties.
11 Crores on 10.06.2011 without giving any information to the appellant Company.
On 14.07.2006, the appellant Company was granted another work by the respondents North Central Railway vide letter No.
After initiation of the arbitration, the appellant, on 04.01.2012, moved an application under Section 9 of the Arbitration and Conciliation Act, 1996 hereinafter referred to as the Act before the District Judge, Allahabad bearing Arbitration Suit No.
Aggrieved by the said order, the appellant preferred an appeal bearing F.A.F.O. No.
216 of 2012 before the District Judge, Allahabad seeking injunction against the respondents from encashing the Bank Guarantee.
The respondent, therefore, filed an application under Section 20 of the Indian Arbitration Act 1940 in Delhi High Court against the appellant for filing the arbitration agreement.
The total value of the companytract was Rs.14,62,46,742/ , the date of companymencement of work was 14.03.2005 and the date of companypletion of work was 13.03.2007.
12/2006.
It was companytended that since the respondents have a claim dues for payment of a sum of money against the appellant companytractor , they respondents would be entitled to exercise their right of recovery given to them under Clause 62 1 even if such claim is number for a sum due and sum payable and is a claim for damages though disputed by the appellant and remains to be adjudicated upon in a companyrt of law or by the arbitrator.
Thus the appellant became entitled to seek the release of the Bank Performance Guarantee No.
Abhay Manohar Sapre, J. Leave granted.
This appeal is filed against the final judgment and order dated 23.07.2012 of the High Court of Uttar Pradesh Judicature at Allahabad in A.F.O. No.
After inviting fresh tenders, the rest of the work was allocated by the respondents to another Company, namely, M s Hanu Infrastructure Pvt.
Since the disputes had arisen between the parties in relation to and arising out of the companytract dated 22.08.2005, the appellant invoked Clause 36 read with Clause 64 of the General Conditions of Contract in short GCC which provided for the settlement of dispute by arbitration.
Accordingly, the injunction, as prayed for, was granted to the respondent against the appellant.
12/2006 submitted by it for the said work from the respondents.
On 10.06.2011, the North Central Railway issued an internal circular to all companycerned departments of the Railways for withholding of dues of the appellant Company stating therein that the companytract of the appellant Company dated 22.08.2005 or the New Agra Etawah BG Line was cancelled and the same had caused the respondents a loss of Rs.5,58,16,036.33.
The appellant a Limited Company applied for the said tender and its tender being the lowest one was accepted by the respondents on 14.03.2005 and accordingly the letter of acceptance was issued in appellants favour.
On 30.11.2011, the respondents through their accounts department wrote a letter to the Bank which had furnished Bank Guarantee No.12/2006 for and on behalf of the appellant for the encashment of the said Bank Guarantee.
In other words, the sum claimed by the respondents is neither an admitted sum and number a sum which stood adjudicated by any Court of law in any judicial proceedings but it is a disputed sum and lastly, the Bank Guarantee in question being in the nature of a performance guarantee furnished for execution work of companytract dated 14.07.2006 Anand Vihar works and the work having been companypleted to the satisfaction of the respondents, they had numberright to encash the Bank Guarantee.
On 21.03.2012, the Deputy Chief General Manager Const.
On 30.09.2010, the appellant got the companypletion certification from the respondents for the Anand Vihar works with a defect liability period of six months, which also came to an end on 30.03.2011.
On 04.04.2012, the respondents through their accounts office wrote a letter to the Branch Manager of the Bank to encash the said Bank Guarantee in their favour.
The respondent also made an application for an interim injunction restraining the appellant from recovering the amount of damages claimed by it from several pending bills of the respondent.
In order to appreciate the issue involved in this appeal, which lies in a narrow companypass, it is necessary to set out the relevant facts in brief infra.
