Andhra Pradesh High Court - Amravati
Danieli & C. Officine Meccaniche Spa vs Rashtriya Ispat Nigam Limited on 6 July, 2023
IN THE HIGH COURT OF ANDHRA PRADESH: AMARAVATI
HONOURABLE SRI JUSTICE SUBBA REDDY SATTI
ARBITRATION APPLICATION No.17 of 2022
Danieli & C. Officine Meccaniche SpA,
represented by its Authorized Representative,
Mr.Raman Achuthan, Via Nazionale 41, 33002
Buttrio (UD), Italy and two others.
... Petitioners.
Versus
Rashtriya Ispat Nigam Limited, Administrative
Building Visakhapatnam Steel Plant,
Visakhapatnam-530031, Andhra Pradesh and
another.
... Respondents.
Counsel for the petitioners : Sri S.Rambabu
Counsel for respondent No.1 : Sri V.Subrahmanyam
Counsel for respondent No.2 : Sri Somu Krishna Murthy
ORDER
Petitioners filed the arbitration application under Section 9 of the Arbitration and Conciliation Act, 1996 (for short "Act 1996") seeking to -
(a) restrain the 1st respondent during the pendency or until conclusion of the Arbitral proceedings bearing ICC Case No.26939/HTG by way of temporary order and injunction from encashing/invoking or taking any precepitative steps or receiving any monies under the (i) Bank Guarantee bearing No.0305ILG014516 dated 15.12.2016 for an amount of Euro 1663717 (Euro One Page 2 of 26 SRSJ ARBAPPL No.17 of 2022 Million Six Hundred Sixty Three Thousand Seven Hundred Seventeen) issued by Punjab National Bank on behalf of petitioner No.1 and (ii) Bank Guarantee bearing No.0305ILG014616 dated 15.12.2016 for an amount of Euro 1663717 (Euro One Million Six Hundred Sixty Three Thousand Seven Hundred Seventeen) issued by Punjab National Bank on behalf of petitioner No.1;
(b) direct the 2nd respondent not to release any amount to 1st respondent against the bank guarantees referred above;
(c) Direct the Respondent No.1 to deposit the amount encashed by it against (i) Bank Guarantee bearing no.4044IPEBG090051 dated April 25, 2009 for an amount of INR 11678824 (Rupees One Crore Sixteen Lakh Seventy Eight Thousand Eight Hundred Twenty Four) issued by Bank of India on behalf of Petitioner No.3, (ii) Bank Guarantee bearing no.4044IPEBG140046 dated September 15, 2014 for an amount of INR 206781 (Rupees Two Lakh Six Thousand Seven Eighty One) issued by Bank of India on behalf of Petitioner No.3, (iii) Bank Guarantee bearing no.4044IPEBG140047 dated September 15, 2014 for an amount of INR 2699681 (Rupees Twenty Six Lakh Ninety Nine Thousand Six Hundred Eighty One) issued by Bank of India on behalf of Petitioner No.3; and (iv) Bank Guarantee bearing no.4044IPEBG140048 dated September 15, 2014 for an amount of INR 8772363 (Rupees Eighty Seven Lakh Seventy Two Thousand Three Hundred Sixty Three) issued by Bank of India on behalf of Petitioner No.3; (v) Page 3 of 26 SRSJ ARBAPPL No.17 of 2022 Bank Guarantee bearing no.2451NDCG00030621 dated September 11, 2020 for an amount of INR 83017139 (Rupees Eight Crore Thirty Lakh Seventeen Thousand One Hundred Thirty Nine) issued by ICICI Bank; (vi) Bank Guarantee bearing no.11640100014587 dated October 29, 2021 for an amount of INR 83017139 (Rupees Eight Crore Thirty Lakh Seventeen Thousand One Hundred Thirty Nine) issued by Axis Bank on behalf of Petitioner No.2 with the Arbitral Tribunal or this Hon'ble Court till the final date arbitration proceedings between the Petitioners and the Respondent No.1.
2. (a) 1st Petitioner is a company incorporated under the laws of Italy, represented by its authorized representative; 2nd Petitioner is a company incorporated under the laws of India, represented by its authorized representative and 3rd Petitioner is also a company incorporated under the laws of India, represented by its authorized representative.
(b) 1st Respondent is a company existing under the laws of India and incorporated under the Companies Act, 1956 (for short "Act 1956") having its registered officer at Administrative Building, Visakhapatnam Steel Plant, Visakhapatnam. 1st Respondent is a public sector enterprise. It intends to build and bring a regular operation Structural Page 4 of 26 SRSJ ARBAPPL No.17 of 2022 Mill under its 6.3 MTPA Expansion Project (for short "the Project") at Visakhapatnam Steel Plant. 2nd Respondent is a public sector bank and issued bank guarantees on behalf of 1st petitioner.
(c) 1st Respondent having decided to building and bring into regular operation Structural Mill under its 6.3 MTPA Expansion Project, invited bids for "Imported design and engineering for structural mill as per the agreed scope of work ...", "Manufacture and supply of imported plant, machiney & equipment for structural mill including refractories, commissioning Spares and Insurance Spares as per the agreed scope of work ...", "Foreign supervision of erection, start up, testing, commissioning, PG Tests ...".
(d) Petitioners formed a consortium and submitted their bid. Petitioners and 1st respondent entered into Contract Agreement bearing No.VSP/CONT/6.3 MTPA EXPN/STM/COV/M-995/2008-2009 dated 27.03.2009 for supply of engineering and equipment and to render technical services in connection thereto in relation to the Project. 1st Respondent executed individual agreements with each of the Page 5 of 26 SRSJ ARBAPPL No.17 of 2022 petitioners thereby delineating the scope of work of each consortium in respect of the Project. Performance bank guarantees were also submitted by the petitioners as per Clause 24.1.1 of the GCC to the contract. The details of the bank guarantees submitted by the petitioners are disclosed in the application.
(e) The effective date of contract was 27.03.2009 with a completion period of 27 months. Parties have to deliberate upon the requirements of 1st respondent and finalize the basic engineering within 10 months of commencement. The time schedule for completion of detailed design engineering was stipulated as 22 months under the contract. Upon approval of the design engineering, the 1st respondent is responsible for completing the civil works and also importing the building steel structure and sheeting. The designs were completed on 04.04.2013. 1st Petitioner requested for extension of time, from time to time on account of delays attributable to 1st respondent and not attributable to the petitioners.
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(f) 1st Respondent completed civil works on 29.12.2015. Since the civil work was delayed, erection work was also delayed. Petitioners completed the works to the extent possible and the plant was put to commercial operation with effect from 28.10.2016. 1st Respondent, however issued Preliminary Acceptance Certificate only on 28.02.2018 after a delay of two years. 1st Respondent granted extension of time from time to time till 28.02.2018 by reserving its right to levy liquidated damages. 1st Respondent misused its dominant position and caused serious financial losses to the petitioners. In the Preliminary Acceptance issued for the part of plant dated 10.12.2016, 1st respondent recorded that Mill was put in operation on 28.10.2016. It was further stated that the plant was found completely delivered, properly erected and fit for operation.
(g) Clause 22 of the GCC to the Contract provides for the Guarantee and Guarantee Period. Clause 22.1 of the GCC specifically states that "the Contractor shall be liable for a period of (12) calendar months of reliable and regular working of the Plant commencing from the date of issue of Pr.A.C as per Clause 20.0 or twenty two (22) calendar months from the Page 7 of 26 SRSJ ARBAPPL No.17 of 2022 date of PAC or twelve (12) months from certified as Deemed Acceptance, whichever is earlier to replace any parts that may fail or show signs of defects ...".
(h) The plant was put into operation with effect from 28.02.2016. The Guarantee Period shall be 22 months from 28.02.2016. The Notice of Termination of Contract was issued by 1st respondent on 19.05.2022, wherein it was stated that petitioners failed to rectify or replace all outstanding defects and/or deficiencies and complete the balance items listed by 28.02.2017. It was further stated that petitioners have failed to execute the work with due diligence and, also contravened the provisions of the contract and neglecting to carry out major obligations under the Contract. Thus, notice was issued invoking Clause 30.1 of GCC to terminate the contract.
(i) Petitioners completed the main scope of work and the 1st respondent issued Preliminary Acceptance Certificate for the Project on 28.02.2018 with a list of punch points. The defect liability period of 12 months from the date of Provisional Acceptance Certificate and 21 months from the Page 8 of 26 SRSJ ARBAPPL No.17 of 2022 date of Preliminary Acceptance Certificate, was expired by 28.12.2019. Hence, the petitioners shall not be held liable for performance after 28.12.2019. The petitioners received payment for 85% of the value of the work. The bank guarantees submitted by the petitioners are conditional.
(j) On 17.03.2022, the petitioners filed their Request for Arbitration before the International Chamber of Commerce vide proceedings bearing ICC Case No.26939/HTG. On 07.06.2022, the Secretary General of ICC confirmed the nomination of Professor Doug Jones and Professor Lawrence Boo as co-arbitrators and directed the co-arbitrators to nominate the presiding arbitrator within a period of one month. As a counterblast to the arbitration, the 1st respondent terminated the contract on 07.06.2022 and illegally encashed the bank guarantees of petitioners 2 and 3 and, also attempting to encash the bank guarantee of 1st petitioner. Petitioners sent a reply dated 08.06.2022 to the termination notice issued by 1st respondent on 07.06.2022. Hence, the petitioners filed the above arbitration application. Page 9 of 26
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3. (a) The 1st Respondent filed counter affidavit. The General Manager (construction) of 1st respondent deposed the affidavit. It was contended that 1st respondent called for open tender for supply of engineering and equipment and to render technical services in connection thereto and in relation to the Project. 1st Petitioner is principal contractor of the consortium. 1st Respondent entered into an agreement with the petitioners vide agreement No.VSP/CONT/6.3-MTPA EXPN/STM/COV/M-995/2008-2009 dated 27.03.2009. The period of contract is 27 months from 27.03.2009 to 27.06.2011. It is the responsibility of the 1st petitioner, being the principal contractor, to ensure due execution of the contract. Since the petitioners failed to execute the work and contravened the terms of contract by neglecting to carry out major obligation, 1st respondent issued termination notice dated 19.05.2022 under Clause 31.0 of GCC. Petitioners committed breach of contract, abandoned the work causing loss to 1st respondent. As per the terms and conditions and procedure of contract the bank guarantees are invoked by the 1st respondent. Time was extended for execution of contract due to delay caused by the petitioners and all extensions Page 10 of 26 SRSJ ARBAPPL No.17 of 2022 were granted by 1st respondent reserving right to claim liquidated damages. The delay analysis was concluded agreed by both parties as per Minutes of Meeting dated 07.10.2020 and the same was signed by petitioners and 1st respondent. In view of the same, delay is attributable to 1st petitioner consortium. As per Para-41 of Minutes of Meeting dated 07.10.2020, the Petitioners, M/s Danieli and Consortium confirmed that they will not invoke any arbitration/legal proceedings against RINL/VSP.
(b) The Preliminary Acceptance Certificate was issued to the petitioner along with a certain list of defects/deficiencies. After rectification of defects/deficiencies only, the petitioners are eligible to conduct PGTs, but the petitioners failed to complete PGTs.
(c) The 1st respondent issued Preliminary Acceptance Certificate on 17.10.2016 for part of the plant along with certain defects list on condition that the petitioners have to completely rectify the defects and deficiencies by 28.02.2017. However, petitioners failed to do so. It was denied regarding operation with effect from 28.02.2016. After termination of Page 11 of 26 SRSJ ARBAPPL No.17 of 2022 the Contract, the bank guarantees were invoked. The invocation and encashing of unconditional bank guarantees is in line with mutually agreed contractual provisions. Out of three bank guarantees, two bank guarantees issued by Bank of India were realized and the bank guarantee issued by 2nd respondent was realized due to deliberate delay caused by the bank.
(d) The defect liability period starts from the date of issue of Provisional Acceptance Certificate. However, Provisional Acceptance Certificate was not issued as PGTs are not completed. Preliminary Acceptance Certificate was issued on 28.02.2018 along with list of defects to be rectified by 30.09.2018 as committed by the consortium. The consortium intentionally consumed time without rectifying the defects to avoid their contractual obligations during defect liability period.
(e) On 08.06.2022 M/s ASP Advocates on behalf of the petitioners informed the 1st respondent that any attempt to encash bank guarantees shall be included in the claim in the Arbitration Case No.ICC 26939/HTG. However, bank Page 12 of 26 SRSJ ARBAPPL No.17 of 2022 guarantees were invoked prior to receipt of the said letter dated 08.06.2022. Since the petitioners abandoned the Contract, 1st respondent sustained huge losses for an amount of Rs.318 crores. The petitioners were paid 90% of total value of the contract, though they failed to attend the defects and deficiencies. The 10% left over amounts are due for Provisional Acceptance and final acceptance. The amount could not be released as the petitioners failed to complete PGTs and other requirements.
(f) The 1st respondent invested about Rs.1,500 crores in the Structural Mill Project, out of which, petitioners' part would be about Rs.1,000 crores. The 1st respondent is incurring losses due to the failure of the petitioners in fulfilling their contractual obligation. The tentative loss for 1st respondent is around Rs.318 crores, whereas the value of SDBGs approximately is Rs.46 crores and thus, prayed to dismiss the application.
4. Additional counter affidavit filed by 1st respondent. It was contended that financial status of 1st respondent net Page 13 of 26 SRSJ ARBAPPL No.17 of 2022 worth as on 31.03.2022 is Rs.3174.55 crores and total turnover for the financial year 2021-22 is Rs.28,207 crores.
5. (a) The 3rd Petitioner filed reply-affidavit to the counter affidavit filed by 1st respondent. It was contended that despite repeated requests, the 1st respondent did not permit the petitioners to complete the Performance Guarantee Tests (PGTs). Petitioners successfully completed PGT for one profile. The Minutes of Meeting dated 07.10.2020 was signed by 3rd petitioner, since the 3rd petitioner was of the view that 1st respondent would release the due payments and claims to the 3rd petitioner. No document was filed by 1st respondent regarding losses suffered. Petitioners agreed to resolve the punch points vide Minutes of Meeting dated 14.03.2020 prior to commencement of PG Test of the last profile. As per Clause 20.7 of GCC in case PG Tests have not been carried out as per the schedule for the reasons attributable to the 1st respondent for a period of six months from the date of petitioner's notification of its readiness for PG Tests, the payment related to Preliminary Acceptance Certificate is to be released. The readiness to restart the PG Tests has been first conveyed in July, 2019 and accordingly, the petitioners Page 14 of 26 SRSJ ARBAPPL No.17 of 2022 invoked Clause 20.7 of GCC. The punch points that remain to be completed by the petitioners were minor in nature and have no impact on completion of the remaining PG Tests or production of the plant and the same was conveyed by the petitioners through various correspondences, meetings and discussions. In fact, it has also been proven by the successful PG Test of one profile.
(b) One of the key reasons that the 1st respondent has not permitted the petitioners to continue PG Tests is that once the Tests conducted successfully, it would result in accumulation of products with 1st respondent and the 1st respondent has no orders for the same. Therefore, the 1st respondent ignored to consider the repeated requests of the petitioners to complete the PG Tests. The fact that the 1st respondent has been operating the plant for the last five years is a testament to the successful running of the plant irrespective of completion of balance punch points.
6. Heard Sri P.Veera Reddy, learned senior counsel representing Sri S.Rambabu, learned counsel for the petitioner and Sri V.Ravinder Rao, learned senior counsel Page 15 of 26 SRSJ ARBAPPL No.17 of 2022 representing Sri V.Subrahmanyam, learned counsel appearing for the 1st respondent.
7. Learned senior counsel appearing for the petitioner while reiterating the contentions in the affidavit, would further contend that, legal notice dated 09.10.2021 was issued opting for arbitration. After that termination notice was issued and later the contract was terminated on 07.06.2022. Immediately bank guarantees of petitioners 2 and 3 were encashed. Petitioner filed application and this Court granted interim order on 13.06.2022. He also would submit that the petitioner has no objection to keeping the bank guarantee alive till the disposal of the case before the arbitral tribunal. He also would submit that if the bank guarantee is permitted to encashed, 1st petitioner will put to irretrievable loss.
8. Learned senior counsel appearing for 1st respondent would contend that works were to be completed by 27.06.2011. Petitioners sought for extension on 14 occasions. After completion of work project has to go through three stages i.e. trial run; integrated trial run and later Preliminary Page 16 of 26 SRSJ ARBAPPL No.17 of 2022 Acceptance Report will be issued. Preliminary Acceptance Certificate was issued subject to fulfilment of defects. As many as 5,466 punch points were pointed out. After performance of guarantee test provisional acceptance certificate will be issued. Later the final acceptance certificate will be issued. To expedite the work, in deviation of contract, a performance test was conducted. Out of 6 profiles, one test was conducted, and 5 tests abandoned. Arbitration application was filed on 13.06.2022 and tribunal was constituted on 25.07.2022. After termination of contract on 07.06.2022, bank guarantees were invoked on 09.06.2022. Except Punjab National Bank, other banks honoured encashment of bank guarantee. Petitioners failed to satisfy fraud and irretrievable injury and prayed to dismiss the petition.
9. The point for consideration is:
Whether invoking bank guarantee by 1st respondent would cause any irretrievable injury to the petitioners?
10. As seen from the material papers filed along with the application and counter affidavit, there is no dispute Page 17 of 26 SRSJ ARBAPPL No.17 of 2022 regarding the contract between petitioners and 1st respondent and bank guarantees executed by petitioners 1 to 3. It is the case of the petitioners that the plant has been in operation for the last five years and that itself proves that there are no defects. The material on record discloses that the plant was put into operation with effect from 28.10.2016. However, Preliminary Acceptance Certificate was issued by 1st respondent on 28.02.2018.
11. One of PG Tests was conducted, and other PG Tests are yet to be conducted. Pleading regarding non completion of other PG Tests is oath against oath. It is pertinent to mention here that learned senior counsel appearing for 1st respondent would contend that to expedite work, in deviation, performance test was conducted. This statement made by learned senior counsel would support the case of the petitioners regarding conducting of performance test.
12. Whether issuance of Preliminary Acceptance Certificate in deviation and delivery of plant; Whether the petitioners committed breach of contract, abandoned the work causing losses to the 1st respondent; and whether the delay in Page 18 of 26 SRSJ ARBAPPL No.17 of 2022 executing the work is attributable to petitioners or 1st respondent will be decided by the learned Arbitrators.
13. The bank guarantees were submitted by the petitioners as security deposit towards performance guarantee. It is the admitted case of both parties that 85% to 90% of the total value of the contract was completed.
14. Clause 20.7 of GCC specifically provides that in case PG Tests have not been carried out as per schedule for the reasons attributable to 1st respondent for a period of six months from the date of petitioner's notification for its readiness for PG Tests, the payment related to Preliminary Acceptance Certificate is to be released. As per the averments in the application and reply-affidavit, the petitioners conveyed their readiness to restart PG Tests in July, 2019. Petitioners further contended that punch points that remain to be completed were minor in nature.
15. The Preliminary Acceptance Certificate dated 28.02.2018 reads thus:
"We certify that after successful completion of erection, testing, start up, trial runs of the individual unit as well Page 19 of 26 SRSJ ARBAPPL No.17 of 2022 as integrated trial runs, the facilities/plant & equipment have been commissioned in conformity to the Contract Specification and related terms and conditions of General Conditions of Contract. Accordingly, we hereby issue this Preliminary Acceptance Certificate (PAC) and take over the Work against your undertaking that you shall rectify or replace all the outstanding defects and/or deficiencies and complete the balance items listed in the attached Annexures hereto, as soon as possible, so as to make the work fully ready for subsequent Performance Tests as per the requirements of the Agreement."
It was further mentioned that -
"This letter does not relieve you or your obligation to complete the execution, and establishment of performance guarantee parameters of the work in accordance with the contract nor of the obligations during the warranty/guarantee period."
16. Thus, a perusal of the Preliminary Acceptance Report would indicate delivery of plaint and commissioning. Of course, subject to other deficiencies. A list of equipment not commissioned is enclosed in Annexure-1. The defect points are noted in Annexure-2. The Consortium has agreed to liquidate the defects by 28.02.2017. The plant is deemed to have been taken over only after issue of PAC for all the units of the plant. This court is conscious of submission of learned senior counsel for the 1st respondent that issue of Preliminary Acceptance Certificate for part of the plant is without prejudice to employer's right under the Contract and the Page 20 of 26 SRSJ ARBAPPL No.17 of 2022 consortium is not relieved from any of the obligation stipulated under the Contract.
17. Petitioners filed the application under Section 9 of the Act 1996 praying the Court to grant injunction restraining the 1st respondent from encashing the Bank Guarantees and other reliefs.
18. For grant of an injunction restraining the 1st respondent from encashing the Bank Guarantees, petitioners must satisfy irretrievable injustice and fraud. Irretrievable injustice, according to petitioners' is impending privatization of 1st respondent and termination of contract after 13 years that to after plant was delivered on trivial grounds. It is also admitted fact that the dispute is now before the learned Arbitral tribunal, and the tribunal fixed the schedule. The Contract was continued for a period of 13 years. After initiation of arbitration proceedings, the contract was terminated. Immediately, after termination of contract, the bank guarantees submitted by petitioners 2 and 3 were enchased on 07.06.2022. The bank guarantees submitted are @ 5% aggregated price for each of three agreements signed by Page 21 of 26 SRSJ ARBAPPL No.17 of 2022 Danieli, Dil and Micco towards security deposit. Commissioning, one of the facets of the Contract, according to petitioners has been complied with.
19. Before the Arbitral Tribunal, petitioners and 1st respondent made their respective claims. Keeping in view the facts of this case, this Court has to see whether invocation of bank guarantee by the 1st respondent would cause irretrievable injury.
20. It is settled law that Bank Guarantees are instruments primarily used by business entities to strengthen and/or secure an obligation under their contract. The party who requests that the guarantee is to be issued applies to its bank for a bank guarantee to be issued in favor of the beneficiary, i.e., the party who will receive the guarantee. Bank guarantees provide a better negotiating position in business conclusions and helps in securing own claims and performance of the other party to the transaction. Generally, bank guarantees can be classified into two types; a conditional bank guarantee and an unconditional bank guarantee. For invoking a conditional bank guarantee, it is Page 22 of 26 SRSJ ARBAPPL No.17 of 2022 mandatory that the conditions specified for invocation of such a guarantee are met and only then the guarantee can be encashed. For invocation of unconditional guarantee, no specific conditions are required to be satisfied. As long as the invocation itself is legal, the bank is bound to honour such an invocation.
21. In Himadri Chemicals Industries Ltd. Vs. Coal Tar Refining Co.1, the Hon'ble Apex Court observed as follows:
"14. From the discussions made hereinabove relating to the principles for grant or refusal to grant of injunction to restrain enforcement of a bank guarantee or a letter of credit, we find that the following principles should be noted in the matter of injunction to restrain the encashment of a bank guarantee or a letter of credit:
(i) While dealing with an application for injunction in the course of commercial dealings, and when an unconditional bank guarantee or letter of credit is given or accepted, the beneficiary is entitled to realise such a bank guarantee or a letter of credit in terms thereof irrespective of any pending disputes relating to the terms of the contract.
(ii) The bank giving such guarantee is bound to honour it as per its terms irrespective of any dispute raised by its customer.
(iii) The courts should be slow in granting an order of injunction to restrain the realisation of a bank guarantee or a letter of credit.1
(2007) 8 SCC 110 Page 23 of 26 SRSJ ARBAPPL No.17 of 2022
(iv) Since a bank guarantee or a letter of credit is an independent and a separate contract and is absolute in nature, the existence of any dispute between the parties to the contract is not a ground for issuing an order of injunction to restrain enforcement of bank guarantees or letters of credit.
(v) Fraud of an egregious nature which would vitiate the very foundation of such a bank guarantee or letter of credit and the beneficiary seeks to take advantage of the situation.
(vi) Allowing encashment of an unconditional bank guarantee or a letter of credit would result in irretrievable harm or injustice to one of the parties concerned."
22. Before the Arbitral Tribunal, the amount in dispute, according to the petitioners (entitled to) is EURO 9,633,915.65 equivalent to INR 831,562,727.01. The 1st respondent also filed a claim statement before the Arbitral Tribunal, claiming approximately Rs.318 crores (as per the counter). The two bank guarantees given by the 1st respondent come to EURO 3,327,434. The claim made by the petitioners is EURO 9,633,915.65.
23. Thus, the discussion made supra, this court is of prima facie view that the plant was commissioned in the year 2016. After the notice was issued by the petitioners to refer the matter to the Arbitral Tribunal, the 1st respondent issued the Page 24 of 26 SRSJ ARBAPPL No.17 of 2022 notice of termination and later terminated the contract. Learned senior counsel appearing for the petitioners would submit that 1st petitioner shall keep the bank guarantee alive till the disposal of case before the Arbitral Tribunal. In the peculiar facts of this case, if the 1st respondent is allowed to encash the bank guarantee offered by 1st petitioner, it will cause irretrievable injury to the 1st petitioner. In respect of other petitioners, the bank guarantees were already invoked. Thus, this Court is of the considered opinion that invocation of bank guarantee given by the 1st petitioner, by the 1st respondent will cause irretrievable injury to the 1st petitioner and hence, injunction is granted restraining the 1st respondent from invoking the bank guarantee bearing NO.03051LG014516 dated 15.12.2016 for an amount of EURO 1,663,717 and No.305ILG014616 dated 15.12.2016 for an amount of EURO 1663717 issued by the Punjab National Bank.
24. The 1st petitioner shall keep the bank guarantees NO.03051LG014516 dated 15.12.2016 for an amount of EURO 1,663,717 and No.305ILG014616 dated 15.12.2016 for an amount of EURO 1,663,717 issued by the Punjab Page 25 of 26 SRSJ ARBAPPL No.17 of 2022 National Bank, alive till the dispute before the Arbitral Tribunal.
25. The relief sought for in (C) directing the 1st respondent to deposit bank guarantee amount already encashed is negatived.
26. Accordingly, this Arbitration Application is partly allowed.
As a sequel, pending miscellaneous petitions, if any, shall stand closed.
________________________________ JUSTICE SUBBA REDDY SATTI 6th July, 2023 PVD Page 26 of 26 SRSJ ARBAPPL No.17 of 2022 IN THE HIGH COURT OF ANDHRA PRADESH: AMARAVATI HONOURABLE SRI JUSTICE SUBBA REDDY SATTI ARBITRATION APPLICATION No.17 of 2022 Date : 06.07.2023 PVD