Rungta Irrigation Limited vs National Building Construction ...
1998 Latest Caselaw 853 Del

JUDGMENT

S.N. Kapoor, J.

1. Heard the learned Counsel for the appellant.

2. In this case 'the applicant furnished a Bank guarantee for a sum of Rs. 1,02,000/-. It appears that the said Bank guarantee was valid till 24th July, 1997. The respondent vide its letter dated 14.7.1997 asked the appellant as under :

"It is regretted that you could not fulfill your commitments as per conditions stipulated in tender and work order. We are, therefore, forced to complete the work at your risk and cost being this project a time bound and Supreme Court monitored as well. In view of this we have no option but to direct your banker to encash the Bank guarantee.

However, if you still wish to settle our issues mutually we have no objection but in which case you have to first of all extend your Bank guarantee immediately for further six months and settle all issues including completion of balance work and final measurements etc. latest by 28.7.1997. You may please apprise us with your option immediately with the receipt of this letter otherwise we will take out stand to encash the Bank guarantee and carrying out the balance work at your risk and cost by inviting fresh tender alongwith other actions in view of contractual stipulations".

3. It indicates that before the expiry of the period the Bank guarantee was sought to be extended by the respondent with warning that if it was not extended, the respondent would invoke Bank guarantee. On a query, the learned Counsel for the appellant informs that the Bank guarantee has not been extended in terms of letter dated 14.7.1997.

4. It is admitted that the petition was filed earlier under Section 11 of the Arbitration & Conciliation Act, 1996 (hereinafter called 'the 1996 Act') and another application was moved on 17.7.1997 which was rejected on 14th May, 1998 on the ground that arbitration agreement had not been filed. Thereafter the appellant moved application under Section 9 of the 1996 Act seeking injunction restraining Allahabad Bank from releasing the amount of Bank guarantee furnished by the applicant to the respondent No. 1 till the disposal of the petition under Section 11 of 1996 Act. It also appears that the Bank guarantee had been invoked before the last day of its validity. Since after 23rd October, 1997 the appellant did not ask for extension of the stay order in the petition under Section 11 of 1996 Act, there was no stay after 23.10.1997. Learned Counsel further submits that since it was not encashed during this period now it cannot be invoked. I feel that it does not indicate that the petitioners intentions are fair. On one hand the Bank guarantee has not been got extended despite the option given by the respondent; instead stay was sought and granted when the Bank guarantee has been invoked before the expiry of its term. Similar application filed earlier has already been dismissed. Now there is no fresh reason to restrain respondent No. 2-Bank from paying the money under the Bank guarantee. There is no merit in this appeal and it is dismissed accordingly.