Gammon India Ltd. vs Gail (India) Ltd. & Anr.
2009 Latest Caselaw 1143 Del

             * IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                                  Date of Reserve: 31.3.2009
                                                                 Date of Order: 2nd April, 2009

OMP No. 169/2009
%                                                                                02.04.2009

        Gammon India Ltd.                                      ... Petitioner
                                        Through: Mr. A.K.De, Advocate

                   Versus


        GAIL (India) Ltd. & Anr.                                    ... Respondents



JUSTICE SHIV NARAYAN DHINGRA

1. Whether reporters of local papers may be allowed to see the
judgment?

2. To be referred to the reporter or not?

3. Whether judgment should be reported in Digest?

JUDGMENT

This application/petition has been filed by the petitioner under

Section 9 of the Arbitration & Conciliation Act, 1996 with a prayer that this Court

should restrain respondent no. 1 from enforcing and encashing bank guarantee

no. 32/94 dated 23.7.1994 and restrain the respondent no.2/bank from remitting

the amount of bank guarantee to the respondent no.1.

2. The bank guarantee was invoked by the respondent no.1 vide letter

dated 24.3.2009 thus, the respondent no.1 cannot be restrained by this Court

from enforcing or encashing the bank guarantee as the respondent no.1 before

filing of this petition had already exercised its right under the contract and

invoked the bank guarantee and asked the bank to encash the bank guarantee.

Respondent no.2 cannot be allowed to be made a party in this

application/petition since respondent no.2 is not a party to the arbitration

agreement.

3. It is settled law that the Court has to be loathe in granting injunction

against invocation of bank guarantees and the Court could issue such an

injunction only under those circumstances where bank guarantee has been

obtained by a fraud or the petitioner is likely to suffer an irretrievable/irreparable

loss. If the allegations of the petitioner that the respondent no.1 was on the

wrong side of the contract and the petitioner was liable to recover some

damages, the Arbitrator would consider this and pass an award and would be at

liberty to allow the damages thus, there is no question of irreparable damage to

the petitioner. I find that there is no force in the application/petition. The

application/petition is hereby dismissed.

April 02, 2009                                                 SHIV NARAYAN DHINGRA, J.
vn