RANI CONSTRUCTION PRIVATE LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) This is a petition under Section 20 of the Arbitration Act. 1940. The petitioner in 1.A.7149/ 93 has prayed for injunction restraining the respondent Union of India from encashing the guarantee of bond No. 88/92 furnished by the State Bank of India. Ponda, Goa till the disposal of the present proceedings.

(2.) The dispute related to the work of "Earthwork in filing/cutting in formations, diversions of nallahs, trollery refuges, construction of arch bridges No. 43 and 43-A etc According to the petitioner, the Union of India rescinded the contract illegally and the petitioner has challenged the recession and has claimed the damages exceeding Rs. 80.00 lakhs.

(3.) As per the terms of the contract, the petitioner was obliged to furnish a bank guarantee to the tune of Rs. 1.50.000.00 It was processed on 22.9.88 and it was subsequently being renewed According to the petitioner, the invocation of the guarantee is not in accordance with law Therefore, there should be an injunction pending the arbitration proceedings. The Union of India has filed a reply to this petition contending inter-alia that the petitioner is not entitled to any damages. Most of the claims made by the petitioner would come into the categories of Excepted Matters in Clause 63 of the General Conditions of Contract. The petitioner was guilty of several breaches of contract and the respondent was forced to rescind the contract. The respondent incurred losses and the respondent was within its rights in invoking the bank guarantee.