BHARAT ELECTRICALS Vs. STANDING CONFERENCE OF PUBLIC ENTERPRISES

JUDGEMENT

(1.) This is a petition under Section 9 of the Arbitration and Reconciliation Act, 1996 (for short the Act) Filed by the petitioner/contractor to restrain the respondent from encashing the bank guarantees No.317/92 to 326/92 and 451/92 to 458/92 issued by Canara Bank, Janpath, New Delhi on behalf of the petitioner which are sought to be invoked by the respondent, beneficiary in their letters dated 20.12.1996/23.12.1996.

(2.) Briefly the facts are that the respondent is a Society which was setting up an office complex for Public Sector undertakings at Laxmi Nagar District Centre, Delhi. The petitioner was awarded a contract for excution of the work of Internal electrification and Sub Station work at the said Complex. The contract between the parties was executed on 28.10.1988. The total value of the work was Rs. 6,85,62,217.70. The work was to be completed within a period of 20 months, i.e., by the end of June, 1990. The work was delayed and could not becompleted within the stipulated period. Only the work of the value of Rs. 7.30 Lacs could be executed. A supplementary agreement was also executed on 20.3.1991 between the parties.

(3.) It appears that the contract was not terminated and the petitioner continued with the work. During the pendency of the work the petitioner approached the respondent vide letter dated July 16, 1992 (Annexure R-2) for sanction of a special interest free advance of Rs. 1.25 Crores for arranging material for the execution of the work on the plea that due to severe cash flow problem they were not having funds to finance the purchase of equipment required for the project and also due to escalation in the cost of material.