ESSAR OIL LIMITED Vs. OIL INDIA LIMITED

JUDGEMENT

(1.) This is a petition under Section 9 of the Arbitration and Conciliation Act, 1996(hereinafter referred to as the Act), seeking to restrain respondent No.1 - M/s Oil India Ltd., from encashing the bank guarantee No.95/2, dated 15 May 1995 for Indian rupees equivalent to US $ 2,221,563 issued on behalf of the petitioner by the Bank of Baroda, Bhubaneshwar Branch, Bhubaneshwar, respondent No.2 herein, in favour of the first respondent and restraining the said bank from paying any amount under the said guarantee. IA 9767/96 is for grant of ad interim relief to the same effect.

(2.) The facts relevant for the controversy involved are as under:

(3.) Under Article 28 of the said agreement the petitioner was required to furnish to respondent No.1 a performance bond in the form of a bank guarantee for the aforenoted amount, representing 7.5% of the estimated value of the tender. In compliance thereof the petitioner furnished to respondent No.1 the aforenoted bank guarantee from respondent No.2 bank. The relevant portion of the bank guarantee reads as under: