CHIEF EXECUTIVE OFFICER OFFICE OF CANTONMENT BOARD WELLINGTON CANTT Vs. GHARPURE ENGINEERING AND CONSTRUCTIONS PRIVATE LIMITED

JUDGEMENT

(1.) Challenging the order of injunction restraining the appellant herein from encashing the bank guarantee executed in their favour by the first respondent herein, the appellant is before us.

(2.) The appellant and the first respondent entered into an agreement on 27/2/2019 and a work order was issued by the appellant to the respondent on 5/3/2019 for providing Sewer Network, constructing, erecting and commissioning of pumping etc., at Wellington Cantonment Board. The first respondent executed a bank guarantee drawn on the second respondent bank to the tune of Rs.2,51,28,677.00 in favour of the appellant. Dispute arose between the parties since the appellant did not make payment in terms of the contract to the tune of Rs.8,54,11,548.00, as per the first respondent's version. The contract agreement contains an arbitration clause and the first respondent is taking steps to appoint an Arbitrator to decide the issue. In the mean time, the appellant, claiming that the first respondent had committed breach of its obligations, attempted to invoke the bank guarantee executed by the first respondent.

(3.) The first respondent, filed A.O.P.No.13 of 2022 on the file of the learned District Judge, the Nilgiris, under Sec. 9 of the Arbitration and Conciliation Act 1996 praying for an order of injunction restraining the appellant from encashing the bank guarantee. The appellant opposed the said application on the ground that there cannot be an injunction restraining the appellant from invoking the bank guarantee stating that there is a violation in the terms of the contract. The appellant's case before the learned District Judge was that the invocation of bank guarantee and the terms of contract are two different aspects and there cannot be any injunction unless there are allegations of fraud or irretrievable injury caused to the person seeking injunction of the enforcement of bank guarantee.