BBEFESA AGUA Vs. IVRCL

JUDGEMENT

(1.) The First Applicant is a Spanish Company operating in the infrastructure sector and operates in India through its subsidiary, the Second Applicant, which is a Joint Venture Company. The Second Applicant is a wholly owned subsidiary of the First Applicant and is a Company incorporated in India and is a contractor to the Second Respondent. The Third Applicant is a Partnership firm of the First Applicant and it is also a contractor to the Second Respondent. The First Respondent is a Joint Venture partner of the Applicants and is also a shareholder in the Second Respondent. The Second Respondent is the Joint Venture Company of the First Applicant and the First Respondent and the Third Respondent issued Bank Guarantees in favour of the Second Respondent at the request of the First Applicant. The brief facts of the case are as follows:

(2.) The Respondent 1 & 2 filed a common counter questioning the maintainability of the Applications under the Arbitration and Conciliation Act, 1996 and also the right of the Applicants to pray for interim injunction restraining the Respondents from invoking the Bank Guarantee, which is unconditional and irrevocable.

(3.) It is stated that the Applications filed under Section 9 of the Act are not maintainable and the Bank Guarantees are distinct and separate Agreements entered into between the Applicants and the Respondents 1 & 2 and the Bank Guarantees issued by the Third Respondent do not contain any Arbitration Clause and therefore, an Application under Section 9 of the Arbitration and Conciliation Act, 1996, for interim reliefs pending Arbitration proceedings cannot be filed for the purpose of determining a dispute arising under such Bank Guarantee. Further, the Third Respondent Bank was not a party to the Memorandum of Understanding [MoU] and therefore, the Third Respondent was not a party to the Arbitration Agreement contained therein and hence, the Applications filed under Section 9 of the Arbitration and Conciliation Act, 1996 are not maintainable.