FENNER INDIA LIMITED Vs. BSES LIMITED A COMPANY

JUDGEMENT

(1.) THE above appeal is preferred against the order dated 22.3.2004 passed by the learned Principal District Judge, Madurai, dismissing Ar.O.P. No. 1/2003 filed under Sec. 9 of the Arbitration and Conciliation Act, 1996, hereinafter called "the Act", directing the parties to maintain status-quo for a period of one month from the date of the said order.

(2.) THE 1st respondent was awarded with the contract by Godavari Sugar mills Limited for construction of a Captive Power Plant in their factory at Sameerwadi, Karnataka. THE 1st respondent, in turn, awarded a part of that work to the appellant for the value of Rs. 70,00,000/-, Rs. 5,57,00,000/- and Rs. 90,00,000/-, totalling a sum of Rs. 7,17,00,000/- under three contracts - namely " (1) Design and Engineering (2) Supply of equipment (3) Civil works. Pursuant to the said contract, four bank guarantees, namely, B.G. No. E1/288/99, 289/99, 290/99 and 291/99 of the value of Rs. 7,00,000/-, 55,70,000/-, 9,00,000/- and 38,35,000/- respectively, towards advances and security deposit were given by the appellant and such bank guarantees were executed on 23.3.2000. THE expiration of the said bank guarantees also was extended from time to time at the instance of the appellant.

(3.) LEARNED Senior Counsel appearing for the appellant submitted that the court below should not have dismissed the petition, or otherwise, should have granted the order to maintain status-quo pending disposal of the Application filed under Sec. 17 of the Act. LEARNED Senior Counsel has referred to the Memorandum of Grounds in support of his submission that the appeal is preferred not only restricting the period for one month while granting order of status-quo but also against the dismissal of the petition. He further submitted that to safeguard their interest, they have approached the court below under Sec. 9 of the Act and the court below has directed the appellant to approach the arbitrators, but the arbitrators are not passing any order and so the appellant should not be non-suited in this appeal merely because they filed an Application under Sec. 17 of the Act, before the arbitrator as directed by the learned District Judge, Madurai. If such a view is taken, the appellant is left with no remedy, as the 1st respondent will enforce the bank guarantees and the Application filed under Sec. 17 of the Act before the arbitrators would become infructuous. LEARNED Senior Counsel also pointed out the averments in the petition filed before the lower court to the effect that the appellant had also alleged fraud, and irretrievable injustice would be caused to them if the 1st respondent is allowed to enforce the bank guarantees. It is his further submission, with respect to the finding given by the learned District Judge, that the advance amount for which 3 out of 4 bank guarantees were given, had been adjusted in the bills. He also stated that the work had been completed and only the 1st respondent has to pay money to the appellant for the extra work done by the appellant and so there is a special equity available to grant an order preventing the 1st respondent from enforcing the bank guarantees.