BHARAT HEAVY ELECTRICALS LTD. ELECTRONICS DIVISION Vs. WEST BENGAL STATE ELECTRICITY DISTRIBUTION COMPANY LTD.

JUDGEMENT

(1.) The instant appeal arises from a judgment and order dtd. 20/1/2022 passed by the Single Bench in AP 242 of 2021 in relation to an application under Sec. 9 of the Arbitration and Conciliation Act, 1996. By the impugned order the aforesaid proceeding is dismissed upon refusal to pass any interim order or order of restraint against the respondent herein to invoke the performance bank guarantee submitted by the appellant in relation to a contract.

(2.) Shorn of unnecessary details, the salient facts emerged from the pleading of the respective parties are adumbrated hereinafter. By a virtue of a notice inviting tender issued by the Respondent no. 1 for work of design, engineering, manufacturing, supply, installation, testing and commissioning including the warrantee, obligation and maintenance of 10 MW Solar PV Power Project at Mejia, the appellant was declared successful bidder and a letter of intent dtd. 30/7/2016 was issued in its favour. Pursuant to the said letter of intent, the Letter of Award dtd. 6/9/2016 was issued containing an exhaustive terms and conditions relating to commissioning, setting up and operationalise the said 10 MW Solar PV Power Project. One of the terms and conditions incorporated in the said Letter of Award (LOA) obligated the appellant to furnish a performance guarantee through bank for due performance of the contract and the obligations imposed upon the appellant. Pursuant to such obligation, the bank guarantee to the tune of Rs.5,60,62,267.00 being the 10 per cent of the value of the contract was furnished by the appellant. The genesis of the litigation ensued when the said bank guarantee was invoked by the Respondent no. 1 on 24/5/2021. The application under Sec. 9 of the Arbitration and Conciliation Act, 1996 was filed by the appellant seeking an order of restraint upon the Respondent no. 1 herein from invoking the said bank guarantee as well as the Respondent no. 2 to honour the said bank guarantee.

(3.) The contention of the petitioner is evidently based upon the nature of the bank guarantee discerned from the language employed therein and the conduct of the parties in relation to the commissioning of the said project. According to the appellant, the intention of the parties can be gathered from the expressions and/or the languages used in the said bank guarantee being suggestive of the fact that it is conditional and depends upon the happening of the events and cannot be regarded as an unconditional or irrevocable. The Trial Court held that the bank guarantee is unconditional and irrevocable and does not depend upon any conditions or the events and therefore, the moment the invocation is made, it is obligatory on the part of the bank to honour the promise or the commitment under the said bank guarantee.