MIR AND SONS Vs. STATE AND OTHERS

JUDGEMENT

(1.) In this appeal, the appellant seeks the indulgence of this Court in setting aside the impugned order dated 31.03.2004, passed by the learned Principal District and Sessions Judge, Srinagar.

(2.) The facts, chiseled in a nutshell, are that a Works Contract for the construction of the Additional Office accommodation at Old Secretariat, Srinagar, was awarded to the appellant by the respondent No. 2-Chief Engineer R&B Department, Kashmir, Srinagar, vide Allotment order No. 15612-16 dated 26.11.1992, on various terms and conditions. Condition No. 8 of the contract, which is germane to the issue, reads as under:

(3.) It is submitted by the appellant that the construction work for which drawings were made available to him has been completed. Against the bill of charge raised by the appellant for completion of this part of the works contract a sum of Rs. 1.20 lacs being 15 % of the bill amount was paid on account of part repayment. The respondents are providing the approved construction drawings for the rest of the work due to which the execution of the works contract did make any headway beyond the stage of construction already done, as a consequence of which, the appellant has been incurring a recurring loss of a substantial amount. He has proceeded to state that a dispute has arisen between the parties which as per Clause 54 of the contract document is to be referred for arbitration to the Engineer-In-Charge/Accepting Authority/Chief Engineer, whose decision in the matter shall be final and binding. According to the appellant, the arbitral proceedings will commence on the date on which a request for that dispute to be referred to the arbitration is received by the respondent and in this behalf the appellant has already made a formal request to the respondent. The respondents are taking undue advantage of the situation and are bent upon to invoke the bank guarantee which the appellant has submitted under the terms of the contract. The appellant preferred a motion before the learned Principal District Judge, Srinagar, under section 9 of the Arbitration and Conciliation Act 1997, to restrain the respondents to invoke the bank guarantee offered by J&K Bank for and on behalf of the bank under bank guarantee No. 34/02 dated 28.12.2002. The motion under Section 9 of the Act of 1997, came up for consideration before the Court of the learned Principal District Judge, Srinagar on 22.09.2003, when the learned Principal District Judge, Srinagar, on an overall consideration of the matter was pleased to pass the order in the matter, whereby notice was issued to the respondents for filing the objections with further direction to take any step to invoke the bank guarantee furnished by the appellants. In response to the notice of motion, the respondent NOs. 2 to 5 entered appearance through counsel and pleaded that the application under Section 9 of the Act of 1997 is maintainable until proceedings are pending in the matter either before the Arbitrator or in the form of a Suit. They also stated before the trial Court that the bank guarantee is independent of the main contract and that the bank is under an obligation to pay as and when the demand is made by the Government. These pleas found favour with the learned Principal District Judge, Srinagar, as a corollary to which he rejected the application of the appellants vide order dated 31.03.2004. It is pleaded that the order impugned herein this appeal, suffers from glaring error of law and jurisdiction and in sequel thereto is rendered bad and unsustainable in the eyes of law, as a corollary to which, the same is liable to be set aside under the appropriate order of this Court.