Full Judgment Text
1
2025 INSC 640
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6413 OF 2025
(ARISING OUT OF SLP (CIVIL) NO. 21916 OF 2024)
M/S JINDAL STEEL AND POWER LTD. & ANR. … APPELLANTS
VERSUS
M/S BANSAL INFRA PROJECTS PVT. LTD.
& OTHERS … RESPONDENTS
J U D G M E N T
R. MAHADEVAN, J.
Leave granted.
2. This appeal has been filed by the appellants challenging the order dated
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20.08.2024 passed by the High Court of Orissa, Cuttack in W.P. (C) No.
11848 of 2024 which was filed under Article 227 of the Constitution of India,
against the order dated 30.04.2024 passed by the Senior Civil Judge (Commercial
Signature Not Verified
Digitally signed by
CHANDRESH
Date: 2025.05.07
17:28:11 IST
Reason:
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Court), Cuttack , in Arbitration Petition No. 14 of 2024 filed by Respondent No.1.
1
Hereinafter referred to as “the High Court”
2
For short, “the Commercial Court”
2
The Commercial Court by the said order dated 30.04.2024 rejected the prayer for
ex parte ad interim injunction made in an application under Order XXXIX Rule 3
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and Section 151 of the Code of Civil Procedure, 1908 filed in the application
under Section 9 of the Arbitration and Conciliation Act, 1996, observing that no
order of injunction could be passed without affording an opportunity of hearing to
the opposite parties, and accordingly, it directed issuance of notice to the opposite
parties and fixed 25.06.2024 as the date for their appearance. Challenging the said
order of the Commercial Court, Respondent No.1 (herein) filed the writ petition
before the High Court, in which, the High Court as an interim measure, granted an
order of status quo till the next date of hearing with regard to encashment of bank
guarantee. Thereafter, the High Court by the order impugned herein, disposed of
the writ petition in the following terms:
“40. Hence, the parties are directed to appear before the Senior Civil Judge,
Commercial Court, Cuttack in ARBP No. 14 of 2024 on 27.08.2024. If so required,
the Commercial Court shall prepone the date to the said date, if the said case
stands posted to any date beyond the said date. The Opposite Parties shall file their
Objection with all relevant documents, if any, to the application filed under section
9 of the Act, 1996, within ten days from the said date.
41. On filing of Objection, the Senior Civil Judge, Commercial Court, Cuttack shall
proceed further in accordance with law and shall try to conclude the said
proceeding at the earliest, preferably within a period of six weeks from the date of
filing of the objection and documents by the Opposite Parties.
3
For short, “CPC”
3
42. Since the Bank Guarantee furnished by the Petitioner is going to expire on
05.09.2024, the petitioner is directed to extend the said BG until 31.12.2024 well
before the expiry of the said period.
43. As the Opposite Parties contested the present Writ Petition on technical
grounds of maintainability so also scope regarding interference by the Court
regarding invocation of Bank Guarantee and are yet to file their Objection in
ARBP No.14 of 2024, it is made clear that after filing of Objection by the Opposite
Parties, the Senior Civil Judge, Commercial Court, Cuttack shall proceed further
in accordance with law and decide the prayer made in ARBP No.14 of 2024 on
merit taking into consideration the pleadings and documents on record, without
being influenced by the observations made above. However, the interim order
dated 20.05.2024 passed in the present case shall remain in force till disposal of
st
the ARBP No.14 of 2024, subject to extension of Bank Guarantee by 31 August,
2024.”
Aggrieved by the aforesaid order of the High Court, the appellants are before us
with the present appeal.
FACTUAL MATRIX
3. The relevant facts necessary to understand the background of the litigation
are as follows:
3.1. The appellants issued a work order dated 24.01.2022 to Respondent No.1
viz ., M/s. Bansal Infra Projects Private Limited, for construction of 400 flats at
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Jindal Nagar, South Block (Sharmik Vihar) for a total value of
Rs. 43,99,46,924.13/-. To execute the said work, the appellants had given an
advance of Rs. 3,73,95,490/- and to secure the same, Respondent No.1 furnished a
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Hereinafter referred to as “the Project”
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bank guarantee bearing No. 32700IGL0001122 dated 08.03.2022 for the said
amount, to the appellants.
3.2. As per clause 62 of the work order, the project was required to be completed
within a period of 8 months i.e., by 30.09.2022. Subsequently, the work order was
amended on 02.02.2022, by which, the project completion date was extended up to
30.06.2023. Thereafter, at the request of Respondent No.1, the project completion
deadline was further extended for a period of 60 days.
3.3. However, due to the respondent’s continuous failure and poor performance –
particularly in relation to quality deficiencies, missed deadlines, and
non-compliance with contractual obligations - the appellants were constrained to
terminate the work order in accordance with clauses 11, 32, 33, 34, 45 and 57 of
the work order.
3.4. In the meanwhile, the project completion timeline was extended upto
30.09.2023, with the express condition that if the handover schedule extended
beyond this date, the retention money would be forfeited. Accordingly, an
amended work order was issued.
3.5. Even thereafter, time limit was extended subject to the condition already
agreed upon regarding the forfeiture of the retention money. Meanwhile, several
issues arose at the project site, and relevant correspondence pertaining to the same
was duly exchanged.
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3.6. Consequently, the appellants sent a letter dated 21.02.2024 to
Respondent No. 1 highlighting the disregard for construction norms which resulted
in a compromise of standards and posed a serious risk to the integrity and safety of
the project. They directed Respondent No. 1 to take appropriate corrective actions.
Since no compliance was made, by letter dated 25.03.2024, the appellants
requested Respondent No. 1 to refund the debit balance of Rs. 4,12,54,904/-
attributed to unadjusted advances and other deductions on or before 30.04.2024,
failing which, the bank guarantee would be encashed.
3.7. In these circumstances, Respondent No. 1 filed a petition bearing Arbitration
Petition No. 14 of 2024 under Section 9 of the Arbitration and Conciliation Act,
1996, before the Commercial Court, along with applications under Order XXXIX
Rules 1 and 2 and Order XXXIX Rule 3 CPC, seeking to pass an order of interim
measure restraining the appellants not to proceed further as per the termination
notice and not to encash the bank guarantee in pursuance of the letter dated
25.03.2024 till the constitution of the Arbitral Tribunal.
3.8. The Commercial Court rejected the application seeking to grant
ex parte injunction, against which, Respondent No. 1 filed a writ petition bearing
W.P.(C) No. 11848 of 2024, in which, the High Court granted an order of
status quo with regard to the encashment of the bank guarantee.
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Simultaneously, Respondent No. 1 also invoked the arbitration proceedings, in
terms of Clause 58.3 of the Work Order / Contract dated 24.01.2022.
3.9. Ultimately, the High Court, after hearing both sides, passed the order dated
20.08.2024 inter alia that the interim order staying encashment of the bank
guarantee shall continue until disposal of the Arbitration Petition No. 14 of 2024,
which is under challenge at the instance of the appellants herein.
CONTENTIONS OF THE PARTIES
4. The primary contention of the learned counsel for the appellants is that an
order passed in an application under Order XXXIX Rule 3 CPC for an ex parte
ad interim injunction is, in essence, an order passed in a Section 9 arbitration
petition. Therefore, Respondent No. 1 had an equally efficacious alternative
remedy available by way of an appeal under Section 37(1)(b) of the Arbitration
and Conciliation Act, 1996. In such circumstances, the High Court ought not to
have exercised its supervisory power under Article 227 of the Constitution of
India, particularly, in the absence of clear reasoning pointing to any specific
perversity or infirmity in the order dated 30.04.2024 passed by the Commercial
Court. It is also submitted that once parties have opted for the statutory remedies
provided under the Arbitration and Conciliation Act, 1996, it is necessary that the
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arbitral process be allowed to proceed without any judicial interference that could
prejudice the rights of the parties.
4.1. Elaborating further, the learned counsel submitted that it is settled law that
the High Court may exercise its power under Article 227 of the Constitution of
India in cases involving grave injustice or failure of justice, such as when:
(i) the court or tribunal has assumed a jurisdiction which it does not possess, (ii) it
has failed to exercise a jurisdiction which it does possess, and such failure has
resulted in a failure of justice; or (iii)the jurisdiction, though available, is being
exercised in a manner that amounts to overstepping the limits of jurisdiction. In the
present case, the High Court in utter disregard of settled principles, entertained a
writ petition under Article 227 of the Constitution of India on an incorrect premise
that the non-grant of exemption under Order XXXIX Rule 3 CPC is not appealable
either under CPC or under the Commercial Courts Act, 2015. Proceeding on this
erroneous understanding, the High Court held that since no appeal was provided
for, Respondent No.1 had rightly invoked its supervisory jurisdiction.
4.2. Adding further, it is submitted that the court should not interfere with the
invocation of a bank guarantee so long as the invocation is in accordance with the
terms of the bank guarantee. Accordingly, the High Court ought not to have
interdicted the encashment of an unconditional bank guarantee, in the absence of
any element of fraud or special equities in favour of Respondent No.1.
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4.3. It is also contended that the impugned order is ex facie erroneous as it
equates an order issuing notice in a petition under Section 9 of the Arbitration and
Conciliation Act, 1996 with an order under Order XXXIX Rule 3 CPC ultimately
concluding that such an order is not appealable under Order XLIII CPC.
In doing so, it overlooks that the expression ‘granting or refusing to grant any
measure under Section 9’ appearing in Section 37(1)(b) of the Arbitration and
Conciliation Act, 1996 includes within its ambit an order refusing to grant any
ex parte interim relief. Such an order is, therefore, appealable under section 37 of
the Arbitration and Conciliation Act, 1996. The use of the word ‘any’ in Section
37(1)(b) is clearly all-inclusive and extends to a refusal to grant ex parte interim
measures under Section 9. Furthermore, there is nothing in Section 13 of the
Commercial Courts Act, 2015, to suggest that only a final order under Section 9 is
appealable under Section 37 of the Arbitration and Conciliation Act, 1996.
Extrapolating this reasoning to the present case, it is evident that any order passed
under Section 9 of the Arbitration and Conciliation Act, 1996 is appealable only
under Section 37 of the Arbitration and Conciliation Act, 1996, which constitutes a
self-contained code governing the appellate remedies. Consequently, the
applicability of Order XLIII Rule 1 CPC stands excluded. Therefore, the High
Court erred in entertaining a writ petition under Article 227 of the Constitution.
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4.4. The learned counsel further submitted that it is an established principle of
law that parties must be prevented from initiating parallel proceedings before
courts so as to avoid delaying the arbitral process. However, in the present case,
the respondent invoked arbitration through its letter dated 13.05.2024, while
simultaneously engaging in court proceedings to obtain a stay on the encashment
of the bank guarantee – first from the commercial court and subsequently from the
High Court. Such a course of action is untenable and contrary to the spirit of the
Arbitration and Conciliation Act, 1996, which mandates minimal judicial
intervention and prioritizes the expeditious resolution of disputes through
arbitration.
4.5. In support of these submissions, the learned counsel placed reliance on a
plethora of decisions of this Court.
4.6. Stating so, the learned counsel sought to allow this appeal and set aside the
order passed by the High Court.
5. Per contra, the learned counsel for Respondent No.1 submitted that the
challenge pertains solely to the grant of interim relief staying the invocation of the
bank guarantee during the pendency of the proceedings under Section 9 of the
Arbitration and Conciliation Act, 1996. The said Arbitration Petition bearing No.
14 of 2024 has already been partly heard; the arguments on behalf of Respondent
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No. 1 and Respondent No. 2 have been concluded on 10.12.2024, and the matter is
now pending for final arguments of the appellants, who have sought an
adjournment citing the pendency of the present appeal. Therefore, no prejudice is
caused to the appellants, and it remains open to them to raise all their contentions
before the Commercial Court. To demonstrate its bonafides, Respondent No. 1 has
extended the bank guarantee until 30.06.2025.
5.1. Continuing further, it is submitted that the appellants vide letter dated
25.03.2024 claimed a debit balance of Rs. 4,12,54,904/- against Respondent No.1
due to unadjusted advances and alleged non-compliance with work order terms.
Further, the appellants would proceed to encash the bank guarantee of
Rs.3,73,95,490/- executed by Respondent No. 1, if payment was not made by
30.04.2024. According to the learned counsel, the alleged non-compliance was
only due to the delays caused by the appellants and hence, invocation and
encashment of the bank guarantee without proper adjudication would be unjust.
5.2. It is also submitted that the appellants have acted contrary to the terms of the
bank guarantee which was furnished to secure the advance given by the appellants
to Respondent No. 1. Further, during the meeting held on 30.04.2024, the parties
had agreed to certain remedial course of action and the appellants had also granted
30 days’ time for alleged rectifications and completion of the job to Respondent
No. 1. However, before the expiry of the said period, the appellants sought to
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invoke the bank guarantee. The High Court has examined the pleadings of the
parties, the communications and the clauses of the contract and bank guarantee,
and has arrived at a prima facie view that “special equities” are in favour of
Respondent No. 1, and held that permitting the appellants to invoke and encash the
bank guarantee would result in irretrievable injustice to Respondent No. 1.
Hence, the order of the High Court does not warrant any interference by this Court.
5.3. It is further submitted that an appeal under Section 37(1)(b) of the
Arbitration and Conciliation Act, 1996, is maintainable only against an order
granting or refusing to grant any measure under Section 9 of the Act.
However, a careful reading of Section 37 indicates that such an appeal lies solely
against a final order passed under Section 9, and not against an interim order
passed under Order XXXIX Rule 3 CPC, even if such an order is passed in
proceedings under Section 9 of the Act. In the present case, the order passed by
the Commercial Court was at an interim stage and not a final adjudication under
Section 9. Accordingly, the said order was not appealable under Section 37(1)(b)
of the Arbitration and Conciliation Act, 1996. Moreover, under Section 8 of the
Commercial Courts Act, 2015, there is an express bar against filing a revision
application or petition against an interlocutory order passed by a commercial court.
In the present case, since the order dated 30.04.2024 passed by the
Commercial Court is an interim order, Respondent No.1 could not have filed a
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revision application or petition under the Commercial Courts Act. That apart, no
appeal could have been filed under Section 13 of the Commercial Courts Act, as
that provision applies only to appeals against decrees of Commercial Courts and
Commercial Divisions, and not against interlocutory orders. Since the order dated
30.04.2024 passed by the Commercial Court is neither a decree nor a final order, it
is not subject to appeal under Section 13 of the Commercial Courts Act, 2015.
Further, there is no provision under the CPC permitting an appeal against an
order passed under Order XXXIX Rule 3 CPC. In these circumstances,
Respondent No. 1 was constrained to approach the High Court under Article 227
of the Constitution of India, in order to safeguard its interests as the invocation of
the bank guarantee would have resulted in a significant financial burden and
caused irreparable prejudice to Respondent No. 1.
5.4. It is ultimately submitted that there is no prejudice caused to the appellants,
given that the bank guarantee has been duly extended and remains in force till date.
On the other hand, irreparable harm and injury would be caused to Respondent
No. 1 if the impugned order is set aside, as the appellants may proceed to invoke
and encash the bank guarantee resulting in significant financial loss and hardship
to Respondent No. 1. Therefore, the learned counsel prayed for dismissal of this
appeal.
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6. We have heard the submissions of the learned counsel for both parties and
perused the materials available on record.
7. The challenge raised in the present appeal is solely to the interim order
passed by the High Court restraining the appellants from invocation of the bank
guarantee during the pendency of the proceedings under section 9 of the
Arbitration and Conciliation Act, 1996. The appellants formulated the following
substantial questions of law, against the impugned order passed by the High Court:
(a) Whether the High Court while exercising its supervisory jurisdiction
under Article 227 of the Constitution of India, can decide a matter on merits?
(b) Whether the High Court ought to exercise its extraordinary jurisdiction
under Article 227 in a matter pertaining to the encashment of an unconditional
bank guarantee?
(c) Whether any interim order passed under Order XXXIX Rule 3 CPC
accompanying a Section 9 Petition under the Arbitration and Conciliation Act,
1996, ought to be treated as an order passed under Section 9 proceedings and can
be challenged under Section 37(l)(b) of the Arbitration and Conciliation Act,
1996?
(d) Whether the writ jurisdiction under Article 227 of the Constitution can
be invoked when an equally efficacious alternative remedy is available by way of
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an appeal under Section 37(1)(b) of the Arbitration and Conciliation Act, 1996,
against the order dated 30.04.2024 passed by the Commercial Court?
(e) Whether an interim application under the Code of Civil Procedure can be
filed in a Section 9 Petition under the Arbitration and Conciliation Act, 1996, given
that the Arbitration Act is a self-contained and exhaustive code?
(f) Whether a party can be permitted to initiate parallel proceedings by
approaching the High Court under Article 227 of the Constitution, while
simultaneously invoking arbitration, thereby causing delay in the arbitral process?
(g) Whether an interlocutory order arising out of the rejection of ex parte
interim stay under Order XXXIX Rule 3 CPC accompanying a Section 9 Petition
under the Arbitration Act, is appealable under Section 37 of the Arbitration and
Conciliation Act, and hence, whether the aggrieved party is barred from
approaching the High Court under Article 227 of the Constitution?
(h) Whether an interlocutory order passed on an Order XXXIX Rule 3
application by the Commercial Court, in a Section 9 arbitration petition is barred
from challenge by virtue of the specific bar under Order XLIII Rule l(r) read with
Section 104 CPC, and is not appealable under Section 37 of the Arbitration Act
thereby permitting recourse only under Article 227 of the Constitution?
15
8. According to the appellants, they made an advance payment of
Rs. 3,73,95,490/- in respect of the work order dated 24.01.2022 issued to
Respondent No. 1, and the Respondent No. 1 furnished an irrevocable and
unconditional bank guarantee dated 08.03.2022 for the said amount as security.
The original project completion period was fixed at eight months, but the timeline
was extended on several occasions. At one point, i.e., on 07.07.2023, the appellants
terminated the work order issued to Respondent No. 1 citing alleged poor
performance by Respondent No. 1 with respect to quality standards,
non-compliance with contractual obligations, delays in timeliness, and missed
deadlines. Subsequently, pursuant to a consensus reached between the parties, the
appellants issued an amended work order on 13.07.2023, incorporating a condition
that the retention money would be forfeited if the building was not handed over by
30.09.2023. Consequently, the appellants sought a refund of the debit balance of
Rs. 4,12,54,904/- attributed to unadjusted advances and other deductions on or
before 30.04.2024, failing which, the bank guarantee would be encashed.
While so, Respondent No. 1 approached the Commercial Court and sought an
ex parte interim protection against the encashment of the bank guarantee.
9. On the other hand, it is the categorical stand of Respondent No. 1 that due to
delays in the supply of materials, delays in releasing the running bills, and the
failure to provide sufficient hutments and facilities for the workers as required
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under the terms of the contract, Respondent No. 1 was unable to complete the
project within the stipulated time. Without considering their own lapses, the
appellants attempted to encash the bank guarantee furnished by Respondent No. 1.
This compelled Respondent No. 1 to file a Section 9 arbitration petition and also an
application to seek an ex parte interim injunction against the enforcement of bank
guarantee.
10. The Commercial Court rejected the application filed under Order XXXIX
Rule 3 CPC and ordered issuance of notice in the Section 9 arbitration petition
filed by Respondent No. 1. However, the Writ Court, exercising its jurisdiction
under Article 227 of the Constitution, granted interim protection in favour of
Respondent No. 1 against the invocation of the bank guarantee until the disposal of
the Section 9 arbitration petition, which is questioned by the appellants by filing
the present appeal.
11. We are aware of the established legal principle that the Courts should refrain
from interfering with the invocation of a bank guarantee except in cases of fraud of
an egregious nature or in cases where allowing encashment would result in
irretrievable injustice. This Court in Hindustan Construction Co. Ltd v. State of
5
Bihar and others , emphasized that bank guarantees serve as the backbone of
5
(1999) 8 SCC 436
17
commercial transactions and must be honoured in accordance with their terms.
The following paragraphs are pertinent in this regard:
“8. Now, a bank guarantee is the common mode of securing payment of money in
commercial dealings as the beneficiary, under the guarantee, is entitled to realise
the whole of the amount under that guarantee in terms thereof irrespective of any
pending dispute between the person on whose behalf the guarantee was given and
the beneficiary. In contracts awarded to private individuals by the Government,
which involve huge expenditure, as, for example, construction contracts, bank
guarantees are usually required to be furnished in favour of the Government to
secure payments made to the contractor as "advance" from time to time during the
course of the contract as also to secure performance of the work entrusted under
the contract. Such guarantees are encashable in terms thereof on the lapse of the
contractor either in the performance of the work or in paying back to the
Government “advance", the guarantee is invoked and the amount is recovered from
the bank. It is for this reason that the courts are reluctant in granting an injunction
against the invocation of bank guarantee, except in the case of fraud, which should
be an established fraud, or where irretrievable injury was likely to be caused to the
guarantor. This was the principle laid down by this Court in various
decisions. In U.P. Coop. Federation Ltd v. Singh Consultants & Engineers (P)
6 7
Ltd. , the law laid down in Bolivinter Oil SA v. Chase Manhattan Bank was
approved and it was held that an unconditional bank guarantee could be invoked in
terms thereof by the person in whose favour the bank guarantee was given and the
courts would not grant any injunction restraining the invocation except in the case
of fraud or irretrievable injury. In Svenska Handelsbanken v. Indian Charge
8 9
Chrome , Larsen & Toubro Ltd v. Maharashtra SEB , Hindustan Steel Works
10
Construction Ltd v. G.S. Atwal & Co. (Engineers) (P) Ltd , National Thermal
11
Power Corporation Ltd v. Flowmore (P) Ltd , State of Maharashtra v. National
12 13
Construction Co. , Hindustan Steel Works Construction Ltd v. Tarapore & Co. as
14
also in U.P. State Sugar Corporation v. Sumac International Ltd , the same
principle has been laid down and reiterated.
6
(1988) 1 SCC 174
7
(1984) 1 All ER 351 (CA)
8
(1994) 1 SCC 502
9
(1995) 6 SCC 68
10
(1995) 6 SCC 76
11
(1995) 4 SCC 515
12
(1996) 1 SCC 735
13
(1996) 5 SCC 34
14
(1997) 1 SCC 568
18
9. What is important, therefore, is that the bank guarantee should be in unequivocal
terms, unconditional and recite that the amount would be paid without demur or
objection and irrespective of any dispute that might have cropped up or might have
been pending between the beneficiary under the bank guarantee or the person on
whose behalf the guarantee was furnished. The terms of the bank guarantee are,
therefore, extremely material. Since the bank guarantee represents an independent
contract between the bank and the beneficiary, both the parties would be bound by
the terms thereof. The invocation, therefore, will have to be in accordance with the
terms of the bank guarantee; or else, the invocation itself would be bad.”
12. However, it cannot be disputed that after hearing both sides and with the
consent of the parties, the High Court disposed of the writ petition by the order
impugned herein, inter alia stating that if the appellants were permitted to invoke
the bank guarantee, the prayer made in the Section 9 arbitration petition would
likely become infructuous. Furthermore, the High Court clearly observed that the
Commercial Court shall proceed in accordance with law and adjudicate upon the
prayers made in the arbitration petition on its own merits, considering the
pleadings and documents placed on record, without being influenced by any of the
observations made therein. Ultimately, it was directed that the interim order
restraining the appellants from encashing the bank guarantee shall remain in force
until the disposal of the arbitration petition pending before the Commercial Court,
subject to Respondent No. 1 extending the validity of the bank guarantee.
Thus, we are of the view that the order passed by the High Court is merely an
interim measure intended to protect the interests of both parties.
19
13. Admittedly, Respondent No. 1 initiated arbitration proceedings to resolve
the disputes with the appellants. In the Section 9 arbitration petition filed by them,
the arguments on behalf of Respondent No. 1 and Respondent No. 2 have already
been concluded, and the matter stands partly heard, pending further arguments on
behalf of the appellants. Furthermore, pursuant to the order dated 06.11.2024
passed by the High Court, an Arbitral Tribunal was constituted to adjudicate the
disputes between the parties and a hearing was held on 03.01.2025, during which,
the parties involved herein appeared and the Arbitral Tribunal directed them to file
statement of claim, statement of defence and counter claim, if any, and reply to the
same. Thus, in view of the ongoing arbitration proceedings concerning the bank
guarantee, it is imperative to maintain the existing position regarding the bank
guarantee until the final outcome of the Section 9 arbitration petition.
14. It is also to be pointed out that as directed by the High Court,
Respondent No. 1 renewed the bank guarantee till 31.12.2024, which was
subsequently, extended till 30.06.2025 pursuant to the directions of this Court.
Furthermore, the learned counsel for Respondent No. 1 has given an undertaking to
extend the validity of the bank guarantee till the disposal of the Section 9
arbitration petition. As such, no prejudice whatsoever is occasioned to the
appellants, for the present. Therefore, we will not decide the legal issues raised
herein and the same are left open.
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15. Since the Section 9 arbitration petition is now ripe for arguments before the
Commercial Court on behalf of the appellants, the parties are directed to advance
all their contentions along with necessary documents, and the Commercial Court
shall pass appropriate orders within a period of eight weeks thereafter.
Until such time, the bank guarantee shall be kept alive and shall be subject to the
outcome of the Section 9 arbitration petition.
16. Accordingly, this appeal stands disposed of. No costs. Consequently,
connected Miscellaneous Application(s), if any, shall stand closed.
…………………………J.
[J.B. Pardiwala]
…………………………J.
[R. Mahadevan]
NEW DELHI;
MAY 7, 2025.
2025 INSC 640
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6413 OF 2025
(ARISING OUT OF SLP (CIVIL) NO. 21916 OF 2024)
M/S JINDAL STEEL AND POWER LTD. & ANR. … APPELLANTS
VERSUS
M/S BANSAL INFRA PROJECTS PVT. LTD.
& OTHERS … RESPONDENTS
J U D G M E N T
R. MAHADEVAN, J.
Leave granted.
2. This appeal has been filed by the appellants challenging the order dated
1
20.08.2024 passed by the High Court of Orissa, Cuttack in W.P. (C) No.
11848 of 2024 which was filed under Article 227 of the Constitution of India,
against the order dated 30.04.2024 passed by the Senior Civil Judge (Commercial
Signature Not Verified
Digitally signed by
CHANDRESH
Date: 2025.05.07
17:28:11 IST
Reason:
2
Court), Cuttack , in Arbitration Petition No. 14 of 2024 filed by Respondent No.1.
1
Hereinafter referred to as “the High Court”
2
For short, “the Commercial Court”
2
The Commercial Court by the said order dated 30.04.2024 rejected the prayer for
ex parte ad interim injunction made in an application under Order XXXIX Rule 3
3
and Section 151 of the Code of Civil Procedure, 1908 filed in the application
under Section 9 of the Arbitration and Conciliation Act, 1996, observing that no
order of injunction could be passed without affording an opportunity of hearing to
the opposite parties, and accordingly, it directed issuance of notice to the opposite
parties and fixed 25.06.2024 as the date for their appearance. Challenging the said
order of the Commercial Court, Respondent No.1 (herein) filed the writ petition
before the High Court, in which, the High Court as an interim measure, granted an
order of status quo till the next date of hearing with regard to encashment of bank
guarantee. Thereafter, the High Court by the order impugned herein, disposed of
the writ petition in the following terms:
“40. Hence, the parties are directed to appear before the Senior Civil Judge,
Commercial Court, Cuttack in ARBP No. 14 of 2024 on 27.08.2024. If so required,
the Commercial Court shall prepone the date to the said date, if the said case
stands posted to any date beyond the said date. The Opposite Parties shall file their
Objection with all relevant documents, if any, to the application filed under section
9 of the Act, 1996, within ten days from the said date.
41. On filing of Objection, the Senior Civil Judge, Commercial Court, Cuttack shall
proceed further in accordance with law and shall try to conclude the said
proceeding at the earliest, preferably within a period of six weeks from the date of
filing of the objection and documents by the Opposite Parties.
3
For short, “CPC”
3
42. Since the Bank Guarantee furnished by the Petitioner is going to expire on
05.09.2024, the petitioner is directed to extend the said BG until 31.12.2024 well
before the expiry of the said period.
43. As the Opposite Parties contested the present Writ Petition on technical
grounds of maintainability so also scope regarding interference by the Court
regarding invocation of Bank Guarantee and are yet to file their Objection in
ARBP No.14 of 2024, it is made clear that after filing of Objection by the Opposite
Parties, the Senior Civil Judge, Commercial Court, Cuttack shall proceed further
in accordance with law and decide the prayer made in ARBP No.14 of 2024 on
merit taking into consideration the pleadings and documents on record, without
being influenced by the observations made above. However, the interim order
dated 20.05.2024 passed in the present case shall remain in force till disposal of
st
the ARBP No.14 of 2024, subject to extension of Bank Guarantee by 31 August,
2024.”
Aggrieved by the aforesaid order of the High Court, the appellants are before us
with the present appeal.
FACTUAL MATRIX
3. The relevant facts necessary to understand the background of the litigation
are as follows:
3.1. The appellants issued a work order dated 24.01.2022 to Respondent No.1
viz ., M/s. Bansal Infra Projects Private Limited, for construction of 400 flats at
4
Jindal Nagar, South Block (Sharmik Vihar) for a total value of
Rs. 43,99,46,924.13/-. To execute the said work, the appellants had given an
advance of Rs. 3,73,95,490/- and to secure the same, Respondent No.1 furnished a
4
Hereinafter referred to as “the Project”
4
bank guarantee bearing No. 32700IGL0001122 dated 08.03.2022 for the said
amount, to the appellants.
3.2. As per clause 62 of the work order, the project was required to be completed
within a period of 8 months i.e., by 30.09.2022. Subsequently, the work order was
amended on 02.02.2022, by which, the project completion date was extended up to
30.06.2023. Thereafter, at the request of Respondent No.1, the project completion
deadline was further extended for a period of 60 days.
3.3. However, due to the respondent’s continuous failure and poor performance –
particularly in relation to quality deficiencies, missed deadlines, and
non-compliance with contractual obligations - the appellants were constrained to
terminate the work order in accordance with clauses 11, 32, 33, 34, 45 and 57 of
the work order.
3.4. In the meanwhile, the project completion timeline was extended upto
30.09.2023, with the express condition that if the handover schedule extended
beyond this date, the retention money would be forfeited. Accordingly, an
amended work order was issued.
3.5. Even thereafter, time limit was extended subject to the condition already
agreed upon regarding the forfeiture of the retention money. Meanwhile, several
issues arose at the project site, and relevant correspondence pertaining to the same
was duly exchanged.
5
3.6. Consequently, the appellants sent a letter dated 21.02.2024 to
Respondent No. 1 highlighting the disregard for construction norms which resulted
in a compromise of standards and posed a serious risk to the integrity and safety of
the project. They directed Respondent No. 1 to take appropriate corrective actions.
Since no compliance was made, by letter dated 25.03.2024, the appellants
requested Respondent No. 1 to refund the debit balance of Rs. 4,12,54,904/-
attributed to unadjusted advances and other deductions on or before 30.04.2024,
failing which, the bank guarantee would be encashed.
3.7. In these circumstances, Respondent No. 1 filed a petition bearing Arbitration
Petition No. 14 of 2024 under Section 9 of the Arbitration and Conciliation Act,
1996, before the Commercial Court, along with applications under Order XXXIX
Rules 1 and 2 and Order XXXIX Rule 3 CPC, seeking to pass an order of interim
measure restraining the appellants not to proceed further as per the termination
notice and not to encash the bank guarantee in pursuance of the letter dated
25.03.2024 till the constitution of the Arbitral Tribunal.
3.8. The Commercial Court rejected the application seeking to grant
ex parte injunction, against which, Respondent No. 1 filed a writ petition bearing
W.P.(C) No. 11848 of 2024, in which, the High Court granted an order of
status quo with regard to the encashment of the bank guarantee.
6
Simultaneously, Respondent No. 1 also invoked the arbitration proceedings, in
terms of Clause 58.3 of the Work Order / Contract dated 24.01.2022.
3.9. Ultimately, the High Court, after hearing both sides, passed the order dated
20.08.2024 inter alia that the interim order staying encashment of the bank
guarantee shall continue until disposal of the Arbitration Petition No. 14 of 2024,
which is under challenge at the instance of the appellants herein.
CONTENTIONS OF THE PARTIES
4. The primary contention of the learned counsel for the appellants is that an
order passed in an application under Order XXXIX Rule 3 CPC for an ex parte
ad interim injunction is, in essence, an order passed in a Section 9 arbitration
petition. Therefore, Respondent No. 1 had an equally efficacious alternative
remedy available by way of an appeal under Section 37(1)(b) of the Arbitration
and Conciliation Act, 1996. In such circumstances, the High Court ought not to
have exercised its supervisory power under Article 227 of the Constitution of
India, particularly, in the absence of clear reasoning pointing to any specific
perversity or infirmity in the order dated 30.04.2024 passed by the Commercial
Court. It is also submitted that once parties have opted for the statutory remedies
provided under the Arbitration and Conciliation Act, 1996, it is necessary that the
7
arbitral process be allowed to proceed without any judicial interference that could
prejudice the rights of the parties.
4.1. Elaborating further, the learned counsel submitted that it is settled law that
the High Court may exercise its power under Article 227 of the Constitution of
India in cases involving grave injustice or failure of justice, such as when:
(i) the court or tribunal has assumed a jurisdiction which it does not possess, (ii) it
has failed to exercise a jurisdiction which it does possess, and such failure has
resulted in a failure of justice; or (iii)the jurisdiction, though available, is being
exercised in a manner that amounts to overstepping the limits of jurisdiction. In the
present case, the High Court in utter disregard of settled principles, entertained a
writ petition under Article 227 of the Constitution of India on an incorrect premise
that the non-grant of exemption under Order XXXIX Rule 3 CPC is not appealable
either under CPC or under the Commercial Courts Act, 2015. Proceeding on this
erroneous understanding, the High Court held that since no appeal was provided
for, Respondent No.1 had rightly invoked its supervisory jurisdiction.
4.2. Adding further, it is submitted that the court should not interfere with the
invocation of a bank guarantee so long as the invocation is in accordance with the
terms of the bank guarantee. Accordingly, the High Court ought not to have
interdicted the encashment of an unconditional bank guarantee, in the absence of
any element of fraud or special equities in favour of Respondent No.1.
8
4.3. It is also contended that the impugned order is ex facie erroneous as it
equates an order issuing notice in a petition under Section 9 of the Arbitration and
Conciliation Act, 1996 with an order under Order XXXIX Rule 3 CPC ultimately
concluding that such an order is not appealable under Order XLIII CPC.
In doing so, it overlooks that the expression ‘granting or refusing to grant any
measure under Section 9’ appearing in Section 37(1)(b) of the Arbitration and
Conciliation Act, 1996 includes within its ambit an order refusing to grant any
ex parte interim relief. Such an order is, therefore, appealable under section 37 of
the Arbitration and Conciliation Act, 1996. The use of the word ‘any’ in Section
37(1)(b) is clearly all-inclusive and extends to a refusal to grant ex parte interim
measures under Section 9. Furthermore, there is nothing in Section 13 of the
Commercial Courts Act, 2015, to suggest that only a final order under Section 9 is
appealable under Section 37 of the Arbitration and Conciliation Act, 1996.
Extrapolating this reasoning to the present case, it is evident that any order passed
under Section 9 of the Arbitration and Conciliation Act, 1996 is appealable only
under Section 37 of the Arbitration and Conciliation Act, 1996, which constitutes a
self-contained code governing the appellate remedies. Consequently, the
applicability of Order XLIII Rule 1 CPC stands excluded. Therefore, the High
Court erred in entertaining a writ petition under Article 227 of the Constitution.
9
4.4. The learned counsel further submitted that it is an established principle of
law that parties must be prevented from initiating parallel proceedings before
courts so as to avoid delaying the arbitral process. However, in the present case,
the respondent invoked arbitration through its letter dated 13.05.2024, while
simultaneously engaging in court proceedings to obtain a stay on the encashment
of the bank guarantee – first from the commercial court and subsequently from the
High Court. Such a course of action is untenable and contrary to the spirit of the
Arbitration and Conciliation Act, 1996, which mandates minimal judicial
intervention and prioritizes the expeditious resolution of disputes through
arbitration.
4.5. In support of these submissions, the learned counsel placed reliance on a
plethora of decisions of this Court.
4.6. Stating so, the learned counsel sought to allow this appeal and set aside the
order passed by the High Court.
5. Per contra, the learned counsel for Respondent No.1 submitted that the
challenge pertains solely to the grant of interim relief staying the invocation of the
bank guarantee during the pendency of the proceedings under Section 9 of the
Arbitration and Conciliation Act, 1996. The said Arbitration Petition bearing No.
14 of 2024 has already been partly heard; the arguments on behalf of Respondent
10
No. 1 and Respondent No. 2 have been concluded on 10.12.2024, and the matter is
now pending for final arguments of the appellants, who have sought an
adjournment citing the pendency of the present appeal. Therefore, no prejudice is
caused to the appellants, and it remains open to them to raise all their contentions
before the Commercial Court. To demonstrate its bonafides, Respondent No. 1 has
extended the bank guarantee until 30.06.2025.
5.1. Continuing further, it is submitted that the appellants vide letter dated
25.03.2024 claimed a debit balance of Rs. 4,12,54,904/- against Respondent No.1
due to unadjusted advances and alleged non-compliance with work order terms.
Further, the appellants would proceed to encash the bank guarantee of
Rs.3,73,95,490/- executed by Respondent No. 1, if payment was not made by
30.04.2024. According to the learned counsel, the alleged non-compliance was
only due to the delays caused by the appellants and hence, invocation and
encashment of the bank guarantee without proper adjudication would be unjust.
5.2. It is also submitted that the appellants have acted contrary to the terms of the
bank guarantee which was furnished to secure the advance given by the appellants
to Respondent No. 1. Further, during the meeting held on 30.04.2024, the parties
had agreed to certain remedial course of action and the appellants had also granted
30 days’ time for alleged rectifications and completion of the job to Respondent
No. 1. However, before the expiry of the said period, the appellants sought to
11
invoke the bank guarantee. The High Court has examined the pleadings of the
parties, the communications and the clauses of the contract and bank guarantee,
and has arrived at a prima facie view that “special equities” are in favour of
Respondent No. 1, and held that permitting the appellants to invoke and encash the
bank guarantee would result in irretrievable injustice to Respondent No. 1.
Hence, the order of the High Court does not warrant any interference by this Court.
5.3. It is further submitted that an appeal under Section 37(1)(b) of the
Arbitration and Conciliation Act, 1996, is maintainable only against an order
granting or refusing to grant any measure under Section 9 of the Act.
However, a careful reading of Section 37 indicates that such an appeal lies solely
against a final order passed under Section 9, and not against an interim order
passed under Order XXXIX Rule 3 CPC, even if such an order is passed in
proceedings under Section 9 of the Act. In the present case, the order passed by
the Commercial Court was at an interim stage and not a final adjudication under
Section 9. Accordingly, the said order was not appealable under Section 37(1)(b)
of the Arbitration and Conciliation Act, 1996. Moreover, under Section 8 of the
Commercial Courts Act, 2015, there is an express bar against filing a revision
application or petition against an interlocutory order passed by a commercial court.
In the present case, since the order dated 30.04.2024 passed by the
Commercial Court is an interim order, Respondent No.1 could not have filed a
12
revision application or petition under the Commercial Courts Act. That apart, no
appeal could have been filed under Section 13 of the Commercial Courts Act, as
that provision applies only to appeals against decrees of Commercial Courts and
Commercial Divisions, and not against interlocutory orders. Since the order dated
30.04.2024 passed by the Commercial Court is neither a decree nor a final order, it
is not subject to appeal under Section 13 of the Commercial Courts Act, 2015.
Further, there is no provision under the CPC permitting an appeal against an
order passed under Order XXXIX Rule 3 CPC. In these circumstances,
Respondent No. 1 was constrained to approach the High Court under Article 227
of the Constitution of India, in order to safeguard its interests as the invocation of
the bank guarantee would have resulted in a significant financial burden and
caused irreparable prejudice to Respondent No. 1.
5.4. It is ultimately submitted that there is no prejudice caused to the appellants,
given that the bank guarantee has been duly extended and remains in force till date.
On the other hand, irreparable harm and injury would be caused to Respondent
No. 1 if the impugned order is set aside, as the appellants may proceed to invoke
and encash the bank guarantee resulting in significant financial loss and hardship
to Respondent No. 1. Therefore, the learned counsel prayed for dismissal of this
appeal.
13
6. We have heard the submissions of the learned counsel for both parties and
perused the materials available on record.
7. The challenge raised in the present appeal is solely to the interim order
passed by the High Court restraining the appellants from invocation of the bank
guarantee during the pendency of the proceedings under section 9 of the
Arbitration and Conciliation Act, 1996. The appellants formulated the following
substantial questions of law, against the impugned order passed by the High Court:
(a) Whether the High Court while exercising its supervisory jurisdiction
under Article 227 of the Constitution of India, can decide a matter on merits?
(b) Whether the High Court ought to exercise its extraordinary jurisdiction
under Article 227 in a matter pertaining to the encashment of an unconditional
bank guarantee?
(c) Whether any interim order passed under Order XXXIX Rule 3 CPC
accompanying a Section 9 Petition under the Arbitration and Conciliation Act,
1996, ought to be treated as an order passed under Section 9 proceedings and can
be challenged under Section 37(l)(b) of the Arbitration and Conciliation Act,
1996?
(d) Whether the writ jurisdiction under Article 227 of the Constitution can
be invoked when an equally efficacious alternative remedy is available by way of
14
an appeal under Section 37(1)(b) of the Arbitration and Conciliation Act, 1996,
against the order dated 30.04.2024 passed by the Commercial Court?
(e) Whether an interim application under the Code of Civil Procedure can be
filed in a Section 9 Petition under the Arbitration and Conciliation Act, 1996, given
that the Arbitration Act is a self-contained and exhaustive code?
(f) Whether a party can be permitted to initiate parallel proceedings by
approaching the High Court under Article 227 of the Constitution, while
simultaneously invoking arbitration, thereby causing delay in the arbitral process?
(g) Whether an interlocutory order arising out of the rejection of ex parte
interim stay under Order XXXIX Rule 3 CPC accompanying a Section 9 Petition
under the Arbitration Act, is appealable under Section 37 of the Arbitration and
Conciliation Act, and hence, whether the aggrieved party is barred from
approaching the High Court under Article 227 of the Constitution?
(h) Whether an interlocutory order passed on an Order XXXIX Rule 3
application by the Commercial Court, in a Section 9 arbitration petition is barred
from challenge by virtue of the specific bar under Order XLIII Rule l(r) read with
Section 104 CPC, and is not appealable under Section 37 of the Arbitration Act
thereby permitting recourse only under Article 227 of the Constitution?
15
8. According to the appellants, they made an advance payment of
Rs. 3,73,95,490/- in respect of the work order dated 24.01.2022 issued to
Respondent No. 1, and the Respondent No. 1 furnished an irrevocable and
unconditional bank guarantee dated 08.03.2022 for the said amount as security.
The original project completion period was fixed at eight months, but the timeline
was extended on several occasions. At one point, i.e., on 07.07.2023, the appellants
terminated the work order issued to Respondent No. 1 citing alleged poor
performance by Respondent No. 1 with respect to quality standards,
non-compliance with contractual obligations, delays in timeliness, and missed
deadlines. Subsequently, pursuant to a consensus reached between the parties, the
appellants issued an amended work order on 13.07.2023, incorporating a condition
that the retention money would be forfeited if the building was not handed over by
30.09.2023. Consequently, the appellants sought a refund of the debit balance of
Rs. 4,12,54,904/- attributed to unadjusted advances and other deductions on or
before 30.04.2024, failing which, the bank guarantee would be encashed.
While so, Respondent No. 1 approached the Commercial Court and sought an
ex parte interim protection against the encashment of the bank guarantee.
9. On the other hand, it is the categorical stand of Respondent No. 1 that due to
delays in the supply of materials, delays in releasing the running bills, and the
failure to provide sufficient hutments and facilities for the workers as required
16
under the terms of the contract, Respondent No. 1 was unable to complete the
project within the stipulated time. Without considering their own lapses, the
appellants attempted to encash the bank guarantee furnished by Respondent No. 1.
This compelled Respondent No. 1 to file a Section 9 arbitration petition and also an
application to seek an ex parte interim injunction against the enforcement of bank
guarantee.
10. The Commercial Court rejected the application filed under Order XXXIX
Rule 3 CPC and ordered issuance of notice in the Section 9 arbitration petition
filed by Respondent No. 1. However, the Writ Court, exercising its jurisdiction
under Article 227 of the Constitution, granted interim protection in favour of
Respondent No. 1 against the invocation of the bank guarantee until the disposal of
the Section 9 arbitration petition, which is questioned by the appellants by filing
the present appeal.
11. We are aware of the established legal principle that the Courts should refrain
from interfering with the invocation of a bank guarantee except in cases of fraud of
an egregious nature or in cases where allowing encashment would result in
irretrievable injustice. This Court in Hindustan Construction Co. Ltd v. State of
5
Bihar and others , emphasized that bank guarantees serve as the backbone of
5
(1999) 8 SCC 436
17
commercial transactions and must be honoured in accordance with their terms.
The following paragraphs are pertinent in this regard:
“8. Now, a bank guarantee is the common mode of securing payment of money in
commercial dealings as the beneficiary, under the guarantee, is entitled to realise
the whole of the amount under that guarantee in terms thereof irrespective of any
pending dispute between the person on whose behalf the guarantee was given and
the beneficiary. In contracts awarded to private individuals by the Government,
which involve huge expenditure, as, for example, construction contracts, bank
guarantees are usually required to be furnished in favour of the Government to
secure payments made to the contractor as "advance" from time to time during the
course of the contract as also to secure performance of the work entrusted under
the contract. Such guarantees are encashable in terms thereof on the lapse of the
contractor either in the performance of the work or in paying back to the
Government “advance", the guarantee is invoked and the amount is recovered from
the bank. It is for this reason that the courts are reluctant in granting an injunction
against the invocation of bank guarantee, except in the case of fraud, which should
be an established fraud, or where irretrievable injury was likely to be caused to the
guarantor. This was the principle laid down by this Court in various
decisions. In U.P. Coop. Federation Ltd v. Singh Consultants & Engineers (P)
6 7
Ltd. , the law laid down in Bolivinter Oil SA v. Chase Manhattan Bank was
approved and it was held that an unconditional bank guarantee could be invoked in
terms thereof by the person in whose favour the bank guarantee was given and the
courts would not grant any injunction restraining the invocation except in the case
of fraud or irretrievable injury. In Svenska Handelsbanken v. Indian Charge
8 9
Chrome , Larsen & Toubro Ltd v. Maharashtra SEB , Hindustan Steel Works
10
Construction Ltd v. G.S. Atwal & Co. (Engineers) (P) Ltd , National Thermal
11
Power Corporation Ltd v. Flowmore (P) Ltd , State of Maharashtra v. National
12 13
Construction Co. , Hindustan Steel Works Construction Ltd v. Tarapore & Co. as
14
also in U.P. State Sugar Corporation v. Sumac International Ltd , the same
principle has been laid down and reiterated.
6
(1988) 1 SCC 174
7
(1984) 1 All ER 351 (CA)
8
(1994) 1 SCC 502
9
(1995) 6 SCC 68
10
(1995) 6 SCC 76
11
(1995) 4 SCC 515
12
(1996) 1 SCC 735
13
(1996) 5 SCC 34
14
(1997) 1 SCC 568
18
9. What is important, therefore, is that the bank guarantee should be in unequivocal
terms, unconditional and recite that the amount would be paid without demur or
objection and irrespective of any dispute that might have cropped up or might have
been pending between the beneficiary under the bank guarantee or the person on
whose behalf the guarantee was furnished. The terms of the bank guarantee are,
therefore, extremely material. Since the bank guarantee represents an independent
contract between the bank and the beneficiary, both the parties would be bound by
the terms thereof. The invocation, therefore, will have to be in accordance with the
terms of the bank guarantee; or else, the invocation itself would be bad.”
12. However, it cannot be disputed that after hearing both sides and with the
consent of the parties, the High Court disposed of the writ petition by the order
impugned herein, inter alia stating that if the appellants were permitted to invoke
the bank guarantee, the prayer made in the Section 9 arbitration petition would
likely become infructuous. Furthermore, the High Court clearly observed that the
Commercial Court shall proceed in accordance with law and adjudicate upon the
prayers made in the arbitration petition on its own merits, considering the
pleadings and documents placed on record, without being influenced by any of the
observations made therein. Ultimately, it was directed that the interim order
restraining the appellants from encashing the bank guarantee shall remain in force
until the disposal of the arbitration petition pending before the Commercial Court,
subject to Respondent No. 1 extending the validity of the bank guarantee.
Thus, we are of the view that the order passed by the High Court is merely an
interim measure intended to protect the interests of both parties.
19
13. Admittedly, Respondent No. 1 initiated arbitration proceedings to resolve
the disputes with the appellants. In the Section 9 arbitration petition filed by them,
the arguments on behalf of Respondent No. 1 and Respondent No. 2 have already
been concluded, and the matter stands partly heard, pending further arguments on
behalf of the appellants. Furthermore, pursuant to the order dated 06.11.2024
passed by the High Court, an Arbitral Tribunal was constituted to adjudicate the
disputes between the parties and a hearing was held on 03.01.2025, during which,
the parties involved herein appeared and the Arbitral Tribunal directed them to file
statement of claim, statement of defence and counter claim, if any, and reply to the
same. Thus, in view of the ongoing arbitration proceedings concerning the bank
guarantee, it is imperative to maintain the existing position regarding the bank
guarantee until the final outcome of the Section 9 arbitration petition.
14. It is also to be pointed out that as directed by the High Court,
Respondent No. 1 renewed the bank guarantee till 31.12.2024, which was
subsequently, extended till 30.06.2025 pursuant to the directions of this Court.
Furthermore, the learned counsel for Respondent No. 1 has given an undertaking to
extend the validity of the bank guarantee till the disposal of the Section 9
arbitration petition. As such, no prejudice whatsoever is occasioned to the
appellants, for the present. Therefore, we will not decide the legal issues raised
herein and the same are left open.
20
15. Since the Section 9 arbitration petition is now ripe for arguments before the
Commercial Court on behalf of the appellants, the parties are directed to advance
all their contentions along with necessary documents, and the Commercial Court
shall pass appropriate orders within a period of eight weeks thereafter.
Until such time, the bank guarantee shall be kept alive and shall be subject to the
outcome of the Section 9 arbitration petition.
16. Accordingly, this appeal stands disposed of. No costs. Consequently,
connected Miscellaneous Application(s), if any, shall stand closed.
…………………………J.
[J.B. Pardiwala]
…………………………J.
[R. Mahadevan]
NEW DELHI;
MAY 7, 2025.