M/S GANGOTRI ENTERPRISES LTD. versus UNION OF INDIA & ORS.

M/S GANGOTRI ENTERPRISES LTD. versus UNION OF INDIA & ORS.

Respondents are not entitled to encash the bank guarantee furnished for Anand Vihar works to recover disputed damages under another contract, as such amounts are not admitted or adjudicated sums due, and the performance guarantee has served its contractual purpose. Injunction against encashment is warranted until liability is determined in arbitration.

Parties
Appellant: M/S Gangotri Enterprises Ltd.; Respondents: Union of India & Ors.
Jurisdiction
India
Judgment Date
05 May 2016
Procedural Posture
Civil Appeal / Appeal Against High Court Judgment
Outcome
Appeal allowed
Legal Topics
Bank Guarantee, Injunction, Performance Guarantee, Section 9 Arbitration and Conciliation Act
Arbitration Contract Law Bank Guarantee Injunction Performance Guarantee Section 9 Arbitration and Conciliation Act

Case Brief

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Parties

M/S Gangotri Enterprises Ltd.

Appellant

Union of India & Ors.

Respondents

Procedural Posture

Civil Appeal / Appeal Against High Court Judgment

Legal Issues

  1. 1 Whether the respondent Railway Department is entitled to encash the bank guarantee furnished for performance of Anand Vihar works to recover damages claimed under another contract.
  2. 2 Whether interim injunction restraining encashment of bank guarantee should be granted when arbitration proceedings regarding damages under a different contract are pending.

Ratio Decidendi

Respondents are not entitled to encash the bank guarantee furnished for Anand Vihar works to recover disputed damages under another contract, as such amounts are not admitted or adjudicated sums due, and the performance guarantee has served its contractual purpose. Injunction against encashment is warranted until liability is determined in arbitration.

Court Disposition

Appeal allowed

Orders

  • Impugned order set aside
  • Injunction application under Section 9 of Arbitration and Conciliation Act allowed