IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Arb. Appeal No. 6 of 2010 Decided on : May 6, 2010 SSJV Projects Pvt. Ltd. …Appellant Versus HPSEB and others ...Respondents Coram The Hon’ble Mr. Justice Surjit Singh, Judge The Hon’ble Mr. Justice V.K. Sharma, Judge Whether approved for reporting?1 For the Appellant: Mr. Rajnish Maniktala, Advocate For the Respondents: Mr. J.S. Bhogal, Senior Advocate with Mr. Suneet Goel, Advocate. Surjit Singh, Judge (oral) Heard and gone through the record. 2. Learned counsel for the parties say that the matter may be disposed of finally at this stage only. Appellants were awarded a work by respondent-Himachal State Electricity Board (HPSEB), regarding a Hydro Power Project in the area of Rampur Bushahr. Agreement was singed on 30.11.2004. Work was required to be completed by 31.8.2007. Respondent-HPSEB advanced a sum of Rs.43,36,000/-, by way of mobilization advance against four bank guarantees, furnished by the appellant. Another bank Whether reporters of the local papers may be allowed to see the judgment? …2… guarantee for a sum of Rs.17,34,000/- was furnished by the appellant as security for contract performance. 3. Admitted facts are that the work was not completed within the time stipulated and was left by the appellant midway. Appellant blames HPSEB for its (appellant’s) failure to complete the work within the stipulated period on account of HPSEB’s non-cooperation. Agreement contained an arbitration clause. Dispute was referred to Arbitrator. Matter is still pending with the Arbitral Tribunal. 4. During the pendency of arbitration proceedings, appellant moved an application, seeking injunction against respondent-HPSEB, restraining it from en-cashing the aforesaid bank guarantees. Arbitral Tribunal has ordered, vide order dated 8.4.2010, that against the bank guarantees furnished by the appellant, HPSEB shall be entitled to draw an amount of Rs.49,49,528/- from the banks. Appellant is aggrieved by this order and has, therefore, appealed. 5. It is submitted by the learned counsel for the appellant that in case the bank guarantees are en-cashed to the aforesaid extent that would lead to sale of office and other assets of the appellant, which have been kept as security with the banks. According to him, this will result in irretrievable injustice and irreparable damage. 6. Learned counsel for the appellant contends that HPSEB is not entitled to encash the bank guarantees, …3… because contract could not be performed on account of HPSEB’s non-cooperation. However, it is admitted on behalf the appellant that so far as the mobilization advance is concerned, appellant is liable to pay unpaid portion of the advance. The unpaid portion, admittedly, works out to Rs.32,15,528/-. So far as this amount is concerned, there is no dispute that the appellant is liable to pay the same and, therefore, no fault can be found with the order of the Arbitral Tribunal, regarding release of this amount, which represents only the remaineder of the principal of advance money. Issue regarding payment of interest on the amount of advance has not been determined by the Arbitral Tribunal and the same has been kept open. 7. As regards the order of Arbitral Tribunal for release of the amount, representing security for contract performance, to the tune of Rs.17,34,000/-, it is not in dispute that the appellant had executed some work before the contract was rescinded and the value of that work is in dispute and is yet to be determined by the Arbitral Tribunal. In case value of that work is ultimately assessed at more than Rs.17,34,000/-, the appellant would be entitled to recover that money from the HPSEB. Total cost of the work was more than rupees eight crore. 8. In view of the above stated position, we are of the considered view that the order of Arbitral Tribunal, with regard to encashment of bank guarantee, in respect of security for contract performance, deserves to be set aside. …4… Accordingly, the order of Arbitral Tribunal to that extent is set aside. However, we do order that the bank guarantee, in respect of the amount of Rs.17,34,000/-, representing the security for contract performance, shall be extended till the matter is finally adjudicated by the Arbitral Tribunal. 9. With the aforesaid change in the order of Arbitral Tribunal, appeal is disposed of. In view of the disposal of the main appeal, pending applications stand disposed of. (Surjit Singh), J May 6, 2010 (ss) (V.K. Sharma), J.