Original Application Nos.653 & 657 of 2010 P.Jyothimani,J. These applications are filed under section 9 of the Arbitration and Conciliation Act,1996 praying for an order of injunction against the respondents from invoking the bank guarantees issued by the second respondent for a sum of Rs.6 lakhs and Rs.2,77,200/- respectively. 2. The first respondent, Southern Railway invited tenders for erection of 3 LED screens in the Chennai Central and Egmore Railway Stations for a period of three years, by identifying the places for installation. The notification was issued on 4.12.2007. The applicant participated in the tenders in both the cases. After opening the technical bids on 4.1.2008 and opening the financial bids subsequently on 3.3.2008, the applicant was declared as a successful bidder and the applicant was awarded the contract for a period of three years on payment of licence fees of Rs.1,20,00,000/-. a) As per the terms and conditions, a sum of Rs.40 lakhs was required to be paid each year and bank guarantee for a sum of Rs.6 lakhs was required to be drawn towards security deposit, in respect of the tender which is the subject matter of O.A.No.653 of 2010 and in respect of the tender which is the subject matter of O.A.No.657 of 2010, as per tender conditions, a sum of Rs.18,48,000/- per year was required to be remitted and a sum of Rs.2,72,200/- as security deposit by way of bank guarantee respectively. The first respondent by communications dated 11.4.2008 and 1.2.2008 accepted the offers and informed that the contract would commence from the date of display of advertisement or 30 days from the date of acceptance of the contract, whichever is earlier. b) It is stated that the original agreement is with the first respondent and in spite of the applicant requesting for a copy of the agreement, the same has not been given to the applicant. It is stated that the applicant remitted the licence fees in both the cases and furnished bank guarantees of Rs.6 lakhs in respect of O.A. No.653 of 2010 and Rs.2,77,200/- in respect of O.A.No.657 of 2010, both drawn on the second respondent bank. It is stated that subsequently the first respondent suspended the awarding of contract on the basis of an order in the writ petition banning installation of LED display in the railway station premises since the same was declared as heritage building. c) It is stated that on 30.7.2008, the first respondent gave a change of location and the permission to execute the contract was given on 29.9.2008 to the applicant which according to the applicant, is with an inordinate delay affecting the terms of contract. The applicant was able to complete the installation thereafter by 7.1.2010. The applicant in this regard is stated to have made representations bringing out the inordinate delay on the part of the first respondent. However, it is stated that the first respondent fixed the date of commencement of the contract as 27.8.2008 for Central Railway Station and 27.10.2008 for Egmore Railway Station in respect of tenders concerned in O.A.Nos.653 and 657 of 2010. d) It is the case of the applicant that the first respondent failed to issue any letter to the effect that the tenure of the contract would commence from 29.12.2008 and according to the applicant, the date was unilaterally fixed by the first respondent Railways. Further, the first respondent demanded service connection charges for the period from 27.8.2008 to 29.12.2008 in respect of Central Railway Station concerned in O.A.No.653 of 2010 and from 27.10.2008 to 29.12.2008 in respect of Egmore Railway Station concerned in O.A.No.657 of 2010. e) Without resolving the date of commencement of contract, the first respondent issued a show- cause notice for terminating the agreement for the failure to remit licence fees for the second year commencing from 28.8.2009 in respect of Central Railway Station and from 28.10.2009 in respect of Egmore Railway Station and a reply was sent to the said notice. Thereafter, the first respondent terminated the contract on 17.3.2010 in both the cases. The applicant by letter dated 10.5.2010, requested the first respondent to withdraw the termination notice and for renewal and also for the waiver of service connection charges from 17.3.2010 till resumption of operation. f) Having terminated the contract, the first respondent threatened to invoke the bank guarantee and according to the applicant, there is a dispute bona fide between the parties which is subject to arbitration and the applicant is in fact, requesting for invoking the arbitration clause. It is the case of the applicant that it was the right of the applicant to rescind the contract and to ask for damages, but, on the other hand, without any liability on the part of the applicant, the first respondent is taking steps to invoke the bank guarantee which will be detrimental to the interest of the applicant. Therefore, the present applications are filed as stated above. The applicant has also given an undertaking that till the disposal of the arbitration proceedings the applicant would keep the bank guarantee subsisting. 3. In the counter affidavit filed by the first respondent Southern Railway in O.A.No.653 of 2010 adopted in O.A.No.657 of 2010 since they are similar, the fact of tender of the applicant having been accepted is admitted. It is also stated that the applicant licensee paid the licence fees belatedly that is, 5 months after the letter of acceptance and the security deposit was also paid with delay. It is stated that a specimen copy of the agreement was sent to the applicant along with tender documents and it was stated in the letter of acceptance that the signed copy of the agreement in all respects must be submitted within 15 days of the issuance of the letter of acceptance. a) It is denied that the original copy of agreement is with the first respondent and in fact, the first respondent repeatedly requested the applicant to sign the copy of agreement and send the same at the earliest. It is stated that after the letter of acceptance was given, the applicant sought for permission for new locations and in the meantime, the first respondent received a notice in W.P.No.7143 of 2006 on 22.4.2008, directing to remove all hoardings covering the fagade of historic buildings in Chennai including Chennai Central and Egmore Railway Stations and therefore, the acceptance was kept in abeyance. b) It is stated that the suspension was only in respect of one location and in respect of other location which is covered in O.A.No.653 of 2010, the first respondent directed the applicant to pay the licence fees. It is stated that in respect of one location only steps were taken for the purpose of providing alternate place at the entry point to Platform No.6 of Chennai Central Railway Station which was one of the choices of the applicant and therefore, a fresh letter of acceptance for new location was issued on 30.7.2008 with advice to pay the licence fees in time and therefore, there is no loss caused to the applicant and the applicant should have commenced the work immediately. c) It is stated that by virtue of change of one location due to the order of the High Court, the commencement of contract in respect of other two locations were not affected and as per the terms of tender conditions only 30 days time was granted for the purpose of execution of the contract and therefore, contract period was fixed from 29.8.2008 to 28.8.2011 and there is no error in fixing the same. It is stated that due to non-payment of licence fees for the second year and non-signing of the copy of agreement, the administration issued the show-cause notice and a reply was also received which was not acceptable and therefore, the contract was terminated on 17.3.2010 and a final notice was sent to clear the dues at once. d) It is also stated that after the contract was terminated, the administration took steps to enforce the bank guarantee by writing to the second respondent, IDBI Bank on 12.4.2010, however, the applicant requested 14 days time for making payment and in view of the same, the first respondent requested the second respondent on 23.4.2010 to wait until further advice. It is stated that subsequently the applicant requested 15 days time stating various reasons and since it was a dilatory tactics, the subsequent requests were rejected and the first respondent gave the demand in writing to the second respondent bank to enforce the bank guarantee and to credit the same in the railways account, however the bank has not paid the amount and in the meantime, a notice was received in these applications. e) It is stated that the applicant has not given proper notice of arbitration proceedings. It is stated that even after enforcement of bank guarantee, there is enormous amount of Rs.22,39,427/- outstanding and in respect of the contract in O.A.No.653 of 2010 for having displayed the advertisement in the railway premises until termination, the applicant is liable to pay charges. It is also stated that the applicant having given undertaking to pay licence fees cannot go back saying that if the bank guarantee is invoked, loss will be caused and on the other hand, it is the railways which is the sufferer. 4. It is the contention of the learned counsel for the applicant in both the cases is that on rescision of contract, the security deposit stands forfeited and the forfeiture is relatable to the performance guarantee. It is also his submission that as per the terms of tender, the licence fees is payable in three years and there can be no breach on the face of it and therefore, according to him, the termination is not valid. His submission is that there is no ground for invoking the bank guarantee at this stage. It is also not in dispute that in spite of the letter given by the first respondent to the second respondent on 7.5.2010 for payment of amount under the bank guarantee, the amount has not been paid. It is his submission that there is no loss of revenue to the railways and he relies upon the judgment in U.P.State Sugar Corporation vs. Sumac International Ltd., [(1997) 1 SCC 568] to drive home that there is no necessity for invoking the bank guarantee at this stage. He would also submit that the applicant is prepared to abide by any condition to keep the bank guarantee alive till the arbitration is completed and as per the original contract the contractual period was available till March, 2010. By referring to the judgment of the Bombay High Court in Dai-ichi Karkaria Pvt., Ltd., Bombay vs. Oil and Natural Gas Commission, Bombay [AIR 1992 Bombay 309], he would also contend that the conduct of the first respondent would amount to duress and the invocation of bank guarantee is made to threaten the applicant with a view to make the applicant to accede to the unjust request of the first respondent. 5. On the other hand, Mr.Vellaichamy, learned counsel for the first respondent would submit that the bank guarantee is independent of the performance and therefore, there is no necessity to interfere with the invocation of the bank guarantee. He would rely upon the judgments in Mahatma Gandhi Sahakra Sakkare Karkhane vs. National Heavy Engineering Co.op Ltd., [(2007) 6 SCC 470] and Vinitec Electronics Private Ltd., vs. HCL Infosystems Ltd. [(2008) 1 SCC 544]. It is his submission that when the letter of acceptance was given in September, 2008 even after the change of location in respect of one place, there was no hindrance for the applicant to install and the identification of alternate place itself was made at the instance of the applicant. Learned counsel has also produced the file in respect of the above said contract. 6. The common issue involved in both the cases is about the invocation of bank guarantee by the first respondent in respect of two contracts, subject matter of these two applications for Rs.6 lakhs and Rs.2,77,200/- respectively. The admitted fact is that there was termination of contract by the first respondent on 17.3.2010. A reference to the termination notice issued by the first respondent dated 17.3.2010 makes it clear that the termination was issued based on the alleged violation of clause 11 which contemplates remittance of second year licence fees at the starting of the second year, which the applicant is alleged to have failed to pay and also on the basis of non-execution of agreement within 15 days from the date of letter of acceptance. It is based on the said two violations, the first respondent issued a show-cause notice to the applicant on 8.12.2009 and after receiving the reply, the first respondent passed the order terminating the contract. It is also not in dispute as stated above that by letter dated 7.5.2010, the first respondent made a request to the second respondent to make payment against the bank guarantee. 7. Even though elaborate submissions were made by the counsel for the respective parties on various terms of the tender conditions and agreement, apart from various communications, since as per the terms and conditions of the tender, there is an arbitration clause available for the parties as per clause 21 and the applicant itself states that it is taking steps to invoke the arbitration clause, I am of the considered view that at this stage, it is not necessary for this Court to refer to various factual aspects, which would be matters for arbitrator to decide. Therefore, the question as to whether the termination of contract is correct or not and valid in the eye of law, need not be elaborately gone into in these applications. The simple question which has to be decided is as to whether the bank guarantees furnished are independent of the obligation of the parties to perform the contract and for that, a reference to few clauses in the tender notification is necessary. Clause 10(b) of the tender notification which is as follows: " 10(b). The successful tenderer should give a Performance Guarantee in the form of an irrevocable bank guarantee amounting to 5% of the total contract value worked out for three years. The bank guarantee should be valid up to 6 months in excess of the expiry of the contract period." says that the applicant being the successful tenderer shall give bank guarantee in the form of irrevocable bank guarantee. 8. Clause 10(e) which is as follows: " 10(e). Whenever the contracts are rescinded, the Security Deposit will be forfeited and the Performance Guarantee shall be encashed." enables the employer viz., the first respondent to forfeit the security deposit and encash the performance guarantee when the contract is rescinded. 9. Of course, the first respondent administration heavily places reliance on clause 11 which is as follows: " 11. The License fee quoted for three years shall be divided into three equal parts and the first part should be paid for the first year in full, in advance before the commencement of the contract. The second part of the License fee shall be paid in full at the start of the Second year and third part should be paid in full at the start of the third year. Any failure in this regard will be reckoned as breach of contract on the part of the licensee and Railway Administration shall have the right to take action deemed fit including imposition of fine, termination of contract duly forfeiting the amounts paid in advance without prejudice to its rights to claim ascertained liquidated damages." explains that the failure on the part of the contractor in paying yearly licence fees will be treated as breach of contract and the administration can either impose fine or terminate the contract forfeiting the amounts without prejudice to the claim of damages. 10. The railway administration also relies upon clause 16 of the tender for terminating the contract, which is as follows: " 16. In the event of the successful Tenderer not complying with any of the conditions stipulated to the satisfaction of the Railway Administration, the Railway administration shall have the right to terminate the contract and take any action deemed fit including forfeiture of all amount paid in advance without prejudice to its right to claim damages from the successful Tenderer." 11. A reference to the terms of bank guarantee shows that it is irrevocable and unconditional as it is evident in paragraph-1 which is as follows: " 1. In consideration of the president of India acting through the divisional Railway Manager (commercial), Southern Railway, Chennai 600 003 (Herein after referred to as the Government) having accepted vide letter No.M/C.37/Pub/tender/LED/MS/II/07 dated 01.02.2008 the tender submitted by M/s.OMNI AGATE SYSTEMS PVT.LTD a Company registered under Companies Act 1956 having its registered office at No.99, Greams Road, II Floor, M.N.Complex, Chennai 600 006 (Herein after referred to as "the contractor(s), and agreed to grant a contract for installation and display of 2 nos. LED Screens (video-walls) at specified location at Chennai Egmore (hereinafter called the contract) and whereas one of the terms agreed by the said contractor, is that he should give a Performance Guarantee in the form of an irrevocable Bank Guarantee amounting to 5% of the contract value i.e., Rs.2,77,200/- (Rupees Two Lakhs Seventy Seven Thousand Two Hundred only) valid upto expiry of the maintenance period, i.e., upto 07.02.2011 by way of security for the due observance of the terms and conditions, performance and fulfillment of the said contract, we the Industrial Development Bank of India Ltd., (IDBI Ltd.,) a Company incorporated under the Companies Act 1956 (1 of 1956) and a Banking Company with in the meaning of the Banking Regulation Act 1949 (10 of 1949), having its registered office at IDBI tower, WTC Complex, Cuffee Parade, Mumbai 400 005, and having its branch office at 115, Annasalai, Saidapet, Chennai 600 015 (herein after referred to as the bank) at the request of the contractors do hereby irrevocably and unconditionally guarantee to the government that the contractor shall duly perform and discharge their obligations under the said contract to the full satisfaction of the Government and render all necessary and efficient services which may be required to be rendered by the contractor in connection with and / or for the performance of the works as per the specifications stipulated in the tender No. M/C.37/pub/tender/LED/MS/II/07 dated 30.10.2007 and letter of acceptance No. M/C.37/Pub/tender/LED/MS/II/07 dated 01.02.2008 within the time of 15 days reckoned from the date as per the letter of acceptance, and further guarantees that the works, which shall be done by the contractor under the said contract, shall be actually performed in accordance with terms and conditions of the contract to the full satisfaction of the government." The bank guarantee also contains a clause to the effect that the amount shall be payable without any demur merely on demand from the company. It also states that the company is required to incur loss because of the breach of contract by the contractor in respect of the terms and the demand shall be conclusive regarding amount due under the contract. It also categorically states in paragraphs 3 and 4 which are as follows: " 3.We, IDBI Ltd., do hereby undertake to pay the amounts due and payable under this guarantee without any demur, merely on a demand from the government stating that the amount claimed in due by way of loss and / or damage caused to or would be caused to or suffered by the government by reason of any breach by the said contractor (s) of any of the terms of conditions contained in the said agreement or by reason of the Contractor's (s) failure to perform the said Agreement. Any such demand made on the Bank shall be conclusive as regarding and amount due and payable by the Bank under this Guarantee. However, our liability under this guarantee shall be restricted to an amount not exceeding Rs.2,77,200/- (Rupees Two Lakhs Seventy Seven Thousand Two Hundred only). 4. We, IDBI Ltd., do hereby undertake to pay to the government any money so demanded notwithstanding any dispute or disputes raised by the Contractor(s) in any suit or proceedings pending before any court, Tribunal or Arbitrator(s) relating thereto our liability under this present being absolute and unequivocal. The payment so made by us under this bond shall be valid discharge of our liability for payment there under and the contractor(s) shall have no claim against us for making such payment." that the undertaking by the bank to pay to the company on demand is notwithstanding any dispute raised in the contract or suit, etc. and the liability is absolute and unequivocal. 12. It is relevant to point out at this stage that it is not the case of the applicant anywhere in the affidavit that in the event of applicant succeeding before arbitration it would not be in a position to recover the amount from the first respondent, railway administration so as to substantiate a prima facie case and to establish the balance of convenience in granting injunction against invoking the bank guarantee. 13. It is also relevant to point out that the applicant has not alleged any fraud against the first respondent in obtaining the bank guarantee or any irretrievable injury that may be caused to the applicant by invoking the bank guarantee. 14. In the letter of the first respondent dated 7.5.2010 addressed to the second respondent bank, it is stated as follows: "SOUTHERN RAILWAY Office of the Sr.DFM, Chennai Division No.W.55/MAS/X-1/BG/11200054&55 Date:7.5.2010 The Manager IDBI Bank No.37, P.M.Tower, Greams Road Thousand Lights, Chennai 600 006. Sub: Registering of claim against Bank guarantee issued at the request of M/s.Omni Agate Systems Pvt. Ltd., Ref: BG No.20080051BGP0321 dated 22.9.2008 for Rs.6,00,000/- valid upto 19.9.2011 BG No.2008129IBG0002 dated 7.2.2008 for Rs.2,77,200/- valid upto 7.8.2011. Kindly refer to this office letter of even no.dated 23.4.2010, wherein it was intimated not to invoke the two BGs cited under reference, submitted by M/s. Omni Agate Pvt. Ltd., until further communications. Since the party has not fulfilled the conditions as per the agreement, the subject Bank Guarantees may be encashed in full immediately and cheque may be drawn in favour of Sr.Divisional Financial Manager, Chennai Division, Southern Railway, Chennai 600 003 and forwarded to the address mentioned under Registered post. Sr.Divisional Financial Manager O/o Senior Divisional Financial Manager 4th Floor, NGO Annexe Chennai Division, Southern Railway Parktown, Chennai 600 003. Sd/-xxxxxx (K.S. Illaya Raja) Additional Divisional Finance Manager/Works" 15. The law is well settled that in such circumstances where the bank guarantee given is independent and unconditional and irrevocable, there is no necessity on the part of the bank to investigate about the correctness or otherwise of the demand made by the beneficiary. When the bank guarantee is independent and unconditional and in the absence of any allegation regarding the fraud having been played for the purpose of obtaining the unconditional bank guarantee, there is no question of duress involved in this case and therefore, the judgment of Queen's Bench Division in Vantage Navigation Corporation vs. Suhail and Saud Bahwan Building Materials LLC [ (1989) Vol-I, Lloyd's Law Reports 138], on which the reliance was placed by the learned counsel for the applicant is of no assistance to substantiate the case of the applicant. 16. The further submission by the learned counsel for the applicant that the economic duress and commercial pressure are to be taken as exception to the general rule of refusing to grant injunction as held by the Bombay High Court in Dai-ichi Karkaria Pvt., Ltd., Bombay vs. Oil and Natural Gas Commission, Commission [AIR 1992 Bombay 309], is also of no use to substantiate the case of the applicant for the purpose of granting an order of injunction against the first respondent from invoking the bank guarantee. 17. Further, whether there is economic duress or not is ultimately for the applicant to raise as a