Section 9 relief and bank guarantees: HC upholds termination rights and rejects restraint absent fraud or irretrievable harm.

Section 9 interim relief was held unavailable to restrain termination of a determinable supply-cum-works contract where substantial work remained incomplete, cure notice had been issued, and damages were an adequate remedy. The Court further held that invocation of unconditional bank guarantees could not be stopped absent egregious fraud or irretrievable injustice of an irreversible kind; contractual disputes and arbitration proceedings were insufficient. On the contract documents and conduct, the obligation for right of way, land access, and related clearances was held to rest on the appellant, so the termination was not vitiated. The Electricity Act and telegraph powers arrangement did not invalidate the supplementary agreements.

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Issues: (i) whether interim relief under Section 9 of the Arbitration and Conciliation Act, 1996 could restrain termination of a supply-cum-works contract; (ii) whether the appellant established fraud, special equities, or irretrievable harm to restrain invocation of the bank guarantees; (iii) whether the contractual and statutory framework placed the obligation to obtain right of way, land access, and clearances on the respondent so as to invalidate the termination.

Issue (i): whether interim relief under Section 9 of the Arbitration and Conciliation Act, 1996 could restrain termination of a supply-cum-works contract.

Analysis: The contract was found to be determinable, and the correspondence showed that substantial work remained incomplete despite repeated extensions of time. The appellant itself had sought to be relieved of the unfinished work and had proposed off-loading of portions of the contract. The notice to cure was issued, no remedial action was shown within the stipulated period, and the Court held that the owner was prima facie justified in terminating the contract. In such contractual disputes, damages were treated as an adequate remedy and interim restraint against termination was not warranted.

Conclusion: No interim injunction could be granted against termination of the contract.

Issue (ii): whether the appellant established fraud, special equities, or irretrievable harm to restrain invocation of the bank guarantees.

Analysis: The guarantees were treated as independent contracts. The Court reiterated that an unconditional bank guarantee must be honoured on demand, and the recognised exceptions are fraud of an egregious nature and irretrievable injustice of an irreversible kind. Mere disputes under the underlying contract, pendency of arbitration, alleged breach by the beneficiary, or assertions of lack of good faith do not suffice. On the pleadings and facts, no such fraud or irretrievable harm was made out.

Conclusion: Invocation of the unconditional bank guarantees could not be restrained.

Issue (iii): whether the contractual and statutory framework placed the obligation to obtain right of way, land access, and clearances on the respondent so as to invalidate the termination.

Analysis: Reading the original contract, the supplementary agreements, and the parties' contemporaneous conduct, the Court held that the obligation regarding statutory clearances, right of way, way leave, and related access measures had been shifted onto the appellant, while the respondent remained responsible for payment of compensation. The Court also held that the order under Section 164 of the Electricity Act, 2003 and the connected telegraph powers did not render the supplementary arrangements void. The appellant's reliance on Article 14 was rejected because the dispute arose in a purely contractual field and the respondent was not treated as an instrumentality of the State for this purpose.

Conclusion: The contractual allocation of obligations stood against the appellant, and the termination was not vitiated on that basis.

Final Conclusion: The appeals failed because the case did not justify restraint of either the contractual termination or the unconditional bank guarantees, and the Court affirmed that the dispute was governed by the contract rather than by a public law standard of review.

Ratio Decidendi: In a purely contractual dispute, an unconditional bank guarantee must be honoured unless there is an egregious fraud or irretrievable harm of an irreversible kind, and interim relief under Section 9 cannot be used to block termination of a terminable contract where the pleadings and contemporaneous conduct do not justify such restraint.

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