B.M. Shyam Prasad, J.The unsuccessful appellant, the petitioner in A.A.No.44/2017 on the file of I Addl. District Judge, at Mangaluru has preferred this appeal under Section 37(1) (b) of the Arbitration and Conciliation Act, 1996( for short, Act) calling in question the order dated 29.01.2018 by the learned District Judge rejecting the petition filed under section 9(ii)(d) & (e) of the Act for injunction restraining the first respondent from encashing the Bank Guarantee bearing No.0544BG00082615, which is amended from time to time, or in the alternative to restrain the respondent from honouring the claim of the first respondent for encashing/invoking the Bank Guarantee bearing No. 0544BG00082615 (for short, subject Bank Guarantee). The learned Judge, while rejecting the application in A.A.No.44/2017, has by the Order dated 31.01.2018 stayed the order of dismissal dated 29.01.2018 for a period of four weeks on the subsequent application filed by the appellant. The appellant in this appeal apart from impugning the order dated 29.01.2018 is also seeking injunction restraining the first respondent from invoking the subject Bank Guarantee, and in the alternative, to restrain the second respondent from honouring such subject Bank Guarantee.

2. The first respondent, as the employer, and the appellant, as the contractor, concluded a detailed Contract Form on 21.10.2009 after the appellant was selected under due tender process. This contract was to enable the first respondent to enhance its crude processing capacity from 12 to 15 million tons per anum by commissioning Hydrogen Generation Unit (EPCC-6 Package)-for short, "HGU Project" and this project involved three components viz., manufacturing, engineering and construction. It appears from the pleadings that the appellants assertions in this regard are undisputed, but the discord between the respective stands is when the appellant asserts that while it could complete the manufacturing and engineering components, which were its sole prerogative, within the time schedule, it was hindered in completing the construction component despite employing measures to expedite such completion because of certain events that were beyond its control and for reasons not attributable to it.

3. The appellant asserts that it was required to complete its entire scope of work including the construction component within 30 months from the zero date viz., 30.03.2009, that is on or before 29.09.2011, but could not complete its scope of work until 03.02.2012, and thus, there was a total delay of 127 days. The appellant also asserts it sought for extension of "time schedule" upto 03.02.2012 lest they suffer levy of Price Reduction/ Adjustment as envisaged in Article 4.4.2.0 of the contract, but the first respondent did not take any decision on the appellants requests as it continued to call for clarification on data and chronology of events, and because the appellant wanted to protect its cash flow and commercial interests, the appellant agreed to furnish subject Bank Guarantee on 04.02.2012, which is renewed over a period of time, in good faith and in anticipation of the first respondent favourably considering its request for extension of "time schedule" without levy of price adjustment.

4. There is no dispute that the last of the renewal of subject Bank Guarantee was on 21.09.2017 for the period up to 31.03.2018 for a sum of Rs.9,86,81,903/-. The nature of the subject Bank Guarantee is mentioned in para No.2 of the guarantee contract and that reads as follows:

" Whereas, the bank hereby unconditionally and irrevocably undertake and guarantee to unconditionally pay to the Company within seven (7) business day of demand(in writing) and without protest or demur and without requiring the company to invoke any other legal remedy any and all moneys as specified in any notice of demand made by the Company to the bank with reference to this guaranties up to an aggregate limit of Rs.INR.21,51,20,373/- plus USD 59,321 plus GBP 48,950 plus EUR 98,67,650 plus JPY 50,09,150( Rupees Twenty One Crore Fifty One lacs Twenty Thousand Three Hundred Seventy Three only plus United States Dollar Fifty Nine Thousand Three Hundred Twenty One Only plus Pound Forty Eight Thousand Nine Hundred Fifty Only plus Euro Eight Lacs Sixty Seven Thousand Six Hundred Fifty Only plus Yen Fifty Lacs Nine Thousand One Hundred Fifty Only) and the bank hereby agree with the Company that:

The subsequent renewals are on the following terms: At the request of LARSEN & TOURBO Limited, we hereby amend above mentioned Bank Guarantee as follows:

Expiry date of the Bank guarantee has been amended to 31-3-2018.

Claim expiry date of the Bank guarantee has been amended to 31-3-2018.

All other terms and conditions of the original Bank guarantee remain unchanged. This letter form an integral part of the original guarantee referred above and may be kept attached thereto."

It is not in dispute that the amount guaranteed was altered reducingly because the appellants liability to shoulder levy of Price Reduction was reduced by the first respondent while allowing certain claims by the appellant.

5. The proverbial spur for the appellant to move the District Court under Section 9 (ii)(d) and(e) of the Act is the first respondents letter dated 18.01.2016 informing the appellant that the contractual completion (i.e., Mechanical completion) date is extended up to 21st December 2011 without levy of Price Reduction/adjustment and without any extended stay compensation stipulating that Price Reduction/adjustment would commence from 22.12.2011, and the first respondents subsequent e-mail dated 27.01.2017 calling upon for remittance of Rs.7,54,88,496/- to secure release of the Bank Guarantee extended upto 31.03.3018.

6. The learned District Judge initially upon presentation of petition under Section 9 (ii)(d) and(e) of the Act by the petitioner did grant ad-interim injunction restraining the first respondent from encashing the subject Bank Guarantee, but by the subsequent impugned order dismissed the appellants petition and also stayed the operation of the order of dismissal for a period of four weeks. The learned Judge by her impugned order, adverting to the law declared by the Honble Supreme Court, has concluded that there can be injunction against invoking a Bank Guarantee only if fraud in obtaining Bank Guarantee or irretrievable injury/injustice upon invocation of Bank Guarantee is established and that the appellant has pleaded neither fraud nor irretrievable injustice/injury and therefore the appellant has not established balance of convenience or irreparable injury, the necessary concomitants for issuance of orders of temporary injunction. The learned Judge though has concluded that the appellant has prima facie established the existence of a dispute.

7. We have heard learned Senior Counsel Sri S.S.Naganand for the appellant and learned Senior Counsel Sri Uday Holla for the first respondent and it is submitted by both that the appellant having invoked the arbitration agreement, arbitral tribunal is constituted and the appellant and the first respondent have filed not only their pleadings but also their evidence and the arbitral Tribunal has fixed tentative dates for conclusion of the proceedings, and that the controversy before the arbitral tribunal is pivoted on the question whether the delay/lag in mechanical completion is attributable to the appellant.

8. The learned Senior Counsel Sri S.S.Naganand assailed the impugned order chiefly on two counts: firstly, the arbitral tribunal was already constituted and in terms of the schedule fixed by the arbitral tribunal there will in all probability be a final adjudication at the earliest, and as such, if injunction is granted no irreversible hardship will be caused to the first respondent; and secondly, the subject Bank Guarantee being issued with regard to levy of Price Reduction/adjustment for the alleged delay in Mechanical Completion by the appellant, which is yet to be adjudicated by the arbitral tribunal, the appellants liability for levy of Price Reduction/adjustment, if any, can only be construed as "damages" payable and in view of the ratio laid down by the Honble Apex Court in its decision reported in Gangotri Enterprises Limited, (2016) 11 SCC 720 [LQ/SC/2016/644] ( in reiteration of the earlier decision of the Honble Apex Court in Union of India Vs. Raman Iron Foundry, (1974) 2 SCC 231 [LQ/SC/1974/98] there is no ascertained liability and therefore invocation of the subject Bank Guarantee will not only cause irretrievable injury to the appellant but will also be impermissible. The learned Senior Counsel emphasized that the decision in Gangotri Enterprises case by the Honble Apex Court is in the context of the Railway authorities choosing to invoke a Bank Guarantee furnished by the contractor on the ground that the Contractor had defaulted in performance of his obligations under an earlier contract, and as the contractors obligation to recompense the employer as damages was pending adjudication in an arbitration proceeding, the Honble Apex Court restrained the employer from invoking the Bank Guarantee. The learned Senior Counsel also brought to the notice of this Court a decision rendered by a learned Single Judge of the High Court of Calcutta in Rahee GPT(JV) and Ors. Vs The Union of India & Ors.,2017 SCCOnline(Cal) 17244(decided on 8.11.2017) to emphasize that the courts in India were recognizing the third exception apart from "fraud of egregious nature" and "irretrievable injustice/injury" for granting injunction against invoking Bank Guarantee in applying exceptional or special equities of the kind that would prick the judicial conscience of the Court and to canvass that the case on hand before this Court will be one of such cases where the third exception should be applied.

9. Per contra, the learned Senior Counsel Sri Udaya Holla, referring to a string of decisions commencing with the decision of the Honble Apex Court in United Commercial Bank Vs. Bank of India and Ors., (1981) AIR SC 1426 and also the later decision of the Honble Apex Court in BSES Ltd Vs. Fenner India Ltd., and another, (2006) 2 SCC 728 [LQ/SC/2006/102] contended, in support of the impugned order and against grant of injunction Order, that the learned District Judge had in terms of the settled law on grant of injunction against invoking Bank Guarantee rightly refused injunction as the appellant had not established, nay not even pleaded, fraud or irretrievable injustice or injury required for grant of injunction. The learned Senior Counsel contended that in the facts and circumstances of the case, even as set up by the appellant in the petition, the appellant could not have alleged fraud or asserted irretrievable injustice/injury. Insofar as the decisions of the Honble Supreme Court in Gangotri Enterprises Limited case and in Raman Iron Foundry case, the learned Senior Counsel contended that the facts on hand before this Court do not justify applying such ratio as the facts in those cases before the Honble Supreme Court were entirely different; and as regards the decision of the learned Single Judge of the High Court of Calcutta in Rahee GPT (JV) cases, the learned Senior counsel without elucidating on the permissibility of applying "any third exception" as detailed in this judgment, submitted that the facts and circumstances of this case do not justify its application.

10. The questions that arise for consideration in this appeal are:

i) Whether the order impugned in this appeal is untenable in the facts and circumstances of the case and contrary to law

ii) Whether this Court could grant injunction restraining the first respondent from invoking the Bank Guarantee as claimed by the appellant

11. The appellant, in reiteration of what is stated in the application before the learned Judge on the circumstances under which the subject Bank Guarantee is furnished, has stated in paragraph No.7.13 of the appeal memorandum that upon the direction of the first respondent the appellant furnished the subject Bank Guarantee towards the pending issue of levy of Price Reduction/adjustment for the delay in the completion of the project in good faith and under the genuine belief that the time extension requested by the appellant would be favourably considered by the first respondent, and because the appellant, with limited choice, had to furnish the subject Bank Guarantee to protect its cash flow and commercial interests. Paragraph 7.13 reads as follows:

7.13. The Respondent No.1 did not pass any orders on the extension of time application dt.09/05/12. The Respondent No.1 directed Appellant to issue a Bank Guarantee towards the pending issue of Price Reduction to be levied due to the delay in the completion of the project. The copy of the Bank Guarantee dated 04.02.2012 is annexed hereto marked as Annexure 6. Further Respondent No.1 repeatedly mandated extension of Bank Guarantee due to its own indecision and pending issue of the said Price Reduction. In view thereof, the Appellant states that on 2 December, 2014 a fresh Bank Guarantee (in place of earlier Bank Guarantee bearing No.0544DG00189512) of Rs.215120373/- + USD 59321 + GBP 48950 + EUR 867650 + GPV 5009150 bearing No.0500BG00082615 was issued in lieu of the Price Adjustment for delay in completion of the project. The Appellant in good faith and with a genuine belief that the time extension request of the Appellant would be considered by Respondent No.1 and also having limited choice or alternative to protect its cash flow, /commercial interest agreed for the Bank Guarantee to release the withhold amount by respondent No.1. Hereto annexed and marked as Annexure 7 and 8 are the copies of the Bank Guarantees. .

12. These assertions and the subsequent assertions regarding the later regular renewals of the subject Bank Guarantee from time to time, with the last renewal being on 21.09.2017 for a sum of Rs.9,86,81,903/-, leave no room for doubt that the subject Bank Guarantee was given by the appellant on its own volition to secure the payment of the amounts from the first respondent knowing that the first respondent could claim for Price Reduction/adjustment after deciding on the appellants request for extension of time. Further, the levy of the Price Reduction/Adjustment for delay is admittedly part of the contract and it is computed applying the details as mentioned in the contract.

13. The appellant completed the project albeit certain delay, and when the appellant wanted release of payments under the contract from the first respondent and when the first respondent called upon the appellant to furnish a Bank Guarantee to secure the amount that it would be entitled to upon the levy of the Price Reduction/Adjustment consequent to its decision on the appellants request for extension of "time schedule", the appellant furnished the subject Bank Guarantee. Therefore, the subject Bank Guarantee can only be a stand alone contract. The terms of the Bank Guarantee are categorical in that it is unconditional and invocable at the complete discretion of the first respondent, and it must be stated that renewal of the subject Bank Guarantee is also admittedly unconditional and invocable at the discretion of the respondent. These facets place the subject Bank Guarantee differently from the Bank Guarantees furnished as part of the initial contract that mandates payment of damages which could become payable by a contractor for any default of or breach of the terms of such initial contract. The definite opinion of this Court is that the subject Bank Guarantee, being a stand alone contract which came about in the circumstances already referred to, will not in sensu stricto, and materially for a just decision in this case, be a Bank Guarantee furnished for securing payment of damages. Therefore, the decision of the Honble Supreme Court in Gangotri Enterprises Limited case will not apply to the present case.

14. The reliance on the decision of the Calcutta High Court in Rahee GPT (JV) & Ors. Vs. The Union of India & Ors. for grant of injunction against invoking Bank Guarantee applying the third exception viz., exceptional or special equities of the kind that would prick the judicial conscious of the Court, given the facts as enumerated above and the opinion of this Court as stated supra, this third exception cannot be applied to the present case even if it could be accepted that such third exception as is delineated in the decision of the High Court of Calcutta would be available in law. However, this Court would not like to express any opinion on the permissibility and the circumstances under which this principle, if permissible, could be applied with the refrain that this will have to be considered by this Court on another day and in a different set of circumstances.

15. For the foregoing reasons, it is concluded that the impugned order dated 29.01.2018 in A.A.No.44/2017 on the file of the I Additional District Judge, D.K. Mangaluru, does not suffer from any illegality or irregularity and that the appellant is not entitled to injunction against the invocation of the subject Bank Guarantee or other relief/s in similar lines.

Accordingly the appeal is dismissed. No costs.