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2016 (9) TMI 1623 - HC - Indian LawsSeeking stay of invocation of the bank guarantees issued for securing the mobilization advance - whether ARIO has made out the necessary grounds for grant of interim stay on invocation of the Mobilization BG? - HELD THAT:- There is also a dispute as to whether ARIO had mobilised the necessary resources at site as is claimed by ARIO. According to GGL, ARIO had merely drawn the resources from another contract/site that was being executed by ARIO at the material time - Although there are disputes between the parties as to which party is in breach of the terms of the LMC Contract, there is no dispute that the mobilization advance provided to ARIO has not been recovered. This is so because only a small fraction of the work as contracted has been completed and, therefore, ARIO has been unable to raise bills and, consequently, GGL has been unable to adjust the mobilization advance from the running bills as agreed. Whether GGL should be interdicted from invoking the mobilization BG only on the basis of the aforesaid disputes between the parties? - HELD THAT:- The mobilization advance provided were in the nature of loan and, admittedly, GGL is entitled to recover the same. Whether ARIO is entitled to retain the advances and adjust the same against its claim is the subject matter of disputes between the parties? - HELD THAT:- The terms of the Mobilization BG make it amply clear that GGL is entitled to recover the same notwithstanding the disputes between the parties. Indisputably, the purpose of Mobilization BG is to secure GGL in recovery of mobilization advance. The entire purpose for securing the mobilization advance by a bank guarantee would be frustrated if the invocation of the bank guarantee is interdicted till the adjudication of the disputes. In the present case, the bank guarantee in question expressly provides that "we undertake to pay you, upon your first written demand declaring the Contractor to be in default under the contract and without caveat or argument, any sum or sums within the limits of (amount of guarantee) as aforesaid, without your needing to prove or show grounds or reasons for your demand or the sum specified therein." Thus, the bank guarantee in the present case is clearly an unconditional one. And, in terms of the bank guarantee, GGL is not required to provide any reasons or to show that ARIO is in breach of the terms of the contract. The invocation of Mobilization BG cannot be interdicted. The petition is disposed of.
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