TMI Blog2016 (5) TMI 516X X X X Extracts X X X X X X X X Extracts X X X X ..... e guarantee furnished for execution work of contract dated 14.07.2006 (Anand Vihar works) and the work having been completed to the satisfaction of the respondents, they had no right to encash the Bank Guarantee. We have, therefore, no hesitation in holding that both the courts below erred in dismissing the appellant's application for grant of injunction. We are also of the view that the District Judge having decided the injunction application in the first instance in appellant's favour vide order dated 04.01.2012 erred in rejecting the application made by the appellant second time vide order dated 12.07.2012. It is not in dispute that the respondents despite having suffered the injunction order dated 04.01.2012 did not file any appeal against this order. Such order thus attained finality and was, therefore, binding on the parties. Thus we hold that the appellants have made out a prima facie case in their favour for grant of injunction against the respondents so also they have made out a case of balance of convenience and irreparable loss in their favour as was held by this Court in the case of Union of India (DGS D) (1974 (3) TMI 105 - SUPREME COURT ). Allow injun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TCR for construction of New Station Building (G+2) circulating area, various service buildings, construction of platform shelters with RCC Column and beam, Underground and Overhead water storage tanks, water supply pipeline network and other misc. works in connection with the Development of New Passenger Terminal at Anand Vihar (East Delhi) [hereinafter referred to as Anand Vihar works ]. In connection with the grant of the Anand Vihar works, the appellant-Company submitted a Bank/Performance Guarantee bearing No. 12/2006 dated 04.08.2006 from its banker Indian Mercantile Co-operative Bank Ltd., Cantt. Road, Lucknow (hereinafter referred to as Bank ) for a sum of ₹ 1,32,78,820/-. 6) Since the work relating to contract dated 22.08.2005 could not be completed within the prescribed time/extended time by the appellant due to non-availability of site because of the agitation of the farmers and non-supply of the specification or drawing of most of the small bridges by the respondents, as complained by the appellant, the Agra-Etawah contract dated 22.08.2005 was terminated by the respondents vide its letter dated 30.04.2009. After inviting fresh tenders, the rest of the work wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the appellant in relation to dispute arising out of another contract dated 22.08.2005. It was alleged that firstly, Bank Guarantee was not furnished by the appellant in relation to contract dated 22.08.2005 but was furnished in performance of another contract dated 14.07.2006 (Anand Vihar works) which is a separate contract and has nothing to do with the contract dated 22.08.2005. Secondly, it was alleged that so far as the contract dated 14.07.2006 (Anand Vihar works) is concerned, the work was completed well within time and also to the satisfaction of the respondents and for which Completion Certificate was also given to the appellant by the respondents on 30.09.2010. Thirdly, it was alleged that since the Bank Guarantee in question was in the nature of performance Guarantee for due execution of contract dated 14.07.2006 (Anand Vihar works) and the same having been performed by the appellant to the satisfaction of the respondents, the appellant-Company was entitled to get its Bank Guarantee No.12/2006 released from the respondents. It was further alleged that in these circumstances, the respondents have no right to encash the Bank Guarantee in relation to any dues arising out o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 13.01.2012. On the request of the respondents, the Bank extended the period of Bank Guarantee for another six months, i.e., upto 13.07.2012. 19) On 04.04.2012, the respondents through their accounts office wrote a letter to the Branch Manager of the Bank to encash the said Bank Guarantee in their favour. 20) Since the respondents went on insisting for encashment of the Bank Guarantee again and again saying that order dated 04.01.2012 passed by District Judge no longer survives as its life was only upto the date of constitution of arbitral Tribunal and hence the respondents became entitled to encash the Bank Guarantee, the appellant again filed a petition under Section 9 of the Act bearing Arbitration Suit No. 216 of 2012 before the District Judge, Allahabad seeking injunction against the respondents from encashing the Bank Guarantee. 21) By order dated 12.07.2012, the District Judge dismissed the petition and declined to grant injunction to the appellant. This time, the District Judge accepted the stand taken by the respondents and held that Clause 62(1) empowers the respondents to recover any dues/claim from the appellant and hence the respondents were within their rights ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsa in connection with another contract. 28) In the third place, learned counsel contended that the District Judge, in the first instance, having rightly granted the injunction to the appellant vide order dated 4.01.2012 and no appeal having been filed against this order by the respondents, the said order had become final and was binding on the parties. It was, therefore, urged that when the appellant moved the second application for grant of injunction after the matter was referred to arbitration because of insistence on the part of the respondents to encash the bank guarantee, the District Judge should have extended the life of first order dated 04.01.2012 instead of again going into the merits of the case. 29) Lastly, learned counsel urged that in the light of this legal position arising in the case, the appellant had made out a prima facie case for grant of injunction against the respondents (North Central Railway) from encashing the bank guarantee in question. 30) In reply, learned counsel for the respondents (North Central railway) supported the impugned order and contended that no case is made out to interfere in the impugned order and hence it be upheld. 31) Hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntended that the appellant committed a breach of the contract and was, therefore, liable to pay to the respondent a sum of ₹ 2,35,800/- by way of damages suffered by the respondent by reason of the breach of the contract whereas the appellant, on the other hand, said that it was the respondent who committed the breach of the contract and was, therefore, liable to pay to the appellant by way of damages a sum of ₹ 2,28,900/-. In the meantime, the appellant through Assistant Director of Supplies sent a letter to the respondent calling upon the respondent to make payment to them a sum of ₹ 2,28,900/- and threatened that if the said amount is not paid, it will be recovered from several respondents pending bills in respect of other contracts. 35) The respondent, therefore, filed an application under Section 20 of the Indian Arbitration Act 1940 in Delhi High Court against the appellant for filing the arbitration agreement. The respondent also made an application for an interim injunction restraining the appellant from recovering the amount of damages claimed by it from several pending bills of the respondent. The learned Single Judge dismissed the injunction applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay in praesenti or in other words which is presently payable and due and, therefore, recovery of only such sums can be made subject matter of Clause 18 which is presently payable and due. It was held that a claim, which is neither due and nor payable, cannot be made subject matter of Clause 18. It was further held that Clause 18 does not create a lien on other sums due to the contractor or give to the purchaser a right to retain such sums until his claim against the contractor is satisfied. It was also held that a claim for damages for breach of contract is not a claim for a sum presently due and payable and the purchaser is not entitled in exercise of the right conferred upon it under Clause 18 to recover the amount of such claim by appropriating other sums due to contractor. 39) Their Lordships approved the view taken by Chagla C.J. in the case of Iron and Hardware (India) Co. vs. Firm Shamlal and Bros., AIR 1954 Bom.423 by observing in para 11 as under. 11. .The same view has also been taken consistently by different High Courts in India. We may mention only a few of the decisions, namely, Jabed Sheikh v. Taher Mallik,AIR 1941 Cal 639 S. Milkha Singh v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wards satisfaction of its claim for damages against the respondent and the learned Judge was justified in issuing an interim injunction restraining the appellant from doing so. 12. We accordingly dismiss the appeals. The appellant in each appeal will pay the costs of the respondent all throughout. 40) In our considered opinion, the case at hand being somewhat identical to this case has to be decided keeping in view the law laid down by this Court in the case of Union of India (DGS D) (supra). 41) Coming now to the facts of the case at hand, we find that wordings of Clause 62 of the contract in question with which we are concerned is identical to that of Clause 18 of Union of India (DGS D) (supra). Clause 62 of GCC provides for determination of contract owing to default of contractor. The relevant portion of Clause 62 reads as under: The amounts thus to be forfeited or recovered may be deducted from any moneys then due or which at any time thereafter may become due to the Contractor by the Railway under this or any other contract or otherwise. 42) On perusal of the record of the case, we find that firstly, arbitration proceedings in relation to the contract ..... 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