THE FERTILISERS AND CHEMICALS TRAVANCORE LIMITED ELOOR v. ARDESHIR B.CURSETJEE & SONS LIMITED MACKINNON MACKENZIE BLDG. 4-SHOORJI VALLABHADAS MARG

RP 1049/12-2-review petitioner herein. Ultimately, when arbitration appealNo.42 of 2005 came up for final hearing on 23/01/2012, it was noticed that it would be sufficient that the interim order dated 31/03/2006 continues till the termination of the arbitralproceedings, and after that, the matter would depend upon the award that the learned Arbitrator may pass. However, it was further ordered that the bank guarantee shall be renewed from time to time. 3. This review petition is filed by M/s.Fertilizers and Chemicals Travancore Limited on the back-drop of the fact that while the Bank is insisting on renewal of the bank guarantees, the 1st respondent has not done that. 4. Heard the learned senior counsel for the review petitioner and the learned senior counsel for the 1strespondent and also the learned counsel for the ICICI Bank. 5. The fact of the matter remains that all the five bank RP 1049/12-3-guarantees stood invoked and the interim order that was granted under Section 9 of the Arbitration and ConciliationAct, 1996, was an order restraining encashment of those guarantees, which were already invoked.

The status obtained by the interim order passed on 31/03/2006 on arbitration appeal No.42 of 2005 was not different. This means that the effect of the judgment dated 23/01/2012 in arbitration appealNo.42 of 2005 is that the five bank guarantees stand invoked from the date of its invocation; however, that they shall not beencahsed until the learned Arbitrator passes the award. Whether the five bank guarantees which stand invoked would be encashed ultimately, would depend upon the award that the learned Arbitrator may pass. A bank guarantee, which has been invoked does not thereafter require to be renewed, because the invocation of the guarantee remains to be potent with crystallized legal liabilities until encashed. There is no ground on which the ICICI Bank can be noted to have delayed in paying the amount following encashment, since theencashment is delayed not because of any act or omission on RP 1049/12-4-their part, but only on account of the judicial orders issued by the competent courts.

Under such circumstances, they would be liable to pay only the amount of `12 crores covered by the five bank guarantees with interest accrued thereon till the date of invocation of the bank guarantees; ultimately, depending upon the award. Under such circumstances, we are of the view that the last sentence in paragraph No.4 of the judgment dated 23/01/2012, that the bank guarantee shall be renewed from time to time, is essentially, a surplusage. The judgment dated 23/01/2012 is clarified to this effect. This review petition is ordered accordingly. No costs. (THOTTATHIL B.RADHAKRISHNAN, JUDGE) (A.V.RAMAKRISHNA PILLAI, JUDGE)jg