RAJIV SAHAI ENDLAW, J. (ORAL) .1. CS(OS) No. 1022/1993 was filed under Section 20 and OMP No. 170/1993 was filed under Section 33 of the Arbitration Act, 1940 by the same petitioner. The arbitration clause in the agreement between the parties provides for reference of disputes for arbitration to the person appointed by the General Manager of the respondent. The General Manager of the respondent .upon being approached by the petitioner for appointment of an independent arbitrator, appointed an official of the respondent as the arbitrator, in terms of the agreement. 2. The petition under Section 20 (CS(OS) No. 1022/1993) was filed seeking appointment of an independent arbitrator, along with an application under Section 41 read with Schedule II for restraining the respondent from encashing the Bank Guarantee. The banks which had issued the guarantees were impleaded as defendants 2 and 3 in these proceedings. The petition under Section 30 and 33 (OMP No. 170/1993) was filed thereafter challenging the arbitration clause in the agreement between the parties on the ground of the same being illegal for the reason of unilaterality empowering respondent to appoint its own officer as arbitrator and being contrary to principles of natural justice. Two officials of respondent were impleaded as respondents 2 and 3 in these proceedings. 3. By an ex parte order in OMP the arbitration proceedings were stayed and remain stayed. By interim orders in the suit, the encashment of Bank Guarantees was stayed and orders were made and undertaking was given that the Bank Guarantee shall be kept alive. The OMP and the suit were being taken up together. In or around the year 2000 it was found that out of eight Bank Guarantees, only four had been kept alive (i.e. those issued by defendant No.2 Bank of India) and the other four (i.e. those issued by defendant No.3 Central Bank of India) had lapsed. The amount of the four live Bank Guarantees was ordered to be deposited by the issuing bank in this Court and has been ordered to be kept in fixed deposit. Contempt proceedings/proceedings under Order 39 Rule 2A CPC were initiated against the petitioner, its Director and Vice Chairman for breach of undertaking given to the Court and defiance of order of Court and which are pending till date. 4. Contempt proceedings/proceedings under Order 39 Rule 2A CPC were initiated against the petitioner, its Director and Vice Chairman for breach of undertaking given to the Court and defiance of order of Court and which are pending till date. 4. Today, after fifteen years, the counsel for the petitioner has stated that he has no objection to the arbitration in terms of the aforesaid agreement and the petitioner withdraws the challenge to the arbitration agreement as made in the OMP and plea for appointment of independent arbitrator made in the suit. Thus the OMP and suit can be disposed of on this concession of petitioner. 5. The arbitration clause in the agreement between the parties provides that the General Manager of the respondent would be entitled to appoint another person to act as the arbitrator in the event of the arbitrator appointed earlier being unable to act. Since fifteen years have passed and it cannot be sure whether the person appointed earlier is still in service of the respondent or not or is in a position to act as the arbitrator or not, it is also deemed expedient to clarify that the General Manger of the respondent shall be entitled to appoint any other person also in terms of the arbitration agreement as the arbitrator and the counsel for the petitioner has stated that he will have no objection to the same. 6. In view of the aforesaid statement, the CS(OS) No. 1022/1993 also does not survive. I may add that otherwise also do not find any merit in both. The petitioner having agreed to the arbitration of appointee of respondent is bound by the agreement. The courts have repeatedly held that the principles of natural justice are not violated if the arbitration is of the officer of undertaking such as the respondent. Both the matters are disposed of in terms of the above. 7. The petitioner has delayed the arbitration proceedings for fifteen years in the aforesaid manner. The issue of costs/consequences thereof falls for consideration. Upon enquiry, counsel for the petitioner states that the claims are of the petitioner only and not of the respondent. The counsel for the respondent states that the claims, if any, of the respondent against the petitioner are to be made before the arbitrator and he has no instructions whether the respondent has any claims. Upon enquiry, counsel for the petitioner states that the claims are of the petitioner only and not of the respondent. The counsel for the respondent states that the claims, if any, of the respondent against the petitioner are to be made before the arbitrator and he has no instructions whether the respondent has any claims. It appears that the aim of the petitioner was to delay the encashment of Bank Guarantees only. As such it is ordered that the respondent shall be entitled to make its claims, if any, before the arbitrator, without any objection by petitioner of the same being barred by time, since the arbitration remained stalled owing to the petitioner. The arbitrator shall take into consideration the said period of fifteen years during which the proceedings aforesaid remained pending for awarding interest if the respondent has any claim against the petitioner and for purposes of awarding costs. Conversely, as far as the claims of the petitioner against the respondent/BHEL is concerned, the petitioner shall not be entitled to any interest for the said period in which arbitration proceedings have remained stayed at the instance of the petitioner. 8. The next question is as to the amount of four Bank Guarantees, lying deposited in this Court. The fate thereof depends on the final order on the application under Section 41 read with Schedule II of the Act. 9. The counsel for the petitioner states that he is not prepared to argue the said application today and the matter be adjourned. No ground for adjournment made out. 10. In my view, this Court, at this stage, need not to go into the merits of the application, only for the reason of the petitioner not complying with the directions subject to which the stay was given and being in breach of undertaking given to the court. The petitioner is, therefore, not found entitled to any discretionary relief under Section 41 read with Schedule II of the Act. The detailed discussion on this aspect follows hereunder. The said application is thus dismissed. The amount of the four bank guarantees deposited in this Court together with interest accrued thereon be released forthwith in favour of the respondent. 11. The petitioner is, therefore, not found entitled to any discretionary relief under Section 41 read with Schedule II of the Act. The detailed discussion on this aspect follows hereunder. The said application is thus dismissed. The amount of the four bank guarantees deposited in this Court together with interest accrued thereon be released forthwith in favour of the respondent. 11. That brings me to the question of Order 39 Rules 2A and breach of undertaking given to the Court and if so, punishment therefor and the related question of liability, if any, of the bank which had issued the four Bank Guarantees at the instance of the petitioner. 12. As aforesaid the application for restraining encashment of bank guarantees was filed by the petitioner alongwith the suit. The suit and the said application were listed first for hearing on 4th May, 1993 when the counsel for the respondent was also present and accepted the summons in the suit and notice in the application. The order sheet shows that the arguments were heard in part and on the statement of the counsel for the petitioner that the bank guarantees had not been encashed till then and till the arguments were completed, the respondent be restrained from encashing the bank guarantees, this court ordered that the bank guarantees if not encashed may not be encashed during the continuance of the arguments. .13. The hearings continued/ were adjourned till 18th May, 1993. It appears that two out of eight bank guarantees were expiring. On 18th May, 1993 an application of the respondent was listed for renewal of the bank guarantees. The counsel for the petitioner submitted that the .petitioner would get the aforesaid two bank guarantees renewed for one year. Similarly, on 19th May, 1993 on it being pointed out by the counsel for the respondent that the validity of another bank guarantees was also expiring, the counsel for the petitioner undertook to get the bank guarantees renewed for one year. 14. On 16th August, 1993 yet another application of the respondent in this regard was listed and the counsel for the petitioner informed that the petitioner had already taken steps for getting the bank guarantees renewed. 14. On 16th August, 1993 yet another application of the respondent in this regard was listed and the counsel for the petitioner informed that the petitioner had already taken steps for getting the bank guarantees renewed. The record reveals that yet another application being IA.No.5111/1994 was filed by the respondent for renewal of the bank guarantees and on 18th August, 1994 the counsel for the petitioner stated that the petitioner will get the bank guarantees mentioned in the application extended for another period of one year. 15. Finally, on 24th August, 1994 the counsel for the petitioner stated that the petitioner shall keep all the eight bank guarantees alive on year to year basis till the disposal of the suit. With this undertaking given by the counsel for the petitioner IA.No.5111/1994 was disposed of. From time to time the order sheet records, Interim orders to continue. 16. On 15th July, 2000 the order in the suit refers to the earlier order dated 24th August, 1994 (supra) as well as the order dated 17th January, 2000 in the OMP to the effect that the bank guarantees were to be kept alive and that the affidavit as directed for showing compliance of the undertaking had not been filed and the counsel for the petitioner had reported that only four bank guarantees had been extended upto 16th August, 2000. By way of last opportunity, the petitioner was directed to, by the next date of hearing, get all the eight bank guarantees extended. .17. Thereafter IA No.1965/2000 under Order 39 Rule 2A of the CPC was also filed by the respondent that the petitioner had failed and neglected to get the bank guarantees renewed as undertaken in the court and for vacation of the interim order and for dismissal of the suit and the petition and for initiation of action under Order 39 Rule 2A of the CPC. Notice of the said application was issued on 14th February, 2001 to the respondent as well as to the Central Bank of India which had been impleaded as defendant No.3 in the suit. The counsel for the defendant No.3 Bank on 31st May, 2001 informed that the defendant No.3 Bank had filed a suit for .recovery of monies against the petitioner and further confirmed that the petitioner had not extended the bank guarantees. 18. The counsel for the defendant No.3 Bank on 31st May, 2001 informed that the defendant No.3 Bank had filed a suit for .recovery of monies against the petitioner and further confirmed that the petitioner had not extended the bank guarantees. 18. On 3rd April, 2002 this court formed a prima facie opinion that the petitioner had disobeyed the order of the court and three weeks time was granted to the petitioner to either get the four lapsed bank guarantees renewed or in lieu thereof to place four fresh bank guarantees on record, by way of last opportunity, failing which it was ordered that appropriate orders shall be passed in respect of the other four bank guarantees taking notice of the conduct of the petitioner. The petitioner was also directed to place on record the scheme propounded by the BIFR with respect to the petitioner. 19. On 2nd May, 2002 it was again recorded by this court that its order had been defied and the bank guarantees were allowed to lapse and the petitioner did not even seek any variation of the orders of the court. The total amount of approximately Rs 27 lacs of the four live guarantees was ordered to be encashed and deposited in this court and kept in a fixed deposit account. The Managing Director of the petitioner was also directed to be personally present on the next date to explain the conduct and for drawing up appropriate proceedings against him for defying the orders of the court. 20. On 20th August, 2002 it was informed that there was no Managing Director of the petitioner and there is only one whole time director of the company, namely, Mr B Narayan. Accordingly, it was directed that the said Mr B Narayan shall be present in the court on the next date of hearing. 21. The said Mr B Narayan failed to appear on the next date of hearing and adjournment was sought. On the adjourned date also only a General Manager of the petitioner appeared and accordingly bailable warrants for the non-appearance of the aforesaid Mr B Narayan were issued. On the same day i.e., 1st October, 2002 it was also recorded that the amount of the four live guarantees had been received in the court and was ordered to be kept in a fixed deposit. 22. On the same day i.e., 1st October, 2002 it was also recorded that the amount of the four live guarantees had been received in the court and was ordered to be kept in a fixed deposit. 22. On 14th November, 2002 Mr B Narayan appeared before this court and this court recorded, prima facie, satisfaction that the said Mr B Narayan, the whole time director of the petitioner, had violated the orders of this court willfully and had prima facie committed contempt of court and, accordingly, a contempt proceeding was ordered to be drawn up against him and he was directed to show cause as to why appropriate punishment should not be imposed on him. The counsel for the petitioner also informed that the petitioner company had been referred to BIFR and a rehabilitation scheme was under preparation. This court from the documents available also concluded that the four lapsed bank guarantees or the dues of the respondent were not, in any manner, part of the scheme propounded by the BIFR. 21.23. On 27th November, 2002 the particulars of the lapsed bank guarantees of the total value of approximately Rs 53 lacs were recorded and further time was granted to Mr B Narayan to file reply to the proceedings earlier initiated against him. 22.24. On 11th December, 2002 it was recorded that the petitioner company had one Chairman and four Directors on its board including the aforesaid whole time director and the Chairman of the petitioner company was Mr M.B.Chaturvedi. The petitioner further assured this court that since the bank i.e., Central Bank of India was refusing to renew the aforesaid four bank guarantees, fresh security for such amount shall be furnished by the petitioner after complying with necessary formalities. On the basis of the said statement, the petitioner was directed to furnish the particulars and the nature of the assets which would be furnished by the petitioner as a security in compliance of the earlier orders. Affidavits of Mr M.B. Chaturvedi and Mr B Narayan aforesaid was directed to be filed and they were also directed to be personally present. .25. Affidavits of Mr M.B. Chaturvedi and Mr B Narayan aforesaid was directed to be filed and they were also directed to be personally present. .25. On 21st January, 2003 an argument was raised by the petitioner that this court may also examine the question of the liability of the Central Bank of India who had issued four lapsed guarantees inasmuch as though the bank guarantees had been invoked during their currency but payment had not been made owing to interim stay of this court. It was argued by the senior counsel for the petitioner that it was not open to the bank to deny payment at a subsequent stage when directed by the court. It was further argued by the counsel for the petitioner that the petitioner was willing to give security of a flat in Mumbai and application had been filed before .the BIFR for permission to furnish the security of the said flat in lieu of the lapsed bank guarantees. This court directed Mr Chaturvedi and Mr B Narayan to file affidavits disclosing their movable and immovable assets. Though the noting on the file is that such affidavits were not filed but it is argued by the counsel for the petitioner that the affidavits were filed and the copies thereof are also available with the counsel for the respondent. Both the said persons have denied having any immovable property and claimed only some investments in share and fixed deposit etc. 23.26. The record reveals that FAO(OS)182/2003 arising out of these proceedings was preferred by the petitioner and was dismissed as withdrawn on 5th May, 2003. The record also shows that FAO(OS)183/2003 arising out of these proceedings was also preferred and which was also dismissed as withdrawn on 20th September, 2007. 24.27. As far as the suit and the OMP are concerned, the record reveals that the same were thereafter simply adjourned from time to time; I am, at this stage, not entering into the controversy, at whose instance, but obviously the beneficiary of such adjournments was the petitioner. 25.28. 24.27. As far as the suit and the OMP are concerned, the record reveals that the same were thereafter simply adjourned from time to time; I am, at this stage, not entering into the controversy, at whose instance, but obviously the beneficiary of such adjournments was the petitioner. 25.28. I may, at this stage, also record that similar orders as aforesaid were being made on the OMP file also except that on 2nd May, 2001 the counsel for the petitioner therein had again assured the court that if the respondent No.3 Bank did not renew the bank guarantees, the petitioner will ensure that fresh bank guarantees are furnished in favour of the respondent No.1. The counsel for the respondent No.3 Bank had also made a statement on that date that if there is proper cover and other formalities are complied with by the petitioner, the respondent No.3 Bank will extend the bank guarantees. .29. In my view the aforesaid conduct shows the gross dilatory and vexatious conduct of the petitioner. The petitioner has, by delaying the proceedings for the last six years, after the notice of contempt was issued, made a mockery of the same. At that stage when short dates were being given by the court and the proceedings for contempt were being pursued against Mr B Narayan and Mr Chaturvedi of the petitioner, assurances were given to the court that other security in lieu of the lapsed bank guarantees would be furnished and on that premise the action / punishment was warded off. Thereafter by repeated adjournments by one party or the other, on some ground or the other, even such serious issues as contempt of court were diluted. During the last six years neither any other security was furnished nor any fresh bank guarantees submitted to the respondent No.1 or to this court. 26.30. The counsel for the petitioner had made the following submissions. Firstly, it is argued that it is not as if the petitioner did not take any step for keeping the bank guarantees alive/renewed as undertaken. Reliance is placed on four letters filed as annexures to the reply to the application under Order 39 Rule 2A written by the petitioner to the bank for renewal of the bank guarantees. Firstly, it is argued that it is not as if the petitioner did not take any step for keeping the bank guarantees alive/renewed as undertaken. Reliance is placed on four letters filed as annexures to the reply to the application under Order 39 Rule 2A written by the petitioner to the bank for renewal of the bank guarantees. It is stated that it is the bank which has failed to renew the bank guarantees and therefore the petitioner cannot be said to be in breach of undertaking or in violation of the order of the court. Secondly, it is argued that the bank also had on 2nd May, 2001 in OMP 170/1993 made a statement before this court that the bank guarantees shall be renewed on the petitioner furnishing the requisite margin money etc. Thirdly, it is argued that the petitioner, in fact, did keep the bank guarantees alive from 1993 to 1999 and the margin money of the petitioner is still with the bank. Lastly, it is argued that this court had directed the petitioner to furnish security in lieu of the bank guarantees. 27.31. As far as the arguments aforesaid vis--vis Bank are concerned, it may be noted that the counsel for the bank, in respect of the arguments qua the liability of the bank, has informed that the bank has already instituted proceedings for recovery of over Rs 150 crores from the petitioner and therefore could not be expected to give further credit to the petitioner when the petitioner was already in default and before the BIFR. .32. In my view the arguments qua the bank of not renewing the bank guarantee do not justify and are not an explanation for the breach of undertaking and of the conditions imposed by this court for staying the encashment of the bank guarantees. The bank guarantees were admittedly invoked within the period of their validity and amount thereof payable by the bank. It is, however, the petitioner who interfered in the same by invoking the jurisdiction of this court. This court pending consideration of the matter stayed payment under the bank guarantees on the .condition that the petitioner keeps the bank guarantees alive. On application of the respondent the petitioner through counsel gave undertaking as aforesaid to keep the bank guarantee alive from year to year till the disposal of the suit/OMP by this court. 28.33. This court pending consideration of the matter stayed payment under the bank guarantees on the .condition that the petitioner keeps the bank guarantees alive. On application of the respondent the petitioner through counsel gave undertaking as aforesaid to keep the bank guarantee alive from year to year till the disposal of the suit/OMP by this court. 28.33. It was for the petitioner thereafter to do everything that was required to be done for keeping the bank guarantees alive. If the bank which had issued the bank guarantees was not willing to keep them alive, it was for the petitioner to do whatever the bank required the petitioner to do for renewing the bank guarantees. The issuance of the bank guarantee by the bank is a contract. The bank is not obliged to enter into such contract with the petitioner. If the bank owing to the conduct of the petitioner was not willing to renew the bank guarantee, the petitioner ought to have immediately brought the said fact to the knowledge of the court and sought permission to furnish guarantees of another bank. However, the petitioner did nothing of this sort. It was only after this court made inquiries and the respondent brought the same to the notice of this court that it transpired that the bank guarantees had lapsed. The counsel for the petitioner admits that the letters to the bank for renewal were written only after the respondent brought it to the notice of this court that the petitioner had not complied with its undertaking. It is argued that the bank guarantees were being renewed in a routine manner and the petitioner remained under the impression that the same would be automatically renewed. The said arguments deserve no discussion for rejection. The petitioner having given an undertaking to the court could not lie in such a slumber; admittedly when the bank guarantees were being renewed from year to year. There is nothing to indicate so. This court can take judicial notice of the fact that the bank guarantees cannot get renewed automatically. The petitioner has to pay the requisite commission to the bank and to comply with the other formalities. The record of this court shows that the petitioner was referred to the BIFR in the year1998/1999. There is nothing to indicate so. This court can take judicial notice of the fact that the bank guarantees cannot get renewed automatically. The petitioner has to pay the requisite commission to the bank and to comply with the other formalities. The record of this court shows that the petitioner was referred to the BIFR in the year1998/1999. When the petitioner was before the BIFR and the other amounts were due to the bank from the petitioner were in jeopardy, the petitioner could not possibly be under the impression that the guarantees would be renewed automatically and in a routine manner. .34. The petitioner warded off punishment for contempt when the matter was being hotly pursued by this court in or about 2002 by making certain assurances which have not been kept. The counsel for the petitioner has today orally argued that the other securities were offered but .were not accepted by the respondent. However, neither is there anything to that effect on record nor is the counsel for the petitioner able to give any particulars of what security was offered and when to the respondent and when the same was refused. 29.35. The affidavits of Mr B Narayan and Mr Chaturvedi which are stated to have been filed do not show the value of their assets to be anywhere near in the principal amount of the bank guarantees of Rs 53 lacs lest interest which may have accrued thereon in the last 15 years. The undertaking given by the petitioner to this court was unequivocal. Breach of undertaking given to this court undoubtedly amounts to contempt of this court. A case under Order 39 Rule 2A of the CPC is also made out since it was a condition of the stay of payment under the bank guarantees that the same will be kept alive. The petitioner, its chairman and all the four directors are found guilty of contempt of court and liable for punishment under Order 39 Rule 2A CPC. The names of the other three directors of the petitioner are not available. Their names and particulars be furnished on the next date. 30.36. The counsel for the petitioner again seeks an adjournment for addressing further arguments on the aspect of guilt of the petitioner and its directors and Chairman under Order 39 Rule 2A and for contempt of court. No ground is found for granting any further adjournment. Their names and particulars be furnished on the next date. 30.36. The counsel for the petitioner again seeks an adjournment for addressing further arguments on the aspect of guilt of the petitioner and its directors and Chairman under Order 39 Rule 2A and for contempt of court. No ground is found for granting any further adjournment. A finding in that regard has already been returned. 31.37. However, it is deemed expedient to defer the passing of the orders for punishment to be meted out to the aforesaid Mr Chaturvedi and Mr B Narayan and the other directors of the petitioner. Mr B Narayan and Mr Chaturvedi who are informed to be still alive are directed to be personally appear before this court on 12th February, 2009. 32.38. List on that for hearing arguments on the aspect of punishment only. 39. It has been put to the counsel for the petitioner that if the petitioner and its aforesaid chairman and director purge the contempt by paying/depositing the amount of the lapsed bank guarantee together with interest at the rate paid by banks on fixed deposits thereon, since the year 2000 till date, a lenient view can be taken on the punishment. The counsel for the petitioner seeks time to obtain instructions. Arguments heard also on the aspect of the liability of the Central Bank which had issued the lapsed bank guarantee to make payment. Order reserved on that aspect only.