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IN THE HIGH COURT OF DELHI AT NEW DELHI
HARISH VAIDYANATHAN SHANKAR
Sadguru Engineers and Allied Services Pvt. Ltd. – Appellant
Versus
National Highways Infrastructure Development Corporation Ltd. – Respondent
JUDGMENT :
HARISH VAIDYANATHAN SHANKAR, J.
1. The present Petition has been filed under Section 9 of the Arbitration and Conciliation Act, 1996 [A&C Act] seeking the following reliefs:
“a. Pass an ex-parte ad-interim order, thereby restraining the Respondents from invoking/ encashing the bank guarantees issued by the State Bank of India i.e., herein Respondent No.2; namely:
i. Performance Bank Guarantee No. 0151824BG0000014 for Rs.3,24,00,324/- dated 20.01.2024;
ii. Mobilization Bank Guarantee No. 0151824BG0000057 for Rs.3,50,46,351/- dated 04.03.2024;
iii. Performance Bank Guarantee No. 0151824BG0000016 for INR. 1,89,00,019/- dated 20.01.2024
b. Pass an order restraining Respondent No.1, its servants, employees and agents from terminating the contracts for Pkg-I and Pkg-IV, in as much as the EPC Contract is also “the subject matter of the arbitration agreement”;
c. Confirm the orders passed in terms of aforesaid Prayers "a" and "b" after notice to the Respondents;
d. Award costs of the present proceedings in favour of the Petitioner and against the Respondents;
e. Pass such other order or further orders as this Hon'ble Court may deem fit and proper in the facts and circumstances of the p
The invocation of bank guarantees must adhere strictly to the contractual terms; courts may intervene to prevent encashment if it risks undermining arbitration.
Unconditional bank guarantees may only be reviewed for egregious fraud or irretrievable injustice; disputes over contract performance must be resolved through arbitration.
The court emphasized the independence and unconditional nature of bank guarantees, while recognizing exceptions such as fraud, irretrievable injustice, or special equities.
Invocation of an unconditional bank guarantee cannot be restrained unless fraud or irretrievable injustice is established; the nature of bank guarantees is independent and absolute.
The court clarified that injunction against unconditional bank guarantees requires proof of egregious fraud, irretrievable injustice, or special equities, none of which were sufficiently substantiate....
Bank guarantees are independent contracts and can only be restrained in exceptional cases of fraud or irretrievable injustice.
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