Unconditional bank guarantees may only be reviewed for egregious fraud or irretrievable injustice; disputes over contract performance must be resolved through arbitration.

JUDGMENT :

HARISH VAIDYANATHAN SHANKAR, J.

1. The present petition under Section 9 of theArbitration and Conciliation Act, 1996, The Act has been filed on behalf ofM/s Safety Controls and Devices Ltd., The Petitioner, seeking ad-interim and interim measures restraining Respondent No.1 from acting upon, encashing and/or appropriating the Advance Bank Guarantee and Insurance Surety Bonds furnished by the Petitioner underAgreements bearing Reference No. NRE-CS-5800-004(SS1)-9-FC-COA-207 & NRE- CS-5800-004(SS1)-9-SC-COA-208 both dated 12.03.2025 for ‘ Substation Package of 945MVA Capacity for Power Evacuation from Solar PV Projects at Bikaner, Rajasthan ’ , Agreement. The prayer clause to the instant petition reads as follows:

"…..

a) Pass an ex-parte ad-interim order restraining and injuncting the Respondents, its officers, servants, agents, representatives and all persons claiming through or under it from receiving, demanding, claiming, or in any manner whatsoever dealing with any payment or proceeds under Bank Guarantee No. VWHGOPG252530083 dated 10.09.2025 for Rs. 8,71,60,919/- issued by Canara Bank, Mid Corporate Branch (19855), Lucknow, and/or Insurance Surety Bond No. 42250050255100000029 dated 25.07.2025 for Rs. 10,44,48,379.77/- issued by the New India Assurance Co. Ltd., and/or Insurance Surety Bond No. 42250050255100000030 dated 25.07.2025 for Rs. Rs. 3,29,83,167.42/- issued by the New India Assurance Co. Ltd., and/or any other Bank Guarantees, Insurance Surety Bonds, securities, or deposits furnished by the Petitioner in relation to Contract Nos. NRE-CS-5800-004(SS1)-9-FCCOA-207 & NRE-CS-5800-004(SS1)-9-SC-COA-208 both dated 12.03.2025;

b) Pass an ex-parte ad-interim order directing Canara Bank, Mid Corporate Branch (19855), 4/11, Vishal Khand, Gomti Nagar, Lucknow – 226010, Uttar Pradesh, The New India Assurance Co. Ltd., and all other concerned banks and insurance companies to not encash, honor, remit, pay, or in any manner give effect to any invocation or demand made by the Respondent No.1 in respect of Bank Guarantee No. VWHGOPG252530083 dated 10.09.2025 for Rs. 8,71,60,919/- and/or Insurance Surety Bond No. 42250050255100000029 dated 25.07.2025 for Rs. 10,44,48,379.77/- and/or Insurance Surety Bond No. 42250050255100000030 dated 25.07.2025 for Rs. Rs. 3,29,83,167.42/- issued by the New India Assurance Co. Ltd., and/or any other Bank Guarantees, Insurance Surety Bonds, securities, or deposits furnished by the Petitioner in relation to the aforesaid Contract;

c) Pass an order staying any action pursuant to the Invocation Letter dated 31.01.2026 bearing reference no. NREL/RJ/945MVA/15 issued by the Respondent No.1 to Canara Bank in respect of Bank Guarantee No. VWHGOPG252530083;

d) Pass an order restraining the Respondent No.1 from invoking, encashing, acting upon or receiving any proceeds under any Insurance Surety Bonds furnished by the Petitioner in relation to Contract Nos. COA-207 and COA-208

e) Direct the Respondent No.1 to maintain complete status quo with regard to the Bank Guarantees, securities, and deposits and Surety Bonds furnished by the Petitioner during the pendency of the present Petition and the subsequent Arbitral Proceedings;

f) Award costs of the present Petition to the Petitioner;

g) Pass such other and further orders as this Hon’ble Court may deem fit and proper in the facts and circumstances of the case and in the interests of justice, equity and good conscience."

BRIEF FA