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IN THE HIGH COURT OF DELHI AT NEW DELHI
HARISH VAIDYANATHAN SHANKAR
Safety Controls And Devices Ltd. – Appellant
Versus
Ntpc Renewable Energy Limited – Respondent
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. 422500502551
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.
Bank guarantees are independent and unconditional contracts, and courts should refrain from interfering with their invocation unless exceptional circumstances such as fraud or irretrievable injury ar....
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 invocation of bank guarantees must adhere strictly to the contractual terms; courts may intervene to prevent encashment if it risks undermining arbitration.
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