The court can restrain invocation of unconditional bank guarantees under Section 9 of the Arbitration and Conciliation Act when a dispute resolution committee is already constituted and hearings are ongoing, to protect the subject matter pending adjudication.

MINI PUSHKARNA, J (ORAL):

I.A. Nos. 11833/2026 & 11834/2026 (For Exemptions)

1. Exemptions allowed, subject to all just exceptions.

2. Applications are accordingly disposed of.

O.M.P.(I) (COMM.) 185/2026 & I.A. No. 11835/2026

3. The present petition has been filed under Section 9 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) assailing the letters dated 24^th April, 2026, issued by the respondent to various banks for encashment of bank guarantees aggregating to Rs. 3,17,00,000/-.

4. Learned counsel for the petitioner submits that the said invocation/encashment is wholly arbitrary, illegal and unsustainable, particularly when the disputes between the parties are pending adjudication before the Dispute Resolution Committee (“DRC”), constituted under Clause 25 of the Agreement dated 04^th June, 2019, entered into between the parties for work of upgradation of Jabalpur Airport.

5. Learned counsel appearing for the petitioner further submits that the petitioner had invoked Clause 25 of the Agreement on 19^th January, 2026 for reference of disputes to the DRC, and thereafter to arbitration. However, the respondent has failed to effectively and promptly constitute a functional DRC, and thus, has failed to ensure timely adjudication of the disputes, as per the agreed contractual mechanism.

6. Learned counsel appearing for the petitioner submits that in another case with respect to a different project between the parties, a petition being O.M.P.(I)(COMM.)118/2026 was filed on behalf of the petitioner, which came to be disposed of vide order dated 22^nd April, 2026, in the following manner:

“1. The present Petition has been filed under Section 9 of the Arbitration and Conciliation Act, 1996 seeking the following reliefs:

“A. Pass an order restraining the Respondent, its officers, agents and representatives from giving effect to, acting upon or enforcing the impugned letter dated 11.03.2026 whereby alleged recovery of Rs. 2,58,65,396/- has been demanded, which is arbitrary, illegal, pending resolution of disputes through the mediation and/or arbitration, and/or;

B. Pass an order restraining the Respondent from taking any coercive action but not limited to invoking, encashing or otherwise acting upon the Bank Guarantee(s) furnished by the Petitioner in relation to the subject contract, till the disputes are adjudicated in mediation and/or arbitration, and/or;

C. Pass an order directing the Respondent to maintain status quo with respect to the subject contract, including refraining from taking any coercive or prejudicial steps against the Petitioner pursuant to letter dated 11.03.2026, and/or;

D. Pass any other or further order(s) as this Hon‟ble Court may deem fit and proper in the facts and circumstances of the present case, in the interest of justice.”

2. At the outset, learned counsel appearing on behalf of the Petitioner submits that three (03) bank guarantees bearing No. 0960121BG0000381, 0960121BG0000552 and 0960122BG0000137 for an aggregate sum of Rs. 3,00,00,000/- have since been encashed.

3. She further submits that the request of the Petitioner for commencing the dispute resolution process, which includes the process of mediation, has not yet been responded to by the Respondent-Authority.

4. Mr. Rai, learned counsel appearing on behalf of the Respondent submits that since the disputes that have arisen as between the parties are approximately to the tune of Rs. 100 crores and since the mediation policy of the Respondent-Authority provides that disputes above a value of Rs. 10 crores would have to be referred to a panel of three Mediators, the same is currently under consideration and the Respondent-Authority is in the midst of nominating the panel of the Mediators to adjudicate upon the present dispute.

5. In view of the fact that the disputes are yet to be considered by the panel of Mediators, this Court is of the view that till such same that the disputes as raised are not accorded consideration, the Bank Guarantees would require