Injunctions against invoking unconditional bank guarantees are only granted in cases of egregious fraud or irretrievable injury. Disputes regarding liquidated damages and performance failures are evidentiary matters reserved for the arbitral tribunal and do not justify summary judicial interference in the interim stage.

JUDGMENT :

MINI PUSHKARNA, J.

1. The present petition has been filed under Section 9 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”), seeking inter alia relief for staying, restraining and injuncting the respondent from acting upon, giving effect to or enforcing the Letter dated 07th May, 2026, issued by the respondent, in so far as the said Letter seeks to levy liquidated damages against the petitioner for the period which was validly extended by the respondent earlier, without levy of liquidated damages. There is a further prayer to restrain the respondent from initiating any coercive steps against the petitioner, including, invoking the Bank Guarantee dated 18th July, 2025.

2. As per the case put forth by the petitioner, the present dispute arises out of a Contract Agreement dated 14th September, 2023 entered between the parties pursuant to the Letter of Intent dated 19th January, 2022 and Purchase Order dated 05th February, 2022, for execution of 131 Km Iron Ore Slurry Pipeline Project in the State of Odisha, wherein, the petitioner was required to complete the works within a stipulated period of 24 months, i.e., by 18th January, 2024. However, the work could not be completed within the original timeline on account of various circumstances. Thus, respondent issued Amendment no. 1 dated 27th December, 2023, whereby, the completion date was extended till 31st May, 2026, without levy of any liquidated damages.

3. Subsequently, three other Amendment Letters were issued by the respondent, and on 07th May, 2026, the respondent issued the Amendment No. 5 to the Purchase Order, whereby, substantial work was descoped from the petitioner’s scope and the contract price was reduced from Rs. 240 crores to 123.20 crores, amounting to a reduction of nearly 50%. The said unilateral amendment was accompanied by a covering letter directing the petitioner to complete the balance work by 31st May, 2026, and simultaneously threatening risk purchase. In the same communication, the respondent also reserved rights to levy damages for alleged delay upto 31st May, 2026.

4. Thereafter, the respondent issued a Formal Notice of Risk Purchase dated 15th May, 2026 invoking Clause 21 of the Contract Agreement, by way of which the respondent alleged that the petitioner has completed only 47% of the agreed contractual scope and further called upon the petitioner to forthwith remedy and/or rectify the default.

5. As per the petitioner, since the respondent failed to fulfil its obligations, the petitioner terminated the Contract Agreement vide its Letter dated 18th May, 2026.

6. Since the respondent is now seeking to invoke risk purchase, threaten levy of liquidated damages against the petitioner, and invoke the Bank Guarantee, the present petition has come to be filed.

7. On behalf of the petitioner, following submissions have been made:

7.1 The Amendment No. 1 dated 27th December, 2023 made by the respondent to the Purchase Order dated 05th February, 2022, explicitly states that liquidated damages charges would not be applicable for validity extension of the Purchase Order.

7.2 The said Amendment No. 1 dated 27th December, 2023 clearly evinces that the respondent itself understood and accepted that the delay in completion of the project was not attributable to the petitioner. Thus, the respondent categorically excluded liqui