Disposed

M/S Shinde Developers Pvt. Ltd. v. the National Highways Authority of India

Delhi HC1 Jul 2025O.M.P.(I) (COMM.)/235/2025

Case brief

AI extract

What is this about?

Contractor sought injunction restraining NHAI from encashing performance and mobilisation bank guarantees after foreclosure of a highway upgradation contract. Court found foreclosure was accepted without cost on either party, stayed encashment subject to bank guarantees being kept alive, and directed the Arbitral Tribunal to treat the petition as a Section 17 application within 8 weeks.

What did the court decide?

Encashment of four Performance Bank Guarantees and one Mobilization Bank Guarantee stayed until the Arbitral Tribunal decides the Section 17 application, subject to petitioner keeping them alive.

M/S Shinde Developers Pvt. Ltd. Vs the National Highways Authority… — Arbitration | Delhi HC (2025)

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$~14

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IN THE HIGH COURT OF DELHI AT NEW DELHI

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- OMP (I) (COMM.) 235/2025

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M/S SHINDE DEVELOPERS PVT. LTD. .....Petitioner

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Through: Mr. Sandeep Sethi, Sr. Adv with Mr. Mahip Singh, Ms. Ruchi Agnihotri, Mr. Krishan Kumar, Ms. Ayushi Pandey, Advs.

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versus

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THE NATIONAL HIGHWAYS AUTHORITY OF INDIA

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.....Respondent

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Through: Ms. Dharitry Phookan, Mr. Devansh Malhotra, Ms. Nidhi Rani, Mr. Aditya, Advs.

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CORAM:

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HON'BLE MR. JUSTICE JASMEET SINGH

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O R D E R

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% 01.07.2025

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This is petition filed under Section 9 of the Arbitration and Conciliation Act, 1996 seeking an injunction restraining the respondent, its principal officers, servants, agents, and all others acting on its behalf from invoking and encashing the bank guarantees submitted by the petitioner namely:-

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(i) Performance Bank Guarantee dated 01.07.2021, bearing No. 0504IPEBG210014, for an amount of Rs. 4,69,80,916/-;

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This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 03/07/2025 at 04:12:59

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(ii) Additional Bank Guarantee dated 14.07.2021 bearing No. 0504IPEBG210015 (Part I), for an amount of Rs. 1,86,62,686/; (iii) Additional Bank Guarantee dated 14.07.2021, bearing No. 0504IPEBG210016 (Part II), for an amount of Rs. 1,68,341/-; (iv) Additional Bank Guarantee dated 15.07.2021, bearing No. 12001/110/5136/04/10/29 (Part III), for an amount of Rs. 2,81,49,889/-

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(v) Mobilization Bank Guarantee bearing No. 111/5136/12001/4/15/BG-0/15, dated 31.12.2021, for an amount of Rs. 5 crores.

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In the present case, the petitioner entered into a contract dated 22.07.2021 with the respondent for upgradation of a 75 kms stretch of highway located in the State of Maharashtra from kms 88.400 (Savali Vihir) to kms 163.400 (start of Ahmednagar bypass). 3. On 13.07.2022, due to certain circumstances, the petitioner foreclosed the contract, which was accepted by the respondent. Thereafter, the contract was awarded to another party. The letter dated 13.07.2022 is reproduced below:

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This is a digitally signed order.

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The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 03/07/2025 at 04:12:59

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This is a digitally signed order.

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The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 03/07/2025 at 04:12:59

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The bank guarantee(s) furnished by the petitioner are 4 Performance bank guarantees along with 1 Mobilisation bank guarantee.

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Mr. Sethi, learned senior counsel for the petitioner states that while accepting foreclosure vide letter dated 13.07.2022, the respondent had linked the return of the bank guarantee with the decision of the Conciliation Committee and the acceptance of that decision by the respondent.

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The Conciliation Committee was disbanded by the respondent on 28.01.2025. It is the case of the petitioner that since the foreclosure was accepted by the respondent, there was no requirement for encashment of performance bank guarantees and substantial portion of the mobilisation advance has already been recovered by the respondent.

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Hence, the Performance bank guarantee as well as the Mobilisation bank guarantee cannot be encashed.

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Ms. Phookan, learned counsel for the respondent disputes the proposition and states that the foreclosure was conditional subject to the decision of the Conciliation Committee and subject to the petitioner keeping the bank guarantee alive.

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She further states that the respondent does not wish to file a reply in the present petition and will file a detailed reply before the learned Arbitral tribunal.

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However, she states that since the Arbitral tribunal has already been constituted, the present petition may be treated as a Section 17 application and be decided by the Arbitral tribunal.

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A perusal of the letter dated 13.07.2022 shows that the foreclosure was accepted by the respondent subject to referring the matter to the Conciliation Committee and the petitioner giving an NoC to the respondent

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for completion of the balance work.

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Pursuant thereto, the petitioner has already given an NoC to the respondent and based on the NoC, the respondent has re-tendered the work. Further, the Conciliation Committee has been disbanded by the respondent themselves.

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From the aforesaid facts, it is clear that the foreclosure was accepted by the respondent and hence, prima facie , the invocation of Performance bank guarantee(s) and the Mobilisation bank guarantee may not be appropriate.

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In addition, on 20.09.2024, the minutes of the meeting records that the contract would be foreclosed “without cost on either party”. Once the respondent is foreclosing the contract without any cost on either parties, prima facie , the encashment of the bank guarantee(s) is not in accordance with the understating arrived at between the parties.

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However, since the arbitral tribunal is already seized of the matter and the bank guarantee(s) have not been encashed for a period of 4 years from the date of foreclosure, it is directed that the Arbitral tribunal shall treat the present petition as a Section 17 application and adjudicate the same in accordance with law expeditiously and in any case, not later than 8 weeks from today.

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Till the Arbitral tribunal decides the Section 17 application, the encashment of the 4 Performance bank guarantee(s) and 1 Mobilization bank guarantee are stayed, subject to the petitioner keeping all the bank guarantees alive.

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The Arbitral tribunal shall adjudicate the section 17 application without being influenced by any of the observations made in this order.

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The present petition is disposed of in the aforesaid terms.

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Dasti under the signature of the Court Master.

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JASMEET SINGH, J

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JULY 1, 2025 / (MS)

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Click here to check corrigendum, if any

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M/S Shinde Developers Pvt. Ltd. v. the National Highways Authority of India

Case brief

What is this about?

What did the court decide?

M/S Shinde Developers Pvt. Ltd. v. the National Highways Authority of India

Case brief

What is this about?

What did the court decide?

What the court decided

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