M/S Nkg Infrastructure Ltd. Vs Airport Authority of India (Aai) through Djm/Jt. Gm Engg. (C) Jabalpur Airport

Through: Mr. Digvijay Rai, Standing Counsel with Mr. Archit Mishra, Advocates with Mr. Vinod Kumar Singh, JGM (Engg-Civil), Mr. Gagan Kochar, Sr. Manager (Law) AAI, Ms. Pragya Bansal JE (Law) AAI, Ms. Kashish Singhal JE (Law) AAI and Mr. Shashank Gupta JE (Law) AAI for respondent AAI. (M): 9873103599, 9412636726 [email protected]

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CORAM:

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HON'BLE MS. JUSTICE MINI PUSHKARNA

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MINI PUSHKARNA, J (ORAL):

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

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Exemptions allowed, subject to all just exceptions.

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Signature Not Verified

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O.M.P.(I) (COMM.) 185/2026 Page 1 of 10

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Digitally Signed By:HARIOM SHARMA Signing Da te:2 9.04.2026 20:59:28

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Applications are accordingly disposed of.

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

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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.

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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.

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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:

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

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Signature Not Verified

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O.M.P.(I) (COMM.) 185/2026 Page 2 of 10

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Digitally Signed By:HARIOM SHARMA Signing Da te:2 9.04.2026 20:59:28

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“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;

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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;

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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;

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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.”

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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.

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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.

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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.

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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 to be safeguarded. Learned counsel appearing on behalf of the Respondent undertakes that prior to invocation of the Bank Guarantees, a Show Cause Notice would be issued providing the Petitioner with a period of one (01) week to respond to the same before invocation of the said Bank Guarantees.

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Signature Not Verified

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O.M.P.(I) (COMM.) 185/2026 Page 3 of 10

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Digitally Signed By:HARIOM SHARMA Signing Da te:2 9.04.2026 20:59:28

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6. In view of the undertaking given by the learned counsel for the Respondent, it is directed that the panel of Mediators be constituted within a period of ten (10) days from today for consideration of the disputes that are stated to have arisen. No coercive action in respect of the Bank Guarantees inter alia, issuance of Show Cause Notice, will be taken till the panel of Mediators takes up the issues for consideration.

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7. Since the parties are ad idem that the present dispute shall be adjudicated by the panel of Mediators so appointed, this Court deems it appropriate to dispose of the present Petition.

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8. Accordingly, the present Petition, along with pending application(s), if any, stands disposed of in the above terms.”

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Learned counsel appearing for the petitioner further draws the attention of this Court to Document No. 34 attached with the present petition, to submit that the extension of time has been approved till 16^th September, 2023, whereas, the competent authority has allowed such extension of time to the petitioner only till the year 2022, on account of which, penalty has also been imposed upon the petitioner.

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It is submitted that the delay is not on account of the petitioner since extension of time has already been granted. Thus, she submits that no penalty could have been imposed upon the petitioner.

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Per contra , learned counsel appearing for the respondent, on advance notice, submits that the respondent is within its right to encash the bank guarantees. He submits that six (06) bank guarantees were sent for encashment, out of which, four (04) already stand encashed and that two (02) bank guarantees have already been processed by the banks for the purposes of encashment.

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He draws the attention of this Court to one of the bank guarantees deposited for Rs. 50,00,000/- by the petitioner, relevant portion of which,

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Signature Not Verified

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O.M.P.(I) (COMM.) 185/2026 Page 4 of 10

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Digitally Signed By:HARIOM SHARMA Signing Da te:2 9.04.2026 20:59:28

reads as under:

“xxx xxx xxx

xxx xxx xxx”

By referring to the aforesaid, learned counsel appearing for the respondent submits that in the bank guarantee, the banks have undertaken to unconditionally pay the amount claimed by the respondent on demand and without any demur to the extent thereof.

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Likewise, learned counsel appearing for the respondent also draws the attention of this Court to the bank guarantee deposited by the petitioner for Rs. 25,00,000/-, to submit that in the said bank guarantee as well, the bank has undertaken to make payment of the amount claimed by respondent, without any demur. The relevant portion of said bank guarantee is as under:

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“xxx xxx xxx

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Signature Not Verified

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O.M.P.(I) (COMM.) 185/2026 Page 5 of 10

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Digitally Signed By:HARIOM SHARMA Signing Da te:2 9.04.2026 20:59:28

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xxx xxx xxx”

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He further submits that bank guarantee is a separate contract, and one that is unconditional. He, thus, submits that once a bank guarantee has been invoked by the respondent, the same is payable. It is only in cases of fraud, irreparable loss, or if the invocation is not in terms of the bank guarantee, that the Court can interdict the invocation. However, the same is not the position in the present case.

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Learned counsel appearing for the respondent has also handed over to this Court a letter dated 15^th April, 2026, which is reproduced as under:

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Signature Not Verified

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O.M.P.(I) (COMM.) 185/2026 Page 6 of 10

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Digitally Signed By:HARIOM SHARMA Signing Da te:2 9.04.2026 20:59:28

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By referring to the aforesaid letter, learned counsel appearing for the respondent submits that the final bill has already been prepared by the respondent for the amounts which are payable by the petitioner. However, it is submitted that despite reminder, the petitioner has not approached the

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Signature Not Verified Digitally Signed By:HARIOM SHARMA Signing Da te:2 9.04.2026 20:59:28

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O.M.P.(I) (COMM.) 185/2026 Page 7 of 10

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respondent for signing the said final bill, on account of which, the bank guarantees are sought to be encashed.

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Having heard, learned counsels appearing for the parties, this Court takes note of the submission made by learned counsel appearing for the respondent that pursuant to the invocation of Clause 25 by the petitioner, the DRC has already been constituted and that the last hearing before the DRC was on 23^rd April, 2026.

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It is to be noted that the dispute resolution clause between the parties, in terms of Clause 25, of the Agreement reads as under:

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Signature Not Verified

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O.M.P.(I) (COMM.) 185/2026 Page 8 of 10

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Digitally Signed By:HARIOM SHARMA Signing Da te:2 9.04.2026 20:59:28

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Signature Not Verified Digitally Signed By:HARIOM SHARMA Signing Da te:2 9.04.2026 20:59:28

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O.M.P.(I) (COMM.) 185/2026 Page 9 of 10

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Accordingly, since hearing is already being granted and the matter is being taken up by the DRC in terms of Clause 25 of the Agreement between the parties, it is directed that no further precipitative action shall be taken by the respondent against the petitioner, till the proceedings before the DRC are finally adjudicated.

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The respondent shall also not take coercive action against the petitioner for a further period of 10 days after the decision by the DRC in the proceedings, as aforesaid.

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