Gravit Onsite Jv India vs The Municipal Corporation Of Greater Mumbai
- Court
- Bombay High Court
CNR No : HCBM020311092026
2026:BHC-OS:22949
carbpl31108-2026-J.doc
AGK
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMM ARBITRATION PETITION (L) NO.31108 OF 2026
Gravit-Onsite-JV, India
… Petitioner
Vs.
1. The Municipal Corporation of
Greater Mumbai
ATUL
GANESH
KULKARNI
Digitally signed
by ATUL
GANESH
KULKARNI
Date: 2026.10.23
12:31:03 +0530
2. Chief Engineer (Sewerage Operation)
3. ICICI Bank
… Respondent
Mr. Vishwajit P. Sawant, Senior Advocate with Mr.
Nikhil Patil, and Mr. Prabhakar M. Jadhav for the
Petitioner.
Mr. Anoop Patil with Ms. Pooja Yadav i/by Komal
Punjabi for the Respondent.
CORAM : AMIT BORKAR, J.
RESERVED ON : OCTOBER 21, 2026.
PRONOUNCED ON : OCTOBER 23, 2026
JUDGMENT:
1. By the present Petition filed under Section 9 of the
Arbitration and Conciliation Act, 1996, the Petitioner seeks an
order of injunction against Respondent Nos. 1 and 2, restraining
them, either by themselves or through their servants, agents,
officers, representatives or any other person acting on their behalf,
1
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
from invoking the deed of counter guarantee dated 25 November
2022, bearing No. 0393NDLG0015826, or receiving any payment
under it, to the extent of Rs. 43,40,400/-.
2. According to the Petitioner, the facts which have led to the
filing of the present Petition are as follows. In November 2017, the
Respondents invited bids by issuing Tender No. 7100104937. The
Petitioner participated in the tender in collaboration with an
Australian liner manufacturer and supplier, namely, M/s. Nuflow
Technologies 2000 Pty, and its bid was accepted. On 10 May 2018,
Respondent No. 2 issued a Letter of Acceptance in favour of the
Petitioner., on 22 May 2018, the Petitioner furnished a bank
guarantee bearing No. 5009IBGIS180392 for an amount of Rs.
43,40,400/- towards the Contract Deposit. The said bank
guarantee was valid till 31 May 2026. On 28 June 2018,
Respondent No. 3 issued a work order in favour of the Petitioner
for an amount of Rs. 19,90,99,935/- for carrying out pipeline work
of 1,725 metres. The work was required to be completed by 31
May 2021. It is the case of the Petitioner that, on 22 May 2018, it
furnished a bank guarantee for an amount of Rs. 67,90,400/-,
which was valid till 31 May 2026. The Petitioner commenced the
work on 1 October 2018. However, by a letter dated 29 March
2019, the Respondents informed the Petitioner that the trial
section lining carried out by M/s. Nuflow Technologies 2000 Pty
had failed. According to the Petitioner, the work was delayed due
to the COVID-19 pandemic and the Russia-Ukraine war. On 27
January 2022, the Respondents informed the Petitioner that the
results of the trial lining and the samples were found to be in
2
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
accordance with the technical specifications of the tender. The
Respondents requested the Petitioner to commence the
rehabilitation work. Subsequently, by a communication dated 18
April 2022, the Respondents informed the Petitioner that the
Competent Authority had approved the extension of the contract
period from 31 May 2021 to 31 December 2023. The Petitioner
states that the work could not be completed within the extended
period because traffic and ward permissions were not received in
time.
3. On 30 November 2023, the Respondents issued a show-cause
notice to the Petitioner regarding the delay in completing the work
and called upon it to submit its reply. On 15 February 2024, the
Petitioner submitted its reply, explaining the difficulties faced by it
while carrying out the work. The Petitioner requested the
Respondents to treat 146 days as non-working days and extend the
completion period by 146 days, that is, from 31 December 2023 to
25 May 2024. It is stated that, on 12 February 2024, a letter was
issued extending the period for completing the balance work till 25
December 2023. The Petitioner states that, by a communication
dated 9 January 2025, it informed the Respondents that
excavation of concrete roads could not be carried out because of
the prohibitory directions issued by Respondent No. 1. The
Petitioner states that, on 26 May 2025, it suggested the use of an
alternative technology for completing the balance work, under
which there would be no need to dig pits. The Petitioner sought
permission to adopt the said technology. However, on 14 August
2025, the Respondents rejected the request to carry out the work
3
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
without excavating the concrete roads by using the alternative
technology., on 30 October 2025, the Petitioner requested the
Respondents to obtain approval from the Municipal Commissioner
for excavating the concrete roads and digging pits so that the work
could be completed. On 25 February 2026 and 4 May 2026, the
Petitioner informed the Respondents that it was ready and willing
to complete the balance work in accordance with the terms of the
contract and the 2017 Schedule of Rates. The Petitioner stated that
the necessary materials were available in its stock and that it could
complete the remaining work within the next six months. The
Petitioner states that it had furnished a bank guarantee bearing
No. 5009IBGIS180392 dated 22 May 2018 for an amount of Rs.
43,40,400/- towards the Contract Deposit, which was valid till 31
January 2027. In these circumstances, apprehending that the
Respondents would wrongfully terminate the contract and invoke
the bank guarantee, the Petitioner has approached this Court by
filing the present Petition.
4. Mr. Vishwajit Sawant, learned Senior Advocate appearing for
the Petitioner, submits that the Petitioner apprehends that the
Respondents are taking steps to terminate the contract and invite a
fresh tender for completing the balance work. He submits that, if
the contract is terminated, the Respondents will invoke the deed of
counter guarantee dated 25 November 2022, bearing No.
0393NDLG0015826, to the extent of Rs. 43,40,400/-. According to
him, the delay in carrying out the lining work was caused by the
Respondents and by circumstances which were beyond the control
of the Petitioner. These included the failure to grant ward and
4
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
traffic permissions in time. He submits that the progress of the
work was affected by the COVID-19 pandemic during 2020 and
2021 and by the war between Russia and Ukraine, which resulted
in a shortage of materials required for the lining work. The
Petitioner had informed the Respondents about these difficulties
from time to time.
5. Learned Senior Advocate submits that the Respondents did
not grant permission to excavate the concrete roads and dig pits
required for completing the work. According to him, the Petitioner
was always willing to complete the work and had requested
permission to use an alternative technology which would not
require excavation of the concrete roads. However, the
Respondents rejected that request. He submits that the
Respondents had extended the contract period on two occasions
after taking into consideration the difficulties faced by the
Petitioner in carrying out the work. In these circumstances,
according to him, there has been no fundamental breach of the
contract on the part of the Petitioner. Learned Senior Advocate
submits that the work has remained stopped because Respondent
No. 1 has not granted permission to excavate the concrete roads,
as those roads are still within the defect liability period. He
contends that Respondent Nos. 1 and 2 are responsible for the
delay caused on this account. According to him, the Petitioner
furnished the bank guarantee on the understanding that the
necessary permissions would be granted by Respondent No. 1 in
time, enabling it to complete the work. Since the Respondents
failed to grant such permissions, they should not be permitted to
5
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
invoke the deed of counter guarantee dated 25 November 2022,
bearing No. 0393NDLG0015826, to the extent of Rs. 43,40,400/-.
He submits that the bank guarantee is affected by fraud because,
when the tender was issued in 2018, the roads forming part of the
project were not covered with concrete.
6. Mr. Sawant, learned Senior Advocate appearing for the
Petitioner submits that where an injunction is sought to restrain
invocation of a bank guarantee before termination of the contract,
the usual requirements of establishing fraud or irretrievable injury
need not be satisfied. He submits that the Petitioner has not
committed any breach of the contract.
7. Without prejudice to the above submissions, learned Senior
Advocate submits that the Petitioner had addressed letters dated
26 May 2025, 30 October 2025, 25 February 2026 and 4 April
2026 to the Respondents. Through these letters, the Petitioner
brought the actual facts and difficulties to their notice and
requested their intervention for resolving the issues. However, the
Respondents did not take any steps to consider the difficulties
pointed out in those communications. He submits that the
Petitioner has complied with the dispute resolution clause
contained in the contract, which provides for the settlement of
disputes.
8. On the other hand, Mr. Anoop Patil, learned Advocate
appearing for the Respondents, opposes the Petition. He submits
that the present Petition filed under Section 9 of the Arbitration
and Conciliation Act, 1996 (hereinafter referred to as "the Act"), is
6
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
misconceived, is an abuse of the process of law and is not
maintainable either in law or on the facts of the case. According to
him, the Petition deserves to be dismissed at the outset for the
reasons stated in the following submissions, apart from other
grounds. Learned Advocate for the Respondents first raises an
objection regarding the maintainability of the Petition, as the
Petitioner seeks an injunction against the invocation and
encashment of the deed of counter guarantee dated 25 November
2022, bearing No. 0393NDLG0015826, for an amount of Rs.
43,40,400/-. He submits that the law laid down by the Supreme
Court repeatedly recognises that a bank guarantee is an
independent contract between the bank and its beneficiary. Its
enforcement does not depend upon the decision of disputes arising
out of the main contract between the contractor and the
beneficiary. According to him, a Court can restrain the invocation
of an unconditional bank guarantee only in two exceptional
situations. The first is where there is egregious fraud connected
with the guarantee, which affects its very foundation. The second
is where special equities exist because invocation of the guarantee
would cause irretrievable injustice or harm which cannot be
compensated by payment of damages. He submits that the
Petitioner has failed to establish either of these exceptional
circumstances in the present case.
9. Learned Advocate submits that the Petitioner's allegations
regarding delay in obtaining permissions and the nature of the
road surfaces relate only to disputes arising out of the main
contract. Such disputes cannot be treated as egregious fraud.
7
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
According to him, the Petitioner has neither pleaded nor
established any facts showing that fraud was committed in issuing
or invoking the guarantee. He relies upon Clause 1.9.1 of Section
11 of the Technical Specifications and submits that, under the
contract, the responsibility for obtaining all necessary permissions
rests with the contractor. He relies upon Serial No. 1 of Section 8,
relating to the Bill of Quantities, under which the contractor is
responsible for obtaining permissions from the ward office, Road
Department, Traffic Police Department and other concerned
authorities. He submits that the Petitioner cannot rely upon the
alleged absence of permissions to prevent the Respondents from
invoking the guarantee.
10. Learned Advocate for the Respondents submits that the
Petitioner has failed to establish that invocation of the guarantee
would cause irretrievable injustice. According to him, any financial
loss suffered by the Petitioner on account of invocation of the
guarantee can be calculated in monetary terms. The Petitioner can
claim such loss and seek its determination in the arbitration
proceedings which it proposes to initiate. Since the contract
provides for arbitration to resolve disputes between the parties, the
alleged financial loss cannot be treated as irretrievable harm. He
submits that the present Petition is an attempt by the Petitioner to
avoid the consequences of its contractual obligations and prevent
the Respondent Corporation, which is a public body, from
protecting its financial interests against the Petitioner's continued
failure to complete the work.
8
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
11. Learned Advocate next submits that the Petitioner has
suppressed material facts regarding its own failure to perform the
contract and has placed an incorrect picture before this Court.
According to him, the Petitioner has failed to properly disclose
that, despite the contract period of 24 months, excluding the
monsoon period, commencing in 2018, and several extensions
granted up to December 2024, only a small part of the work has
been completed. He submits that the Petitioner has relied upon the
Part Completion Certificate dated 18 November 2025 in a manner
which suggests that the Respondents have accepted and approved
its work. However, according to him, the Petitioner has not
disclosed that the proposed certificate records that the work was
terminated because of the Petitioner's defaults. He contends that
the Petitioner has presented the facts selectively to obtain interim
relief from this Court.
12. Learned Advocate for the Respondents submits that the
Petitioner's claim that it was always ready and willing to complete
the work is incorrect. According to him, the official records show
long periods during which no work was carried out, even when the
necessary permissions were available. He submits that the
Petitioner is relying upon incomplete facts to obtain an unfair
advantage. He points out that, between October 2018 and May
2021, the Petitioner was awarded two other works in addition to
the work involved in the present Petition. According to him, the
Petitioner failed to complete those works as well, despite
extensions granted at its request. Both those contracts were
eventually terminated with the approval of the Competent
9
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
Authority. He submits that, in both cases, the bank guarantees
furnished by the Petitioner were forfeited in accordance with the
terms and conditions of the respective contracts. He relies upon
these circumstances to contend that the Petitioner's failure to
complete the present work cannot be explained only by the
difficulties relating to permissions or other external circumstances.
13. Learned Advocate for the Respondents lastly submits that the
Petitioner has failed to establish a prima facie case for grant of
interim relief and that the balance of convenience is in favour of
the Respondents. He points out that the work concerns the
rehabilitation of an important public infrastructure project, namely,
a sewerage rising main. According to him, the failure of the
Petitioner to complete the work has already caused a delay of
several years and has affected public interest. If an injunction is
granted, the Respondent Corporation would be prevented from
taking necessary steps to complete the remaining work through
another contractor or by other appropriate means. It would be
deprived of the financial security available to it under the contract.
He submits that the likely loss to public funds and the public at
large would be much greater than any monetary loss which the
Petitioner may claim to suffer due to invocation of the guarantee.
On these grounds, he seeks dismissal of the Petition.
REASONS AND FINDINGS:
14. I have heard Mr. Vishwajit Sawant, learned Senior Advocate
appearing for the Petitioner, and Mr. Anoop Patil, learned Advocate
appearing for the Respondents. The main question which needs to
10
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
be considered is whether the Petitioner has made out a case for
stopping the Respondents from invoking the guarantee for Rs.
43,40,400/-.
15. At the beginning, it needs to be made clear that merely
because a party approaches the Court under Section 9 of the
Arbitration and Conciliation Act, 1996, fearing some action by the
other party, an injunction cannot be granted as a matter of course.
The Court has to see what action is apprehended, what the
concerned document says, what material is produced and what
harm may be caused if protection is not granted. Where the prayer
is to stop invocation of a bank guarantee, the special legal
principles applicable to such guarantees have to be kept in mind.
The dispute about performance of the main contract and the
obligation to make payment under an independent guarantee are
two different matters. Normally, both cannot be treated as the
same.
16. Mr. Sawant has argued that where an injunction is asked for
before the contract is terminated, the Petitioner is not required to
establish fraud or irretrievable injury in the usual manner. I am
unable to accept this argument. Merely because the contract has
not been terminated, the legal restrictions on stopping an
unconditional bank guarantee do not disappear. The Court must
look at the nature of the document and the conditions written in it.
If the document creates an independent obligation to make
payment when a demand is made, the party seeking an injunction
must establish a recognised reason for stopping that payment.
Merely saying that the main contract may be terminated does not
11
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
create a separate exception to this rule.
17. In U.P. State Sugar Corporation v. Sumac International Ltd.,
(1997) 1 SCC 568, the Supreme Court has explained that the
Court can normally interfere with an unconditional bank
guarantee only in exceptional circumstances. One such
circumstance is fraud of a serious nature which affects the
foundation of the guarantee. The other is where payment under
the guarantee would result in irretrievable harm or injustice. The
harm must be of such an exceptional kind that it can justify
interference with the guarantee and with the normal course of
commercial dealings. The same principles were explained again in
Himadri Chemicals Industries Ltd. v. Coal Tar Refining Company,
(2007) 8 SCC 110, and Gujarat Maritime Board v. Larsen & Toubro
Infrastructure Development Projects Ltd., (2016) 10 SCC 46. The
Supreme Court has made it clear that a dispute relating to the
main contract is not enough to stop payment under an
independent bank guarantee.
18. The reason for applying these principles is that a bank
guarantee is given as financial security to the person in whose
favour it is issued. If the person who has furnished the guarantee is
permitted to stop its invocation merely by raising a dispute about
the performance of the main contract, the very purpose of taking
the guarantee would be lost. This does not mean that the
beneficiary can act against the conditions of the guarantee or that
the Court can never examine a case of fraud. It only means that
there must be convincing material to show that the case falls
within a recognised exception before payment can be stopped. In
12
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
Standard Chartered Bank v. Heavy Engineering Corporation Ltd.
(2020) 13 SCC 574, the Supreme Court has explained that a clear
case of fraud, irretrievable injustice or special equities must be
pleaded and prima facie established by strong evidence before the
Court normally interferes with invocation of a guarantee made
according to its terms.
19. The principles explained by the Supreme Court in Kuldip
Singh, are relevant to the apprehension raised by the Petitioner
about the future action of the Respondents. In paragraph 6 of that
judgment, the Supreme Court explained that a quia timet action is
preventive in nature. It is taken to prevent a wrong which is feared
to happen in future, before it takes place. Such relief cannot be
granted merely because a person fears that some injury may
happen later. The Court must be satisfied that the apprehended
wrong is real enough and that preventive protection is justified in
the circumstances. In paragraph 8, the Supreme Court observed:
“In case of a future nuisance, a mere possibility of injury will
not provide the plaintiff with a cause of action unless the
threat be so certain or imminent that an injury actionable in
law will arise unless prevented by an injunction.”
20. The Court held:
“but a strong case of probability that the apprehended
mischief will in fact arise must be shown by the plaintiff.”
21. The above judgment dealt with an apprehended nuisance
and not with a dispute relating to a bank guarantee. Therefore, the
subject matter of that case was different. However, the principle
that a preventive injunction requires a real and sufficiently
13
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
immediate threat is relevant to the present matter. This judgment
does not support the argument of the Petitioner that the usual
legal restrictions on granting an injunction against a bank
guarantee will not apply because invocation is feared before
termination of the contract.
22. I shall now examine the actual Deed of Counter Guarantee,
because its conditions are important for deciding whether the
Petitioner can get the relief which it is asking for. The document
placed before the Court shows ICICI Bank Limited as the
Guarantor and Bank of Baroda as the Lender. The Petitioner,
GRAVIT ONSITE JV INDIA, is described as the Borrower. The
document states that the Borrower has obtained credit facilities
from the Lender and that the counter guarantee relates to the
amounts outstanding under those facilities. Thus, from the
document, it appears that the counter guarantee forms part of the
financial arrangement between the two banks in connection with
the credit facilities given to the Petitioner. According to the
conditions of this document, it is not a guarantee directly given by
the Petitioner to the Municipal Corporation. Clause (a) of the Deed
of Counter Guarantee states that the Guarantor will be responsible
for paying the outstanding amounts under the credit facilities if
those amounts become payable, are incurred or are paid by the
Lender. Clause (b) states that the Lender can claim those amounts
from the Guarantor and that the Guarantor must repay the Lender
within two business days, subject to the conditions and limits
mentioned in the deed. More importantly, Clause (d) states that
the Guarantor shall pay the amount “without any demur and
14
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
forthwith on demand by the Lender for any amount due and
payable by the Guarantor”. Clause (e) states that payment must be
made without referring the matter to the Borrower and even if the
Borrower has raised a dispute against the Lender. These conditions
show that the obligation of the Guarantor under this document is
intended to operate separately from the disputes which the
Borrower may have against the Lender. The deed states that the
Guarantor will be liable as a principal debtor and not merely as a
surety. These conditions have to be kept in mind while considering
the request made by the Petitioner. The Court cannot proceed on
the assumption that payment under the counter guarantee must be
stopped until every dispute relating to the municipal contract is
finally decided.
23. The Fourth Schedule mentions three bank guarantees issued
by Bank of Baroda in favour of MCGM. The first entry refers to
bank guarantee No. 5009IBGIS180392 for Rs. 43,40,400/-, where
MCGM is shown as the beneficiary. The other two entries mention
guarantees for Rs. 67,90,400/- and Rs. 72,61,700/-. Thus, the
amount of Rs. 43,40,400/- claimed in the present Petition
corresponds with one of the underlying bank guarantees
mentioned in the schedule. However, the document which the
Petitioner wants to prevent from being invoked is the Deed of
Counter Guarantee issued by ICICI Bank in favour of Bank of
Baroda. Both documents are connected with each other, but they
remain separate documents and their conditions are separate. This
difference between the two documents is important for deciding
the relief asked for by the Petitioner. MCGM is shown as the
15
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
beneficiary under the bank guarantee issued by Bank of Baroda.
Bank of Baroda, on the other hand, is shown as the Lender and
beneficiary under the counter guarantee issued by ICICI Bank. The
Petition seeks to stop Respondent Nos. 1 and 2 from invoking the
Deed of Counter Guarantee or receiving payment under it.
However, the material placed before the Court does not show that
either of these Respondents is the Lender who is entitled to make a
demand under that deed. It does not explain how an order passed
against Respondent Nos. 1 and 2 would prevent Bank of Baroda
from making a demand under its separate arrangement with ICICI
Bank. If the actual grievance of the Petitioner is that MCGM may
invoke the underlying bank guarantee, then that grievance has to
be examined with reference to the conditions of that particular
guarantee and the relief sought against the concerned party. The
two documents cannot be treated as though they are one and the
same document.
24. The Fourth Schedule mentions 31 May 2026 as the expiry
date and claim date of the underlying bank guarantee for Rs.
43,40,400/-. The counter guarantee states that it will remain valid
until the earlier discharge contemplated under the deed or the
stated expiry date of 31 May 2026. On the other hand, the
Petitioner claims that the bank guarantee was valid until 31
January 2027. However, the documents placed before the Court do
not contain any amendment or renewal showing that this
particular counter guarantee was extended beyond 31 May 2026.
This difference in the dates is important. If the Petition is being
decided after 31 May 2026, the Petitioner must show from the
16
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
operative document that the guarantee for which protection is
sought is still valid or that its validity has been extended. From the
material available, the Petitioner's statement that the guarantee
was valid until 31 January 2027 does not establish that the
counter guarantee was extended up to that date.
25. Even if the case of the Petitioner is considered on the
assumption that the concerned guarantee is still valid, the
allegation of fraud made by it does not satisfy the legal
requirement. Mr. Sawant submits that there is fraud because the
roads forming part of the project were not covered with concrete
when the tender was issued in 2018. Even if this fact is accepted, it
would mainly relate to the conditions in which the rehabilitation
work had to be done and the permissions which were required for
completing that work. This fact alone does not show that fraud
was committed when the bank guarantee or the counter guarantee
was obtained. It does not show that the person asking for payment
is knowingly taking advantage of any fraud which affects the very
foundation of the guarantee.
26. Merely using the word “fraud” is not enough. The Court has
to see the facts on which the allegation is based and whether those
facts are connected with the guarantee whose invocation is sought
to be stopped. There must be material to show fraud of an
exceptional nature. An ordinary dispute about the duties and
responsibilities of the parties under the main contract cannot be
treated as such fraud. No such material has been shown through
the submissions or documents placed before the Court. Therefore,
at this stage, the Petitioner's argument that the guarantee is
17
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
affected by fraud cannot be accepted. The explanation given by the
Petitioner for the delay in completing the work has to be
considered separately. Mr. Sawant submits that the lining work
could not be completed because the Respondents did not grant
ward and traffic permissions in time. He relies upon the COVID-19
pandemic during 2020 and 2021, the war between Russia and
Ukraine, the resulting shortage of materials required for the lining
work and the refusal to permit excavation of concrete roads which
were within the defect liability period. According to him, these
difficulties were not within the control of the Petitioner and the
Respondents were informed about them from time to time.
27. These submissions may be relevant for deciding who was
responsible for the delay and what should be the result of the
alleged breach of contract. It will be necessary to examine whether
permissions were obtained in time, whether excavation was
permitted, whether the required materials were available and how
the outside circumstances affected the progress of the work. The
two extensions of time relied upon by the Petitioner may be
relevant for deciding whether the Respondents accepted that some
difficulties existed and what effect those extensions had upon the
obligations of the parties. However, these circumstances, by
themselves, do not establish that invocation of the bank guarantee
would amount to fraud or would cause irretrievable injustice.
28. The Respondents rely upon Clause 1.9.1 of Section 11 of the
Technical Specifications and Serial No. 1 of Section 8 of the Bill of
Quantities. According to them, it was the contractor's responsibility
to obtain permissions from the ward office, Road Department,
18
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
Traffic Police Department and other concerned authorities. The
Petitioner disputes that it was responsible for obtaining the
particular permission required for excavating the concrete roads.
Its case is that the Respondents themselves did not permit the
necessary excavation and rejected its proposal to use alternative
technology.
29. From the material available, it is not necessary to finally
decide which party was responsible for each period of delay. Such
a decision would require the Court to examine the complete
contract conditions, the exact permissions required, the
correspondence exchanged between the parties and the
circumstances in which the work remained incomplete. Even if the
explanation of the Petitioner is accepted for the limited purpose of
considering this Petition, the dispute would still relate to the
performance of the main contract. Such a dispute does not
automatically give a ground for stopping an independent financial
guarantee. The Petitioner can establish its contractual rights in the
appropriate proceedings. However, the mere existence of this
dispute is not sufficient to stop payment under the counter
guarantee.
30. Mr. Sawant has relied upon the documents at pages 417 to
424 and submitted that they show that the Petitioner was always
ready and willing to perform its part of the contract. According to
the Petitioner, its letters dated 26 May 2025, 30 October 2025, 25
February 2026 and the letter stated to be dated 4 April 2026 show
that it repeatedly requested the Respondents to intervene and
permit completion of the remaining work. The Petitioner states
19
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
that the necessary materials were available in its stock and that the
remaining work could be completed within six months. These
communications are relevant because they show that the Petitioner
was expressing its willingness to complete the remaining work and
was asking the Respondents to resolve the difficulties. They cannot
be ignored. However, the fact that such letters were written does
not finally prove that the Petitioner was in a position to complete
the work within the original period or the extended period. It does
not prove that the entire delay was caused by the Respondents.
The readiness and willingness of the Petitioner have to be
considered along with the work completed, the dates fixed for
completion under the contract, the permissions required, the
progress of the work and the reasons why the remaining work
could not be completed. These letters support the case put forward
by the Petitioner. But, without material, they do not establish the
exceptional circumstances which are required for stopping
invocation of the guarantee.
31. The Respondents have relied upon the long period during
which the work remained incomplete, even after the original
contract period and the extensions granted. They have referred to
the Part Completion Certificate dated 18 November 2025 and
submitted that it records that the work was terminated because of
the defaults of the Petitioner. They rely upon the alleged failure of
the Petitioner to complete two other contracts, the termination of
those contracts and the forfeiture of the guarantees furnished in
those matters. These allegations cannot be treated as final proof
that the Petitioner committed a breach of the present contract
20
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
merely because the Respondents have made such allegations.
Failure to complete another contract has to be kept separate from
the question whether the Petitioner committed a breach of the
contract involved in this Petition. The present contract must be
examined on the basis of its own conditions and the evidence
relating to it. At the same time, the submission of the Respondents
that the work has remained incomplete for a long period is
relevant. The Petitioner accepts that some work is still remaining
and seeks time to complete it. Therefore, the dispute is not about
whether the entire work has been completed. The real dispute is
why the remaining work is still incomplete and which party should
bear the consequences of the delay. These questions may have
important consequences under the contract. However, they do not,
by themselves, decide whether the counter guarantee can be
invoked. I am not recording any final finding that the Petitioner
alone is responsible for the delay. I am only holding that this
disputed question of responsibility cannot,, justify the injunction
sought in the present Petition.
32. The submission of the Petitioner that it was ready and
willing to complete the work must be considered with reference to
the time available for completing it. The work order was issued in
June 2018, the work commenced in October 2018 and the original
date for completion was 31 May 2021. According to the Petitioner,
the contract period was extended up to 31 December 2023.
However, difficulties prevented completion of the work. The later
letters were written during 2025 and 2026, when the remaining
work was still pending. These dates show that the dispute
21
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
continued for a long period even after the original date for
completion had passed. They do not, by themselves, prove that the
Petitioner alone caused the delay. However, they do not establish
that the Respondents are acting fraudulently merely because they
intend to terminate the contract or invite a fresh tender for
completing the remaining work. Whether the termination is
justified and whether the Petitioner is entitled to time are matters
which can be decided in the appropriate contractual or arbitral
proceedings.
33. The Petitioner submits that the Respondents extended the
contract period twice after accepting the difficulties faced by it.
This submission needs to be considered. An extension may show
that the employer knew about some difficulties or was willing to
give additional time to the contractor. However, merely because an
extension was granted, it does not mean that the employer
accepted responsibility for every delay or gave up its rights under
the contract. The effect of each extension will depend upon the
conditions on which it was granted and the circumstances existing
at that time. The material placed before the Court does not
establish that, by granting these extensions, the Respondents
agreed that the Petitioner would be protected against invocation of
the guarantee in every situation. Therefore, the extensions granted
by the Respondents cannot, by themselves, be treated as a
sufficient ground for stopping invocation of the guarantee.
34. I shall now consider the submission of the Petitioner that it
followed the procedure for settlement of disputes provided under
the contract. The contract document provides that a dispute
22
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
arising out of the contract may be referred, within seven days, to a
committee constituted by the concerned Additional Municipal
Commissioner. The committee is required to give its decision in
writing within sixty days. An appeal against the committee's order
may be filed before the Municipal Commissioner within seven
days. Thereafter, the Municipal Commissioner is required to
constitute a committee and give written notice of its decision
within ninety days after being requested to do so. Clause 74, which
is titled “Arbitration and Jurisdiction”, provides that disputes which
remain unresolved may be referred to arbitration in the
circumstances stated in that clause. The arbitration is to be
conducted by a sole arbitrator in accordance with the Arbitration
and Conciliation Act, 1996. The clause provides that, if possible,
the work under the contract should continue during the arbitration
proceedings. It states that payment due to the contractor should
not be withheld unless such payment is the subject matter of the
arbitration proceedings.
35. The letters written by the Petitioner requesting the
Respondents to intervene are relevant because they show that the
Petitioner brought its grievances to their notice. However, merely
writing these letters does not establish that the Petitioner followed
every stage of the dispute resolution procedure provided under the
contract. The material placed before the Court does not show that
the disputes were referred to the specified committee within the
prescribed period, that the appeal procedure was completed or
that a decision was given or arbitration was commenced in
accordance with Clause 74. It is not necessary to hold that failure
23
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
to complete every stage of the dispute resolution procedure
automatically prevents a party from applying under Section 9. In
appropriate circumstances, the Court has power to grant interim
protection under the Act, including before or during arbitration.
However, when the Petitioner relies upon its compliance with the
contract to support its request for protection, the actual
requirements of the dispute resolution clause must be examined.
From the material available, the letters written by the Petitioner do
not, by themselves, establish that the entire procedure for
settlement of disputes under the contract has been followed.
36. The clause providing for continuation of the work, wherever
possible, must be understood in its proper meaning. It shows that
the parties intended that the work should not ordinarily stop
merely because a dispute had arisen between them. Their rights
could be decided through the agreed procedure while the work
continued, wherever such continuation was possible. However, this
clause does not mean that the employer must allow the contractor
to continue the work indefinitely without considering the progress
made or the other conditions of the contract. At the same time, the
employer cannot ignore genuine difficulties faced by the
contractor. The rights and obligations of both parties have to be
examined under the contract. This provision supports the need to
resolve the dispute through the agreed procedure, but it does not
automatically give the Petitioner a right to stop invocation of the
guarantee.
37. The statement of the Petitioner that it was always willing to
complete the remaining work is not sufficient to establish
24
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
irretrievable injustice. According to the Petitioner, the required
materials are available in its stock and the remaining work can be
completed within six months, provided the necessary permissions
are granted. On the other hand, the Respondents point out that the
work relates to a sewerage rising main, which is an important part
of public infrastructure. According to them, the delay has already
continued for several years and an injunction would prevent the
Corporation from taking steps to get the remaining work
completed through another contractor.
38. This submission of the Respondents has to be considered. A
public authority responsible for maintaining essential
infrastructure cannot be compelled to allow the work to remain
pending indefinitely merely because the contractor offers to
complete it at a later date. At the same time, the fact that the
project concerns public infrastructure does not give the
Respondents a right to act contrary to the contract or the law. The
rights of both parties have to be considered according to the
applicable conditions of the contract.
39. The balance of convenience must therefore be considered
along with the nature of the guarantee and the injury claimed by
the Petitioner. The Respondents have an interest in completing the
rehabilitation work and protecting the financial security available
to them under the contract. The Petitioner, on the other hand,
wants to prevent wrongful invocation of the financial security and
protect its contractual rights. However, the Petitioner has not
shown that payment under the counter guarantee would make it
impossible for it to pursue its contractual claims or that any loss
25
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
caused by such payment could not be compensated through
appropriate legal proceedings. If an independent guarantee is
stopped without establishing the recognised legal grounds, the
financial security on which the banks and the beneficiary rely
would be affected. In these circumstances, the balance of
convenience does not support the grant of the injunction sought by
the Petitioner.
40. The allegation of irretrievable injustice has to be considered
separately from an ordinary financial loss. The Petitioner fears that
an amount of Rs. 43,40,400/- may be paid under the concerned
guarantee. Payment of this amount may cause financial difficulty
to the Petitioner. However, financial difficulty or payment of an
amount which is disputed does not,, amount to irretrievable
injustice. The Petitioner has not placed any material to show that,
if the amount is paid, and it ultimately succeeds in arbitration, it
would become impossible to recover that amount. It has not shown
that the Respondents or the concerned beneficiary would be
unable to meet a lawful claim for repayment. Merely saying that
the amount may be paid before the contractual dispute is finally
decided is not enough. The Petitioner must show that the injury
would be of such an exceptional nature that it could not be
properly remedied later. No such material has been placed before
the Court.
41. The argument of the Petitioner that invocation must be
stopped because the contract has not yet been terminated cannot
be accepted as a general rule. Whether a guarantee can be invoked
depends upon the conditions of that particular document. If the
26
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
guarantee states that termination of the contract or some other
event must take place before a demand can be made, that
condition must be fulfilled. However, if the document provides for
an independent demand for payment in the circumstances stated
in it, the Court cannot add a condition which is not written in the
document.
42. The copy of the Deed of Counter Guarantee placed before
the Court provides for payment on demand, subject to its
conditions and limits. It states that payment is to be made without
referring the matter to the Borrower and even if disputes exist
between the Borrower and the Lender. The material placed before
the Court does not establish that termination of the municipal
contract is a necessary condition for making a demand under this
counter guarantee.
43. I am unable to accept the argument that the absence of
permissions, rejection of the alternative technology and the
proposed termination, when considered together, amount to
special equities which are sufficient to stop invocation of the
guarantee. These circumstances may be relevant for deciding
whether the Respondents are justified in terminating the contract,
whether the Petitioner is entitled to time and whether it can claim
compensation for the difficulties faced by it. However, the question
whether the termination is justified is different from the question
whether the guarantee is valid or whether a demand for payment
under it can lawfully be made. Unless the conditions of the
guarantee make termination a necessary requirement for payment,
the two questions cannot be treated as one. No material has been
27
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
placed before the Court to show that the conditions of the counter
guarantee prohibit a demand merely because the main contract is
still in dispute.
44. There is one more difficulty regarding the nature of the
action which the Petitioner apprehends. The Petitioner states that
it fears that the Respondents will terminate the contract and invite
a fresh tender. The Respondents rely upon the long delay in
completing the work and contend that the contract has already
been terminated because of the defaults of the Petitioner. The
submissions refer to a Part Completion Certificate dated 18
November 2025. However, the actual termination order has not
been reproduced in the material available for consideration.
Therefore, from the documents before the Court, it is not possible
to give a definite finding about the exact date of termination or
whether a final termination order had been issued. This
uncertainty does not help the Petitioner on the main question.
Whether termination is likely to take place or has already taken
place, the Petitioner must still establish a recognised legal ground
for stopping the guarantee. The requirements of fraud or
irretrievable injustice cannot be avoided merely by describing the
Petition as one seeking preventive relief.
45. In Kuldip Singh , paragraph 8, the Supreme Court held that
the mere possibility of future injury is not enough and that a
strong probability of the apprehended harm must be shown. In the
present case, the correspondence between the parties and the
continuing dispute show that there is a serious disagreement
regarding completion of the work and the consequences of the
28
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
delay. The material may show that the Petitioner has reasons to
apprehend action under the contract. However, it does not
establish that the proposed invocation of the counter guarantee
would be fraudulent or would cause irretrievable injury. Even if it
is accepted that the apprehension of the Petitioner regarding
invocation is real, it must separately satisfy the legal requirements
applicable to injunctions against an independent bank guarantee.
Those requirements have not been satisfied in the present case.
46. The documents placed before the Court create one more
difficulty for the Petitioner. The counter guarantee shows ICICI
Bank as the Guarantor and Bank of Baroda as the Lender. MCGM is
shown as the beneficiary of the underlying bank guarantees
mentioned in the Fourth Schedule. However, the prayer in the
Petition seeks an injunction against Respondent Nos. 1 and 2 in
relation to invocation of the Deed of Counter Guarantee. The
material does not establish that either Respondent No. 1 or
Respondent No. 2 is the party entitled to demand payment under
that deed. Further, no amended or renewed document has been
placed before the Court to show that this particular counter
guarantee continued to remain valid after its recorded expiry date
of 31 May 2026. These are important difficulties which cannot be
ignored when the Court is asked to stop payment under a
particular financial document. An order of the Court must relate to
the actual rights and obligations created by that document and
must operate against the party which is entitled to exercise the
relevant right.
29
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
carbpl31108-2026-J.doc
47. For these reasons, I find that the Petitioner has failed to
establish a case for granting an injunction under Section 9 of the
Arbitration and Conciliation Act, 1996.
48. The Petition is accordingly dismissed. There shall be no order
as to costs.
49. This decision is limited to the request of the Petitioner for
interim protection against invocation of the specified counter
guarantee. The rival claims regarding delay in completing the
work, responsibility for non-completion, validity of termination
and the Petitioner's claim for time or compensation shall be
decided in the appropriate proceedings on the basis of the material
placed before the competent forum.
(AMIT BORKAR, J.)
30
Uploaded on - 23/10/2026 Downloaded on - 23/10/2026 12:43:14
Powered by TCPDF (www.tcpdf.org)