STOCKWELL ENERGY VAULT FOUR PRIVATE LIMITED vs GUJARAT URJA VIKAS NIGAM LIMITED (GUVNL)

C/SCA/15364/2026 JUDGMENT DATED: 19/10/2026
(GJHC240796072026)
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 15364 of 2026
FOR APPROVAL AND SIGNATURE:

HONOURABLE MS. JUSTICE NISHA M. THAKORE - Sd/-

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Approved for Reporting Yes No
✔
======================================
STOCKWELL ENERGY VAULT FOUR PRIVATE LIMITED & ANR.
Versus
GUJARAT URJA VIKAS NIGAM LIMITED (GUVNL) & ORS.
======================================
Appearance:
MR HARSH N PAREKH(6951) for the Petitioner(s) No. 1,2
PRIYAL M PARIKH(7593) for the Petitioner(s) No. 1,2
MR. HENIL SHAH, AGP for the Respondent(s) No. 3
MR DIPAK R DAVE(1232) for the Respondent(s) No. 1
MR PRADIP D BHATE(1523) for the Respondent(s) No. 2
======================================
CORAM: HONOURABLE MS. JUSTICE NISHA M. THAKORE

Date : 19/10/2026
ORAL JUDGMENT
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Draft amendment dated 19 October, 2026 is allowed.
To be carried-out forthwith .
1. By way of present petition under Article 226 read with
Article 227 of the Constitution of India, the petitioner has
invoked extraordinary writ jurisdiction of this Court thereby
praying for following reliefs:
“(A) Your Lordships may be pleased to issue a writ of
certiorari or any other appropriate writ, order or
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direction quashing and setting aside the impugned
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notice dated 18 September, 2026 (annexed at
Annexure-A) issued by the respondent no.1.
(B) Your Lordships may be pleased to issue a writ of
mandamus or any other appropriate writ, order or
direction directing the Respondent No. 1 to pass an
order, after affording an opportunity of hearing to the
Petitioners, on the Petitioner No.1's Force Majeure claim
and requests for extension contained in its letters dated
30.04.2026, 24.09.2026 and 06.10.2026 (annexed at
Annexure-H. Annexure-Q and Annexure-S), within such
time as this Hon'ble Court may deem fit;
(C) Your Lordships may be pleased to issue a writ of
mandamus or any other appropriate writ, order or
direction restraining the Respondent No.1 from invoking
or encashing the Performance Bank Guarantee dated
17.03.2026 for Rs.8,12,50,000/-(annexed at Annexure-
E), and from terminating the BESPA dated 18.03.2026
or taking any other coercive action against the
Petitioners, until the decision referred to in prayer (B)
above is taken and communicated to the Petitioners and
for a period of two weeks thereafter, so as to enable the
Petitioners to avail of their remedies in accordance with
law;
OR IN THE ALTERNATIVE
(D) Your Lordships may be pleased to issue a writ of
mandamus or any other appropriate writ, order or
direction restraining the Respondent No.1 from invoking
or encashing the Performance Bank Guarantee dated
17.03.2026 for Rs.8,12,50,000/-(annexed at Annexure-E)
and from terminating the BESPA dated 18.03.2026, and
directing the Respondent No.4 not to make any payment
under the said Performance Bank Guarantee, until the
application for interim relief to be filed by the Petitioners
before the Gujarat Electricity Regulatory Commission, in
the petition to be filed under Section 86(1)(f) of the
Electricity Act, 2003, is heard and decided by the Gujarat
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Electricity Regulatory Commission;
(E) Pending admission and final hearing of this
Petition, Your Lordships may be pleased to restrain the
Respondent No.1 from invoking or encashing the
Performance Bank Guarantee dated 17.03.2026 for Rs.
8,12,50,000/- (annexed at Annexure-E) and from
terminating the BESPA dated 18.03.2026, and to direct
the Respondent No.4 not to make any payment under the
said Performance Bank Guarantee, until final disposal of
the petition;
(F) Ex-parte ad-interim relief in terms of prayers (D)
and (E) above.
(G) Any other further relief as may be deemed fit in the
facts and circumstances of the case may also please be
granted.”
2. In order to appreciate the controversy raised in the
present petition, it would be appropriate to take note of the
relevant facts of the case.
2.1 The petitioner no.1 claims to be a company incorporated
under the Companies Act , 2013. Whereas petitioner no.2 is
the holding company of petitioner no.1 engaged in providing
renewable energy solutions, including Battery Energy Storage
Systems (for sake of brevity, referred as “BESS”) and solar
engineering, procurement and construction services and
claims to contribute to India's clean energy transition.
2.2 The petitioner no.2 is the successful bidder and has been
assigned letter of intent by respondent no.1 who is the Battery
Energy Storage System implementing agency nominated by
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the energy and petrochemical department, Government of
Gujarat under the viability gap funding scheme for
development of Battery Energy Storage Systems supported
through the Power System Development Fund (“PSDF
Scheme”), notified by the Ministry of Power. The respondent
no.2 the Union of India is joined through the Ministry of
Power which has promoted the development of BESS to
facilitate integration of renewable energy, address its
intermittency and improve the reliability and flexibility of the
electricity grid.
The respondent no.3 State of Gujarat is joined through
the Energy and Petrochemicals Department, which has
nominated respondent no.1 as its implementing agency.
Whereas respondent no.4 is the bank which has issued the
performance bank guarantee and is joined as a proforma
party as against it no substantive relief is sought except with
regard to direction to not to make payment under the
performance bank guarantee.
2.3 The petitioner no.2 had issued guidelines for
“Procurement and Utilization of Battery Energy Storage
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Systems” under Section 63 of the Electricity Act, 2003 on 10
March, 2022. In furtherance of same, the respondent no.1
had issued the request by floating tender for selection of
Battery Energy Storage System Developers for setting up of
4000 megawatt hertz MWH (2000 MW x 2 hours) Battery
Energy Storage Systems in Gujarat for “on demand” usage
under tariff based competitive bidding (phase 7) on a build -
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own - operate basis, with viability gap funding supported
through the power system development fund. The aforesaid
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tender notice dated 23 July 2025 was later on amended on
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16 September, 2025 and 26 September, 2025.
nd
2.4 On 2 January, 2026 the petitioner no.2 was declared
successful bidder for capacity of 130 MW / 260 MWh at a
tariff of Rs.1,88,991/- per MW per month. The respondent no.1
had therefore issued letter of intent for the aforesaid capacity,
comprising two projects of 65 MW / 130 MWh each, at the 132
KV Nandesari AIS substation and 132 KV Vasedi AIS
substation respectively. Pursuant to the order passed by the
Gujarat Electricity Regulatory Commission (in short GERC) in
petition no.2612 of 2026, adopted the tariff discovered
through the competitive bidding process undertaken by
respondent no.1 under the RFS and directed respondent no.1
to execute the battery energy storage purchase agreements
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with the successful bidder. On 17 March, 2026 the petitioner
had furnished a performance bank guarantee of
Rs.8,12,50,000/- in favor of respondent no.1, corresponding to
Rs.12,50,000/- per MW for the contracted capacity of 65 MW.
On 18th March, 2026 the BESPA in respect of the project at
Vasedi AIS substation came to be executed between petitioner
no.1 and respondent no.1. The BESPA records the applicable
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tariff of Rs.1,88,991/- per MW per month and specified 17
September, 2026 as the financial closure deadline under
Article 3.1(vii), subject to other applicable provisions of the
agreement, including its force majeure framework.
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2.5 It is the case of the petitioner that following the
execution of the BESPA, the implementation of the project was
materially affected on account of the prevailing West Asia
conflict and its escalation on account of closure and rerouting
of maritime routes, imposition of war risk premiums, port
congestion and withdrawal or revision of supplier delivery
commitments which disrupted the international supply chains
upon which the project depended.
2.6 Despite the aforesaid circumstances prevailing, the
petitioner no.1 was constrained to issue a formal notice on
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30 April, 2026 to the respondent no.1 invoking the force
majeure clause under Article 11 of the BESPA which
according to petitioner was well within the period of 15 days
contemplated under Article 11.4.1. In response, the
respondent no.1 vide letter dated 11th May, 2026 disputed the
invocation of force majeure clause by citing that the case of
the petitioner will not fall within the scope of force majeure
events as provided under article 11.2(e). The respondent no.1
specifically requested the petitioner no.1 to submit the
documentary evidence in support of their claim and recorded
that invocation of force measure cannot be considered at this
stage .
2.7 In the meanwhile the Gujarat Energy Development
Agency granted provisional registration to the project as a
standalone BESS project of 65 MW / 130 MWH at 132 KVV KV
Vasedi AIS substation, pursuant to the application submitted
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by the petitioner on 9 June, 2026. On 6 July, 2026 the
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petitioner claims to have entered into memorandum of
understanding with the owners of agriculture land bearing
Revenue Survey nos.162, 163 and 194 situated at village
Vasedi, Taluka and District Chhota Udaipur admeasuring
approximately 2.21 Hectors of land. The petitioners have
agreed to avail such land on lease for the project purpose for
a period of 13 to 14 years.
2.8 On the other hand the Gujarat Energy Transmission
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Corporation Ltd., by its letter dated 6 August, 2026 granted
65 MW connectivity to the project at 132 KV Vasedi
substation, pursuant to the application of the petitioner dated
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11 June, 2026. However, on the next day the respondent no.1
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issued a letter dated 7 August, 2026 calling upon the
petitioner no.1 to submit the documents for financial closure
as provided under Article 3.1 of the BESPA or alternatively to
seek an extension under Article 3.2.2 of the BESPA. Again, the
respondent no.1 vide letter dated 8th September, 2026 issued
a further letter calling upon the petitioner no.1 to submit the
documents for financial closure or, alternatively, to seek an
extension under article 3.2.2 of the BESPA. Ultimately, the
respondent no.1 had issued notice dated 18th September,
2026 recording that the scheduled date of financial closure
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had elapsed on 17 September, 2026 and the said notice to be
treated as 30 day notice under Article 3 of BESPA thereby
indicating that in case of non compliance of the contractual

obligations by 16th October, 2026, the respondent no.1 shall
without any further notice or correspondence, proceed to
encash the performance bank guarantee as well as exercise
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their right of termination of agreement. Subsequently, the
petitioner no.1 received confirmation from its EPC contractor
the petitioner no.2 informing that the original equipment
manufacturers of liquid cooled LPF battery containers and
bidirectional power conversion systems approached for the
project have in view of the prevailing West Asia situation and
its effect on international shipping, declined to accept
purchase orders confirmed and fixed delivery timelines and
payment terms. The petitioner no.1 had immediately
responded to the notice impugned by submitting their reply
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dated 24 September, 2026 as well as the letters addressed on
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11 May, 2026, 8th September, 2026 by furnishing
documentary evidence called for by the respondent no.1. In
view of the aforesaid documents, the petitioner no.1 sought
for an extension of 120 days for financial closure. The request
was also made to respondent no.1 to take its decision on the
force measure claim in terms of Article 11.4.1 of the BESPA
within a period of 30 days and thereby requested respondent
no.1 to keep in abeyance any action for encashment of
performance bank guarantee pending such decision. Again on
6th October, 2026 the petitioner addressed further letter to
respondent no.1 placing on record the advisory of Ministry of
Power, seeking and entering day to day extension of the
financial closure timeline and other contractual timelines
pending decision on the force measure claim and requesting
the respondent no.1 to confirm within 7 days that no coercive
action, including encashment of performance bank guarantee
would be taken pending such decision or in the alternative to
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communicate a reasoned decision. On 14 October, 2026 the
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petitioner issued a disputed notice via email to respondent
no.1 in accordance with Article 16.2.1 of the BESPA. Despite
pursuance of the petitioner to extend the timeline till the date
of filing this petition, the respondent no.1 has not taken any
decision on the petitioners force measure claim nor has
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responded to his letter dated 24 September, 2026 and 6
October, 2026 nor the respondent has withdrawn the notice.
Since the 30 day period available to the respondent under
Article 11.4.1 of the BESPA for taking decision on the
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documented claims runs up to 24 October, 2026 and
apprehending the encashment of the performance bank
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guarantee which is likely to expire on 16 October, 2026, the
petitioner has been constrained to approach this Court by
invoking extraordinary jurisdiction under Article 226 of
constitution of India.
3. Mr. Mitul Shelat, learned Senior Advocate appearing
with Mr. Priyank Parikh, learned advocate on record for the
petitioner has vehemently submitted that the BESPA
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agreement was entered between the parties on 18 March
2026. The petitioner company has adhered to the compliance
of bidding requirements by furnishing a performance bank
guarantee of Rs.8,12,50,000/- in favour of respondent no.1
corresponding to Rs.12,50,000/- per MW for contracted
capacity of 65 MW. As agreed between the parties, the
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timeline for financial closure was scheduled as 17
September, 2026 under Article 3.1(vii) subject to other
applicable provisions of the agreement. It was submitted that
the aforesaid financial closure deadline however has to be
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read subject to other applicable provisions of the agreement
including its force measure framework. It was further
submitted that due to unprecedented circumstances the
project was materially affected by the prevailing West Asia
conflict and its escalation on account of closure and rerouting
of maritime routes, imposition of war risk premiums, port
congestion and withdrawal or revision of supplier delivery
commitments, which disrupted the international supply chains
upon which the project depended. It was therefore submitted
that taking note of the aforesaid adverse circumstances the
Ministry of Finance Department of Expenditure, Procurement
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Policy Division also issued office Memorandum dated 29
April, 2026, whereby it clearly stipulated that contractual
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obligations failing due on or after 20 February, 2026 where
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the parties were not in default as on 27 February, 2026 were
directed to be extended for a period of not less than two
months and not more than four months without imposition of
any cost or penalty on the contractor. In view of the aforesaid
instructions issued by the Ministry of Finance, and the
unprecedented period of war, the petitioner was constrained
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to address a formal notice dated 30 April, 2026 to
respondent no.1 seeking invocation of the force majeure
clause under Article 11 of the BESPA which is filed within
period stipulated of 15 days under Article 11.4.1.
3.1 It was contended that the essential components of the
project which mainly includes battery modules, inverters and
battery management systems are sourced through
international procurement channels and in view of ongoing
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war, the schedule of delivery of such components has been
affected. The attention of this Court was invited to Article 3.1
of the BESPA which provides that the BESSD shall complete
the said activities again “unless such completion is affected by
any force majeure event”. The reference was also made of
Article 3.2.1 of the BESPA as well as clause 23.4 of the RFS
referring to Article 11.2 E of the BESPA, it was submitted that
the aforesaid clause clearly stipulates force majeure events as
any act of war whether declared or undeclared, invasion,
armed conflict or act of foreign enemy, blockade, embargo….
if any and only if it is declared / notified by the competent
State /Central Authority /Agency “as applicable”.
3.2 Reference was also made of Article 11.3.1 and 11.4.1 as
well as Article 11.5.1 and Article 11.5.2 with regard to the
specific obligation and consequences of force measure event
as agreed by the parties. Referring to Article 11.9, learned
advocate had submitted that as per the aforesaid clause no
party is to be held in breach of its obligation to the extent that
their performances was prevented, hindered or delayed by a
force measure event. Referring to aforesaid clause of the
agreement, learned advocate had submitted that the
petitioner has simultaneously approached the Gujarat Energy
Regulatory Commission (GERC) by way of preferring a
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petition on 15 October, 2026 which has been physically
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accepted and registered on 16 October, 2026. It was
submitted that since the member of the Bench of GERC hears
the matters on the scheduled date, at the most the case of the
nd
petitioner may be taken up for hearing on 22 October, 2026
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or lately by 27 October, 2026. However, in the interregnum
the timeline of financial closure has been agreed between the
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parties as 15 October, 2026 in such circumstances, the
petitioner had no other efficacious remedy but to approach
this Court under Article 226 of constitution of India.
3.3 On the aspect of revocation of performance bank
guarantee and termination of agreement is concerned,
learned advocate had pointed out that the interpretation of
the invocation of force majeure clause in the facts of the case
and in view of the recitals made in the agreement is subject
matter of consideration in view of pendency of the petition
before the GERC. However, before adjudication of such a
petition on merits, the respondent may be prohibited from
revocation of performance bank guarantee as well as
termination of the agreement by issuing appropriate
directions to GERC to expedite the hearing of their petition.
Alternatively, it was submitted that till the GERC hears the
matter on the first date till such period the petitioner may be
protected by directing the respondent no.1 to not to encash
the performance bank guarantee and to not to terminate the
agreement.
3.4 It was further submitted that the Ministry of New
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Renewable Energy has also issued a letter dated 6 July, 2026
directing the State as well as Union Territory Governments
and their Agencies to take into consideration the instructions
issued by the Ministry of Finance while dealing with the
request of extension of time for implementation of the
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st
projects. It was submitted that subsequently on 21 August,
2026 the Ministry of New and Renewable Energy has issued
further advisory acknowledging the fact that “war” is
stipulated as a force majeure event under most power
purchase agreements and reiterating that the State
Government and the Agencies under them are required to
take into consideration the instructions issued by Ministry of
Finance while considering the request for extension of time.
The attention of this Court was also invited to the instructions
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dated 5 October 2026 issued by the Ministry of Power (NRE
section), which was addressed to the Principal Secretaries of
Energy Departments of concerned Government including
State of Gujarat. The attention of this Court was further
invited to the fact that through such instructions the
concerned Ministry having received various representations
from the States, BESS Implementing Agencies (BIAs) and
developers seeking extension of timeline for achieving
financial closure in respect of BESS capacities implemented
through viability gap funding (VGF) schemes. The respective
States and their Nodal Agencies have been advised to allow a
one time extension of the timeline for achieving financial
closure for BESS projects which have not achieved financial
closure within the prescribed timeline, subject to condition
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that such projects achieve financial closure by 6 November,
2026. In view of the above instructions, learned advocate had
submitted that the aforesaid instructions being issued by the
concerned department who has floated the scheme
significantly taking note of the adverse circumstances on
account of ongoing war, the respondent no.1 being a Nodal
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Agency is bound by such instructions. Learned advocate had
therefore urged to give a fair opportunity to the petitioner to
put forward his case for extension of timeline of financial
closure before the respondent proceeds for revocation of
performance bank guarantee and termination of the
agreement by protecting the petitioner for the interregnum
period till the matter is taken up by GERC for hearing.
4. Mr. Deepak R. Dave, learned advocate appearing for
respondent no.1 being served by advance copy of the petition,
Mr. Pradip Bhate, learned counsel representing respondent
no.2 - Union, as well as Mr. Henil Shah, learned AGP
appearing for respondent no.3 - State authorities.
5. Per contra, Mr. Dave, learned advocate for the
respondent no.1 has objected to the aforesaid submissions by
contending that as per the BESPA agreement executed with
Gujarat Urja Vikas Nigam Ltd., (GUVNL) and M/s. Stock
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Energy World Force Private Ltd., petitioner herein on 18
March, 2026, the schedule date for compliance of financial
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closure as agreed between the parties was 17 September,
2026. He has further submitted that under Article-3 of the
BESPA agreement, the contractual obligations incurred by the
petitioner company in the first phase was to secure lease
agreements for at least 90% of the required land area at the
time of financial closure in the name of BESSD. The Article
term 3.1(i) clearly stipulates that failure to do so will result in
the termination of the BESPA agreement. He has further
submitted that as per Article 3.1(v), the petitioner company
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was further expected to make project financing arrangements
for which necessary certificate was to be undertaken before
GUVNL in this regard. As per Article 3.1(viii), the petitioner
company was required to submit documents to GUVNL at
least 14 days prior to the scheduled financial closure date and
in case of delay GUVNL was not to be held liable for delayed
verification of documents and subsequent delay in financial
closure. Referring to article 3.2.1, learned advocate had
submitted that in absence of compliance of aforesaid
contractual obligations by the petitioner, the respondent no.1
was constrained to issue notice in writing which was 30 days
prior to the scheduled date of financial closure. He has
therefore submitted that in the event of inaction on the part of
the BESS, the termination of agreement shall consequently
take effect upon expiry of 30th day of the said notice. He has
therefore submitted that the notice being duly served upon
the petitioner company in terms of the aforesaid clause on
18th September 2026, on the 30th day which is 17th October
2026, the consequences of termination of BESPA agreement
and encashment of performance bank guarantee ipso facto
follows.
5.1 He has further submitted that except for referring to the
instructions issued by the concerned ministry, there is nothing
on record to suggest that the petitioner company has taken
any effective steps to comply with the contractual obligations.
As regards submission made by learned Senior Advocate on
the aspect of invocation of force majeure clause is concerned,
learned advocate had submitted that the execution of lease
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agreement which is the first step to be complied with by the
petitioner company shall not be affected by the ongoing West
Asia war situation. As regards battery storage components are
concerned, the same are mostly purchased from the market of
countries like China. He has therefore submitted that having
failed to abide by the contractual obligations the
consequences as agreed has to follow in the facts of the case.
5.2 He has further objected to the conduct of the petitioner
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inasmuch as despite being served with the notice on 18
September 2026, period of 30 days almost being available, the
petitioner has chosen to approach this Court on the last date
of the scheduled date of financial closure so as to pressurize
the Courts to issue the orders without any adjudication of the
case on merits. He has further submitted that as submitted by
learned advocate for the petitioner, the appropriate remedy
was to approach directly before the Gujarat Electricity
Regulatory Commission instead of preferring the present
petition. The petition which is now preferred before GERC has
been filed today and by pressing this Court at the last
moments, the petitioner wants to secure interim protection
which may later on continue because of prolonged hearing in
the matters. He has therefore submitted that the Court may
take into consideration the conduct of the petitioner while
exercising discretion in favor of the petitioner.
5.3 In support of his submission, learned advocate has
placed reliance upon the judgment of Hon’ble Supreme Court
in the case of State of Orissa Vs. Madan Gopal Rungta (1951
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Law Suit SC 60 - 1952 AIR SC 12) . It was submitted that while
considering the scope of granting interim relief under Article
226 of Constitution of India, it has been held that when the
Court declined to decide on rights of the parties and expressly
held that they should be investigated more properly in a civil
suit, the Court should not issue directions in the nature of
temporary injunction under Article 226 of the Constitution of
India. A similar view has also been taken by the division
Bench of this Court in case of Union of India Vs. Manubhai

Parmar, reported in 1998 Law Suit (Gujarat) 638 . The Court
has categorically held that while disposing of the petition
under Article 226 of the Constitution of India finally, the Court
should refrain from giving interim relief, as interim relief can
be granted only in aid of and as ancillary to the main relief
which may be available to the party on final determination of
its right in a suit or proceeding. As regards invocation of
performance bank guarantee is concerned, learned advocate
has placed heavy reliance upon the decision of Hon'ble
Supreme Court in the case of Himadri Chemicals Industries
Limited Vs. Coal Tar Refining Company reported in 2007 8
SCC 110 as well as in the case of Standard Chartered Bank
Vs. Heavy Engineering Corporation Ltd., and another reported
in ( 2020) 13 SCC 574 . Referring to the aforesaid judgments,
learned advocate has submitted that it is settled legal position
that in commercial transactions, the beneficiary of a bank
guarantee or a letter of credit is entitled to realize the same in
terms of the agreement irrespective of the fact that any
dispute is pending in relation to the terms of the contract. He
has further submitted that it is only where the Court is
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satisfied that allowing encashment of an unconditional bank
guarantee shall result in irreparable harm or injustice to one
of the parties, the Court may interfere. Otherwise, the Court
should be slow in granting injunction against such payments.
Learned advocate has therefore urged this Court to dismiss
the petition as having availed the remedy before the GERC.
6. Heard learned advocates for respective parties and
considered their arguments in light of the averments made in
petition and documents placed on record. The short question
which arises for consideration is whether petitioner is entitled
to relief prayed for in the facts of the case. At the outset, it is
required to be noted that the petitioner during the course of
hearing of the matter has pointed out that an appropriate
petition has been preferred before the Gujarat Electricity
Regulatory Commission pending the present petition. In view
of the above, the only relief at this stage which can be
examined is whether the case of the petitioner can be
considered for issuance of prohibitory orders as against
encashment of performance bank guarantee and termination
of agreement till the GERC takes up the petition for hearing.
The amendment in this regard has been placed after the
matter was kept for orders and the order was to be
pronounced. The learned advocate for respondent has
objected to the grant of aforesaid relief as well predominantly
on the ground that there is no material worth which speaks of
any action being taken by the petitioner company to fulfill
even the first stage of contractual obligation.
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7. I have carefully considered the judgments relied upon by
learned advocate for the respondent in the case of Himadri
Chemicals Private Limited (supra) and Standard Chartered
Bank (supra) , which lays down the legal principles regarding
performance bank guarantees under very specific public law
and equitable circumstances. However, this court while
exercising its direction as a writ court is also expected to
evaluate the surrounding circumstances and the action of the
State or its instrumentalities through the lens of public law,
fair play and Article 14 of the Constitution of India. In the
facts of the case, the respondent is admittedly an
instrumentality of the State and is bound to act reasonably
and in fair manner while considering invoking of performance
Bank guarantee. It is equally required to be noted that the
petitioner has approached the commission wherein the aspect
of force majeure event shall be objectively and in detail
examined, however, before the same is established, the
petitioner have rushed to the jurisdiction of this court in
circumstances where the commission as per the calendar , the
allocated dates of hearing of the matters, the matter of the
nd
petitioner is likely to be heard on 22 October 2026 or latest
th
by 27 October 2026, which are the days fixed for hearing by
GERC. As against that the date of financial closure and
consequential revocation of the performance Bank guarantee
th
and termination of agreement indicated is 17 October 2026.
Having noted the aforesaid relevant dates, the petitioner has
though invoked the remedy available in law by preferring
petition before GERC, however, in absence of date of hearing
being allocated prior to the date of revocation of bank
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guarantee and termination of agreement, it cannot be said to
be efficacious statutory remedy available to the petitioner for
consideration of the interim prohibitory orders. It is true that
it is a settled legal position that in commercial transactions,
the beneficiary of bank guarantee stands on a different footing
irrespective of any dispute pending consideration in relation
to the terms of the contract. However, the Hon’ble Supreme
Court in the case of Standard Chartered Bank (supra) has also
recognised special equities as a distinct circumstance,
justifying judicial intervention. In exception, circumstances
like force majeure , event being pleaded, which is to be
examined by the commission , invocation of performance Bank
guarantee without providing a basic personal hearing or
considering their representations, would amount to denying
fair opportunity of hearing to the petitioner. The principle laid
down by the Hon’ble Supreme Court in the case of Himadri
chemicals (supra) , which governs the principles with regard to
grant of an injunction to restrain the engagement, has to be
appreciated in the facts of the case. In the case like present,
where the petitioner is merely seeking the minimum relief of a
fair opportunity of being heard, which according to court is in
alignment with the principles of nature justice and audi
alteram partem.
8. At this stage, it would be appropriate the recent view of
the Hon'ble Supreme Court in the case of M/S Jindal Steel
And Power Ltd. & Anr. Versus M/S Bansal Infra Projects
Pvt. Ltd. & Others (Neutral Citation : 2025 INSC 640), in
a similar set of facts though arising out of proceedings under
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Section 9 of the Arbitration and Conciliation Act, 1996, which
otherwise mandates minimum judicial interference by the
courts including the High Court, has upheld the order of the
High Court granting interim relief under Article 227 in cases
where the denial of interim relief can cause irreparable harm.
Thus, the Hon’ble Supreme Court has also, while
acknowledging the legal principles related to bank guarantees
as well as the minimal interference by the courts, the Court
observed that if the parties were permitted to invoke the bank
guarantee, the prayer made in the arbitration petition would
likely to become infructuous. The Court observed that the
interim order passed by the High Court restraining the
appellants from encashing the bank guarantee was in the
interest of both the parties and shall remain in force until the
disposal of the arbitration petition pending before the
commercial court, subject to respondent no. 1 extending the
validity of the bank guarantee. It would be appropriate to
reproduce the relevant observations made by the Hon’ble
Supreme Court as recorded hereunder:
“ 13. Admittedly, Respondent No. 1 initiated
arbitration proceedings to resolve the disputes with
the appellants. In the Section 9 arbitration petition
filed by them, the arguments on behalf of
Respondent No. 1 and Respondent No. 2 have
already been concluded, and the matter stands
partly heard, pending further arguments on behalf
of the appellants. Furthermore, pursuant to the
order dated 06.11.2024 passed by the High Court,
an Arbitral Tribunal was constituted to adjudicate
the disputes between the parties and a hearing was
held on 03.01.2025, during which, the parties
involved herein appeared and the Arbitral Tribunal
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directed them to file statement of claim, statement
of defence and counter claim, if any, and reply to
the same. Thus, in view of the ongoing arbitration
proceedings concerning the bank guarantee, it is
imperative to maintain the existing position
regarding the bank guarantee until the final
outcome of the Section 9 arbitration petition.
9. It is also to be pointed out that as directed by the High
st
Court, respondent no.1 renewed the bank guarantee till 31
th
December, 2024, which was subsequently, extended till 30
June, 2025 pursuant to the directions of this Court.
Furthermore, the learned counsel for Respondent No. 1 has
given an undertaking to extend the validity of the bank
guarantee till the disposal of the Section 9 arbitration
petition. As such, no prejudice whatsoever is occasioned to
the appellants, for the present. Therefore, we will not decide
the legal issues raised herein and the same are left open.”
10. Having noted the aforesaid guiding principles as to
peculiar circumstances, this Court is of the view that in
absence of any interim measures, the proceedings may be
defeated by mere passage of time and the remedy though
being availed may become illusory as it may lead to situation
where an act complained of will get completed before it is
adjudicated by competent forum. As a result, there is a
likelihood of multiplicity of proceedings and final adjudication
turning to be only an empty formality. Hence, in order to
prevent an irreversible situation and prevent a fait accompli ,
it would be in the interest of justice to balance equities by
issuing following directions :
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10.1 The respondent no.1-Gujarat Electricity Regulatory
Commission (GERC) is directed to peremptorily hear and
th
adjudicate Interim Application dated 15 October, 2026,
th
preferred by the petitioner, on 27 October, 2026, by
providing an opportunity of hearing to the parties on record
and to take a decision on such interim applications strictly in
accordance with law, preferably within a period of two weeks
from date of such hearing.
10.2 In the interregnum, the respondents are hereby directed
not to encash the performance bank guarantee furnished by
the petitioner in the context of the Power Purchase Agreement
th
dated 18 March, 2026, pending the adjudication of such
interim application.
10.3 The respondents are also directed to maintain status quo
th
with regard to the Power Purchase Agreement dated 18
March, 2026, pending adjudication of interim application by
th
the GERC till 27 October, 2026.
11. It is clarified that the aforesaid directions are issued by
way of interim measure solely considering the principle of
audi alteram partem and principle of fair trial so as to extend
both the parties a meaningful opportunity of hearing and the
subject matter of dispute is preserved. Thus, this Court has
not examined the merits of the matter and all the rights and
contentions of the respective parties are kept open. The
GERC shall examine the matter on its own merits strictly in
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accordance with law.
12. With these observations, the petition is allowed to the
aforesaid extent. Direct service is permitted .
Sd/-
(NISHA M. THAKORE, J.)
AMAR RATHOD.../sfs/21.10
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