Delhi HC Refuses To Block ₹4.32 Crore Mobilisation-Advance Guarantees, Finding Civil-Works Invocation Condition Prima Facie Met

The petitioner sought interim protection under Section 9 of the Arbitration and Conciliation Act, 1996, against invocation of two bank guarantees totalling ₹4.32 crore.

The guarantees secured mobilisation advances under a Civil Works Contract (CWC); the parties had also entered a separate Framework Agreement (FA) concerning supply of cement and steel.

An interim arrangement was recorded on 22 July 2026, and the petition was ultimately dismissed.

Under Section 9 of the Arbitration and Conciliation Act, 1996, interim protection is discretionary.

In Hindustan Construction Co. Ltd. v. State of Bihar, (1999) 8 SCC 436, a bank guarantee whose payment obligation is qualified by specified conditions cannot be treated as wholly unconditional; the court may examine whether those conditions have been met [paras. 2, 14, 17].

Conversely, National Highways Authority of India v. Ganga Enterprises, (2003) 7 SCC 410, affirms that a bank guarantee is a separate contract, and disputes under the underlying contract ordinarily do not determine the bank’s obligation [para. 17].

The Court also noted that Section 9 relief may be considered on recognised grounds such as egregious fraud, irretrievable injury or special equities, but the petitioner’s case was not advanced on those grounds [para. 16].

It further referred to Order XI Rule 1(5) of the Commercial Courts Act, 2015, requiring disclosure of material documents [para. 19].

The Court rejected the claim that invocation was connected to the FA: the guarantees were furnished under the CWC, and the notices concerning the FA demanded payment and threatened MSME proceedings, not invocation of these guarantees [paras. 8–9].

It treated the guarantees as partly conditional, but found that the respondent’s notices and correspondence prima facie raised serious allegations of non-fulfilment of CWC obligations, including notices of default and the withdrawal of works, later kept in abeyance [paras. 10–12].

The Court did not determine the merits of those allegations; it held that they were sufficient, at this stage, to satisfy the relevant guarantee condition [paras. 12–14].

The petitioner’s arguments about the CWC’s separate recovery mechanisms were left for arbitration, and the Court also noted that the petitioner had omitted material correspondence relevant to its request for discretionary relief [paras. 15, 18–19].

Finding no basis to restrain invocation under Section 9, it dismissed the petition without costs and vacated any interim arrangement.