High Court of DelhiO.M.P.(I) (COMM.)/303/2025

Ge Power India Limited v. Jaiprakash Power Ventures Limited & ANR.

2025-08-21Hon'Ble Mr. Justice Jasmeet Singh10 pages

$~19-20 *

IN THE HIGH COURT OF DELHI AT NEW DELHI

+ O.M.P.(I) (COMM.) 303/2025 & I.A. 18579/2025, I.A. 18580/2025 I.A. 19952/2025 GE POWER INDIA LIMITED .....Petitioner Through:

Mr. Sandeep Sethi, Sr. Adv. with Mr.

Ajay Bhargava, Ms. Phalguni Nigam, Mr.

Triyambak, Ms. Vaishnavi, Mr. Abhishek P., Advs.

versus JAIPRAKASH POWER VENTURES LIMITED & ANR.

.....Respondent Through:

Mr. Anupam Lal Das, Sr Adv, Mr.

Pawan R Upadhyay, Mr. Varun Sharma, Mr.

Rishab Khare, Mr. Anmol Wadhwa, Mr. Piyush Gupta , Ms. Aditi Anup, Advocates + O.M.P.(I) (COMM.) 304/2025 & I.A. 18637/2025, I.A. 18638/2025, I.A. 19951/2025 GE POWER INDIA LIMITED .....Petitioner Through:

Mr. Sandeep Sethi, Sr. Adv. with Mr.

Ajay Bhargava, Ms. Phalguni Nigam, Mr.

Triyambak, Ms. Vaishnavi, Mr. Abhishek P., Advs.

versus JAIPRAKASH POWER VENTURES LIMITED & ANR.

.....Respondent Through:

Mr. Anupam Lal Das, Sr Adv, Mr.

Pawan R Upadhyay, Mr. Varun Sharma, Mr.

Rishab Khare, Mr. Anmol Wadhwa, Mr. Piyush Gupta , Ms. Aditi Anup, Advocates

CORAM:

HON'BLE MR. JUSTICE JASMEET SINGH

O R D E R

% 21.08.2025 The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

The present petitions are filed under Section 9 of the Arbitration and Conciliation Act, 1996, ("the Act") seeking an injunction restraining the respondent No. 1 from invoking or encashing the Advance Bank Guarantees furnished by the petitioner.

These two connected petitions concern six bank guarantees issued in relation to two distinct projects, namely the Nigrie and Bina projects located in Madhya Pradesh.

Out of the total six Bank Guarantees, the petitioner furnished four Advance Bank Guarantees and two Performance Bank Guarantees. The Advance Bank Guarantees comprise two guarantees of INR 24.525 crores each, and two guarantees of INR 14.22 crores each, particulars whereof are as follows:

(i) Advance Bank Guarantee No. 796BGG2400702 dated 26.03.2024 issued by the Deutsche Bank AG for a sum of Rs. 24,52,50,000/- having a validity till 05.03.2026. (ii) Advance Bank Guarantee No. 796BGG2401144 dated 15.04.2024 issued by the Deutsche Bank AG for a sum of Rs. 24,52,50,000/- having validity till 05.03.2027. (iii) Advance Bank Guarantee No. 796BGG2400700 dated 26.03.2024 issued by the Deutsche Bank AG for a sum of Rs. 14,22,00,000 having validity till 05.12.2026. (iv) Bank Guarantee No. 796BGG2401145 dated 15.04.2024 issued by the Deutsche Bank AG for a sum of Rs. 14,22,00,000/- having validity till 05.12.2026. 4.

Mr. Sethi, learned senior counsel for the petitioner, on instructions, The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

states that the amount equivalent to 4 bank guarantees i.e., totalling to Rs. 77,49,00,000/- shall be deposited with the respondent No. 1 within 7 days from today in the form of the Demand Draft ("DD"). 5.

On receipt of the DD, the unencashed original Advance Bank Guarantees mentioned above shall be returned to the petitioner/its nominee.

The issue now revolves around the Performance Bank Guarantee No. 796BGG2400703 dated 26.03.2024 issued by the Deutsche Bank AG for a sum of INR 24,52,50,000 having validity till 05.09.2028 and Performance Bank Guarantee No. 796BGG2400701 dated 26.03.2024 issued by the Deutsche Bank AG for a sum of INR 14,22,00,000 having validity till 05.06.2028.

Mr. Sethi, learned senior counsel for the petitioner, submits that the correspondence exchanged between the parties clearly demonstrates that the very purpose of the Contract, namely the erection and commission of Wet Limestone Based Flue Gas Desulfurization Package for the respondent No. 1's facility, became redundant owing to a change in Government policy. The petitioner has placed on record several communications evidencing that the respondent No. 1 itself desired foreclosure and termination of the contract in view of the said policy change. In such circumstances, once the contract stood foreclosed, the petitioner cannot be held responsible for any alleged non-performance.

Mr. Das, learned senior counsel for the respondent No. 1, contends that the agreement executed between the parties was a time-bound contract divided into multiple phases, with specific obligations to be completed The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

by the petitioner within stipulated timelines from 30.03.2024 until its foreclosure. According to him, the petitioner failed to adhere to these milestones and did not perform its obligations in accordance with the agreed schedule.

In these circumstances, it is argued that the respondent No. 1 are within their contractual rights to invoke and encash the Performance Bank Guarantees furnished by the petitioner. Reliance is placed on the judgment of the Hon'ble Supreme Court in Ansal Engineering Projects Ltd. v. Tehri Hydro Development Corporation, (1996) 5 SCC 450, to submit that non-performance of contractual obligations disentitles the petitioner to seek an injunction against encashment of bank guarantees.

10. I have heard learned senior counsels for the parties.

11. The relevant paragraphs of Performance Bank Guarantee No.

796BGG2400703 and Performance Bank Guarantee No.

796BGG2400701 dated 26.03.2024 are reproduced below: The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

12. A perusal of the Performance Bank Guarantees reveals that they were furnished as security to ensure the due and faithful performance of the contract and all obligations undertaken by the petitioner under, or in relation to, the contract. Clause 3 of the guarantees further stipulates that the invocation was to be made strictly in the form annexed as Exhibit 1 to the guarantees. It is thus evident that the guarantees were meant to serve a specific and limited purpose, namely, to secure the due performance of the contractual obligations.

13. In the present case, however, owing to the change in Government policy, the very performance of the contract was no more required. The respondent No. 1, by its letter dated 19.11.2024, expressly foreclosed the contract. Whether or not the petitioner failed to adhere to the phasewise completion schedule is a matter that falls squarely within the jurisdiction of the arbitral tribunal, to be determined on merits.

14. For the purposes of the present proceedings, it suffices to note that the performance of the Contract stood rendered impossible due to reasons not attributable to the petitioner, and the foreclosure was at the instance of the respondent No. 1. In such circumstances, invocation of the Performance Bank Guarantees would prima facie amount to unjust enrichment, particularly when the petitioner cannot be faulted for nonperformance. Moreover, the invocation as attempted does not conform to the requirements of Clause 3 of the Performance Bank Guarantees.

15. For the aforesaid reasons, the petitions are allowed and the respondent No. 1 is restrained from encashing the performance bank guarantees No.

796BGG2400703 dated 26.03.2024 and Performance Bank Guarantee No. 796BGG2400701 dated 26.03.2024. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

16. The parties are already in the process of initiating arbitral proceedings in terms of the arbitration clause contained in Clause 24 of the Contract Agreement.

17. It is clarified that the respondent No. 1 shall be at liberty to move an application before the learned arbitral tribunal seeking vacation or modification of this order. Such an application, if made, shall be considered by the Arbitral Tribunal as and when constituted, and the tribunal shall remain uninfluenced by the prima facie observations made in this order, which are confined only to the limited purpose of adjudicating the present petitions under Section 9 of the Act.

18. The petitions are disposed of in the aforesaid terms. JASMEET SINGH, J AUGUST 21, 2025 / (MS) The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.