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Delhi High Court
M/S Schindler India Private Limited vs Parnika Commercial And Estates Private … on 29 May, 2025
Author: Jasmeet Singh
Bench: Jasmeet Singh
$~88
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 29.05.2025
+ O.M.P. (I) (COMM.) 165/2025
M/S SCHINDLER INDIA PRIVATE LIMITED .....Petitioner
Through: Mr. Saurabh Kripal, Sr. Adv. with Mr.
Joel, Mr. Ujjval Gupta, Mr. Shivank
Aggarwal, Mr. Dhruv Chatrath, Advs.
versus
PARNIKA COMMERCIAL AND ESTATES PRIVATE LIMITED &
ANR. .....Respondents
Through: Mr. Rajshekhar Rao, Sr. Adv. with
Mr. Chitvan Singhal, Ms. Muskan
Gupta, Mr. Ajay Sabharwal, Mr.
Abeere Malik, Advs.
CORAM:
HON'BLE MR. JUSTICE JASMEET SINGH
: JASMEET SINGH, J (ORAL)
1. This is a petition filed under Section 9 of the Arbitration and
Conciliation Act, 1996, seeking ad interim injunction restraining the
respondent No. 1 from invoking two bank guarantees, i.e. the Advance
Bank Guarantee (“ABG”) and the Performance Bank Guarantee
(“PBG”), totaling to Rs.1,14,40,676/-, issued in favour of the
respondent.
2. Vide the Order dated 07.05.2025 passed by this Court, in paragraph
Nos. 13, 14, 15 and 16, while staying the bank guarantees, it was held
as under:
“13. As per the averments of the petitioner, the respondent
no.1 has not completed the office building or made it ready forDigitally Signed O.M.P. (I) (COMM.) 165/2025 Page 1 of 11
By:MAYANK
Signing Date:04.06.2025
16:26:50
the installation of lifts and escalators.
14. Further, the advance bank guarantee was furnished with
respect to the lifts and escalators to be supplied by the
petitioner. The advance amount has been utilized and the
petitioner has already supplied 03 lifts and 01 escalator. As
regards, the PBG is concerned, the respondent no. 1 has
attributed the delay of the completion of Work Order on the
petitioner, however, prima facie, I am of the view that a ready
site was essential for the completion of the work order and in
the absence of a complete site, the supply and installation of
the remaining lifts and escalators could not have been done.
15. The fact whether the petitioner was in violation of its
obligations under the Work Order dated 25.07.2023, will be
adjudicated once the respondent no. 1 files its reply.
16. I am satisfied that the petitioner has a prima facie case and
the balance of convenience lies in favor of the petitioner. The
invocation of bank guarantee(s), would be causing
irreparable loss and injury to the petitioner.”
3. Thereafter, a reply has been filed by the respondents and the matter has
been taken up for hearing.
4. Mr. Kripal, learned senior counsel for the petitioner, has drawn my
attention to the terms of the ABG and the PBG, which read as under:
Digitally Signed O.M.P. (I) (COMM.) 165/2025 Page 2 of 11
By:MAYANK
Signing Date:04.06.2025
16:26:50
Digitally Signed O.M.P. (I) (COMM.) 165/2025 Page 3 of 11
By:MAYANK
Signing Date:04.06.2025
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Digitally Signed O.M.P. (I) (COMM.) 165/2025 Page 4 of 11
By:MAYANK
Signing Date:04.06.2025
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5. As regards ABG is concerned, it is submitted that the ABG was issued
for supply of 20 lifts and 4 escalators. Even though the petitioner has
supplied 3 lifts and 1 escalator only, the balance lifts and escalators
could not be supplied as the infrastructure of the respondent, i.e. where
the lifts were to be installed, was not ready. Hence, no fault lies on
behalf of the petitioner.
6. As regards the PBG is concerned, it is submitted that the terms of the
PBG show that it was a conditional bank guarantee and could only be
invoked on the failure of the petitioner not performing its obligations.
However, in the present case, the invocation of the PBG is not in
accordance with the terms of the PBG. It is further submitted that the
petitioner has always been ready and willing to perform its obligations.
7. I have heard learned counsels for the parties and perused the material
available on record.
8. The invocation notice of the ABG reads as under:
Digitally Signed O.M.P. (I) (COMM.) 165/2025 Page 5 of 11
By:MAYANK
Signing Date:04.06.2025
16:26:50
Digitally Signed O.M.P. (I) (COMM.) 165/2025 Page 6 of 11
By:MAYANK
Signing Date:04.06.2025
16:26:50
9. The law on bank guarantees is well settled. The Hon’ble Supreme
Court in Ansal Engineering Projects Ltd. v. Tehri Hydro
Development Corporation Ltd. & Anr., (1996) 5 SCC 450, held as
under:
“4. It is settled law that bank guarantee is an independent and
distinct contract between the bank and the beneficiary and is
not qualified by the underlying transaction and the validity of
the primary contract between the person at whose instance the
bank guarantee was given and the beneficiary. Unless fraud or
special equity exists, is pleaded and prima facie established by
strong evidence as a triable issue, the beneficiary cannot be
restrained from encashing the bank guarantee even if dispute
between the beneficiary and the person at whose instance the
bank guarantee was given by the bank, had arisen in
performance of the contract or execution of the works
undertaken in furtherance thereof. The bank unconditionally
and irrevocably promised to pay, on demand, the amount of
liability undertaken in the guarantee without any demur or
dispute in terms of the bank guarantee. The object behind is to
inculcate respect for free flow of commerce and trade and
faith in the commercial banking transactions unhedged by
pending disputes between the beneficiary and the contractor.”
10. On perusal, it is clear that once the bank guarantee is unconditional and
irrevocable, the only requirement is of the beneficiaries of bank
guarantee to make a demand.
11. Reliance is placed by the petitioner on the decision of the Hon’ble
Digitally Signed O.M.P. (I) (COMM.) 165/2025 Page 7 of 11
By:MAYANK
Signing Date:04.06.2025
16:26:50
Supreme Court in Hindustan Construction Co. Ltd. v. State of Bihar
& Ors., (1999) 8 SCC 436. The relevant paragraph reads as under:
“14. This condition clearly refers to the original contract
between the HCCL and the defendants and postulates that if
the obligations, expressed in the contract, are not fulfilled by
HCCL giving to the defendants the right to claim recovery of
the whole or part of the “Advance Mobilisation Loan”, then
the Bank would pay the amount due under the Guarantee to
the Executive Engineer. By referring specifically to Clause 9,
the Bank has qualified its liability to pay the amount covered
by the Guarantee relating to “Advance Mobilisation Loan” to
the Executive Engineer only if the obligations under the
contract were not fulfilled by HCCL or the HCCL has
misappropriated any portion of the “Advance Mobilisation
Loan”. It is in these circumstances that the aforesaid clause
would operate and the whole of the amount covered by the
“Mobilisation Advance” would become payable on demand.
The Bank Guarantee thus could be invoked only in the
circumstances referred to in Clause 9 whereunder the amount
would become payable only if the obligations are not fulfilled
or there is misappropriation. That being so, the Bank
Guarantee could not be said to be unconditional or
unequivocal in terms so that the defendants could be said to
have had an unfettered right to invoke that Guarantee and
demand immediate payment thereof from the Bank. This
aspect of the matter was wholly ignored by the High Court andDigitally Signed O.M.P. (I) (COMM.) 165/2025 Page 8 of 11
By:MAYANK
Signing Date:04.06.2025
16:26:50
it unnecessarily interfered with the order of injunction,
granted by the Single Judge, by which the defendants were
restrained from invoking the Bank Guarantee.”
12. On perusal, I am of the view that the decision in Hindustan
Construction Co. Ltd. (supra) is of no assistance to the petitioner as the
bank guarantee itself was conditional to the terms of the Contract in the
said case.
13. The disputes – whether the infrastructure of the respondent was ready or
not and whether the non-supply of the balance lifts and escalators by
the petitioner was due to the fault of the respondent or not – are issues
which the Arbitral Tribunal will decide as and when appointed.
14. As of today, the ABG is unconditional and the invocation is in terms of
the ABG and hence, the same must be encashed.
15. The next question that arises is with regard to the PBG.
16. It is stated that the PBG could only be invoked if there was a failure on
part of the petitioner to perform its obligations.
17. The invocation notice of the PBG reads as under:
Digitally Signed O.M.P. (I) (COMM.) 165/2025 Page 9 of 11
By:MAYANK
Signing Date:04.06.2025
16:26:50
Digitally Signed O.M.P. (I) (COMM.) 165/2025 Page 10 of 11
By:MAYANK
Signing Date:04.06.2025
16:26:50
18. A perusal of the invocation of the PBG shows that the respondent has
categorically stated that there has been a loss/ damage caused on behalf
of the petitioner due to non performance of its contractual obligations.
19. In issues relating to bank guarantees, it is not for the Courts to see
whether there was a failure of the petitioner in performance of its
obligations or not. The failure has to meet the opinion of the respondent
alone. Mere averment in the invocation that the petitioner has caused
loss/damage due to breach is good enough. The determination of the
reasons of the respondent come to the opinion that the petitioner has
committed breach of its obligations, is an issue which the arbitrator
shall decide as and when appointed.
20. For the said reasons, there is no merit in the petition and the same is
dismissed and the interim order stands vacated.
21. The petition is disposed of.
JASMEET SINGH, J
MAY 29, 2025/sp
(Corrected and released on 04.06.2025)
Click here to check corrigendum, if any
Digitally Signed O.M.P. (I) (COMM.) 165/2025 Page 11 of 11
By:MAYANK
Signing Date:04.06.2025
16:26:50
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