The Delhi High Court has granted an ad interim relief to Shapoorji Pallonji And Company Private Limited in a petition under Section 9 of the Arbitration and Conciliation Act, 1996, staying the operation of letters issued by the Union of India through CPWD seeking extension and revalidation of bank guarantees despite an arbitral award directing their return.
The petition arose from an arbitral award dated March 22, 2026, directing the Union of India, represented through the Executive Engineer and Senior Manager, Redevelopment Project Division-II, CPWD, to return a Performance Bank Guarantee of ₹7.50 crore and four Mobilisation Advance Bank Guarantees aggregating to ₹6.87 crore to Shapoorji Pallonji And Company Private Limited.
According to the petitioner, despite the award, the Union of India issued letters dated March 24, April 8 and April 17, 2026, calling upon the company to extend and revalidate the bank guarantees, while also intimating IndusInd Bank that failure to do so would result in encashment.
Contending that a mere intention to challenge the arbitral award under Section 34 of the Arbitration and Conciliation Act does not operate as a stay of the award, the company approached the Delhi High Court seeking protection against coercive action and encashment of bank guarantees collectively valued at over ₹35 crore.
After hearing the parties, on May 15, 2026 , the Delhi High Court issued notice to the Union of India and granted ad interim stay on the impugned communications, thereby restraining the authorities from acting upon the letters seeking extension and revalidation of the bank guarantees.
Appearances
The Petitioner, Shapoorji Pallonji and Company Pvt. Ltd., was represented by Mr. Saurav Agrawal, Advocate, along with Ms. Sonali Jaitley Bakhshi, Mr. Jaiyesh Bakhshi, Mr. Ravi Tyagi, Mr. Mayank Mishra, Mr. Gaurav Mishra, Ms. Manmilan Sidhu, Mr. Ankit Tyagi, Ms. Neetu Devrani, Mr. Gyanendra Singh and Mr. Jaskirat Brar of Jaitley & Bakhshi.
The Respondent, Union of India, was represented by Mr. Abhishek Gupta, Advocate.