Bengaluru: Court dismisses L&T's plea to restrain K-RIDE from encashing bank guarantees

Bengaluru: A commercial court in Bengaluru has dismissed L&T's application in its contractual dispute with K-RIDE, clearing the way for the agency to invoke bank guarantees after January 24. 

The company filed a Commercial Arbitration Application before the 87th Additional City Civil and Sessions Judge (Commercial Court), seeking to restrain K-RIDE from invocation of mobilisation and performance bank guarantees over its contract for Corridor-4 (Kanaka Line) of the Bengaluru Suburban Rail Project (BSRP). 

The dispute is related to a contract awarded to L&T for the design and construction of an 8.96-km elevated corridor and a 37.92-km at-grade corridor on the Heelalige-Rajanukunte line. 

The company was issued the Letter of Acceptance (LoA) on December 30, 2023. 

L&T alleged that K-RIDE induced it to bid by making false and fraudulent representations about the availability of encumbrance-free land and work fronts. According to the company, even months after the LoA, substantial portions of the required land were unavailable, utilities had not been shifted, and the project scope was repeatedly altered without formal change-of-scope orders. 

L&T claimed that these factors made performance impossible and eventually led it to terminate the contract unilaterally in July 2025. 

On these grounds, the company sought protection against the invocation of a performance bank guarantee of Rs 31.21 crore and a mobilisation advance bank guarantee of Rs 28.41 crore. 

K-RIDE denied the allegations of fraud and contended that land was to be handed over progressively as clarified during the pre-bid stage. It argued that delays, if any, entitled the contractor only to extensions of time, not suspension of obligations. It also alleged poor mobilisation and slow progress by L&T despite availability of work fronts. 

Judge CD Karoshi noted that L&T had itself terminated the contract and that the bank guarantees in question were unconditional and irrevocable. 

The court observed that an arbitral tribunal had already been constituted and proceedings had commenced. In such circumstances, Section 9(3) of the Arbitration and Conciliation Act restricts it from granting interim measures when efficacious relief can be sought under Section 17 before the tribunal. 

While allowing K-RIDE’s application to vacate the earlier ex parte interim injunction granted on July 30, 2025, the court ruled that the interim restraint on invocation of bank guarantees will continue only until January 24.