In Brief
A construction contractor (Respondent) executed a work order valued at Rs. 43.99 crore with advance payment secured by a bank guarantee. The contractor's poor performance led the developer (Appellant) to claim a refund of Rs. 4.12 crore and threaten encashment of the guarantee. The contractor initiated arbitration and sought interim protection. The High Court granted a status quo order restraining encashment until arbitration concluded. The Supreme Court, while acknowledging that courts ordinarily should not interfere with bank guarantee invocation except for egregious fraud or irretrievable injustice, upheld the interim restraint because arbitration was actively proceeding, the guarantee had been extended, and no prejudice resulted to either party. The Court disposed the appeal without deciding the underlying legal issues, directing the arbitration to conclude within eight weeks.
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