Supreme Court Clarifies Jurisdiction Over Bank Guarantees in Section 9 Arbitration Petitions
The Supreme Court upheld the High Court's interim order restraining encashment of a bank guarantee during pending Section 9 arbitration proceedings under the Arbitration Act. The Court emphasized that judicial interference with bank guarantees is permissible only to prevent irretrievable injustice, while leaving open questions regarding maintainability of Article 227 petitions against interlocutory orders in arbitration matters. The ruling preserves the arbitral process by directing the Commercial Court to decide the Section 9 petition within eight weeks, subject to continued extension of the bank guarantee validity. The judgment balances contractual sanctity of bank guarantees with equitable considerations in ongoing arbitration.
Facts Of The Case:
Jindal Steel & Power Ltd. awarded ...