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M/S Sanjeevni Infra Projects Limited vs. Union of India & Anr.

Original Miscellaneous Petition (Interim, Commercial) · 2026:DHC:8893Decided 7 Oct 2026New Delhi Bench
O.M.P.(I) (COMM.) 469/2026CNR: DLHC010483202026
Justice Manoj Jain

Background

Sanjeevni Infra was contracted to construct a Regional Centre Building for the Union of India and had furnished a Performance Bank Guarantee through HDFC Bank. After the Union terminated the contract, allegedly in bad faith, it invoked the guarantee, and Sanjeevni asked the Court to stop the bank from paying out on it.

Decision Breakdown

The Court reiterated that a bank guarantee is a contract independent of the underlying commercial dispute, and that courts will block an unconditional guarantee's encashment only in narrow situations: proven fraud, special equities, or irretrievable injustice. Since no fraud was even alleged and the petitioner could still sue for recovery later if it ultimately won in arbitration, none of these exceptions applied, and the petition was dismissed.

Lesson Learnt

It is very difficult to stop a bank from honouring an unconditional bank guarantee through a court injunction: ordinary allegations of contractual unfairness or potential financial loss are not enough; only fraud or truly irretrievable harm will do.

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