Gateway Of India Jetty Construction Dispute: Bombay HC Refuses To Stop ₹31.86 Cr Bank Guarantee Encashment

The Bombay High Court has recently declined to restrain the invocation and encashment of bank guarantees worth Rs 31.86 crore in a dispute between RKEC Projects Limited and the Maharashtra Maritime Board over the construction of a passenger jetty and terminal near the Gateway of India in Mumbai.

The ruling came on a petition under Section 9 of the Arbitration and Conciliation Act, 1996, which allows courts to grant temporary protection until disputes are decided through arbitration, before Justice Sandeep V. Marne.

At the heart of the decision was a settled principle. Bank guarantees stand on their own footing, and courts do not ordinarily interfere.

“It is only in exceptional and rare cases, where there is an element of egregious fraud or where the case involves irretrievable injury or irretrievable injustice or where there are special equities, that the court would be justified in making interim order restraining encashment of bank guarantee,” the Court observed.

The dispute traces back to an EPC contract dated October 11, 2024, under which RKEC was tasked with building passenger jetty and terminal facilities at Radio Club, near the Gateway of India. The project, intended to ease connectivity to Alibaug and Raigad, carried a completion timeline up to April 11, 2027.

As part of the contract, RKEC furnished performance bank guarantees of Rs 11.33 crore and mobilisation advance guarantees of Rs 20.53 crore. It had also received around Rs 19.35 crore as mobilisation advance.

Execution, however, did not proceed smoothly. RKEC attributed delays to the Maharashtra Maritime Board, pointing to late approvals of drawings and deck levels. It claimed that 107 days were lost due to the “No Cold Moves” restriction between June 1 and September 15, 2025, and another 189 days during the process of finalising deck elevations and general arrangement drawings. On that basis, it sought a 308-day extension, pushing the completion date to February 15, 2028.

The Board took a different view. It alleged that contractual milestones were not met, issued a show cause notice on December 5, 2025, and imposed liquidated damages at Rs 8.70 lakh per day. A notice indicating its intention to terminate the contract followed on March 24, 2026.

In the meantime, RKEC had invoked conciliation on February 20, 2026. That process, however, did not yield any positive outcome.

With termination and encashment looming, RKEC moved the High Court. By the time the matter was heard, it confined its request to one relief, preventing the invocation of the bank guarantees.

Senior Advocate Umesh Shetty, appearing for RKEC, argued that the delays were not attributable to the contractor and that encashment would cause irretrievable injury.

For the Board, Senior Advocate Dr. Birendra Saraf opposed the plea. He submitted that the contract was determinable in nature and therefore not specifically enforceable under Section 14 of the Specific Relief Act. He also relied on Section 20A, arguing that since the project qualifies as infrastructure, courts are barred from granting injunctions. The independent nature of bank guarantees, he said, further weighed against any restraint.

The Court noted these statutory constraints. A port project falls within the definition of infrastructure, attracting the bar under Section 20A. At the same time, a determinable contract cannot be specifically enforced under Section 14.

There was also the contract itself to consider. Clause 23.6 permits encashment of bank guarantees upon termination, something the Court noted while examining the Board's entitlement.

What ultimately proved decisive was the absence of necessary pleadings.

“The Petitioner has not even pleaded the case of egregious fraud, irretrievable injury or special equities. Since there are no pleadings, there is no question of Petitioner being able to establish such exceptional circumstances,” the Court held.

On an irretrievable injury, the Court was unconvinced. Losses, it said, could be addressed in arbitration. Encashment of the guarantees would not render that remedy meaningless.

With no exceptional case made out, the Court declined to grant interim relief restraining encashment of the Rs 31.86 crore bank guarantees.

The petition was disposed of, leaving RKEC at liberty to pursue its claims before the arbitral tribunal.

For Petitioner (RKEC Projects Limited): Advocates Umesh Shetty, Gopalkrishna Nayak, Sharila D'Souza, Pooja Gondhali.

For Respondent (Maharashtra Maritime Board): Senior Advocates Birendra Saraf, Advocates Jay Sanklecha, Ishwar Nankani, Huzefa Khokhawala, Kartik Gupta.