Supreme Court Refuses To Direct IDBI Bank To Honour ₹8.7 Crore Bank Guarantee To CTUIL

The Supreme Court on Friday refused to interfere with the Delhi High Court's division bench order declining to direct IDBI Bank Limited to release ₹8.7 crore to the Central Transmission Utility of India Limited (CTUIL) under a bank guarantee.

The Delhi High Court on July 1, 2026 dismissed an appeal filed by Central Transmission Utility of India Limited (CTUIL) challenging a Single Judge's order dated March 19, 2026, which declined to direct IDBI Bank Limited to release ₹8.7 crore under a bank guarantee.

A Division Bench of Justices Dipankar Datta and Sheel Nagu while dismissing CTUIL's petition, said that the instant case is a private contractual arrangement and the appropriate remedy is to file a suit before the competent court.

“Question is whether bank guarantee this is a statutory contract or a private contract? If it is a private contract, there is no public law element involved in it. You will have to file a suit. That is the decision of our court.”, the Court said.

Appearing for CTUIL, counsel argued that IDBI Bank's status as a public-sector entity was relevant and sought to rely on the decision in Kerala State Electricity Board. The Bench responded that the bank's status was not in dispute, clarifying that the question was whether the bank guarantee itself constituted a statutory or private contract.

The Court however interjected and said, “Nobody is disputing that. Nobody is disputing IDBI's entity or a status.”

Counsel sought to press the matter further, submitting that the case was not one where the dispute could simply be relegated to a civil suit. However, the Bench maintained that the nature of the contract and the absence of a public law element were decisive to the issue of writ jurisdiction.

The Supreme Court however refused to interfere with the Delhi High Court's order dismissing CTUIL's appeal against the Single Judge's March 19, 2026 order declining to direct IDBI Bank to release ₹8.7 crore under the bank guarantee.

CTUIL and Lanco Vidarbha Thermal Power Limited had entered into a Transmission Agreement on March 31, 2016, under which 22 bank guarantees aggregating ₹66 crore were furnished in CTUIL's favour. CTUIL invoked 11 guarantees worth approximately ₹32 crore, including the ₹8.7 crore guarantee through a letter dated December 17, 2020.

IDBI Bank refused to release the amount, contending that the guarantee had not been invoked within the stipulated period and that no extension had been sought. CTUIL subsequently approached the High Court, arguing that the invocation had been upheld by the NCLT and NCLAT and that the bank was bound to honour the guarantee.

A Division Bench of the High Court held that disputes concerning the interpretation of a bank guarantee, the validity of its invocation and entitlement to payment involve disputed questions of fact requiring detailed examination of evidence. It ruled that the dispute was essentially contractual and could be pursued through a civil suit, finding no ground to interfere with the Single Judge's order.