Uttarakhand High Court
M/S Manish Taxi Service & Another vs The Airports Authority Of India on 29 July, 2026
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IN THE HIGH COURT OF UTTARAKHAND
AT NAINITAL
HON'BLE THE CHIEF JUSTICE SRI MANOJ KUMAR GUPTA
AND
HON'BLE SRI JUSTICE SUBHASH UPADHYAY
APPEAL FROM ORDER NO. 229 OF 2026
29TH JULY, 2026
M/s Manish Taxi Service & another ...... Appellants
Versus
The Airports Authority of India ...... Respondent
Counsel for the appellants : Mr. Jitendra Chaudhary, learned
counsel
Counsel for the respondent : Mr. Digvijay Rai, Ms. Abhilasha
Tomar and Mr. Y.S. Chaudhary,
learned counsel
The Court made the following:
JUDGMENT:
(per Sri Manoj Kumar Gupta, C.J.)
1) The present appeal is directed against the order
of Commercial Court dated 23.05.2026, whereby the
application filed by the appellants under Section 9 of the
Arbitration and Conciliation Act, 1996 has been rejected.
In the said application, the appellants had prayed for an
order restraining the Airports Authority of India (AAI),
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Dehradun from encashing the bank guarantees furnished
by the appellants by way of security for execution of the
contract between the appellants and AAI. During the
pendency of the proceedings before the Commercial
Court, the appellants by means of another application
(paper No. 17C), sought an ad-interim injunction against
AAI for restoring back the status of bank guarantee as on
02.05.2025 and, vide yet another application (paper No.
22C), the appellants prayed for staying the effect of a
letter dated 15.05.2025, by which AAI intimated the
appellants that it had adjusted the outstanding dues
against the Security Deposit available with it as bank
guarantee and after adjustment, the Security Deposit has
got reduced. The appellants were accordingly required to
recoup the same within fifteen days of issuance of the
notice failing which the license would be terminated.
2) The facts of the case have been noted by the
Commercial Court in paragraph Nos. 2, 3 and 4 of its
order and, the same are as follows :
2(i). Brief facts of the case are that, earlier the present
petition was filed by the petitioners before this Court on dated
02.05.2025 for restraining the respondent from encashing the
Bank Guarantees as mentioned in the relief clause of the
petition. On dated 28.05.2025, after hearing both the sides,
the Application under Section 9 of the Act, was rejected by2
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this Court holding that the petition was premature and not
maintainable without exhausting the remedy of mediation
provided under the Agreement between the parties. The
petitioners challenged the aforesaid order of this Court by
filing A.O. No. 168 of 2025.
(ii). On dated 09.06.2025, Hon’ble High Court of
Uttarakhand held that for the reason that the bank guarantees
have already been invoked, the remedy, provided under
Section 9 of the Act, cannot be rendered nugatory, allowed
the Appeal and remitted the mater back to this Court for
deciding the same on merits.
(iii). In compliance of the order passed by the Hon’ble
High Court of Uttarakhand in the aforesaid appeal, the present
matter has been heard on merit.
3(i). The contentions of the petitioner are that on
25.01.2023, the respondent issued an e-tender notice inviting
request for proposal for Concession to Design, Fit out, finance,
develop, market, operate, maintain and manage the Food and
Beverage outlets at Dehradun Airport for a period of seven
years. A total area 429.61 square meters was earmarked for
the said purpose by the respondent. The petitioner firm was
declared L-1, as it quoted highest price at the rate of Rs.51.70
per passenger.
(ii). On 24.05.2023, a letter of intent (LOI) was issued
by the respondent in favour of the petitioner firm. The
petitioners deposited the Bank Guarantee amount in three
parts, (a) BG of Rs.1 crore issued by HDFC Bank Dehradun
dated 03.07.2023 (b) BG of Rs. 6 crores issued by HDFC Bank
Dehradun dated 09.10.2023 and (c) BG of Rs.46.68 lakhs
issued by HDFC Bank Dehradun dated 07.11.2023.
(iii). Thereafter, on 07.11.2023, Concession Agreement
was executed between the parties. It is stated by the
petitioner that the respondent was obliged to hand-over the
entire area measuring 429.61 square meters and only then,
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liability to make payment would accrue, but the respondent
delivered possession in phases starting from 29.11.2023 till
September 2024. The respondent issued Show Cause Notices
on various dates, however, it is contended by the petitioner
that the demands made by the respondent were not genuine
and the petitioner disputed the demands and did not make the
payment to the respondent.
(iv). During pendency of the present petition, on dated
09.05.2025 the respondents encashed the Bank Guarantees
and adjusted a sum of Rs.4,78,93,927/- (Rs.3,89,05,633
towards the principal amount and Rs.89,88,294/- as penal
interest) against the outstanding dues and therefore, the
security deposit (BG) got reduced to Rs.2,67,74,093/-.
(v). Thereafter, the respondent issued notice to the
petitioner dated 15.05.2025 intimating the petitioners about
the adjustment made towards the arrears of license fees from
the security deposit and required the petitioners to recoup the
security deposit in terms of the license agreement within
fifteen days of issue of the notice, i.e. 30.05.2025, failing
which necessary action to terminate the license would be
initiated without any further reference to the petitioner.
(vi). In the above mentioned changed circumstances,
the petitioner filed an application paper no. 17C seeking ad-
interim injunction, against the respondent to restore back the
status of bank guarantee as on 02.05.2025 and vide an
application paper no. 22C the petitioner has prayed to stay
the effect of the above mentioned letter dated 15.05.2025.
4(i). The respondent contended that the gestation
period was 60 days from Access Date of each location (site)
and not 60 days from the date of issuance of LOI. The
respondent raised bills on pro-rata basis from access date.
The petitioners defaulted in payment of the bills. The present
petition has become infructuous as the bank guarantees have
already been invoked and Writ Petition (M/B) Nos. 381 and
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383 of 2025 which were filed by the petitioner for seeking
stay order against the termination of the contract and issuing
fresh tenders, rejected by the Hon’ble High Court and the
petitioner has not moved any amendment application, in the
present petition for any additional prayer before this Court,
despite the liberty granted to the petitioner by the Hon’ble
High Court vide order dated 20.03.2026.
(ii). The operation of F&B locations at the Airport is
being seriously impacted. The respondent issued a notice
inviting tender for short-term license for operating a snack bar
over a small area measuring 15 square meters on the first
floor at Dehradun Airport on 1st May, 2025 subject to
termination of the Master Concessionaire in favour of the
petitioners. In the changed circumstances, the relief sought
by the petitioner cannot be granted in the present petition
under Section 9 of the Act. Ld. Counsel for the respondent
has placed reliance upon the case law M/s Inter Ads Exhibition
Pvt. Ltd. Vs Busworld Internation Cooperatieve Vennootschap
Met Beperkte Anassprakelijkheid, O.M.P(I) (Comm.) 273/2019
and submitted that the said contract has already terminated
by the respondent. The dispute is capable of arbitration, the
disputes can only be adjudicated in the arbitration
proceedings.”
3) The Commercial Court has held that an
injunction order for restraining a party from encashing
bank guarantee can only be passed in a case where any
fraud is established and, since in the present matter,
there is no such case, therefore, no such injunction can be
granted. For arriving at the said conclusion, the
Commercial Court has placed reliance on the judgment of
the Supreme Court in case of U.P. State Sugar
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Corporation Vs M/s Sumac International Ltd., 1997 (1)
SCC 568. The relevant observations wherein are as
follows :
“….The law relating to invocation of such bank
guarantees is by now well settled. When in the course
of commercial dealings an unconditional bank
guarantee is given or accepted, the beneficiary is
entitled to realize such a bank guarantee in terms
thereof irrespective of any pending disputes. The bank
giving such a guarantee is bound to honour it as per its
terms irrespective of any dispute raised by its
customer. The very purpose of giving such a bank
guarantee would otherwise be defeated. The courts
should, therefore, be slow in granting an injunction to
restrain the realization of such a bank guarantee. The
courts have carved out only two exceptions. A fraud in
connection with such a bank guarantee would vitiate
the very foundation of such a bank guarantee. Hence if
there is such a fraud of which the beneficiary seeks to
take advantage, he can be restrained from doing so.
The second exception relates to cases where allowing
the encashment of an unconditional bank guarantee
would result in irretrievable harm or injustice to one of
the parties concerned. Since in most cases payment of
money under such a bank guarantee would adversely
affect the bank and its customer at whose instance the
guarantee is given, the harm or injustice contemplated
under this head must be of such an exceptional and
irretrievable nature as would override the terms of the
guarantee and the adverse effect of such an injunction
on commercial dealings in the country. The two
grounds are not necessarily connected, though both
may co-exist in some cases. In the case of U.P.
Cooperative Federation Ltd. v. Singh Consultants and6
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Engineers (P) Ltd. (988 [1] SCC 174), which was the
case of works contract where the performance
guarantee given under the contract was sought to be
invoked, this Court, after referring extensively to
English and Indian cases on the subject, said that the
guarantee must be honoured in accordance with its
terms. The bank which gives the guarantee is not
concerned in the least with the relations between the
supplier and the customer; nor with the question
whether the suppler has performed his contractual
obligation or not, nor with the question whether the
supplier is in default or not. The bank must pay
according to the tenor of its guarantee on demand
without proof or condition. There are only two
exceptions to this rule. The first exception is a case
when there is a clear fraud of which the bank has
notice. The fraud must be of an agregious nature such
as to vitiate the entire underlying
transaction. Explaining the kind of fraud that may
absolve a bank from honouring its guarantee, this
Court in the above case quoted with approval the
observations of Sir John Donaldson, M.R. in Bolivinter
Oil SA v. Chase Manhattan Bank NA (1984 [1] AER 351
at 352): “The wholly exceptional case where an
injunction may be granted is where it is proved that the
bank knows that any demand for payment already
made or which may thereafter be made will clearly be
fraudulent. But the evidence must be clear both as to
the fact of fraud and as to the bank’s knowledge. It
would certainly not normally be sufficient that this rests
on the uncorroborated statement of the customer, for
irreparable damage can be done to a bank’s credit in
the relatively brief time which must elapse between the
granting of such an injunction and an application by the
bank to have it charged”.
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This Court set aside an injunction granted by the High
Court to restrain the realisation of the bank guarantee.
The same question came up for consideration
before this Court in Svenska Handelsbanken v. M/s
Indian Charge Chrome & Ors. (1994 [1] SCC 502). The
Court once again reiterated that a confirmed bank
guarantee/irrevocable letter of credit cannot be
interfered with unless there is established fraud or
irretrievable injustice involved in the case. Irretrievable
injury has to be of the nature noticed in the case of Itek
Corporation v. The First National Bank of Boston etc.
(566 Fed Supp. 1210). On the question of fraud this
Court confirmed the observations made in the case
of U.P. Cooperative Federation Ltd. (supra) and stated
that the fraud must be that of the beneficiary, and not
the fraud of anyone else.
Clearly, therefore, the existence of any dispute
between the parties to the contract is not a ground for
issuing an injunction to restrain the enforcement of
bank guarantees. There must be a fraud in connection
with the bank guarantee….”
4) As regard the second prayer made by the
appellants through application 22C it has been observed
that the AAI in pursuance of notice dated 15.05.2025 had
already terminated the agreement. The appellants were
granted liberty by this Court by order dated 20.03.2026 in
Writ Petition (M/B) Nos. 381 and 383 of 2025 to amend
the reliefs in their applications pending before the
Commercial Court under Section 9 of the Act. However,
the appellants have failed to claim any relief in light of the
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subsequent development, namely the termination of the
license agreement. The Commercial Court has, therefore,
held that the appellants have failed to establish any prima
facie case in their favour, nor balance of convenience lies
with them. It has also been observed that the present
case is not a case where even if any loss or injury is
suffered the same cannot be compensated in terms of
money. Accordingly, the application has been rejected.
5) Mr. Jitendra Chaudhary, learned counsel for the
appellants submits that an order restraining a party to
invoke the bank guarantee can also be passed if a case of
irretrievable injustice or injury is made out and the court
below has not considered the said aspect of the matter.
In support of the said submission he also places reliance
on the same judgment of the Supreme Court in case of
M/s Sumac International Ltd. (supra). He further
submits that the object of granting injunction under
Section 9 of the Arbitration and Conciliation Act, 1996 is
to preserve the lis. It is submitted that if injunction is not
granted, the lis would be destroyed. He accordingly
submits that the court below has erred in rejecting the
application under Section 9 of the Act.
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6) On the other hand, learned counsel for AAI, has
supported the order passed by the Commercial Court and
has further submitted that the license agreement was
terminated on 31.05.2025 as the appellants had failed to
comply with the conditions of the agreement and recoup
the security deposit. He further submits that since after
issuance of notice dated 15.05.2025 the agreement itself
was terminated, therefore, Section 9 application itself was
rendered infructuous.
7) The Supreme Court in M/s Sumac International
Ltd. (supra) has held that an order restraining a party
from invoking bank guarantee should not be passed in a
casual manner. Only two exceptions have been carved
out. The first being in case of fraud and, the other one,
where any irretrievable injustice would be caused.
8. In the present case, the main dispute between
the parties was whether AAI was entitled to realize license
fees from the ‘access date’ of each location or from 60
days from the date of issuance of LOI. The further
dispute was whether the AAI was justified in raising
demands on pro- rata basis in respect of the area of which
possession was delivered to the appellants. Various other
ancillary questions are also involved. The Commercial
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Court has rightly observed that these issues are still to be
examined by the Arbitral Tribunal.
9) On query made from learned counsel for the
appellants, it is admitted that till date the appellants have
not taken any steps to even get the dispute referred to
the arbitral tribunal.
10) The alleged injury, as rightly observed by the
Commercial Court, is capable of being computed in terms
of money and, it is not a case where any irretrievable
injury would be caused. The court below has rightly
observed that no case is made out in favour of the
appellants to grant any injunction.
11) The notice dated 15.05.2025 in respect of which
application 17C was filed has also exhausted itself as
thereafter the contract has already been terminated. We
are also of the considered opinion that the present case is
not one of such case where any injunction against the
invocation of bank guarantee, or upon its invocation, for
its restitution, should be granted to the appellants.
12) The appellants are still free to approach the
Arbitral Tribunal to get the dispute between the parties
resolved.
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13) Accordingly, we find no good ground to interfere
with the order of the Commercial Court. The appeal lacks
merit and is, accordingly, dismissed.
14) Pending application(s), if any, also stand
disposed of.
______________________
MANOJ KUMAR GUPTA, C.J.
_________________
SUBHASH UPADHYAY, J.
TH
Dt: 29 JULY, 2026
Negi
Digitally signed by HIMANSHU NEGI
HIMANS
DN: c=IN, o=HIGH COURT OF
UTTARAKHAND, ou=HIGH COURT OF
UTTARAKHAND,
2.5.4.20=bb3b60774012c1ef1dae20d13aaf1
16e73351fdaf6878326386908a7f90d5757,
HU NEGI
postalCode=263001, st=UTTARAKHAND,
serialNumber=75BD9D0FB7F4A80990FC51A
722A6BC552D470EB4FD2F88DDF7C18DB2A
1524A4D, cn=HIMANSHU NEGI
Date: 2026.07.30 11:53:37 +05’30’
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