Court Dismisses L&T Plea, K-RIDE Can Encase Bank Guarantees
Overview
A court has rejected Larsen & Toubro's application for interim protection against Rail Infrastructure Development Company (Karnataka) Limited (K-RIDE) invoking bank guarantees. The ruling impacts Corridor-4 of the Bengaluru Suburban Rail Project, allowing K-RIDE to proceed with encashing guarantees while L&T can seek recourse via arbitration.
Stocks Mentioned
Court Rejects L&T's Bid to Block Bank Guarantee Invocation
A commercial court has dismissed an application by Larsen & Toubro (L&T) seeking interim protection against Rail Infrastructure Development Company (Karnataka) Limited (K-RIDE) from invoking bank guarantees related to Corridor-4 of the Bengaluru Suburban Rail Project. The ruling effectively allows K-RIDE to proceed with encashing the guarantees.
Limited Relief for L&T
While dismissing the primary application, the Additional City Civil and Sessions Judge (Commercial Court), C D Karoshi, granted L&T temporary relief to approach the arbitral tribunal. The court noted that the balance of convenience did not favour L&T, especially given the unconditional nature of bank guarantees and the established arbitral tribunal.
Arbitration Takes Precedence
The court's detailed order, dated January 5, 2026, highlighted that powers to grant interim measures regarding bank guarantees are barred by Section 9(3) of the Arbitration and Conciliation Act, 1996, once an arbitral tribunal is constituted. L&T possesses an "efficacious remedy" before the tribunal under Section 17. The interim injunction previously granted on July 30, 2025, is set to automatically vacate on January 24, 2026. L&T has been given 20 days from the order date to seek similar relief from the tribunal.
