Case Law Analysis
|Bombay High Court
Section 9 Arbitration Act | Bank Guarantee Encashment Cannot Be Stopped Without Proven Fraud or Irretrievable Injury: Bombay HC
The Bombay High Court has ruled that mere apprehension of contract termination or financial hardship does not satisfy the high threshold for restraining encashment of bank guarantees under Section 9 of the Arbitration Act. This reinforces that bank guarantees are independent instruments meant to ensure contractual performance, and judicial intervention requires concrete evidence of fraud or irretrievable harm - not speculative claims. Contractors and public authorities alike must now treat guarantees as enforceable security unless exceptional misconduct is proven.