Bengaluru court allows K-RIDE to invoke L&T bank guarantees

Bengaluru court rejects L&T’s plea, allowing K-RIDE to invoke bank guarantees after Jan 24; L&T can seek remedies via arbitration

A Bengaluru commercial court has dismissed Larsen & Toubro’s (L&T) plea to restrain Karnataka Rail Infrastructure Development Enterprises (K-RIDE) from encashing its bank guarantees in connection with the Bengaluru Suburban Rail Project’s Corridor‑4, also known as the Kanaka Line.

The dispute stems from a contract awarded to L&T for designing and constructing an 8.96‑km elevated corridor and a 37.92‑km at‑grade corridor along the Heelalige–Rajanukunte line. L&T received the Letter of Acceptance on December 30, 2023, and furnished two guarantees: a performance guarantee worth ₹31.21 crore and a mobilisation advance guarantee of ₹28.41 crore.

L&T alleged that K-RIDE misrepresented the availability of encumbrance‑free land and work fronts, claiming that large portions of land remained inaccessible and utilities were not shifted even months after the contract was awarded. The company further argued that repeated scope changes without formal orders made execution impossible, leading it to unilaterally terminate the contract in July 2025 and seek to block invocation of the guarantees.

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K-RIDE, however, denied allegations of fraud, stating that progressive land handover had been clarified during the pre‑bid stage. It maintained that delays entitled the contractor only to extensions of time, not suspension of obligations, and accused L&T of poor mobilisation and slow progress despite having access to work fronts.

Judge C D Karoshi observed that L&T itself terminated the contract and that the guarantees furnished were unconditional and irrevocable. The court also noted that an arbitral tribunal is already in place and, under Section 9(3) of the Arbitration and Conciliation Act, interim relief should generally be sought before the tribunal rather than the court.

Consequently, the court vacated the interim injunction granted on July 30, 2025, which had temporarily restrained K-RIDE from invoking the guarantees. It ruled that the restraint will remain only until January 24, after which K-RIDE will be free to encash them, while L&T can pursue remedies before the arbitral tribunal.

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