KRIDE Encashes ₹57 Crore Performance Bank Guarantees from L&T Following Arbitration Tribunal Ruling
Rail Infrastructure Development Company (Karnataka) Limited (KRIDE), a joint venture of the Government of Karnataka and the Ministry of Railways, has successfully invoked and encashed two Performance Bank Guarantees worth approximately ₹57 crore issued by YES Bank on behalf of Larsen & Toubro (L&T).
The action follows the Arbitration Tribunal’s decision rejecting L&T’s request for an injunction against the invocation of these guarantees. KRIDE carried out the encashment yesterday.
Background of the Dispute
L&T was awarded contracts for the civil works of BSRP (Bengaluru Suburban Railway Project) Corridors 2 and 4. According to KRIDE, L&T defaulted on the execution of the works and later unilaterally terminated the agreements in a manner not in accordance with the terms and conditions of the contracts.
Earlier, L&T had approached the commercial court seeking a stay on the encashment of the bank guarantees and also invoked the arbitration clause. An arbitration tribunal comprising retired judges of the Supreme Court and High Courts was constituted to adjudicate the claims and counterclaims between the parties. The commercial court later referred all related matters to the arbitration tribunal.
The tribunal’s recent decision has upheld KRIDE’s stand, allowing the public sector company to proceed with the invocation and encashment of the guarantees.
KRIDE’s Position
In its official media release, KRIDE described the tribunal’s ruling as an important decision that vindicates its commitment to contractual discipline, financial prudence, and safeguarding public interest.
The release emphasized that L&T’s termination of the agreements was “unilateral and illegal.”
Current Status
This development comes after earlier court proceedings in which L&T’s pleas for interim protection against the invocation of bank guarantees were dismissed by the Bengaluru commercial court in January 2026.
KRIDE is now expected to utilise the recovered amount towards completing the pending works on the two corridors, likely through fresh tenders or alternative arrangements.
This case highlights the growing emphasis on enforcing contractual obligations in large public infrastructure projects in India, particularly in the rail and urban mobility sector.
