Mozambique Coal Mine Dispute: Delhi High Court Refuses To Stay $10.53 Million Bank Guarantee Encashment

The Delhi High Court recently dismissed a petition filed by Black Gold Resources Private Limitada to prevent the termination of its coal mining contract in Mozambique as well as the invocation of a $10.5 million Performance Bank Guarantee (PBG) by International Coal Ventures Pvt. Ltd. and Minas De Benga Limitada. While withdrawing an earlier interim stay, Justice Jasmeet Singh on December 17, 2025, noted that the petitioner had not proven "irretrievable harm" and that the issues at hand were matters best suited to be resolved by an arbitral tribunal, not by a Court under Section 9 of the Arbitration and Conciliation Act, 1996.

The dispute began with a 2017 agreement for coal mining operating services at Mozambique's Benga Mine, wherein Minas de Benga issued a default notice in November 2024, claiming that the "overburden" volumes regarding the waste material removed to obtain coal had been incorrectly calculated, despite the project's extension until August 2025. Alleging that Black Gold Resources Private Limitada had fraudulently accepted payments for exceeding overburden volumes, Minas de Benga Limitada demanded recovery of roughly USD 30.08 million. On March 3, 2025, Minas de Benga Limitada and International Coal Ventures Pvt. Ltd. terminated the mining contract by invoking the Performance Bank Guarantee.

Senior Advocate Rajiv Nayar on behalf of Black Gold Resources argued that the termination was arbitrary and went against the required 90-day notice time for correction. They argued that overburden reduction was only incidental and that coal extraction targets were met. Additionally, they contended that since the defendants had previously withheld $25 million from outstanding invoices, cashing the $10.5 million PBG would result in "severe financial hardships" and insolvency.

On the other hand, International Coal Ventures Pvt. Ltd. and Minas de Benga Limitada contended that the contract could not be explicitly enforced under the Specific Relief Act because it was "determinable" in nature. They insisted that the Performance Bank Guarantee was unconditional and could only be stayed in situations involving serious fraud or irreversible harm, neither of which were proven. Additionally, they claimed that Black Gold Resources and a former employee conspired to falsify overburden measures.

Refusing to grant an injunction, noting that the contract was determinable under Clause 12, Justice Singh pointed out that the standard for "irretrievable injury" for an unconditional bank guarantee is far higher than a mere financial hardship. The court held that “in cases of unconditional and irrevocable bank guarantees, the Court may stay invocation only when there is egregious fraud, irretrievable injustice, or special equities” and in this case, no case as such had been made out.

The court emphasized that in December 2024, the petitioner had sent letters indicating that it was unable to proceed with the contract. Observing that a third party had been awarded mining rights and that the contract had already been ended, the Court stated that the arbitral tribunal would investigate the legality of termination and held that no interim injunction could currently be granted by the Court.

It stated that "The contentions raised by the learned senior counsels for the petitioner for injunction against invocation of the PBG essentially revolved around interpretation and performance/ non-performance of the conditions stipulated in the Contract and Addendum and the same are entirely arbitrable in nature and not for this Court to adjudicate upon in a Section 9 petition".

The court concluded that the PBG's invocation was consistent with its recitals and text. Justice Singh ruled that "the petitioner has failed to establish that it will suffer irretrievable harm if invocation of the PBG is not restrained" . As a result, the March 6, 2025, interim order was vacated and the petition was dismissed.

Case Title: Black Gold Resources Private Limitada v. International Coal Ventures Pvt. Ltd. & Anr.

Case No: O.M.P. (I) (COMM) 78/2025

Coram: Justice Jasmeet Singh

Date of Decision: December 17, 2025

Appearances: For Petitioner: Mr. Rajiv Nayar, Mr. Saurav Agrawal, Mr. Mayank Jain, Mr. Madhur Jain, Mr. Saurabh Seth, Mr. Arpit Goel, Mr. Deepak Jain, Ms. Allaka M, Mr. Raghav Thareja, Ms. Raadhika Chawla, Mr. Mehak Joshi, and Mr. Abhiroop Rathore ; For Respondents: Mr. Shaiwal Srivastava

Click Here To Read/Download Order