The Delhi High Court has set aside a Commercial Court order that required NBCC India Limited to deposit ₹1.48 crore in a fixed deposit during the pendency of a recovery suit between a contractor and a subcontractor. The Court held that such a direction could not be issued in the absence of any determined or admitted liability on NBCC's part.
The ruling was delivered by Justice Tejas Karia on June 15, 2026.
Background of the Case
The dispute arose from a construction project relating to a National Investigation Agency office and residential complex in Hyderabad. NBCC had awarded the main contract to GNC Infra LLP, which subsequently subcontracted portions of the work to another entity.
According to the plaintiff, payment disputes emerged after the subcontract arrangement ended. The parties later entered into a settlement agreement under which GNC Infra LLP allegedly agreed to pay ₹1 crore towards full and final settlement of dues. The plaintiff claimed that cheques issued under the settlement were dishonoured and subsequently initiated legal proceedings seeking recovery of money.
During the suit, the Commercial Court directed NBCC to deposit an amount equivalent to the suit claim ₹1.48 crore in the form of a fixed deposit receipt before the court. NBCC challenged that order before the High Court.
The High Court examined whether NBCC, which was not directly involved in the settlement agreement between the disputing parties, could be compelled to deposit the disputed amount before any liability had been established.
The bench noted that a garnishee order-a mechanism allowing recovery from a debtor of the judgment-debtor-can ordinarily be invoked only after liability is established and where the debt is clear and enforceable.
“The liability, if any, of the petitioner towards Respondent No. 2 is not admitted or crystallised,” the Court observed while analysing the legal requirements for such directions.
Justice Karia further clarified that merely expressing willingness to preserve funds pending litigation could not be treated as an admission that the money was legally payable.
The Court also pointed out that the recovery suit itself was still pending and the claims between the principal disputing parties had not yet been adjudicated. Therefore, there was no legal basis to compel NBCC to deposit the entire suit amount.
An additional factor considered by the High Court was that, in August 2024, the Commercial Court had already removed NBCC from the array of defendants after finding that there was no contractual relationship between NBCC and the plaintiff.
The High Court noted that this order had not been challenged and had attained finality. As a result, NBCC was no longer a party to the underlying suit.
Allowing NBCC’s petition, the Delhi High Court held that the Commercial Court's direction requiring deposit of ₹1.48 crore could not be sustained because there was neither a crystallised liability nor any adjudicated claim against NBCC.
“The Impugned Order directing the Petitioner to deposit the Suit Amount ... cannot be sustained,” the Court held.
Accordingly, the High Court set aside the order dated September 27, 2022, and allowed the petition. No order as to costs was passed.
Case Details
Case Title: NBCC India Limited v. GNC Infra LLP & Anr.
Case Number: CM(M) 1181/2022
Judge: Justice Tejas Karia
Decision Date: June 15, 2026
