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PRASENJIT BISWAS, HARISH TANDON
Bharat Heavy Electricals Ltd. Electronics Division – Appellant
Versus
West Bengal State Electricity Distribution Company Ltd. – Respondent
JUDGMENT :
(Harish Tandon, J.) :
1. The instant appeal arises from a judgment and order dated 20th January, 2022 passed by the Single Bench in AP 242 of 2021 in relation to an application under Section 9 of the Arbitration and Conciliation Act, 1996. By the impugned order the aforesaid proceeding is dismissed upon refusal to pass any interim order or order of restraint against the respondent herein to invoke the performance bank guarantee submitted by the appellant in relation to a contract.
2. Shorn of unnecessary details, the salient facts emerged from the pleading of the respective parties are adumbrated hereinafter. By a virtue of a notice inviting tender issued by the Respondent no. 1 for work of design, engineering, manufacturing, supply, installation, testing and commissioning including the warrantee, obligation and maintenance of 10 MW Solar PV Power Project at Mejia, the appellant was declared successful bidder and a letter of intent dated 30th July, 2016 was issued in its favour. Pursuant to the said letter of intent, the Letter of Award dated 6th September, 2016 was issued containing an exhaustive terms and conditions relating to commissioning, setting up and operational
Bank guarantees are independent and unconditional contracts, and courts should refrain from interfering with their invocation unless exceptional circumstances such as fraud or irretrievable injury ar....
The court emphasized the independence and unconditional nature of bank guarantees, while recognizing exceptions such as fraud, irretrievable injustice, or special equities.
A confirmed Bank Guarantee/irrevocable Letter of Credit cannot be interfered with unless there is established fraud or irretrievable injustice involved in case.
Unconditional bank guarantees may only be reviewed for egregious fraud or irretrievable injustice; disputes over contract performance must be resolved through arbitration.
Point of Law : It is trite law that a Court can restrain encashment of bank guarantee in cases of established fraud in invocation of bank guarantee. The fraud has to be absolute and egregious, vitiat....
The court clarified that injunction against unconditional bank guarantees requires proof of egregious fraud, irretrievable injustice, or special equities, none of which were sufficiently substantiate....
Invocation of an unconditional bank guarantee cannot be restrained unless fraud or irretrievable injustice is established; the nature of bank guarantees is independent and absolute.
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