What are the principles governing the invocation of bank guarantees? What is the validity of a bank guarantee invocation when the invocation letter does not specify the amount of loss or damages suffered? What is the effect of extending a bank guarantee on the liability of the guarantor?

Key Points: - The court sought an injunction against the respondent from claiming or encashing two bank guarantees issued by the New Bank of India on behalf of the petitioner (!) . - The respondent was awarded a contract for the construction of Iraq Grain Storage Projects, and the petitioner was associated with a part of this project (!) (!) . - The petitioner furnished a performance bank guarantee and a bank guarantee to secure an advance payment, both of which were extended over time (!) (!) (!) . - Disputes arose between the parties, and the matter was referred to an arbitrator; the respondent invoked both bank guarantees (!) (!) . - The petitioner claimed the work was completed and the advance was adjusted, while the respondent denied performance and claimed outstanding dues (!) (!) . - The court partly allowed the petition, upholding the invocation of the bank guarantee for the advance amount but restraining the respondent from invoking the performance bank guarantee due to invalid invocation (!) . - The court noted that the extension of a bank guarantee can be seen as an admission of liability by the petitioner (!) . - The principles governing bank guarantees emphasize their independence from the underlying contract and the need for honoring irrevocable commitments unless fraud or special equity is established (!) (!) (!) (!) . - The invocation of the performance bank guarantee was found to be invalid because the letter did not specify the amount of loss or damages suffered, as required by the guarantee's terms (!) (!) (!) . - The invocation of the advance bank guarantee was upheld as the letter stated the advance had not been recovered and the guarantee terms gave the respondent sole discretion to determine the extent of loss or damage (!) (!) .

What are the principles governing the invocation of bank guarantees?

What is the validity of a bank guarantee invocation when the invocation letter does not specify the amount of loss or damages suffered?

What is the effect of extending a bank guarantee on the liability of the guarantor?