The main legal point established is that the law on invocation of bank guarantees or letters of credit is well settled, with exceptions for fraud and irretrievable damage.

1. The present petition has been filed by the petitioner seeking the following reliefs:-

“(a) Restrain the respondent No.1 from invoking the Letters of Credit bearing Nos.6011ILCRE140001 & 6011ILCRE130001 for an amount of Rs.18,08,000/- & Rs.25,00,000/- respectively, issued by Respondent No.2, till the time the disputes are finally adjudicated by an Arbitrator;

(b) Restrain the respondent No.2 from making any payment to respondent No.1 towards invocation of the 'Letters of Credit' bearing Nos.6011ILCRE140001 & 6011ILCRE130001 for an amount of Rs.18,08,000/- & Rs.25,00,000/- respectively, till the time the disputes are finally adjudicated by an Arbitrator;

c) Pass an ex-parte interim order in terms of prayers (a) &(b) above;

And/or

Pass such other orders which this Hon'ble Court may deem fit and proper in the facts and circumstances of the case in favour of the Petitioner.”

Facts

2. It is the case of the petitioner in the petition that it is engaged in the business of paper coating at its unit at T-4, Old Industrial Area, Bahadur Garh District, Jhajjar, Haryana. For the purpose of this business the petitioner requires Regassified Liquid Natural Gas (RLNG) and accordingly entered into a Gas Sale Agreement dated December 25, 2008 with the respondent No.1 for supply of RLNG. According to the petitioner, under the terms of the agreement the respondent No.1 was to supply the gas at the unit situated at Jhajjar, Haryana. The respondent No.1 was to supply 59000 MMBTU’s to the respondent every year and in terms of the agreement the petitioner was required to maintain letters of credit with the respondents. In total the petitioner has provided two letters of credit for an amount of Rs.43,08,000/-. The petitioner in its petition would state that under clause 8.1(b)(i) the petitioner prior to the commencement of each year was to give written notice to the respondent No.1 of the quantities of the gas which the petitioner required during each calendar year. It is the petitioner’s case that the petitioner had not been able to utilize the entire gas within its unit, it addressed a communication dated July 26, 2013 to the respondent No.1 requesting it to reduce the monthly allotment of gas from 5000 MMBTU to 2000 MMBTU with immediate effect. The said request was followed by another request on August 22, 2013, whereby the petitioner had requested the respondent No.1 to reduce the allotment of gas to 1500 MMBTU every month with effect from September 01, 2013. The petitioner would state that it had received an e-mail dated September 09, 2013 from the respondent No.1 requiring the petitioner to renew the letters of credit and to further enhance the value of letters of credit to Rs.65.13 lacs. According to the petitioner, it had specifically vide communication dated September 11, 2013 informed the respondent No.1 that the letters of credit was on the basis of 5000 MMBTU per month and it had already informed the respondent No.1 for reduction to 1500 MMBTU per month and hence the value of letters of credit be reduced accordingly. The petitioner would also state that the respondent No.1 vide its e-mail dated September 20, 2013 had informed the petitioner that the request of the petitioner for surrender for RLNG gas quantity every month is being examined and would be decided in terms of the policy of respondent No.1. According to the petitioner, till date no such decision has been communicated by the respondent No.1 to the petitioner.

3. Despite sending the letters of credit for an amount of Rs.25,00,000/-, the respondent No.1 still insisted upon the petitioner to send the letters of credit for an amount of Rs.65.13 lacs which compelled the representative of the petitioner to meet the officers of the respondent No.1 and explain them the entire situation. The petitioner would state that the officers had assured the representative that they would expedite the decision on the request of the petitioner for reduction in the quantity of the gas pe