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DELHI HIGH COURT
VIBHU BAKHRU
Gammon Engineers and Contractors Pvt. Ltd. – Appellant
Versus
Rail Vikas Nigam Limited – Respondent
| Table of Content |
|---|
| 1. contractual obligations and performance guarantees. (Para 3 , 4 , 5 , 6 , 7 , 8 , 9) |
| 2. disputes regarding bank guarantee invocation. (Para 10 , 11 , 12 , 13 , 14) |
| 3. law on interdicting unconditional bank guarantees. (Para 15 , 16 , 17) |
| 4. dismissal of the petition by the court. (Para 18 , 19) |
JUDGMENT
Vibhu Bakhru, J. (Oral)
[Hearing held through video-conferencing]
IA No. 3262/2022
1. Exemption is allowed, subject to all just exceptions.
2. The application stands disposed of.
O.M.P.(I) (COMM.) 68/2022
3. The petitioner has filed the present petition under Section 9 of the Arbitration and Conciliation Act, 1996 (hereafter `the A&C Act'), inter alia, praying that an order be passed restraining the respondent from taking any further action in terms of the letters dated 11.02.2022 and 16.02.2022.
4. In terms of the said letters, the respondent had called upon the petitioner to pay an amount of Rs.9,21,22,006.33/- failing which, it would be recovered by encashment of the Bank Guarantees available with the respondent. The petitioner, thus, also prays that an order be passed restraining the respondent from making any claim for payment under the Performance Bank G
Unconditional bank guarantees can only be interdict on grounds of egregious fraud or special equities; mere disputes about contract performance are insufficient for such a relief.
Unconditional bank guarantees can only be interdicted on grounds of egregious fraud and special equities.
The court ruled that bank guarantees must be honored regardless of existing disputes, affirming their unconditional nature and limiting judicial intervention to cases involving fraud or irretrievable....
Bank guarantees cannot be interdicted on account of contractual disputes between the parties, and exceptions for interdicting bank guarantees include cases of egregious fraud and irretrievable injust....
An interim order can restrain the encashment of bank guarantees pending arbitration if there is a risk of irreparable harm to the aggrieved party.
The unconditional nature of bank guarantees requires them to be honored despite disputes between the parties, and specific enforcement of a contract is impermissible under the Specific Relief Act, 19....
The court reinforced that unconditional bank guarantees cannot be restrained unless egregious fraud or irretrievable injustice is established, which was not proven by the petitioner.
A party seeking to restrain the invocation of a bank guarantee must demonstrate either clear fraud or irretrievable injustice; mere contractual disputes do not suffice for injunctions.
Bank guarantees cannot be interdicted due to contractual disputes unless fraud or irretrievable injustice is established.
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