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IN THE HIGH COURT OF KERALA AT ERNAKULAM
Harisankar V. Menon,J
Flemingo (DFS) Private Limited – Appellant
Versus
Airports Authority Of India – Respondent
| Table of Content |
|---|
| 1. petitioner engaged in duty-free operations disputes with the authority over bank guarantees. (Para 1 , 2 , 3 , 4 , 5 , 6) |
| 2. arguments presented by both parties regarding fairness and maintainability of the writ petition. (Para 7 , 8) |
| 3. court observations on the invocation of bank guarantees and the necessity of fairness. (Para 9 , 10 , 11 , 12 , 14 , 15 , 16) |
| 4. court's ruling that the invocation of bank guarantees was unjustified. (Para 13) |
| 5. final directions regarding the bank guarantees and closure of the writ petitions. (Para 17 , 18) |
JUDGMENT
HARISANKAR V. MENON, J.
These two writ petitions are filed by the same petitioner, a Company, stated to have been engaged in the operation of duty- free shops at the Trivandrum and Calicut International Airports. The petitioner contends that the duty-free shops at the arrival/departure terminals in the afore airports were conducted by it on the basis of the license agreements executed with the respondent herein till 31.8.2017. It states that two bank guarantees for Rs.1,29,60,406/- and Rs.2,66,93,694/- were executed with reference to the license agreements in favour of the respondent authority herein. The petitioner states
The invocation of bank guarantees was found unjustifiable as it violated principles of fairness under Article 14, despite the stay period expiry, highlighting the need for due diligence from state au....
The main legal point established in the judgment is that a bank guarantee cannot be invoked in the absence of default on the part of the respondent company, and the interim relief is not maintainable....
The independence of bank guarantees, the discretion of bank managers in invoking them, and the jurisdiction of the court to implement its own orders and the remedies available to the petitioners.
A bank guarantee is an independent contract, and its invocation must comply with its terms; disputes regarding underlying agreements should be resolved in civil court.
fraud or misrepresentation against the 2nd respondent, the question of interfering in the present Writ Petition directing the respondents not to invoke the bank guarantees provided by the petitioner ....
The bank guarantee must be honored in accordance with its terms, except in cases of clear fraud or special equities.
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.
Bank guarantees are independent contracts and can only be restrained from invocation in cases of fraud or special equities, which were not established in this case.
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