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SANJIB BANERJEE, W. DIENGDOH
North Eastern Electric Power Corporation Ltd. (Neepco) – Appellant
Versus
Patel-Unity Joint Venture – Respondent
JUDGMENT
Sanjib Banerjee, CJ. - These three appeals arise out of identical orders passed on three independent petitions under Section 9 of the Arbitration and Conciliation Act, 1996 pertaining to the three packages forming parts of the same work for the construction of a hydro-electric power project in the State.
2. The primary prayer in the three petitions was as follows:
'Restrain the Respondent, its assign(s), its officers, employees or representatives from fraudulently invoking the Bank Guarantees as listed in para 26 of the present application and issued by the Applicant in favour of the Respondent.'
3. To begin on a lighter note, the prayer made may just as well have been allowed for the mere asking. By the use of the word 'fraudulently' therein, the respondent herein only prayed that the invocation should not be fraudulent but did not seek any injunction on the invocation otherwise. So much for careless drafting and the daily rubbish that the Indian Judge is subjected to.
4. There is no dispute that the relevant bank guarantees were unconditional in nature, in the sense that the bank unequivocally agreed to pay the amounts covered by the relevant bank guarantees on the first dema
Courts should not interfere with the invocation or payment under an unconditional bank guarantee unless there is egregious fraud or special equity.
A confirmed Bank Guarantee/irrevocable Letter of Credit cannot be interfered with unless there is established fraud or irretrievable injustice involved in case.
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....
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.
Unconditional bank guarantees may only be reviewed for egregious fraud or irretrievable injustice; disputes over contract performance must be resolved through arbitration.
Bank guarantees can be invoked regardless of disputes, unless fraud or irretrievable harm is clearly established.
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