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2020 (1) TMI 1607 - HC - Insolvency and BankruptcyLegality of invocation of Bank Guarantee - fraudulent or not - tri-partite agreements - seeking grant a decree of permanent injunction restraining defendant No.1 from invoking/enforcing the Bank Guarantee - HELD THAT:- Once the Court below had found that the Bank Guarantees furnished by the 1st respondent to the appellant are irrevocable, that they were rightly invoked under Ex.P39 and such invocation does not amount to fraud, the Court below ought to have rejected both the applications and denied relief to the 1st respondent. The law relating to invocation of Bank Guarantees is well settled. In Himadri Chemicals Industries Ltd. Vs. Coal Tar Refining Co. [2007 (8) TMI 704 - SUPREME COURT], the Supreme Court had summarized the principles for grant or refusal to grant an injunction restraining the enforcement of a Bank Guarantee or letter of credit, holding that Since a bank guarantee or a letter of credit is an independent and a separate contract and is absolute in nature, the existence of any dispute between the parties to the contract is not a ground for issuing an order of injunction to restrain enforcement of bank guarantees or letters of credit. Having perused the contents of the plaint filed by the 1st respondent in the instant case, it is found that the allegations therein do not constitute prima facie a plea of egregious fraud and at best amount to an alleged breach of contract by the appellant. As pointed out already even the Court below had observed that invocation of Bank Guarantees does not amount to fraud - It cannot also be said that by mere invocation of Bank Guarantees, any irretrievable harm or injustice would be caused to the 1st respondent. Even if the amount covered by the Bank Guarantees is paid to the 4th respondent, which is one of the creditors of the appellant, if the 1st respondent were to succeed in the suit or in the arbitration proceedings, it can still recover the amount from the 4th respondent, which is a public sector financial institution. Appeal allowed.
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