Court Can Interfere In Unconditional Bank Guarantee Only When There Isn't A Slightest Possibility Of Amount's Restitution: Bombay HC
Live LawThe Bombay High Court has recently observed that there can be no interference with an unconditional bank guarantee except when fraud is established or apprehension of irretrievable injustice is demonstrated. These agreements required Cethar to furnish advance and performance bank guarantees and at its request, in February 2012, the Canara Bank issued five Bank Guarantees in favor of SKS Power. On 6th March 2017, Cethar asked Canara Bank to extend the bank guarantees, pursuant to this, on 30th June 2017, the Bank extended the bank guarantees until 30th September 2017 Meanwhile, by an order of 16th June 2017, the NCLAT, Chennai admitted an application against Cethar Limited and ordered the commencement of a Corporate Insolvency Resolution Process or CIRP and which resulted in an immediate moratorium. On the other hand, on 5th September 2017, SKS Power invoked the Bank Guarantees and requested Canara Bank to remit the full amounts, however, neither Cethar nor Nagarajan brought suit for an injunction against the invocation of Bank Guarantee or payment. Now, in the context of the instant case, the Court observed that there was no fraud shown in The underlying power plant construction contract; or The issuance of the bank guarantees; or The invocation.
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