9911796707
TMI Blog1995 (5) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... uarantees in favour of the appellant issued by the Canara Bank which are the subject- matter of dispute before us. These are: (1) a bank guarantee dated 27.2.80 for ₹ 11,54,290/-, (2) a bank guarantee dated 26.7.86 for ₹ 85,000/-, (3) a bank guarantee dated 26.7.86 for ₹ 2,53,250/-, (4) a bank guarantee dated 26.7.86 for ₹ 63,411.42 and (5) a bank guarantee dated 26.7.86 for ₹ 3,79,875/-. While the first two bank guarantees are performance guarantees, the other three bank guarantees are to secure the advances given by the appellant to the first-respondent to be adjusted against payments to be made under the contract. All these bank guarantees are payable on demand. Clause 1 of the bank guarantee dated 26.7.86 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny and all monies payable by the contractor by reason of any breach" of the terms of the contract. There were disputes between the parties in respect of the supply of pumps under the contract. The appellant by its letter dated 15th of March, 1990 addressed to the first- respondent demanded from the first-respondent payment of a sum of ₹ 13,22,466.80, being the net recovery which the appellant was entitled to make from the first-respondent as per the particulars set out in that letter. The appellant called upon the first-respondent to pay the said amount on or before 25.3.90 failing which they would invoke the above bank guarantees without any further notice. On 11.6.90 the first-respondent invoked the arbitration clause under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Canara Bank objected to partial invocation of the bank guarantee for ₹ 3,79,875/-, the appellant by its letter dated 26th of March, 1993 invoked the bank guarantee for ₹ 3,79,875/- also in full. On 26th March, 1993 the first-respondent filed a petition before the Delhi High Court under Section 41 of the Arbitration Act seeking an injunction to restrain the present appellant from invoking the guarantees and the Canara Bank from remitting the amounts under the bank guarantees to the appellant. A Learned Single Judge of Delhi High Court by his order dated 20.10.94 granted an injunction restraining the appellant from encashing the bank guarantees. An appeal filed by the first-respondent before the Division Bench of the Delhi Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... While irretrievable injustice. Fraud must be of an "egregious nature" so as to vitiate the entire underlying transaction. While irretrievable injustice should be of the kind arising in an irretrievable situation which was referred to in the U.S. case of Itek Corporation v. The First National Bank of Boston etc. (566 Fed. Supp. 1210). The irreparable harm should not be speculative. It should be genuine and immediate as well as irreversible - a kind of situation which existed in the case of Itek Corporation (supra) where, on account of the revolution in Iran the American Government had cancelled all export contracts to Iran and had blocked all Iranian assets within the jurisdiction of the United States. Fifty two Americans had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all be conclusive and binding on the bank notwithstanding any difference between the Owner and the Contractor or any dispute pending before any Court, Tribunal, Arbitrator or any other Authority. Nevertheless, this express term merely reiterates the nature of a bank guarantee which is payable on demand being made by the beneficiary of the bank guarantee. A bank guarantee which is payable on demand implies that the bank is liable to pay as and when a demand is made upon the bank by the beneficiary. The bank is not concerned with any inter se disputes between the beneficiary and the person at whose instance the bank had issued the bank guarantee. All the three bank guarantees which have been invoked are payable on demand. There is, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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