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TMI Blog2020 (1) TMI 1607X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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. - CIVIL MISCELLANEOUS APPEAL NOS.1027 AND 1028 OF 2019 - - - Dated:- 6-1-2020 - HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO AND HONOURABLE SRI JUSTICE K. LAKSHMAN FOR THE PETITIONER : S LAKSHMI KANTH, ADVOCATE FOR THE RESPONDENT : ASAD HUSSAIN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 1st respondent, had issued the said letters. According to the 1st respondent, the appellant and respondents 1 and 3 had conducted a meeting on 16.05.2018 in Chennai wherein the parties present had signed an agreement/contract in the form of minutes of the meeting; as per the said minutes of the meeting, the appellant induced the 1st respondent to believe and agreed to return the balance retention of Rs.2.00 Crore and also to return the above Performance Bank Guarantees of Rs.10,90,00,000/- and Rs.9,40,00,000/- respectively; that this was to be done on 15.06.2018, but the appellant did not return the same. It is contended that multiple communications were exchanged between the 1st respondent and the appellant for return of the said Bank Guarantees. 7. It is further contended that the 3rd respondent, who is the Contractor in the Tripartite Agreements, failed to make timely payments to the 1st respondent for the work completed by the 1st respondent in accordance with the tripartite agreements. 8. It is contended that as per the minutes of the meeting dt.18.07.2017, the parties had agreed that the appellant, in its capacity as the owner under the Tripartite Agreements, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. The appellant filed counter-affidavits in both the I.A.s opposing grant of any interim relief to the 1st respondent. 13. The appellant denied that it was fraudulently invoking the two Bank Guarantees referred to above and contended that they were being invoked as there was non-performance on the part of the 1st respondent of its part of the contract. 14. It denied that there was any agreement in the meeting held on 16.05.2018 in Chennai for return of the Bank Guarantees and retention of Rs.9.40 Crore. 15. It is contended that in the minutes of the meeting dt.16.05.2018, it was only recorded that the 1st respondent made a request to return the Bank Guarantees and the last line in the minutes of the said meeting showed that the issue would be further discussed with the appellant and resolved in a meeting planned around 25.05.2018. It is contended that there is no decision taken to return the Bank Guarantees and on the contrary, there was to be further discussion on this issue in the meeting to be held on 25.05.2018. 16. It was contended that in the meeting which occurred on 18.07.2017 between the parties, the 1st respondent had agreed to perform its part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended that the 1st respondent had neither prima facie case nor balance of convenience and no irreparable loss or hardship would be caused to the 1st respondent. The proceedings in the Court below and it s order dt.2.11.2019 in IAs 723 and 724 of 2019 22. Before the Court below, the 1st respondent marked Exs.P1 to P43 while the appellant marked Exs.R1 to R32. 23. It was also informed by the appellant to the Court below that the Bank Guarantees had already been invoked by the appellant by issuing letters to the 2nd respondent Bank on 18.10.2019 (marked as Exs.P14 and P15). 24. By separate orders dt.02.11.2019, the Court below allowed both I.A.Nos.723 and 724 of 2019 and issued ad interim injunctions restraining the appellant from continuing the process of invocation of the Bank Guarantees till further orders on condition that the 1st respondent shall keep the Bank Guarantees alive. 25. The Court below in its separate orders referred to the contentions of the parties and the documents filed by them and observed that in applications of this nature, prima facie case is essentially to be decided as to the existence of a triable issue. It referred to the minutes of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther creditors of the appellant since as per the invocation letter issued by the appellant, the amount should be deposited in the account of the 4th respondent, one of its creditors. It further went on to hold that if the 4th respondent takes the money, it would be distributed among the creditors of the appellant and the 1st respondent s money would be utilized for payments of debts of the appellant and it would be very difficult for the 1st respondent to realize the money from the 4th respondent and other lenders of the appellant. It also thus concluded that irreparable loss would be caused to the 1st respondent if the injunction applications are not allowed. It also observed that if the claim of the 1st respondent is not proved, the appellant can invoke the Bank Guarantees after disposal of the suit. 28. Assailing the same, these Appeals are filed. The consideration by this Court 29. It is firstly the contention of the learned counsel for the appellant that even prior to the suit being filed, the appellant had already invoked the Bank Guarantees under Ex.P39 addressed by it to the 2nd respondent Bank on 18.10.2019 and the applications for interim injunction should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Court below ought to have rejected both the applications and denied relief to the 1st respondent. 36. The law relating to invocation of Bank Guarantees is well settled. In Himadri Chemicals Industries Ltd. Vs. Coal Tar Refining Co. (2007) 8 SCC 110, 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 in the following manner: 14. . (i) While dealing with an application for injunction in the course of commercial dealings, and when an unconditional bank guarantee or letter of credit is given or accepted, the beneficiary is entitled to realize such a bank guarantee or a letter of credit in terms thereof irrespective of any pending disputes relating to the terms of the contract. (ii) The bank giving such guarantee is bound to honour it as per its terms irrespective of any dispute raised by its customer. (iii) The courts should be slow in granting an order of injunction to restrain the realisation of a bank guarantee or a letter of credit. (iv) Since a bank guarantee or a letter of credit is an independent and a separate contract and is absolute in nature, the e ..... 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