GUJARAT MARITIME BOARD versus L&T INFRASTRUCTURE DEVELOPMENT PROJECTS LTD. AND ANOTHER

GUJARAT MARITIME BOARD versus L&T INFRASTRUCTURE DEVELOPMENT PROJECTS LTD. AND ANOTHER

The High Court erred in granting injunction restraining invocation of unconditional bank guarantee; such bank guarantees are independent contracts and are enforceable upon written demand from beneficiary, except in situations of egregious fraud or irretrievable injury. Disputed questions of fact between contracting parties are outside the purview of writ jurisdiction under Article 226.

Parties
Appellant: Gujarat Maritime Board; First Respondent: L&T Infrastructure Development Projects Ltd.; Guarantor Bank: Yes Bank Limited
Jurisdiction
India
Judgment Date
28 September 2016
Procedural Posture
Civil Appeal / Final Supreme Court Judgment
Outcome
Appeal allowed; impugned High Court judgment set aside.
Legal Topics
Bank Guarantee Invocation, Writ Jurisdiction, Injunction, Contractual Obligations
Contract Law Constitutional Law Bank Guarantee Law Bank Guarantee Invocation Writ Jurisdiction Injunction Contractual Obligations

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Parties

Gujarat Maritime Board

Appellant

L&T Infrastructure Development Projects Ltd.

First Respondent

Yes Bank Limited

Guarantor Bank

Procedural Posture

Civil Appeal / Final Supreme Court Judgment

Legal Issues

  1. 1 Whether High Court can restrain invocation of unconditional performance bank guarantee under Article 226 in contractual matters
  2. 2 Whether disputes in contract justify grant of injunction against enforcement of bank guarantee

Ratio Decidendi

The High Court erred in granting injunction restraining invocation of unconditional bank guarantee; such bank guarantees are independent contracts and are enforceable upon written demand from beneficiary, except in situations of egregious fraud or irretrievable injury. Disputed questions of fact between contracting parties are outside the purview of writ jurisdiction under Article 226.

Court Disposition

Appeal allowed; impugned High Court judgment set aside.

Orders

  • Impugned judgment dated 10.03.2015 is set aside.
  • Respondents shall not encash the bank guarantee in question.