G H STANDARD CHARTERED BANK versus HEAVY ENGINEERING CORPORATION LTD. & ANR.

G H STANDARD CHARTERED BANK versus HEAVY ENGINEERING CORPORATION LTD. & ANR.

The Court held that the bank guarantees in question were unconditional, specific in nature, and limited in amount, covering advances paid due to breach or failure in performance by SCIL. The invocation by the 1st respondent was compliant with the terms of the guarantees. As no exception such as fraud, irretrievable injustice, or special equities was established, the Court ruled that the appellant bank was obliged to pay under the guarantees and that the courts should not interfere.

Parties
Appellant: Standard Chartered Bank; Respondent No. 1: Heavy Engineering Corporation Ltd.; Respondent No. 2: Simon Carves India Ltd. (SCIL)
Jurisdiction
India
Judgment Date
18 December 2019
Procedural Posture
Civil Appeal / Appeal for Final Disposition After Division Bench of High Court Decree
Outcome
Appeal dismissed
Legal Topics
Bank Guarantee, Invocation of Guarantee, Indemnity, Supply Contract, Contract Breach
Banks/banking Contracts Bank Guarantee Invocation of Guarantee Indemnity Supply Contract Contract Breach

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Parties

Standard Chartered Bank

Appellant

Heavy Engineering Corporation Ltd.

Respondent No. 1

Simon Carves India Ltd. (SCIL)

Respondent No. 2

Procedural Posture

Civil Appeal / Appeal for Final Disposition After Division Bench of High Court Decree

Legal Issues

  1. 1 Whether the invocation and encashment of the bank guarantees furnished by the appellant bank in favour of the 1st respondent were proper in law
  2. 2 Whether the appellant bank can refuse to honour unconditional and irrevocable bank guarantees upon demand

Ratio Decidendi

The Court held that the bank guarantees in question were unconditional, specific in nature, and limited in amount, covering advances paid due to breach or failure in performance by SCIL. The invocation by the 1st respondent was compliant with the terms of the guarantees. As no exception such as fraud, irretrievable injustice, or special equities was established, the Court ruled that the appellant bank was obliged to pay under the guarantees and that the courts should not interfere.

Court Disposition

Appeal dismissed

Orders

  • Registry of the High Court of Calcutta to release the money lying in the account in favour of the 1st respondent
  • Appellant Bank (judgment debtor) to settle and satisfy the decree impugned in these proceedings