Q: What are the exceptions when an injunction can be granted to restraint invocation of bank guarantee ?

Ans:  

The jurisprudential disposition has carved out three exceptions when an injunction can be granted to restraint invocation of bank guarantee:

Fraud of an egregious nature, which goes to the root of the bank guarantee (and not the underlying contract): A clear evidence, both as to the fact of fraud and as to the bank’s knowledge of such fraud, which would vitiate the very foundation of such a bank guarantee can go a long way in restraining invocation of a bank guarantee; or

Irretrievable injury/harm or injustice: If the harm or injustice is of such an exceptional and irretrievable nature as would override the terms of the guarantee and cause adverse effect of such an injunction on commercial dealings in the country, the courts can treat such situations as exceptional and accordingly grant an injunction; or

Special equities: Relief on account of injuries caused due to exceptional circumstances.

Comments

Post a Comment

Popular posts from this blog

Q: Elaborate the citation of Hindustan Construction Co. Ltd. vs State of Bihar and othrs ?

Ans:  Hindustan Construction Co. Ltd vs State Of Bihar And Ors on 8 October, 1999 In this case, the honourable Supreme Court held that the bank only pays the amount after certain conditions which might be enumerated in the guarantee contract, are fulfilled by the debtor. Conditions can be like- Proof of default, approval of a third party etc. To invoke the encashment of the bank guarantee, the conditions put forth in the contract have to be fulfilled. Injunction against encashment of conditional Bank guarantees can be granted by the courts in view of the facts of the case present and the beneficiary can’t have an unrestrained right to invoke the bank guarantees. Therefore, the invocation of the bank guarantee should be in strict conformity with the conditions on which the guarantee is issued. In the case of Hindustan Construction Co. Ltd. vs State of Bihar and othrs, the honourable supreme court held that  under conditional bank guarantees, the beneficiary does not have an unf...
Read more

Q: What is performance bank guarantee?

Ans: Performance bank guarantee was given against defects, unfinished and unsupplied items. In case of non performance by the contractor,  performance bank guarantee is invoked. A performance guarantee provides an assurance of compensation in the event of inadequate or delayed performance on a contract.
Read more

Q: Elaborate foreign bank guarantee ?

Ans: A foreign bank guarantee is provided by a bank on behalf of a borrower. This will be offered on behalf of the foreign beneficiary or creditor.  If the business is concerned with an export and import, the bank guarantee will be foreign bank guarantee. x
Read more