26 August 2021 | SES Energy Services India Ltd. v. Vedanta Limited and others | OMP (I) (Comm.) 285/2021 | C Hari Shankar | 2021 SCC OnLine Del 4196
Refusing an injunction against the invocation of performance bank guarantees, C Hari Shankar J has ruled that:
- The law recognises only three circumstances in which invocation or encashment of unconditional bank guarantees could be injuncted: (i) egregious fraud; (ii) special equities; (iii) irretrievable injustice. The latter two are interconnected as held by the Supreme Court in BSES Ltd. v. Fenner India Ltd., (2006) 2 SCC 728.
- (b) Fraud per se is not sufficient. It must be egregious and must vitiate the entire underlying transaction.
- (c) Fraud is egregious when it erodes the very foundation of the bank guarantee and is definitively established. Therefore, even if the invocation is fraudulent, an injunction cannot be granted unless the bank guarantee itself is vitiated by fraud.
Read the judgment here.
