North Karanpura Transmission Company ... vs Central Electricity Regulatory ... on 23 February, 2023
20. The Supreme Court observed that both the courts below had committed
a jurisdictional error when they failed to take note of the law laid down
in Raman Iron Foundry which governed the controversy, and had instead
placed reliance on Himadri Chemicals Industries Ltd. v. Coal Tar Refining
Co., (2007) 8 SCC 110 and U.P. State Sugar Corpn. v. Sumac International
Ltd., (1997) 1 SCC 568 , which laid down general principle relating to bank
guarantees; there could be no quarrel with the proposition laid down in those
cases; however, every case had to be decided with reference to the facts
involved therein; the case at hand was similar on facts with that of Raman Iron
Foundry, and hence the law laid down in that case was applicable to this case;
the District Judge, having decided the injunction application in the first instance
in the appellant's favour, had erred in rejecting the application made by the
appellant the second time; the respondents, despite having suffered the
injunction order the first time, did not file any appeal against that order; the said
order had thus attained finality and was, therefore, binding on the parties; the
appellants had made out a prima facie case in their favour for grant of
injunction against the respondents; they had also made out a case of balance
of convenience and irreparable loss in their favour as held in Raman Iron
Foundry; and they were, therefore, entitled to claim injunction against the
respondent in relation to encashment of the Bank Guarantee. The appeal was
allowed, the impugned Order was set aside, in consequence, the injunction
application submitted by the appellant under Section 9 of the Arbitration Act
was allowed, and injunction was granted in the appellant's favour restraining
the respondent from encashing the Bank Guarantee.